BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 2330


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          Date of Hearing:  April 27, 2016


                        ASSEMBLY COMMITTEE ON APPROPRIATIONS


                               Lorena Gonzalez, Chair


          AB  
          2330 (Ridley-Thomas) - As Introduced February 18, 2016


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          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


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          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


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            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


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             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