Wednesday, 26 July 2017

Real Estate Commissioner Issues Warning To Agents and Brokers

Written by Posted On Monday, 27 March 2017 14:44

Although many California real estate agents and brokers may not know it, this month (March, 2017) Real Estate Commissioner, Wayne Bell, issued a "Licensee Alert" in the form of a Supplemental Disciplinary Advisory to an advisory that was issued in September of 2015. That advisory was titled Disciplinary Warning to Real Estate Salespersons Who Act, Conduct Themselves, and/or Advertise as "Independent" Real Estate Professionals -- and a Simultaneous Caution to Brokers Who Allow or Support Such Practices.

The earlier advisory began by noting, "Under California law, with its two-tiered licensing system, real estate salespersons cannot provide -- or advertise that they can provide -- real estate services independently of their responsible brokers. Moreover, salespersons must be associated or affiliated with a responsible broker in order to engage in real estate licensed activities in this State."

Three specific problems were identified:

(1) "CalBRE has received a number of reports of salespersons who are conducting property management businesses without any broker affiliation or supervision. Such activity is a crime."

(2) "Also, it is evident that a number of salespersons have branded themselves as independent real estate practitioners, and they practice and advertise as such. That is unlawful as well, and the advertisements in connection therewith are false and misleading to the public."

(3) "Finally, it has been reported to CalBRE, although it has not been verified, that some brokers are assisting associated salespersons with some of the practices above… CalBRE has been told that some brokers are helping salespersons with ‘independent branding' and the advertising related to that branding."

In the recent supplementary advisory, the Commissioner noted that, since the earlier warning, CalBRE has continued to be made aware of the false and misleading advertising engaged in by some agents.

"A scenario that we have repeatedly seen is the use by a salesperson (who for this illustration we will identify as John Doe) of a fictitious business name that would lead members of the public to incorrectly believe that the business is operated and managed by a real estate broker. In this example, salesperson Doe conducts business using the name Doe Real Estate. Doe advertises using that business name, and the advertisements are connected to, or accompanied by, a webpage and other materials that extol the virtues of Doe Real Estate. The public would not think that Doe is a salesperson who must be supervised by another, and would most certainly conclude that Doe Real Estate is a real estate broker or brokerage, And the above practices are unlawful."

The Commissioner also notes that similar unlawful practices are employed by agents who advertise as teams, but who do not comply with the rules governing team advertising.

Perhaps the most common example of non-compliant team advertising occurs when the advertisement either does not identify the responsible broker, or which fails to do so in a compliant manner. The law requires that "The responsible broker's identity under which the members of the team are a part, must be displayed as prominently and conspicuously as the team name in all advertising and solicitation materials." [my emphasis] But it is commonplace, if not typical, that the team name will be this size and the broker's name will be this size. Or, maybe the broker's name will be the same size, but it will be displayed in a white-on-white color scheme… Or hidden in some other way.

The Commissioner's warning advisory ends as follows: "CalBRE will take appropriate disciplinary action (including the imposition of significant fines, and -- where appropriate -- the revocation of licensure) against real estate salespersons who engage in the unlawful activities discussed above, and against real estate brokers who permit their salespersons to engage in such activities."

He appears not to be kidding.

Bob Hunt is a director of the California Association of Realtors®. He is the author of Real Estate the Ethical Way. His email address is This email address is being protected from spambots. You need JavaScript enabled to view it..

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Bob Hunt

Bob Hunt is a former director of the National Association of Realtors and is author of the recently published book, "Real Estate the Ethical Way." A graduate of Princeton with a master's degree from UCLA in philosophy, Hunt has served as a U.S. Marine, Realtor association president in South Orange County, and director of the California Association of Realtors, and is an award-winning Realtor. Contact Bob at scbhunt@aol.com.

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