BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 146|
|Office of Senate Floor Analyses | |
|(916) 651-1520 Fax: (916) | |
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CONSENT
Bill No: SB 146
Author: Galgiani (D)
Amended: 3/23/15
Vote: 27 - Urgency
SENATE BUS, PROF. & ECON. DEV. COMMITTEE: 9-0, 4/6/15
AYES: Hill, Bates, Berryhill, Block, Galgiani, Hernandez,
Jackson, Mendoza, Wieckowski
SUBJECT: Real estate licensees: fictitious business names:
team names
SOURCE: California Association of Realtors
DIGEST: This bill exempts "team names" of realtors from the
requirement of filing a fictitious business name (FBN) with
their local county when providing real estate services.
ANALYSIS:
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 FBN. The team
name is used by two or more real estate licensees who work
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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))
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 FBN with the county clerk where the
FBN will be used. A salesperson must also be authorized to
use their FBN 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 FBN for the purposes of
any other law and therefore does 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.
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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) Takes effect immediately.
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 FBN is any name under which an individual transacts business
in this state, other than his or her legal name. The use of a
FBN 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 FBN statement is $10 for the
first FBN and owner, and $2 for each additional FBN 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
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, the California Association of Realtors sponsored AB 2018
(Bocanegra, Chapter 892) to resolve this ambiguity by
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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 FBNs. 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. This bill will further clarify that these
names do not constitute an FBN, and thus do not require
registration with the county.
Related/Prior 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; and specifies that the
bill's provisions shall not be construed to limit or change a
real estate broker's duties to supervise a salesperson.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:NoLocal: No
SUPPORT: (Verified 4/8/15)
California Association of Realtors (source)
OPPOSITION: (Verified 4/8/15)
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None received
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 FBN. 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 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."
Prepared by:Janelle Miyashiro / B., P. & E.D. / (916) 651-4104
4/8/15 15:43:03
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