Since January 1, 2015, important rules must be followed to use “Team Names” and DBAs known as fictitious business names (“FBN”). This Tip is intended to be a guide for how to comply with the law and DRE regulations when using either a Team Name or FBN.
(NOTE: As used in this Tip, the term “Salesperson” refers to either a licensee who holds a salesperson’s license or a broker licensee who is a broker-associate with a Broker. The term “Broker” refers to the responsible Broker and/or the brokerage company with whom a Salesperson is associated.)
- TEAM NAMES: This law defines a “Team Name” as 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.” See Business & Professions Code §10159.7(a)(3)
The use of a Team Name, as defined in this law, does not constitute a FBN and does not require a separate DBA license, if ALL of the below-listed provisions (A through C) are met:
A. The name is used by two or more Salespersons who are associated with the same Broker and 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, AND
B. The name includes the surname (last name) of at least one of the licensee members of the team, group, or association in conjunction with the term “associates,” “group,” or “team;” AND
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, or imply or suggest the existence of a real estate entity independent of a responsible broker.
(NOTE: See the Department of Real Estate FAQ on this subject which follows.)
EXAMPLES OF TEAM NAMES: If two or more licensees are operating as the “Smith Team” or the “Smith & Jones Group” or “Smith Associates,” those licensees can do so without filing anything with the DRE. With their Broker’s permission and following their Broker’s policies, the Salespersons can just start using the Team Name.
- FICTITIOUS BUSINESS NAMES: If a licensee or licensees desire to operate with a fictitious name other than one that fits within the definition of a “Team Name” above, then a separate DBA (“Doing Business As”) license for that FBN must be obtained from the DRE by either: (a) the Broker with whom the Salesperson is associated, or (b) a Salesperson who will be using that FBN.
For example, if a Salesperson or Salespersons want to operate as the “Home Town Team” or the “Upper Happy Valley All Stars,” then a DBA license is required which can only be acquired by following either 1 of the following 2 procedures:
A. BROKER OBTAINS FBN FROM THE COUNTY CLERK:
1) Broker files for and obtains a Fictitious Business Name Statement (“FBNS”) from the County Clerk where the Broker has its principal place of business.
2) Broker delivers the FBNS file-stamped application to the DRE with a request for a DBA license to be issued under the Broker’s license.
3) The Broker is responsible for maintaining the active FBNS with the county.
NOTE: In this option, it is acceptable for the Broker and their Salespersons to only show the licensed DBA name in all advertising, marketing and first-contact solicitation materials. The Broker’s identity does not need to be included (but may be required by a Broker’s policies) in that advertisement. (See Best Practice Tip #5 on the last page.)
B. SALESPERSON OBTAINS FBNS FROM THE COUNTY CLERK:
1) The Broker may (but is not obligated to) permit a Salesperson to file an application for a FBNS in the Salesperson’s name with a County Clerk in the County where the Broker has its principal place of business.
2) The Broker can deliver the FBNS file-stamped application to the DRE along with an application, signed by the Broker, requesting DRE’s approval to use the FBN to be identified with the Broker’s license number.
In either of the above cases, the chosen FBN cannot already be registered by any other person or entity in that County. Once the FBN application with the County has been completed and the FBN is approved by DRE, the FBN will appear on the Broker’s license record as a DBA License.
REQUIRED DRE FORM: DRE has a form titled, “Add/Cancel Salesperson Owned Fictitious Business Name” Form (RE 247), which Brokers should use to add and/or cancel Salesperson-owned FBN’s. This form is available on the DRE’s website.
PRACTICE TIPS FOR A SALESPERSON-OWNED FBN:
— For a “Salesperson-owned FBN,” the Salesperson must pay for, and be responsible for keeping active such fictitious business name, which (unless renewed by following the County’s procedures where the FBN was originally filed) expires after five years.
— A Salesperson-owned FBN can only be used as permitted by the Broker, and cannot be used for any other purpose apart from the Broker’s real estate business.
- MARKETING AND ADVERTISING REQUIREMENTS:
A. TEAM NAMES: The law requires that when a “Team Name” is used in any advertising, including print or electronic media and “for sale” signage, it must meet all 3 of the following requirements:
(1) include a team member’s name and license number in a conspicuous manner;
(2) include the Broker’s identity; and
(3) not contain terms that imply the existence of a real estate entity independent of the responsible Broker. (NOTE: See the DRE FAQ on this subject which follows at the end of this Tip.)
NOTE: For all advertising of Team Names, “the responsible broker’s identity shall be displayed as prominently and conspicuously as the Team Name in all advertising.” B&P §10159.6
B. FICTITIOUS BUSINESS NAMES: The law also identifies specific disclosure requirements when Salesperson-owned FBN’s are used in advertising, marketing, and solicitation materials. All advertising, marketing and solicitation materials, including business cards, print or electronic media and “for sale” signage, when using a Salesperson-owned FBN, shall include:
(1) The Broker’s identity in a manner equally as prominent as the FBN, and,
(2) The Salesperson’s name and license number.
NOTE: Since January 1, 2015 and the passage of SB 710, the responsible Broker’s license number does not need to be included in the Salesperson-owned FBN advertising.
For more information on changes to advertising laws effective as of January 1, 2018, See Weekly Practice Tip “DRE Advertising Requirement Changes.”
BEST PRACTICE TIPS
- All Salespersons who wish to operate with a Team Name or FBN should first decide which of the two directions discussed above they wish to go. Creating a Team Name is much simpler since it requires NO DRE FORMS or other official County paperwork to complete and file. The Salesperson merely needs to comply with the Broker’s policies and all advertising and marketing requirements.
- Salespersons who wish to go through the effort to create a FBN should discuss with their Broker whether the Broker will allow the Salesperson to file a FBNS with the County Clerk and allow the Salesperson to own the actual fictitious business name that will get filed with the DRE.
- If Salespersons who have a team, which was registered under the pre-2015 law as a Broker-owned FNB, want to undo that process and then comply with the new law (either as a Team Name, or as a FBN owned by the Salesperson rather than the Broker), discuss this process with your Broker.
- Remember, the advertising and marketing requirements apply only if the Salesperson’s name, Team Name or salesperson-owned FBN appear in the advertising, marketing materials, or “for sale” sign.
For more details, See Weekly Practice Tip “DRE Advertising Requirements – Changes” for the requirements after January 1, 2018.
5. The “broker identity” which must be used in the advertising and marketing is defined as “the name under which the broker operates or conducts business and may include a sole proprietorship or business entity name.” Agents should confirm with their Broker how that Broker name should be identified in their advertising.
6. DRE GUIDANCE: While not specified in the law, the DRE Legal Department has repeatedly advised Broker Risk Management that they will not allow Salespersons to use any variations of Team Names and DBA’s other than as specified above. For example, they will not allow any add-on to a Salesperson’s name such as “Bob Jones Real Estate” or “Maria Gomez Homes.” The DRE considers these to be illegal DBA’s. Also, see the Tip #7 below, for a further limitation on this practice.
7. DRE GUIDANCE: While seemingly discretionary under Regulation 2731(c), the DRE’s position is that it will NOT approve a DBA license which contains all or any part of the name of a Salesperson. The DBA must be a true “fictitious name.
WEEKLY PRACTICE TIP: DO NOT FORWARD TO CLIENTS. This Weekly Practice Tip is for the exclusive use of clients of Broker Risk Management and their agents. It may not be reproduced or distributed without the express written consent of Broker Risk Management. The advice and recommendations contained herein are not necessarily indicative of standards of care in the industry, but rather are intended to suggest good risk management practices.
© Copyright Broker Risk Management 2019 07/12/19
Frequently Asked Questions Regarding “Team Names”
The purpose of these FAQs, and the answers to these questions, is to provide up-to-date information following the latest changes to the Real Estate Law concerning “team names”. The Bureau of Real Estate previously issued Advisories in 2014 and 2015 following the passage and signing of legislation related to “team names”. These FAQs collectively provide the latest information in response to some of the most commonly posed questions related to “team names” following the signing of SB 710 into law in August 2016.
Question: What is a team name?
A “team name,” is a statutorily created term that is described in Business and Professions Code Section 10159.7. It means a professional identity or brand name used by a salesperson, and one or more other real estate licensees, for the provision of real estate services.
Question: What must a team name include?
A team name must include the surname of at least one member of the team, in conjunction with the words “group,” “team,” or “associates.”
Question: Am I allowed to use the word “brokerage” in my team name?
No. Use of the words “broker,” “real estate brokerage,” “real estate broker,” or any other term that would lead a member of the public to believe the team is offering real estate brokerage services or suggest the existence of a real estate entity independent of the responsible broker is not allowed.
Question: Is a team name considered a fictitious business name?
Under the Real Estate Law, the use of team name is not considered a fictitious business name. Therefore, no paperwork needs to be submitted to the Bureau to use a team name.
Question: Can I use the words “realty,” or “real estate” as part of my team name?
Because the law does not prohibit such words, the answer is yes, provided you include the surname of at least one team member, and include the words “group,” “team,” or “associates.” For example, the “Smith Real Estate Team” would be allowed as an acceptable team name.
Question: I am a salesperson. Do I need to include my license number on my team name advertising?
Advertising and solicitation materials must include in a conspicuous and prominent manner, the team name, and the surname and license number of at least one member of the licensed members of the team.
Question: Do I need to include my responsible broker’s license number on my team name advertising?
It depends. Current law requires that you must include your responsible broker’s name in your advertising, OR you can include both your broker’s name and license identification number. In all instances, the responsible broker’s identity must be displayed as prominently and conspicuously as the team name in all advertising and solicitation materials.
Question: I know I have to display my responsible broker’s identity in my team name advertising prominently and conspicuously. Can you give me an example of what that means?
Yes. As an example, if the font size on your team name advertising is in a 12-point font, then your responsible broker’s name should be in an equal or greater font size.
Question: What do you mean by the term “responsible broker identity?”
The term “responsible broker identity” is defined in Business and Professions Code Section 10159.7 (a) (1). It means the name under which the responsible broker is currently licensed by the bureau and conducts business in general or is a substantial division of the real estate firm, or both the name and the associated license identification number. Responsible broker’s identity does not include a fictitious business name obtained pursuant to paragraph (2) of subdivision (a) of Section 10159.5 or the use of a team name pursuant to Section 10159.6.
Question: I am working as a broker associate for another broker. Can I advertise and operate on behalf of a “team name”?
Yes, if you are a broker working in the capacity of a salesperson for another broker or corporation, you can advertise and operate on behalf of a “team name” as long as all of the team name requirements have been met.
Question: Can real estate brokers who operate as brokers and not broker associates use a “team name?”
No. Brokers who operate as brokers and not broker associates are precluded from using a “team name” as defined in Business and Professions Code Section 10159.7(a)(5). Instead, they would be required to file and obtain a fictitious business name pursuant to Business and Professions Code Section 10159.5. *
[1]Please note that the disclosure requirements for mortgage loan advertising are more extensive, even if a team name is used. Please review the License Disclosure Requirements for Mortgage Loan Advertising, RE 858 for more information.