AB 456

This bill: 1) revises the law governing the practice of real estate (real estate

practice law) by real estate brokers, real estate salespersons, and time-share

salespersons; 2) establishes a statute of limitations for filing an action against a real

estate broker or salesperson; and 3) provides that real estate brokers and

salespersons may not be considered "employees" for various purposes.

Changes regarding practice of real estate

Current law regulates the practice of real estate, which can only be practiced

by real estate brokers and real estate salespersons and, to a limited extent,

time-share salespersons. Real estate brokers and salespersons (licensees) are

licensed by the Real Estate Examining Board (REEB), which is attached to the

Department of Safety and Professional Services (DSPS). A real estate broker's

license may be issued to either an individual or a business entity. Time-share

salespersons are registered by the REEB. This bill makes various changes to real

estate practice law, described in further detail as follows:

Terminology and related changes

Current law, in various contexts, refers to "brokers," without qualification, and

contains various references to the "employment" of licensees. The bill eliminates

most references to "employment" in current law and instead refers to licensees as

being "associated with a firm." The bill defines being "associated with a firm" as

having been engaged by a firm to provide brokerage services to the firm's clients and

customers on behalf of the firm and under the firm's supervision, including as an

employee of the firm or as an independent contractor. The bill also modifies a number

of references to "brokers" so as to refer more specifically either to firms or to firms

and licensees associated with the firm, or to refer more generally to licensees. The

bill defines "firm" as a licensed individual broker acting as a sole proprietorship or

a licensed broker that is a business entity, such as a corporation, limited liability

company, or partnership.

Current law defines "agency agreement" as a written agreement between a

broker

and a client in which the client authorizes the

broker

to provide brokerage

services to the client and defines "client" as a party to a real estate transaction who

has an agency agreement with a

broker

for brokerage services. The bill modifies the

definitions of "agency agreement" and "client," as well as other relevant provisions,

to specify that an agency agreement is between a

firm

and a client and that a client