BILL ANALYSIS Ó
SENATE COMMITTEE ON
BUSINESS, PROFESSIONS AND ECONOMIC DEVELOPMENT
Senator Jerry Hill, Chair
2015 - 2016 Regular
Bill No: SB 146 Hearing Date: April 6,
2015
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|Author: |Galgiani |
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|Version: |March 23, 2015 |
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|Urgency: |Yes |Fiscal: |No |
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|Consultant|Janelle Miyashiro |
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Subject: Real estate licensees: fictitious business names:
team names.
SUMMARY: Exempts "team names" of realtors from the requirement of
filing a fictitious business name (FBN) with their local county
when providing real estate services.
Existing law:
1) Defines a "fictitious business name" as a professional
identity or brand name under which activity requiring a real
estate license is conducted. (BPC §10159.7a(2))
2) Defines a "team name" as a professional identity or brand
name used by a salesperson, and one or more other real estate
licensees. A team name does not constitute a fictitious
business name. The team name is used by two or more real
estate licensees who work together to provide licensed real
estate services or who represent themselves to the public as
being a part of a team, group, or association to provide
those services. The team name includes the surname of at
least one of the licensee members of the team, group, or
association along with the term "associates", "group", or
"team". (BPC §10159.7a(5))
3) Defines a "broker identity" as the name under which the
broker operates or conducts business and may include a sole
proprietorship or business entity name. (BPC §10159.7a(1))
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4) Specifies that salespersons who desire to have their license
issued under a FBN file with his or her application a
certified copy of their fictitious business name with the
county clerk where the FBN will be used. A salesperson must
also be authorized to use their fictitious business name by
his or her broker. (BPC §10159.5)
5) Specifies that to use a FBN, a person or entity must file a
FBN statement with the local county clerk as well as publish
the statement in a public newspaper in the same county. (BPC
§17900 and BPC §17917)
6) Requires publication in a public newspaper of a FBN statement
once a week for four successive weeks. (Government Code
§6064)
7) Specifies that advertising that contains a team name,
including print or electronic media and "for sale" signage,
must include the licensee's name and license number in all
advertising. The responsible broker's identity must also be
displayed as prominently and conspicuously as the team name
in all advertising. Advertising material with a team name
must not contain terms that imply the existence of a real
estate entity independent of the responsible broker. (BPC
§10159.6)
This bill:
1) Clarifies that a team name is not a fictitious business name
for the purposes of any other law and would therefore not
require those operating under a team name to apply for an FBN
with the appropriate county where the FBN will be used for
real estate services.
2) Clarifies what constitutes a broker identity for purposes of
advertising both FBNs and "team names".
a) The revised definition will require that all
advertisements include a company or firm name in
conjunction with the FBNs or "team name."
3) Take effect immediately.
SB 146 (Galgiani) Page 3
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FISCAL
EFFECT: None. Legislative Counsel has keyed this bill as
"nonfiscal."
COMMENTS:
1. Purpose. This bill is sponsored by the California
Association of Realtors . According to the Author, "SB 146
provides clean-up and clarifying changes and specifies that
"team names" not requiring a fictitious business name (FBN)
for purposes of the real estate law do not require the
filing of an FBN with their local county. This legislation
will make it clear that the law regarding "team names" is
applied consistently at all levels of government and will
ensure that these names do not constitute an FBN, and thus
do not require registration with the county."
2. Background. The use of "team" names in advertisements
and marketing materials has become a popular and general
practice amongst real estate businesses. Throughout
California, "team" names (i.e. "The Smith Team") are often
included on for sale signs, billboards, business cards,
promotional flyers, emails, and brochures.
A fictitious business name is any name under which an individual
transacts business in this state, other than his or her legal
name. The use of a fictitious business name requires filing a
fictitious business statement, "doing business as," with the
county clerk's office where the business is located. The fee
for filing a fictitious business name statement is $10 for the
first fictitious business name and owner, and $2 for each
additional fictitious business name or owner filed on the same
statement.
The California Bureau of Real Estate (BRE) announced in its
Spring 2013 Real Estate Bulletin, a stricter standard for what
constitutes a FBN. The article suggested that salespersons only
be permitted to work under a "team name" if the names are
approved by the county as a bona fide FBN and approved by the
BRE. The BRE article further pointed out that the BRE
regulations generally prohibit the approval of a FBN that
includes the name of a salesperson employed by a broker unless
SB 146 (Galgiani) Page 4
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the employing broker's name is also included in the FBN.
This lack of clear regulation created confusion throughout the
real estate industry on what was and what was not a FBN. In
2014, C.A.R. sponsored AB 2018 to resolve this ambiguity by
statutorily defining that "team names" are not considered to be
"fictitious business names." This would allow consumers to
identify and look up the licensees who actually make up the
team. Consumers would be able to complain directly to the
broker in charge of the team, therefore holding licensees making
up the team more accountable to consumers.
Although AB 2018 was signed and chaptered in 2014, the recent
changes made to the Business & Professions Code have not
addressed the problem of the requirements for teams to register
as fictitious business names. FBN filing is through the county,
and is regulated through both the Business Professions Code and
Government Code. Even after AB 2018 was chaptered, licensees
operating under a team name have still been required by the
county to file a FBN.
This bill will make it clear that the law regarding "team names"
is consistent in both the Business & Professions Code and
Government Code. The bill will further clarify that these names
do not constitute an FBN, and thus do not require registration
with the county.
3. Related Legislation. AB 2018 (Bocanegra, Chapter 892,
Statutes of 2014) revises the requirements for the use of
"fictitious business names" by real estate licensees to
additionally authorize the use of "team names" subject to
specified requirements; specifies that the bill's
provisions shall not be construed to limit or change a real
estate broker's duties to supervise a salesperson.
4. Arguments in Support. Writing in support of the bill,
the California Association of Realtors (CAR) states that
"team names" have already been statutorily exempted from
being defined as a fictitious business name. The CAR
writes, "In its Spring 2013 Real Estate Bulletin, The
California Bureau of Real Estate (BRE) announced a
stricter standard for what constituted a fictitious
business name (FBN). A lack of clear regulation created
confusion throughout the real estate industry on what was
SB 146 (Galgiani) Page 5
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and what was not a FBN." The BRE article suggests that
salespersons are only permitted to work under "team names"
if the names were bona fide fictitious names that are
registered by the employing broker with the county clerk
and approved by BRE.
CAR states that while the previously sponsored AB 2018 resolved
some ambiguity by statutorily defining how a salesperson with
their broker's permission can use a FBN, and that it is clear
that "team names" are not required to be registered with BRE,
real estate licensees are still being advised to continue to
register these "team names" with their county. CAR asserts
that, "SB 146 will make it clear that the law regarding "team
names" is applied consistently at all levels of government and
will ensure that "team names" do not constitute an FBN, and thus
do not require registration with the county."
SUPPORT AND OPPOSITION:
Support:
California Association of Realtors (Sponsor)
Opposition:
None on file as of 3/31/15.
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