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
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|Policy |Business and Professions |Vote:|16 - 0 |
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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.
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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