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 ----------------------------------------------------------------- |Author: |Galgiani | |----------+------------------------------------------------------| |Version: |March 23, 2015 | ----------------------------------------------------------------- ---------------------------------------------------------------- |Urgency: |Yes |Fiscal: |No | ---------------------------------------------------------------- ----------------------------------------------------------------- |Consultant|Janelle Miyashiro | |: | | ----------------------------------------------------------------- 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)) SB 146 (Galgiani) Page 2 of ? 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 of ? 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 of ? 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 of ? 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. -- END --