BILL ANALYSIS Ó AB 2330 Page 1 Date of Hearing: April 27, 2016 ASSEMBLY COMMITTEE ON APPROPRIATIONS Lorena Gonzalez, Chair AB 2330 (Ridley-Thomas) - As Introduced February 18, 2016 ----------------------------------------------------------------- |Policy |Business and Professions |Vote:|16 - 0 | |Committee: | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | ----------------------------------------------------------------- Urgency: No State Mandated Local Program: NoReimbursable: No SUMMARY: This bill requires the Real Estate Commissioner (Commissioner) to disclose on the Bureau of Real Estate's (Bureau) 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. AB 2330 Page 2 FISCAL EFFECT: Total cost of $153,000 (special funds) in FY 2016/17, and $137,000 (special funds) in FY 2017/18 and ongoing for 2.0 Program Technician II positions to handle the associated workload required to implement the bill, plus additional costs of $65,000, likely absorbable, for necessary changes to the Bureau's IT systems. The Bureau does not currently collect information related to the contractual relationship(s) between brokers and would therefore require that information to be provided by their licensees. These costs, which are fee supported, assume the same type of processing currently used by Bureau to collect and disclose similar information for salespersons will be required to implement the provisions of this bill. COMMENTS: 1)Purpose. 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." 2)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. 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 AB 2330 Page 3 evidence of completion of 45 hours of Bureau-approved continuing education courses. Unlike salespersons, licensed brokers are not required to 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 from contractual associations and partnerships that are largely governed under the civil code. Salespersons are required to report to the Bureau within five days of changing supervising brokers, and the Bureau 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. 3)Associate Licensees. An associate licensee is statutorily defined 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 Bureau'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 Bureau has not reported complaints regarding this issue, but the author proposes that more transparency regarding employment structure is beneficial to the consumer. 4)Prior Legislation. AB 2330 Page 4 a) 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. This bill was held in the Assembly Committee on Insurance. b) AB 2540 (Dababneh), Chapter 295, Statutes of 2014 requires 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 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. Analysis Prepared by:Jennifer Swenson / APPR. / (916) 319-2081