AB 1850

AB1850:v98#DOCUMENT

Bill Start

CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION

Assembly Bill

No. 1850

An act to amend Section 10131 of, and to add Section 10140.9 to, the Business and Professions Code, relating to professions and vocations.

LEGISLATIVE COUNSEL'S DIGEST

AB 1850, as amended, Irwin. Real estate: wholesaling.

Existing law, the Real Estate Law, provides for the licensure and regulation of real estate brokers and salespersons by the Real Estate Commissioner, the chief officer of the Department of Real Estate within the Business, Consumer Services, and Housing Agency. Existing law makes it unlawful for any person to engage in the business of, act in the capacity of, advertise as, or assume to act as a real estate broker or a real estate salesperson within this state without first obtaining a real estate license from the Department of Real Estate. Existing law defines a real estate broker for these purposes as a person who, for compensation or in expectation of a compensation, regardless of the form or time of payment, does or negotiates to, among other things, sell or offer to sell, buy or offer to buy, solicit prospective sellers or buyers of, solicit or obtain listings of, or negotiate the purchase, sale, or exchange of real property or a business opportunity for another or others. A willful violation of the Real Estate Law is a crime.

This bill would expand the definition of a real estate broker under the Real Estate Law to include a person who, for compensation or in expectation of a compensation, regardless of the form or time of payment, does or negotiates to enter into, or offers to enter into, a contract or option to purchase real property with the intent to sell, assign, or market that contract or option to another person for compensation or profit. negotiates the sales contract. The bill would also prohibit a person from engaging in wholesaling unless they hold a valid real estate license, as specified, and would define wholesaling as entering into or offering to enter into a contract or option to purchase real property with the intent to sell, assign, or market on behalf of another person and selling, assigning, or marketing that contract or option to another person them for compensation or profit. The bill would require a wholesaler to clearly disclose in writing to any property owner with whom they contract that they do not intend to will not take title to the property, as specified. The bill would require an advertisement or offer to sell or assign a contract or option under these provisions to clearly disclose in writing that the person making the offer does not hold legal title to the property. The bill would deem the failure to provide the above-described disclosure as substantial misrepresentation and would make the failure to provide this disclosure subject to disciplinary action, as specified. By expanding the application of the real estate professional licensing laws, the willful violation of which is a crime, the bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Digest Key

Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: YES

Bill Text

The people of the State of California do enact as follows:

SECTION 1.

Section 10131 of the Business and Professions Code is amended to read:

10131.

A real estate broker within the meaning of this part is a person who, for a compensation or in expectation of a compensation, regardless of the form or time of payment, does or negotiates to do one or more of the following acts for another or others:

(a) Sells or offers to sell, buys or offers to buy, solicits prospective sellers or buyers of, solicits or obtains listings of, or negotiates the purchase, sale, sales contract, or exchange of real property or a business opportunity.

(b) Leases or rents or offers to lease or rent, or places for rent, or solicits listings of places for rent, or solicits for prospective tenants, or negotiates the sale, purchase, or exchanges of leases on real property, or on a business opportunity, or collects rents from real property, or improvements thereon, or from business opportunities.

(c) Assists or offers to assist in filing an application for the purchase or lease of, or in locating or entering upon, lands owned by the state or federal government.

(d) Solicits borrowers or lenders for or negotiates loans or collects payments or performs services for borrowers or lenders or note owners in connection with loans secured directly or collaterally by liens on real property or on a business opportunity.

(e) Sells or offers to sell, buys or offers to buy, or exchanges or offers to exchange a real property sales contract, or a promissory note secured directly or collaterally by a lien on real property or on a business opportunity, and performs services for the holders thereof.

(f)Enters into, or offers to enter into, a contract or option to purchase real property with the intent to sell, assign, or market that contract or option to another person for compensation or profit.

SEC. 2.

Section 10140.9 is added to the Business and Professions Code, to read:

10140.9.

(a) For purposes of this section, “wholesaling” means entering into, or offering to enter into, a contract or option to purchase real property with the intent to sell, assign, or market on behalf of another person and selling, assigning, or marketing that contract or option to another person them for compensation or profit.

(b) A person shall not engage in wholesaling unless they hold a valid real estate license issued under this division.

(c) A wholesaler shall clearly disclose in writing to any property owner with whom they contract that the wholesaler does not intend to will not take title to the property but and is a person seeking to assign or sell their contract rights and may market or resell the contract for a profit before closing.

(d) (1) Any advertisement or offer to sell or assign a contract or option under this section shall clearly disclose in writing that the person making the offer does not hold legal title to the property.

(2) Failure to provide this disclosure shall be deemed substantial misrepresentation and subject to disciplinary action pursuant to Section 10176.

SEC. 3.

No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.