California recently enacted Assembly Bill 2884, which amends the state’s Real Estate Law to update terminology in the statute and conform the statute to current industry practices, as part of an ongoing effort to update the state’s laws governing licensed real estate activities.
The law adds or amends numerous definitions for core terms in the law—such as “seller,” “buyer,” “seller’s agent,” “buyer’s agent,” “dual agent,” “real property,” “real estate salesperson,” “manager,” “responsible broker,” “broker associate,” and others—to bring them more in line with the terminology currently used in the industry and to make the statute easier to understand for consumers.
Among other things, the law provides greater clarity regarding the scope of coverage for listing agents and the use of listing agreements, clarifies how corporations can act as real estate brokers through the use of qualified broker-officers and how officers of corporations can engage in real estate activity depending upon whether they hold individual licensure in the state, clarifies how real estate salespersons can split compensation with each other, and allows for greater use of electronic means to transmit or deliver certain types of agreements to consumers.
Additionally, the bill creates new reporting requirements and clarifies others, such as the requirements to notify the Real Estate Commissioner when a licensed real estate professional joins or leaves a brokerage, if the sole designated broker-officer of a corporation dies or is incapacitated, and of certain changes of addresses.
Finally, the bill notes that it is not meant to affect, among other things, any of a real estate broker’s agency or fiduciary duties which otherwise exist under statute or common law, any existing disclosure or other duties which are applicable to real estate brokers, or any of a responsible broker’s existing duties to supervise and oversee its retained salespersons and broker associates. The bill further affirms a responsible broker’s duty to supervise and oversee the licensed acts of each salesperson and broker associate affiliated with and working under his or her supervision (whether via independent contractor or employment relationship), as well as a responsible broker’s liability for the actions or negligence of a salesperson or broker associate it retains to perform acts for which a license is required under applicable law.
The new law takes effect on January 1, 2019.
For a copy of the new law, click here.