OHIO REALTORS – Advertising White Paper 1
I. Real Estate Advertising Must Comply With Ohio License Laws
In addition to any legal liability, incomplete or misleading real estate advertising may expose the broker and agent to sanctions under the Ohio real estate licensing laws. Possible sanctions include suspension or revocation of the real estate license, fines, and letters of reprimand.
A. Types of Advertising Governed by the Licensing Laws
The licensing law provisions concerning advertisements apply to any form of advertisement, including print, radio, television or display, and any materials intended to promote the brokerage, the individual licensee, or a property. The requirements are the same regardless of the type of advertising involved. Covered advertisements include personal brochures promoting individual agents, even when they do not promote specific properties. For example, the Division of Real Estate and Professional Licensing has historically considered all of the following as advertising:
1. Business cards;
3. Yard signs;
6. Television promotions;
8. Refrigerator magnets;
9. Door hangers; and
10. Telephone solicitations
Due to the development of new marketing techniques, the Division of Real Estate and Professional Licensing has had to make determinations as to whether certain communications with the public are deemed to be advertising. These include websites, e-mails to prospective customers/clients information regarding properties on the market, voice mail messages, etc.
To provide clarity on what types of communications the Division considers to be advertising the following provisions were added to OAC Section 1301:5-1-02:
For purposes of this rule, the term advertising or advertisement means any manner, method or activity by which a licensed real estate broker or salesperson makes known to the general public properties for sale or lease or any services for which a real estate license is required, through the use of, including but not limited to, newspapers, magazines, radio, television, signs, Internet websites, unsolicited mail, voicemail, e-mail, facsimile transmissions, social networking sites, blogs, business cards, or property listing data base service.
The term advertising or advertisement does not include forms of private communication between a licensee and a client, customer or prospective client, including but not limited to the dissemination of information about properties available for purchase or lease, private mail, voicemail, e-mail, password protected websites or facsimile transmissions, provided such communications are initiated at the request of a client, customer or prospective client.
Thus, private communications that are initiated at the request of the public are not considered by the Division to be advertising.
B. Real Estate Advertising may not Contain Misleading Statements
The licensing laws require that all real estate advertisements be truthful and free from any misleading statements, including any misrepresentation as to the property itself, the terms of the sale, or the property value. Even if the misrepresentations are made inadvertently, they may trigger liability. For example, if an owner tells the broker or agent that the property is within “ABC” school district, and the agent, relying on the owner’s statement advertises the property as being within “ABC” school district, the agent may be subject to discipline if that statement is incorrect.
R.C. § 4735.18(A) (21) states that any broker or agent who publishes a false or misleading advertisement is subject to discipline by the Ohio Real Estate Commission. Ultimately, it is the broker or agent named in the advertisement who is liable for any misstatement, even if a secretary or other unlicensed person prepares the advertisement for the licensee.
Reference to the sales volume or other statistics of a particular broker or agent also may constitute impermissibly misleading advertising. Any statistical claim must be supported by adequate documentation. For example, brokers and agents should not violate the “double dipping rule.” This rule refers to the method of calculating a specific dollar amount of property sold during a given period of time. When calculating this number, the Real Estate Commission found that it was misleading to double the sales price of a property which was both listed and sold by the same broker. For example, if a broker or an agent lists a property for $100,000, and then sells that same property for $100,000, he or she would not be able to advertise sales of $200,000 worth of real estate.
Similarly, if the advertisement contains statistics compiled by either the Local Board of REALTORS or MLS service, MLS rules require that the time period over which such statistics were calculated must be included. The ad also must indicate that the statistical claims are based upon Local Board or MLS records. When using these types of statistics, brokers and agents should check the Local Board or the MLS rules for any specific language required.
C. The Licensing Laws Regulate the Form of the Advertisement
All advertising must include the brokerage name and indicate it is a licensed broker. The brokerage name in the ad must be the same as it appears on the brokerage license unless one of the following exceptions apply:
If the broker has been granted approval to use a “dba”, then that trade name as it appears on the license is the name that must appear in ads.
Words or abbreviations included in the licensed name that indicate the legal framework under which the licensee conducts business, such as “Inc.” or “Co.”, are not required to appear in the ads.
The words “Realty” or “Real Estate” or the authorized use of a trade name or insignia indicating membership in a real estate organization (i.e., “REALTOR” or “R”) may be included by brokers even though not a part of the broker’s licensed name.
Any licensee’s name appearing in an advertisement must consist of his name as it appears on his license with the following exceptions:
1. A licensee may use a commonly accepted derivative of their first name;
2. The licensee’s first name abbreviated as an initial with the licensee’s full middle name as it appears on the license;
3. The licensee’s first and middle name as it appears on the license abbreviated as an initial;
4. A nickname in parenthesis or quotation marks with the full licensed name.
According to R.C. § 4735.16, the name of the broker must be displayed in at least equal prominence with the name of the salesperson. When evaluating the prominence of a name, the person placing the ad should consider the size and type of print and whether the broker’s name is placed in an equally prominent part of the ad. Because a franchise name is not part of a brokerage’s licensed name, it is not included when determining the prominence of the agent’s name in relation to that of the brokerage.
D. Real Estate Advertising on the Internet/Social Media
With respect to Ohio license law, the Ohio Administrative Code specifically addresses internet advertising and licensee’s websites. Ohio Administrative Rule 1301:5-1-02 provides that an internet website established by a real estate licensee is considered to be advertising. As such, these sites must comply with the provisions regarding advertising that are contained in the license law.
With the exceptions noted below, all internet advertising must disclose the brokerage name on every viewable page of the website. A web page is defined as one that may or may not scroll beyond the borders of the screen.
The two exceptions to the requirement that the brokerage name be included on every page is as follows:
1. When advertising in electronic messages of limited characters (i.e., twitter), a licensee must provide a direct link to a display that includes the brokerage name.
Information on a website maintained by a licensee which becomes outdated or expired, must be updated within fourteen days of the information becoming outdated or expired. Each website maintained by a licensee must disclose the date upon which the information contained on the site was most recently updated. If a licensee’s website is maintained on the licensee’s behalf by a third party, the licensee must provide to the third party written notice of any updates to outdated or expired information so that the site can be updated in a timely manner. A licensee who provides such timely notice will not be in violation of the license law if the third party fails to make the changes as notified.
The license law internet advertising requirements only apply to websites within the licensee’s ownership or control. A licensee is not responsible for the accuracy of information taken from his website or advertising and placed on a website or in advertising not within the licensee’s ownership or control.
E. Advertising Properties Listed by Another Broker or FSBOs
Section 1301:5-1-02 also addresses the issue of whether a licensee can advertise property that is not listed with the licensee. This could occur where a REALTOR mails a newsletter listing all of the available properties in a particular area, including those listed by him/her and those listed by competing REALTORS. This administrative rule clarifies that a licensee cannot advertise property that he/she does not have listed without the consent of the owner (title holder), or the owner’s authorized agent (i.e., the actual listing broker or agent). It goes further and clarifies that such consent must be given in writing. When such permission is granted on property being offered for sale by the owner or listed with someone else, the licensee must disclose the fact that he does not have the property listed and must include the name of the listing broker. This must be done in a type size that is the same or larger than the type size used to describe the property.
F. Team Advertising
An increasing trend among Realtors is for two or more licensees with a brokerage to work together as a “team”. The Division of Real Estate and Professional Licensing does not license or technically recognize such teams or groups. However, due to the increased number of licensees conducting business in this manner, the Division has adopted a regulation setting forth the advertising requirements as they apply to such entities. Under this rule (OAC Section 1301:5-1-21), such a team or group must:
1. Include in the advertisement the full name of a licensee that is a member of such team. The licensee is not required to include in the advertisement the names of every member of the team;
2. Include in the advertisement the name of the broker or brokerage under whom the licensee is licensed;
3. Identify as non-licensed any unlicensed team members whose name is included in such advertising;
4. Display the name of the broker or brokerage in equal prominence with the team name;
5. Display the name of the broker or brokerage in equal prominence with the name of any salesperson in the advertisement.
The rule also addresses the use of photographs of a team in advertisement. The rule specifies that the names of all of the team members do not need to be disclosed as long as the above specified requirements are met.
G. The Regulations Governing Advertising Apply When Selling Your Property
A broker or agent also may be disciplined for a failure to follow the advertising requirements when selling his or her own property. For example, if broker Jane Doe is selling her house, the advertisement should identify her as:
Jane Doe, Real Estate Broker/Owner
If salesperson John Doe is selling his house, then any advertisement should identify him as:
John Doe, Real Estate Agent/Owner
The name of the brokerage with whom the licensee is affiliated would only be required to appear in the ads if the property is listed with the brokerage. Ohio license law does not require licensees to list their property for sale or lease with the brokerage with whom they are licensed. They can sell or lease their own property on their own as any other owner of real estate can do. However, handling a licensee’s own property through the brokerage may be a condition of affiliation with that brokerage.
H. The Licensees Must Obtain the Owner’s Consent
In addition to the form and disclosure requirements, brokers and agents wanting to advertise certain real estate first must obtain the consent of the owner or person holding actual legal title. The licensee must obtain this consent before a “for sale” sign may be placed on a property and before the property is otherwise offered for sale.
In some instances, a licensee may be approached to list a property by a buyer under a land contract or a person holding an option to purchase prior to that person acquiring title. Under Ohio license law, to advertise the property, the licensee must obtain the consent of the owner, which means the person currently holding legal title. Consent of the land contract buyer or the lessee exercising an option is not sufficient.
Licensees often obtain a blanket consent to offer an owner’s property for sale. Such consent merely authorizes a licensee to offer the owner’s property for sale; they do not specify the types of advertisements and/or the advertising vehicles that the licensee will be utilizing. Although there is nothing in the licensing laws that suggests that a blanket consent is insufficient to justify any kind of advertising selected by the licensee, clearly the better practice would be to obtain a specific consent for the advertising medium that will be used. This is particularly true when the licensee is utilizing unusual forms of advertising, not customary in the marketing of real estate. This may include television and probably includes the Internet and other forms of computer generated advertisements because of the audience that these media reach. Listing real estate licensees owe fiduciary duties to the owner of the property to follow his or her instructions, and conceivably an owner could claim that these fiduciary duties were violated because the owner did not specifically authorize non-customary forms of advertising, such as television and the Internet. This would be analogous to placing a listing in the multiple listing service which, among other things, is a form of advertising. Multiple listing services have always required the owner’s consent before accepting a listing from a licensee, and now most multiple listing services which are connected to the Internet in some way are requiring specific consent before allowing the listing to reach the Internet.