BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | SB 146| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- UNFINISHED BUSINESS Bill No: SB 146 Author: Galgiani (D), et al. Amended: 6/18/15 Vote: 27 - Urgency SENATE BUS, PROF. & ECON. DEV. COMMITTEE: 9-0, 4/6/15 AYES: Hill, Bates, Berryhill, Block, Galgiani, Hernandez, Jackson, Mendoza, Wieckowski SENATE FLOOR: 38-0, 4/9/15 (Consent) AYES: Allen, Anderson, Bates, Beall, Block, Cannella, De León, Fuller, Gaines, Galgiani, Hall, Hancock, Hernandez, Hertzberg, Hill, Hueso, Huff, Jackson, Lara, Leno, Leyva, Liu, McGuire, Mendoza, Mitchell, Monning, Moorlach, Morrell, Nguyen, Nielsen, Pan, Pavley, Roth, Runner, Stone, Vidak, Wieckowski, Wolk NO VOTE RECORDED: Berryhill ASSEMBLY FLOOR: 76-0, 6/29/15 (Consent) - See last page for vote 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 and revises the definition of "responsible broker's identity". SB 146 Page 2 Assembly Amendments add clarifying language to revise the definition of "responsible broker's identity" to also include the associated license identification number under which a broker is licensed; make technical changes to clarify that all "for sale" signage must include and display the team name and license number of at least one of the licensed members of the team; and add a coauthor. 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 an FBN. 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)) 4) Specifies that salespersons who desire to have their license SB 146 Page 3 issued under an 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 an FBN, a person or entity must file an 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 an 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) Makes technical changes to clarify that a team name is not an FBN 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. 2) Revises the definition of "responsible broker's identity" to mean a name and the associated license identification number under which the responsible broker is currently licensed and conducts business for a real estate firm that does not include an FBN or a team name used by a salesperson for a sales team. 3) Takes effect immediately as an urgency measure. Background SB 146 Page 4 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. An FBN is any name under which an individual transacts business in this state, other than his or her legal name. The use of an 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 an 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 an 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 an 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 an FBN. In 2014, the California Association of Realtors sponsored AB 2018 (Bocanegra, Chapter 892) 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 SB 146 Page 5 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 an 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. FISCAL EFFECT: Appropriation: No Fiscal Com.:NoLocal: No SUPPORT: (Verified6/30/15) California Association of Realtors (source) OPPOSITION: (Verified6/30/15) 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 an 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 SB 146 Page 6 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 an 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." ASSEMBLY FLOOR: 76-0, 6/29/15 AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom, Bonilla, Bonta, Brough, Burke, Calderon, Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper, Roger Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte, Olsen, Patterson, Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams, Wood, Atkins NO VOTE RECORDED: Brown, Low, O'Donnell, Perea Prepared by:Janelle Miyashiro / B., P. & E.D. / (916) 651-4104 7/1/15 16:37:19 **** END **** SB 146 Page 7