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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