California Assembly Bill AB1242

California 2023-2024 Regular Session

• Introduced: 2/16/23
• Refer: 3/2/23
• Failed: 2/1/24

Caption

Real estate: contracts granting exclusivity to sell: one-year maximum.

Impact

The introduction of AB 1242 is expected to have a significant impact on state laws regulating real estate practices. By limiting the duration of exclusive listing agreements, the bill seeks to mitigate potential abuses wherein brokers could impose onerous long-term contracts on consumers. This reform is anticipated to foster a more dynamic real estate market where consumers can reassess their agreements more frequently and change brokers if their needs are not being met.

Summary

Assembly Bill 1242, introduced by Assembly Member Wilson, pertains to real estate transactions and sets forth regulations regarding contracts that grant exclusivity to real estate brokers. Specifically, the bill prohibits real estate brokers from entering into contracts that grant an agent the exclusive right to list or sell a property for more than one year. This new limitation aims to protect consumers from overly long commitments to brokers, thereby enhancing their ability to engage with the market in a more flexible manner. By capping the exclusivity period, the bill seeks to encourage competition among agents and provide consumers with more options.

Contention

Opponents of the bill may argue that such limitations could disadvantage brokers, as it may reduce their ability to assure clients of commitment in marketing their properties. Additionally, there may be concerns regarding how these changes could affect broker compensation structures and the overall stability of commercial real estate practices. Further, the bill stipulates that contracts in violation of this provision would not incur criminal penalties but rather civil penalties, which raises questions around the enforcement mechanisms in place to ensure compliance among real estate professionals.