BILL ANALYSIS �
AB 2018
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Date of Hearing: August 20, 2014
ASSEMBLY COMMITTEE ON BUSINESS, PROFESSIONS AND CONSUMER
PROTECTION
Susan A. Bonilla, Chair
AB 2018 (Bocanegra) - As Amended: August 12, 2014
SUBJECT : Real estate licensees: fictitious business names.
SUMMARY : Revises the requirements for the use of "fictitious
business names" by real estate licensees, and authorizes the use
of "team names" subject to specified requirements.
Specifically, this bill :
1)Authorizes a responsible broker to permit, by contract, a
salesperson to:
a) File an application with a county clerk on behalf of the
broker to obtain a fictitious business name;
b) Deliver to the California Bureau of Real Estate (BRE) an
application, signed by the responsible broker, requesting
BRE's approval to use a county-approved fictitious business
name that shall be identified with the broker's license
number;
c) Pay any related application fees to a county or BRE; and
d) Maintain ownership of a fictitious business name that
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may be used subject to the control of a responsible broker.
1)Requires a salesperson using a fictitious business name to use
that name only as permitted by his or her responsible broker.
2)Clarifies that nothing in this bill changes a real estate
broker's duty to supervise a salesperson.
3)Authorizes a person applying to a county for a fictitious
business name to file his or her application in the county or
counties where the fictitious business name will be used.
4)Requires marketing and solicitation materials, including
business cards, print or electronic media and "for sale"
signage, using a fictitious business name to include the
responsible broker's identity in a manner equally as prominent
as the fictitious business name.
5)Requires advertising, including print or electronic media and
"for sale" signage, containing a fictitious business name to
include the salesperson's name and license number.
6)Declares that a violation of these provisions is not a
misdemeanor.
7)Regarding the use of a "team name", as defined, provide that
all of the following shall apply:
a) Advertising that contains a team name, including print
or electronic media and "for sale" signage, shall include
the licensee's name and license number in all advertising
and be displayed in a conspicuous manner;
b) The responsible broker's identity shall be displayed as
prominently and conspicuously as the team name in all
advertising;
c) The advertising material shall not contain terms that
imply the existence of a real estate entity independent of
the responsible broker; and
d) A violation of these provisions is not a misdemeanor,
and shall be enforced as specified.
8)Defines "broker identity" to mean "the name under which the
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broker operates or conducts business and may include a sole
proprietorship or business entity name."
9)Defines "fictitious business name" to mean "a professional
identity or brand name under which activity requiring a real
estate license is conducted and the use of which is subject to
approval by the bureau pursuant to Section 10159.5."
10)Defines "team name" to mean "a professional identity or brand
name used by a salesperson, and one or more other real estate
licensees, for the provision of real estate licensed services.
Notwithstanding any other law, the use of a team name does not
require that a separate license be issued for that name
pursuant to Section 10159.5. A team name does not constitute a
fictitious business name for purposes of this part if all of
the following apply:
a) The 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.
b) The name includes the surname of at least one of the
licensee members of the team, group, or association in
conjunction with the term 'associates,' 'group,' or 'team.'
c) The name does not include any term or terms, such as
"real estate broker," "real estate brokerage," "broker," or
"brokerage" or any other term that would lead a member of
the public to believe that the team is offering real estate
brokerage services, that imply or suggest the existence of
a real estate entity independent of a responsible broker."
11)Defines the terms "ownership of a fictitious business name"
and "responsible broker."
12)Makes other technical or clarifying changes.
EXISTING LAW:
1)Establishes the CalBRE, which is headed by the Real Estate
Commissioner, which issues licenses to and regulates real
estate brokers and real estate salespersons under the Real
Estate Law. (Business and Professions Code (BPC) Section
10150 et seq.)
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2)Requires an applicant who desires to have his or her license
issued under a fictitious business name to file with his or
her application a certified copy of his or her fictitious
business name statement. (BPC 10159.5)
3)Provides that "solicitation materials intended to be the first
point of contact with consumers," includes business cards,
stationery, advertising fliers, and other materials designed
to solicit the creation of a professional relationship between
the licensee and a consumer, and excludes an advertisement in
print or electronic media and "for sale" signs. (BPC 10140.6)
FISCAL EFFECT : According to the Senate Appropriations
Committee, pursuant to Senate Rule 28.8, negligible state costs.
COMMENTS :
1)Purpose of the bill . This bill is intended to facilitate the
use of "team names" advertised in a real estate context while
specifying when a team name is not formally a "fictitious
business name" with all the additional requirements that would
normally apply. By clarifying the distinction between a team
name and a fictitious business name, the author aims to make
it easier for real estate brokers to use team names and
thereby avoid the full regulatory burden of obtaining a
fictitious business name. This bill is author sponsored.
2)Author's statement . According to the author, "Real estate
licensees are NOT permitted to make any misleading or false
representations within their advertisements or marketing
materials. Because salespersons activities are supervised by
an employing broker, they are not permitted to hold themselves
out as an unsupervised licensee or independent real estate
firm. In recent years, salespersons (real estate licensees)
attempting to create their own brand identity, for marketing
purposes, has led to an increased use in 'team' marketing
approaches within Brokerages. Throughout California 'team'
names (i.e. 'The Smith Team') are often included on for sale
signs, billboards, business cards, promotional flyers, emails,
and brochures."
"Filing for a fictitious business names is a very detailed
[and] cumbersome process. Additionally, the rules regarding
fictitious business names differ depending on the structure of
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the business. Current law only permits an employing Broker to
own a fictitious business name, which may be used by their
salespersons. Those licensees wishing to use a fictitious
business name must first register the name with the County
that hosts their broker's main office and then submit the
approved name to CalBRE for their review."
3)Fictitious business names . 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' (DBA) with the county clerk's
office where the business is located.
The fictitious business statement is intended to provide the
public with a means to learn the identities of individuals
doing business under the fictitious name in case a consumer
needs to contact the owners of a business to seek help with a
problem, or to report owners or licensees to the authorities.
This bill is intended to loosen the requirements for when an
advertised business name is 'fictitious' and thereby reduce
the filing requirements, on the theory that the criteria
provided by this bill (first and last names, license numbers,
names of employing broker, etc.) should give consumers enough
information to identify responsible individuals if there is a
problem or complaint.
4)Arguments in support . According to the California Association
of Realtors, "This bill makes an important clarification in
the real estate law. The amendments taken in the Senate were
necessary to create clarity in the regulation of fictitious
business names while also setting out clear and understandable
advertising standards for [fictitious] business names and
'team' names? The lack of clear regulation creates confusion
throughout the real estate industry on what is and what is not
a fictitious business name. AB 2018 will resolve this
ambiguity by statutorily defining how a salesperson, with
their broker's permission, can use a fictitious business name,
while also establishing clear standards for the use [of]
'team' names that are not fictitious business names."
5)Substantial amendments . This bill was substantially amended
in the Senate and the Assembly-approved version of this bill
was largely deleted, although the topic remained the same.
The current provisions of this bill, as amended in the Senate,
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have not been heard in an Assembly policy committee.
REGISTERED SUPPORT / OPPOSITION :
Support
California Association of Relators
Opposition
None on file.
Analysis Prepared by : Hank Dempsey / B.,P. & C.P. / (916)
319-3301