Thursday, 23 November 2017

California Legislation Addresses The Use Of Team Names in Real Estate. Again

Written by Posted On Monday, 24 August 2015 15:53

If recently-approved legislation has its intended effects, clarity will have finally been achieved regarding the rules for the use of team names by California real estate licensees. Whether there will be compliance with those rules may be another matter altogether.

The legislation, Senate Bill 146 (Galgiani), was approved by the Governor July 16. It is the culmination of efforts initiated by the Real Estate Commissioner in early 2013. The problem was, and in many instances still is, that consumers were frequently unable to determine the identity of the agent(s) or responsible party behind a team name. For example, if a consumer had a problem with something that was being done by the Surf's-Up Team, he might have had no way of connecting that team to a particular brokerage or office. Nor would the Bureau of Real Estate (BRE).

The BRE's initial solution was to require that team names be registered with the county as a fictitious business name (FBN), often referred to as a DBA (for "doing business as"). The FBN would be owned by the broker, but could, by contract, be used by a particular agent or agents. This, however, proved more than a little cumbersome. Ensuing legislation (AB 2018) sought to make matters more workable by stipulating that the most common types of team names -- those containing the surname of a team member -- did not have to be registered as an FBN.

Because of continuing unclarity, however, this year's SB 146 was introduced. Now that it has passed there should be a set of rules that are clear and workable.

Here is a summary:

As before, an agent may file a team name as an FBN of the broker, and may use that team name with the consent of the broker.

A team name is not considered a fictitious business name and does not require an FBN filing, if the following three conditions 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."

For example, the team name "The Surf's-Up Team" would not be exempt from the requirement to file an FBN, because it does not meet condition (B) above. It doesn't contain the name of a team member. On the other hand, "The Bob Hunt Team" would be a name that would not require being filed as a fictitious business name.

So far, so good. No one should have any trouble figuring out whether or not a fictitious business name filing is required for a particular team name. So where is the potential compliance problem? Advertising.

The rules in this regard cover "Advertising and solicitation materials, including business cards, print or electronic media and ‘for sale' signage…" If the team name is a fictitious business name, it must include the name and license number of the salesperson who is using the fictitious business name. If the team name is not considered an FBN, the ad must include "the name and license number of at least one of the licensed members of the team." This would not appear to be a problem.

The troublesome part is that, in either case -- fictitious business name or not – the responsible broker's identity (name and license number) must be displayed in all advertising in a manner that is "equally as prominent" as the team name.

Pick up a paper or magazine that contains real estate ads. Try to find one that has a team name with the broker's name equally prominent. Usually, it's harder than finding Waldo.

To be sure, the legislation doesn't define "equally as prominent" or "as prominently and conspicuously" (as the team name). One would expect that font size will be an important consideration. Placement and color contrast might also play a role (don't put the broker's name in dark grey on a black background). In the end, it may be like "I know it when I see it." Or perhaps, "I'll know if I don't see it." In any event, it will take a monumental change in habits and attitude for teams to start displaying their broker's name as prominently as the team name.

When SB 146 became law, it became effective immediately. This is because the act was considered "an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the [state] Constitution…" Some of us might think that a bit of a stretch. Nonetheless, the important point is that it is effective NOW.

Bob Hunt is a director of the California Association of Realtors®. He is the author of Real Estate the Ethical Way.

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Bob Hunt

Bob Hunt is a former director of the National Association of Realtors and is author of the recently published book, "Real Estate the Ethical Way." A graduate of Princeton with a master's degree from UCLA in philosophy, Hunt has served as a U.S. Marine, Realtor association president in South Orange County, and director of the California Association of Realtors, and is an award-winning Realtor. Contact Bob at scbhunt@aol.com.

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