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CALIFORNIA CORPORATE & SECURITIES LAW

Contractors Do It, PIs Do It; Why Not Real Estate Brokers?

Individuals and corporations, but not limited liability companies, may be licensed as real estate brokers under the California Real Estate Law.  This is a result of a bargain reached when California’s enacted its first limited liability company law – the Beverly-Killea Act.  In order to overcome the objection of the California Trial Lawyers Association, the act proscribed LLCs from providing professional services that may be lawfully rendered only pursuant to a license, certification or registration authorized by the California Business & Professions Code. Over the years, the California legislature has enacted various exceptions to this wholesale proscriptions:

  • Private cemeteries (SB 1225 (Harman), Stats. 2008, ch. 114)
  • Contractors (SB 392 (Flores), Stats. 2009, ch. 698)
  • Alarm companies (SB 1077 (Price), Stats. 2012, ch. 291)
  • Private investigators (AB 1608 (Olson), Stats. 2014, ch. 669)

In 2004 and 2006, Assembly Member Nicole Parra introduced bills (AB 2261 and AB 2235) to permit the licensing of LLCs as real estate brokers.  Both bills died in the Senate Judiciary Committee.  This year, Senator John Moorlach tried again with SB 1253.  See Senator Introduces Bill To Allow LLCs To Be Licensed As Real Estate Brokers.  Although the Senate Business, Professions and Economic Development Committee passed the bill on a 7-1 vote in April, the bill recently died in the Senate Judiciary Committee. The Senate Judiciary Committee may have killed SB 1253, but the causa mortis was the inability of the Consumer Attorneys of California (fka California Trial Lawyers Association) and the California Association of Realtors to reach an agreement on whether an insurance requirement should be imposed:

At a certain point, a serious public policy question arises as to whether this gradual trend to add new professionally-licensed LLCs to become more “business friendly,” which comes at the cost of leaving more and more consumers at risk of being unable to obtain redress for their injuries, has unraveled the public policy protections set forth in the 1994 Beverly-Killea LLC Act (a policy that was affirmed in 2012 when this Legislature passed the current LLC law, the Revised Uniform Limited Liability Company Act.)

Senate Judiciary Committee Bill Analysis.

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