BILL ANALYSIS Ó AB 2330 Page 1 ASSEMBLY THIRD READING AB 2330 (Ridley-Thomas) As Introduced February 18, 2016 Majority vote ------------------------------------------------------------------ |Committee |Votes|Ayes |Noes | | | | | | | | | | | | | | | | |----------------+-----+----------------------+--------------------| |Business & |16-0 |Salas, Brough, Baker, | | |Professions | |Bloom, Campos, | | | | |Chávez, Dahle, Dodd, | | | | |Eggman, Gatto, Gomez, | | | | |Holden, Jones, | | | | |Mullin, Ting, Wood | | | | | | | |----------------+-----+----------------------+--------------------| |Appropriations |20-0 |Gonzalez, Bigelow, | | | | |Bloom, Bonilla, | | | | |Bonta, Calderon, | | | | |Chang, Daly, Eggman, | | | | |Gallagher, Eduardo | | | | |Garcia, Roger | | | | |Hernández, Holden, | | | | |Jones, Obernolte, | | | | |Quirk, Santiago, | | | | |Wagner, Weber, Wood | | | | | | | | | | | | AB 2330 Page 2 ------------------------------------------------------------------ SUMMARY: Requires the Real Estate Commissioner (Commissioner) to disclose on the Bureau of Real Estate's (BRE) Web site 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. Specifically, 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: According to the Assembly Committee on Appropriations, total cost of $153,000 (special funds) in fiscal year (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 information technology (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: Purpose. This bill is sponsored by the California Association of Realtors. According to the author, "This bill will close an AB 2330 Page 3 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 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. AB 2330 Page 4 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 Web site 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. Analysis Prepared by: Elissa Silva / B. & P. / (916) 319-3301 FN: 0003174 AB 2330 Page 5