Legal Hotline Q&A: Advertising
IN THIS SECTION:
| Disclosure obligations & team advertising |
| Mailings |
| Referrals |
| Owner/agent |
| URLs/search engine optimization |
| Out of state listings |
| "No money down" ads |
| FSBOs |
DISCLOSURE OBLIGATIONS & TEAM ADVERTISING
Question: What are my disclosure obligations for online and print advertising?
Answer:
Online ads for a firm must have:
- Firm name;
- City and state of main office; and
- All jurisdictions in which the firm is presently licensed
- Online ads for a licensee (not a firm) must have:
- Licensee’s and firm’s name;
- City and state of the licensee’s office (not necessarily firm’s main office); and
- Jurisdiction(s) (usually states) in which licensee holds a license, active or not.
For all other ads, the requirement is simply this: The firm’s name must be clearly and legibly displayed. No address, states of licensure, phone, etc. — just firm name.
Question: What are the requirements for team advertising?
Answer:
The Virginia Real Estate Board (VREB) issued “advisory” rulings years ago on team advertising.
The Board is very sensitive to team ads in which the team name is so prevalent, and the firm name so hidden, that the public could be confused as to whom they are dealing with. Firms should also be cautious about team names. We strongly encourage firms to limit team names to those that do not hold out the likelihood of confusion; teams should avoid realty, real estate, land, associates, partners, company, limited, consultants, sales, and properties. Use of the terms “team” or “group” is preferable. The key question is - does the ad leave the impression that the team is a brokerage firm acting independently? If it does, VREB will likely punish the offenders.
VREB also suggests – although it does not require it – that teams find a way to put the team members’ names in the ad. This might not work for some teams, but if it’s possible, it’s a good idea.
Question: Is it true that the agent name (or team name) cannot be in larger print than the company name?
Answer:
No, there is no such regulation. The bottom line is that all advertising – including team ads – must be clear and unambiguous as to the identity of the firm and that the team is a team, and not a brokerage.
Question: An agent is sending postcards to all owners in a certain development giving information about six recent sales in the area. The cards make no representation that the sender was involved in the sales, and in fact he was not. Is this ethic?
Answer:
Yes. The information is true, clear, would not mislead the reasonable person.
Question: An agent wants to run an advertisement (for the benefit of a developer client) soliciting "investors" for his client. Should he do this?
Answer:
Probably not, unless the agent is a mortgage broker, since this is really nothing more than soliciting loans for his client, for which he must be licensed as a mortgage broker.
Question: May I advertise payment of a referral incentive to folks who refer business to my firm?
Answer:
Yes. You may advertise anything you like. However, if you pay such a referral fee you will be in violation of the Real Estate Board's prohibition against paying a commission to someone for an act in violation of the licensing laws. See VREB regulations, 18 VAC 135-20-280. The Board considers such referrals to be acts for which a license is required.
Question: If a licensee is selling her own property, must advertisements state that the owner is an agent?
Answer:
The VREB regulations have been changed so that now advertisements must state that the owner is a licensee only if the property is not listed with a licensed brokerage firm. This makes sense, as the public will realize that they are dealing with professionals (the firm's name must appear in all ads). If the property is not listed, all advertisements must state that the owner is a licensee. Whether the property is listed or not, the contract must still contain that notice.
Question: May a buyer agent who sells another agent’s listing advertise that she sold the property?
Answer:
Yes. Code of Ethics, Standard of Practice 12-7 provides that "Only Realtors® who participated in the transaction as the listing broker or cooperating broker (selling broker) may claim to have ‘sold’ the property."
Question: A firm has advertised a property in the newspaper. After it was sold, the firm continued the ad for a week or two with the word "Sold" superimposed over the ad. The buyer is now complaining that the firm is advertising his property without his consent. Does the buyer have the right to prohibit such ad?
Answer:
Probably not, as the buyer probably has no property rights in the image of the house in the same way that an individual, for instance, has in the image of his person. But if the buyer is complaining, I’d withdraw the ad for before the next printing.
URLs/SEARCH ENGINE OPTIMIZATION
Question: A real estate firm in (we'll call it) Southbeach, Virginia, has operated under the name Southbeach Realty for many years. It has a website at www.southbeach.com. They have just discovered that a local competitor has linked its website so that anyone typing in www.southbeachrealty.com will reach the competitor's website. Is this legal? What action can Southbeach Realty take?
Answer:
If you have used a name for more than five years that is descriptive of what you do and where you do it, you have earned the exclusive trademark in the name, and can bring a trademark action to enforce your rights. There is also a dispute resolution service offered by ICANN, the company that manages domain names, and you might want to check out the federal Anti-Cyber Squatting Act passed in October of 1999. But I would start with a stern letter from an intellectual property attorney who can use all the right scary terms, to see if you can get them to stop misusing your name.
Question: May a Virginia licensee advertise South Carolina property in Virginia publications?
Answer:
Sure. The real estate license is not property-sensitive, but activity-sensitive. In other words, it's not a function of where the property is located, but where the activity occurs.
Question: A broker wants to advertise that certain property can be bought with "no money down." Must the ad contain APR and other information sufficient to satisfy Truth in Lending requirements? Also, may the broker advertise urging buyers to "Call us for fee brochure on mistakes to avoid when buying a home" without putting the name of the firm in the ad, since no property is being advertised or business solicited?
Answer:
If you're not acting as a lender, Realtor's ads that talk about loans don't have to comply with TIL or Reg Z. So APR would not be required. However, the Real Estate Board's regulations require all "marketing" to be done in the name of the firm. This second ad is clearly a marketing tool, and so the firm's name must be clearly displayed.
Question: A FSBO has taken a shine to an agent who showed his house, and now wants to have her put her phone number on his sign, and let her show the house for him. There would not be a listing. Is this legal?
Answer:
Well, there’s no law or regulations requiring a licensee to have a listing to advertise someone’s property. The REB regulations require only that the owner consent to such advertising, and that is the case here. However, all advertising must be done in the name of the firm, so I would not just add the firm number to the owner’s sign. Why not just put the firm sign in the yard? The bigger issue here is the actual relationship between firm and seller. If there’s no listing, what is the relationship? How will the firm get paid? And what will it tell buyers and buyer agents who call, and who will naturally assume the firm is representing the seller? I would answer these questions before embarking on this marketing effort for Mr. FSBO.
Question: A FSBO agrees to pay an agent a fee if he secures an acceptable contract from a current or future buyer client. The agent will not be representing the FSBO. The FSBO asks the agent to advertise the property on the agent’s website. May the agent do so?
Answer:
You need not represent the owner to advertise the owner’s property. If you have the owner’s written consent, you may do so.
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