For well more than a decade, real estate gurus and even some companies have encouraged agents to form teams. Moreover, it has also been widely recommended that teams make concerted efforts to brand themselves. Thus it is that team names are used on for-sale and open-house signs, in newspaper ads and mailings, on business cards and stationery. Anywhere the team - or a team member - has a business presence, the team name is used.
In many states, a team name like "The George Babbitt Team" or "The Babbitt Realty Group" would be considered a fictitious business name or a dba (for "doing business as") and, as such, would have to be registered within the state. Certainly, that would be the case in California (Business and Professions Code 17900(c)).
But, here's the problem, in California at least: It is a long-standing California rule that real estate business cannot be conducted under a fictitious business name unless that name has been duly registered with and approved by the Department (now Bureau) of Real Estate. (Commissioner's Regulation #2731) But it is also a part of that long-standing rule that a fictitious business name may only be added to the license of a broker or corporation licensee, and may not be added to a license of a real estate salesperson.
So, for all these years, most, if not all, California agent teams have been operating in conflict with the real estate regulations. Apparently, though, this has not been a major enforcement concern for the Department/Bureau. They have had other things on their minds. Like short-sale fraud, loan mod scams, trust fund embezzlement, and large-scale Ponzi schemes.
Recently, however, the Bureau has turned its attention to the matter of fictitious business names. In a June release it was noted that "the use of 'team names' in advertisements and marketing materials has become a popular and pervasive practice amongst real estate professionals." After reviewing the rules that had been broken so frequently, the release announced a modification of existing policy. It said that the "Department will now generally approve fictitious business name requests, submitted by brokers, that include the name of salespersons (and which do not include the broker's name in the 'team name') under the following conditions:
- The fictitious business name has been filed with the county clerk in which the broker's main office is located,
- The salesperson whose name is included in the fictitious business name is currently employed by the broker applying for the fictitious business name, and
- The fictitious business name submitted for issuance includes the terms "team", "associates", or "group" or any other term that implies an existence of a team, as deemed appropriate by the department.
The modification was said to be in "response to the increased popularity of real estate licensees incorporating the use of 'team names' in their advertising and marketing practices..." One has to appreciate the Bureau's concern, even while noting that compliance with the modified rules may be both cumbersome and not altogether satisfactory.
It appears, for example, that approved team names must include a salesperson's name. "The Surfer Selling Team" won't do. Moreover, one curious result of this is that the team name will be registered to the broker, not the key team member. If the Babbitt Home Selling Team leaves ABC Realty, they will probably have to find themselves a new name.
No doubt other anomalies will surface as the rule modifications are put into practice. Whether they actually do get put into practice will quite probably depend upon the degree to which enforcement of the new (and still-existing old) rules is a Bureau priority.