BILL ANALYSIS Ó
AB 2330
Page 1
Date of Hearing: April 12, 2016
ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS
Rudy Salas, Chair
AB 2330
(Ridley-Thomas) - As Introduced February 18, 2016
SUBJECT: Real estate licensees.
SUMMARY: Requires the Real Estate Commissioner (Commissioner)
to disclose on the Bureau of Real Estate's (BRE) website for
every licensee, whether that licensee is an associate licensee,
and further requires the Commissioner to identify, if the
associate licensee is also a broker, every responsible broker
with whom the associate licensee is contractually associated.
EXISTING LAW:
1)Provides for the licensure and regulation of real estate
brokers and salespersons by the Real Estate Commissioner.
(Business and Professions Code (BPC) Section 10000 et seq.)
2)Defines a "real estate broker" as a person who, among other
things, sells, buys, or rents real property for another for
compensation, as specified (BPC Sections 10131-10131.6)
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3)Defines a "real estate salesperson" as a natural person who is
employed by a licensed real estate broker for compensation
(BPC Sections 10017, 10132)
4)Defines a "responsible broker" to mean the broker responsible
for the exercise of control and supervision of licensed
salespersons. (BPC Section 10159.7(a)(4))
5)Defines an associate licensee as a person who is licensed as a
real estate broker or salesperson and who acts under the
supervision of a broker and as the broker's agent in
connection with real estate functions. (Civil Code (CIV)
Section 2079.13)
6)Authorizes a real estate broker acting in the capacity of a
salesman to another broker under written agreement to perform
acts for which a license is required on behalf of the
employing broker at any place of business at which the
employing broker is currently licensed to perform acts for
which a real estate license is required (Title 10 California
Code of Regulations (CCR) Section 2728.5)
7)Requires every broker, except a broker acting in the capacity
of a salesperson to another broker under written agreement, to
maintain on file with the commissioner the address of his
principal place of business for brokerage activities, the
address of each branch business office and his current mailing
address, if different from the business address (10 CCR,
Section 2715)
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8)Requires every broker who is acting in the capacity of a
salesperson to another broker under written agreement to
maintain on file with the commissioner the address of the
business location where he expects to conduct most of the
activities for which a license is required and his current
mailing address. 10 CCR, Section 2715)
9)Requires the Commissioner of the BRE to post on the Internet
non-confidential license information of every salesperson or
broker licensed by the BRE. (BPC Section 10083.2)
10) Requires transparency in the process of lending and home
foreclosures. Also known as the Homeowner's Bill of Rights.
(CIV Sections 2920- 2925, relating to Mortgages)
THIS BILL:
1)Requires the Commissioner to disclose on the BRE's website for
every licensee, whether that licensee is an associate
licensee.
2)Requires the Commissioner to identify on its website, if the
associate licensee is also a broker, every responsible broker
with whom the associate licensee is contractually associated.
FISCAL EFFECT: Unknown. This bill is keyed fiscal by the
Legislative Counsel.
COMMENTS:
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Purpose. This bill is sponsored by the California Association
of Realtors . According to the author, "This bill will close an
important deficiency in existing law by identifying who a real
estate broker is working for when that broker is not acting
under his or her own license. Existing provisions, such as the
Homeowner's Bill of Rights, already require transparency in
other areas of real estate transactions. AB 2330 makes sure
that consumers always have access to information that affects
one of the biggest purchases of their lifetime."
Brokers and Salespersons. To obtain a broker's license,
applicants are required to submit evidence of at least two years
of experience as a real estate salesperson, in addition to
elevated education requirements and passage of a written
examination. In order to obtain a real estate broker license,
an individual, in most cases, must have held a real estate
salesperson's license for at least two years during which time
he or she must have been actively engaged in real estate, meet
certain real estate education requirements in addition to
passing an examination. Broker and salesperson licenses are
issued for a four-year period. In general, both types of
licenses may be renewed by submitting the appropriate fee and
application, and evidence of completion of 45 hours of
BRE-approved continuing education courses. These courses
include 15 hours of required courses in ethics, agency
relationships, trust fund handling, fair housing, and risk
management, and at least 18 hours in courses dedicated to
consumer protection. The remaining courses, up to 12 hours of
electives, may be related either to consumer protection or
consumer services that will enable the licensee to achieve a
high level of competence in serving the objectives of consumers
who may engage the services of licensees to secure the transfer,
financing, or similar objectives with respect to real property,
including organizational and management techniques.
Unlike salespersons, licensed brokers are not required to
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operate under the supervision of another broker. Brokers are
authorized to be the direct fiduciary representative of their
clients on matters pertaining to the sale of real property.
Brokers are also free to form contractual associations and
partnerships that are largely governed under the civil code.
Salespersons are required to report to the BRE within five days
of changing supervising brokers, and the BRE discloses this
information online. However, there is no similar requirement to
collect and disclose this information for brokers who are acting
as a contractual agent of another broker.
Associate Licensees. An associate licensee is defined in the
civil code as a licensee who is acting as an agent of a broker
in connection with real property transactions. A broker can
also act as an associate licensee, but the BRE's website does
not distinguish between brokers working independently and
brokers voluntarily operating under the supervision of another
broker. The author writes that without this legislation, a
member of the public would not know if, or whom, a licensed real
estate professional is supervised by, in case of a complaint.
The BRE has not reported complaints regarding this issue, but
the author proposes that more transparency regarding employment
structure is beneficial to the consumer.
Prior Related Legislation. AB 2169 (Cooley) of 2014 would have
reiterated the existing structure of Real Estate law that allows
salespersons and brokers the choice to contract with other
brokers as "independent contractor" or "employer- employee"
under their retention agreement. NOTE: This bill was held in
the Assembly Committee on Insurance.
AB 2540 (Dababneh), Chapter 295, Statutes of 2014 required every
real estate broker and salesperson licensee to provide the
commissioner with his or her current office or mailing address,
current telephone number, and current electronic mail address
that he or she uses to perform any activity that requires a real
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estate license, and at which the bureau may contact the
licensee, and to update that information no later than 30 days
after making a change. The bill also exempts a violation of
this requirement from criminal penalties.
ARGUMENTS IN SUPPORT:
California Association of Realtors writes in support, "AB 2330
makes a simple, but important, change in the way real estate
licensees are shown on the [BRE] license verification website.
In short, the bill requires that a salesperson who also
maintains a broker's license can still be linked to his or her
responsible broker. The current system makes it difficult for
consumers to verify who is actually in charge of the licensee,
and the change will greatly simplify that task."
IMPLEMENTATION ISSUES:
It is not clear that the BRE currently has the authority to
collect the information relevant to the implementation of this
bill. Through its regulations, the BRE requires brokers (and
brokers who are associate licensees) to disclose the address at
which they expect to conduct most of their business. However,
it does not require brokers to list every contractual
association they are a party to. Additionally, nothing in the
real estate code requires licensed brokers to disclose all of
their contractual associations to the BRE. Thus, implementation
of this bill may require time for the BRE to promulgate
regulations requiring licensed brokers to disclose their
contractual relationships with other brokers, so that the BRE
may be able to disclose this information on the website.
REGISTERED SUPPORT:
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California Association of Realtors
REGISTERED OPPOSITION:
None on file.
Analysis Prepared by:Tessa Nevarez / B. & P. / (916) 319-3301