BILL ANALYSIS Ó
SENATE COMMITTEE ON
BUSINESS, PROFESSIONS AND ECONOMIC DEVELOPMENT
Senator Jerry Hill, Chair
2015 - 2016 Regular
Bill No: AB 2330 Hearing Date: June 20,
2016
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|Author: |Ridley-Thomas |
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|Version: |June 14, 2016 |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant|Mark Mendoza |
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Subject: Real estate licensees
SUMMARY: Requires the Real Estate Commissioner to disclose on the
Bureau of Real Estate's website for every licensee, whether that
licensee is an associate licensee; requires the Real Estate
Commissioner to identify, if the associate licensee is also a
broker, every responsible broker with whom the associate
licensee is contractually associated; requires the responsible
broker to report the employment relationship between themselves
and the associate licensee to the Bureau of Real Estate.
Existing law:
1) Establishes within the Department of Consumer Affairs (DCA)
the Bureau of Real Estate (CalBRE), which regulates the
licensing of real estate agents, brokers, and mortgage loan
originators. (Business and Professions Code (BPC) § 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 §§ 10131-10131.6)
3) Defines a "real estate salesperson" as a natural person who
is employed by a licensed real estate broker for
compensation. (BPC §§ 10017; 10132)
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4) Defines a "responsible broker" to mean the broker responsible
for the exercise of control and supervision of licensed
salespersons. (BPC § 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) §
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) § 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 Real Estate Commissioner
(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 § 2715)
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 § 2715)
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9) Requires the Commissioner of the CalBRE to post on the
Internet non-confidential license information of every
salesperson or broker licensed by the CalBRE.
(BPC § 10083.2)
This bill:
1) Requires the Commissioner to disclose on the CalBRE'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.
3) Requires the responsible broker to report the employment
relationship between themselves and the associate licensee to
the Bureau of Real Estate.
4) Makes other technical and clarifying changes.
FISCAL EFFECT: This bill has been keyed "fiscal" by Legislative
Counsel. According to the April 27, 2016 Assembly
Appropriations Committee analysis, this bill would cost
"$153,000 (special funds) in FY 2016/17, and $137,000 (special
funds) in FY 2017/18 and ongoing [costs] 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 CalBRE's IT
systems. CalBRE 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 CalBRE to collect and
AB 2330 (Ridley-Thomas) Page 4
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disclose similar information for salespersons will be required
to implement the provisions of this bill."
COMMENTS:
1. Purpose. The California Association of Realtors is the
Sponsor of the bill. 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. Background on CalBRE. Real estate licensing in California
commenced in 1917. CalBRE is the state entity currently
charged with responsibility to enforce the Real Estate Law,
the Subdivided Lands Act, and the Vacation Ownership and
Time-share Act of 2004. CalBRE's programs are in place to
satisfy its statutorily mandated obligations of licensing and
regulating salespersons, brokers, mortgage loan originators,
real estate and prepaid listing service licensees, reviewing
and approving subdivision and time share offerings, and
approving continuing education and pre-license courses.
Within the framework of requirements of Division 4 of the BPC
and the Regulations of the Real Estate Commissioner as
contained in the California Code of Regulations, each of
CalBRE's programs contribute toward satisfying its mission of
protecting and serving the interests of the public in real
estate transactions and providing related services to the
real estate industry. Specifically, BPC § 10050 requires the
Real Estate Commissioner to enforce all laws commencing with
BPC § 10000 and BPC § 11000 of Part 2 in a manner which
achieves the maximum protection for the purchasers of real
property and those persons dealing with real estate
licensees.
3. 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
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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 evidence of completion of 45 hours of CalBRE-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 from contractual associations and
partnerships that are largely governed under the civil code.
Salespersons are required to report to CalBRE within five days
of changing supervising brokers, and CalBRE 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.
4. 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 CalBRE'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. CalBRE has not reported complaints
regarding this issue, but the Author proposes that more
transparency regarding employment structure is beneficial to
the consumer.
5. 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. ( Status: This
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bill was held in the Assembly Committee on Insurance.)
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.
6. Arguments in Support. The 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
[CalBRE] 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."
SUPPORT AND OPPOSITION:
Support:
The California Association of Realtors (Sponsor)
Opposition:
None on file as of June 14, 2016.
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