It is a violation of OAR 863-015-0125(2)(e): to advertise properties listed for sale by other licensees without that licensee’s written permission. Fortunately, the authorization can be contained in MLS, or other cooperative service, rules. Where MLS rules are the source of the permission to advertise, the advertising must be consistent with the MLS rules. Because of the truthfulness requirement, a licensee cannot alter any informational part of another licensee”s listing. Formatting changes, however, are allowed under state advertising rules if the information itself is still accurate and not misleading. Formatting may, however, be subject to separate MLS rules.
Modification of listing data is an issue because of Internet advertising. Remember, all of the rules concerning identification and truthfulness apply to Internet advertising. It is not necessary to identify yourself as a licensee in every electronic exchange of information when engaged in an ongoing exchange once the identification is made. A licensee with their own webpage can provide the required company information by having a clearly identified link to their real estate business”s homepage.
A licensee who owns or operates a site on the Internet is responsible for the accuracy of the information displayed. The licensee owner of the site must periodically review the advertising and marketing information displayed to make sure it is current and not misleading. “Current” depends on whether more current information is “reasonably available.”
Electronic display of property information raises a number of issues unique to the medium. Photographs, for instance, once in digital form, can be edited or enhanced. Editing and enhancement of digital photographs that materially changes the appearance of the property or changes or deletes significant features of the property is considered misleading. Similarly, the coding and programming used to display information on the Internet cannot, by “meta-tag” or otherwise, be used to misdirect Internet traffic from another site to your own. Virtual tours that feature the inside of the house should be used only with the written permission of the owner and the tour should be designed to protect the privacy of the owners and prevent misuse by the public. Click here for a sample permission form.
As mentioned earlier, advertising rules also cover business signs. License law requires every licensee who is not associated with another broker to have at least one place of business and designate that place with a sign containing the name under which the broker is licensed. For years, signage was closely regulated by administrative rule. The new advertising rules delete these provisions. Nevertheless, it is still probably a good idea have business signs located on or near the main entrance of the office or on a wall or window immediately adjacent to the entrance. If located in a general office building, the sign should be on the individual office door or, if there is no door, displayed on the desk or prominently within the area used by the broker.
Being forced by real estate license laws to have a business sign doesn”t give real estate licensees any right to ignore or violate local zoning or sign ordinances. This can sometimes be an issue, especially when it comes to real estate office signs for offices operating out of the broker”s home. Many zoning and sign ordinances prohibit business signs in residential zones. If that is the case, a licensee may find they are unable to have a home office because they cannot meet the signage requirements of license law without violating local zoning or sign ordinances.
Another place the general “truthful and not deceptive or misleading” rule applies is with “inducements.” Inducements, like free home warranties, discounts, trips, merchandise and so on, given to encourage listing property or utilizing other broker services are now common in the industry. Inducements continue, however, to have a bad name. In fact, many Oregon brokers appear to believe they are illegal when in fact they are not. As long as the inducements are truthful and are not misleading – the consumer actually gets whatever is offered – and they do not run afoul of commission-sharing rules they are not illegal. Commission Sharing is covered under the main topic Working With Clients.
A form of inducement that is becoming more prevalent in the market is offering a selling bonus to the selling agent. Such bonuses do not violated commission sharing rules because the recipient is licensed. Truthfulness is usually not a problem with selling bonuses as long as there are no hidden criteria for collecting the bonus. Selling bonuses do, however, raise disclosure issues for the selling agent. Because the agent is receiving a bonus in money as a result of their representation, the agent must disclose the bonus to their client. The duty to disclose a bonus is a function of the duties of loyalty and disclosure agents owe their principal. Click Here for a detailed discussion of agency duties.
Normally, the truthfulness requirement doesn”t cause any problems with inducements. The exception is not including the full terms of the inducement in advertising. To meet the truthfulness requirement, the consumer must be able to tell from the ad what action is required to receive the inducement. Take, for instance, an ad that says: “List your house with us and we”ll send you to Hawaii.” On its face, there is nothing wrong with the ad. If, however, there are strings attached such as the property must be worth more than $500,000 or must sell in-house or for full price, truthfulness will require the ad contain the qualifying conditions or at least some warning that additional terms apply.
Whether an agent”s statements about the property are of such a character as to “reasonably induce” someone to act to their detriment is the key to understanding false advertising claims. Part of that understanding is the difference between misleading facts and “puffing.” Puffing is said to be “sales talk.” That is, an expression of opinion by a sales person about the product they are selling. At common law, it was thought that no reasonable person, considering the source, would rely on a sales person”s opinion. Puffing was, therefore, not actionable as misrepresentation or false advertising.
Modern real estate practices limit the value of the “puffing” distinction. Statutory duties requiring honesty to all parties have seriously undermined “puffing” as a defense to misrepresentation claims. Agents who represent buyers are not engaged in selling at all, so “puffing” is not involved when a buyer”s agent is talking to the buyer. There are also Fair Housing laws that limit the use of puffing in advertising. Click Here for a detailed explanation of Fair Housing laws.
On the listing side of the deal, it is still important to distinguish fact from opinion, but whether something is “truthful and not misleading” is measured by its effect on potential buyers, not whether it is just factually correct. For example, consider the following ad language: “Great five acres, 20 miles from town. Modern three bedroom house in charming landscaped setting.” There are some facts in the ad (five acres, 20 miles, three bedrooms, landscaped) and some opinion (great, modern and charming). This manner of advertising is susceptible to false advertising claims because it qualifies fact with opinion.
Qualifiers do not negate the over-all impression left by the ad. It is the overall impression people rely on, not ambiguous qualifiers like “charming.” In fact, the ambiguity of the qualifiers actually hurts because if the overall impression is misleading, the qualifiers are evidence that it was deliberately so. If the property turns out to be 4.6 acres of mostly wetland 31 miles from town with a cheaply remodeled twenty-years-old house that has new bark dust in the flower beds that border the freshly mowed crabgrass yard, the qualifiers just aren”t going to help. If you want to “puff,” don”t mix opinion and fact, just offer opinion. For example: “Nice small acreage country charmer.” After all, all you want out of advertising is a call to request details.
OAR 863-015-0125(1): Defines “advertising.”
The definition of advertising set out in OAR 863-015-0125(1): includes “advertising activity conducted by mail, telephone, the Internet, the World Wide Web, E-mail, electronic bulletin board or other similar electronic common carrier systems, business cards, signs, billboards and telephonic greetings or answering machines.” The list contained in the rule is not exclusive because “advertising” includes “all forms of representation, promotion and solicitation disseminated in any manner and by any means of communication for any purpose related to professional real estate activity.” In short, if you are making information about property, or even yourself or your company, available to the public, to a member of the public, or even to other agents, you are advertising. For instance, your remarks in the MLS data are considered advertising.
OAR 863-015-0125(2): Advertising by a licensee must, in process and substance, meet five specific criteria.
OAR 863-015-0125(2): There are five specific criteria that apply to all real estate advertising. They are: (1) identity of ad as that of a licensee; (2) truthfulness; (3) correct license status (if used); (4) correct expertise (if used); and (5) property owner”s permission. These five criteria will no doubt result in unwritten interpretations as time goes by. For that reason, it is wise to look to the underlying purpose of these rules when trying to decide what may or may not be allowed. That purpose is to prevent the public from being deceived or mislead when dealing with real estate licensees. According to Oregon courts, any statement by a licensee in any form is a violation of license law if the statement is “of such a character as reasonably to induce any person to act to his damage or injury.”
OAR 863-015-0125(3): When a licensee includes their name in advertising, they must use either their licensed name or a common derivative of their first name and their licensed last name.
OAR 863-015-0125(3): Subsection (3) in the latest version of the advertising rule attempts to clarify the identity requirement by demanding that advertising that includes the licensee’s name use the licensed name or the licensed last name and a “common derivative” of the first name. Licensed names can be verified by doing a licensee search on the Real Estate Agency Website at: http://outside.rea.state.or.us/weblookup/ Using anything other than the name found on the Real Estate Agency website, because that is what they have as your “licensed name,” can cause you trouble. The narrow exception is that you may use a “common derivative” of your first name. For instance, “Bob” instead of “Robert” or “Rich” instead of “Richard.” Nicknames probably aren”t going to qualify as “common derivatives” of the first name, and therefore can be used only with the entire licensed name.
OAR 863-015-0125(4): The licensed name or registered business name of the principal broker, sole practitioner or property manager must be prominently displayed, immediately noticeable and conspicuous in all advertising.
OAR 863-015-0125(4): Subsection (4), the latest version of the advertising rule, requires that the principal broker”s, sole practitioner”s or property manager”s licensed or registered business be “prominently displayed, immediately noticeable and conspicuous in all advertising.” This rule has taken the place of the never implemented rule that the licensee”s name had to be smaller than the principal broker”s. That rule- often called the “font rule” – was intended to take effect in March of 2008. It”s purpose was to prevent licensees associated with principal brokers from advertising as if they were independent brokers with their own businesses. The new rule abandons the legally questionable and impractical font rule in favor of demanding prominent, noticeable and conspicuous display or the principal broker”s licensed name or registered business name. Almost all existing advertising by licensees meets this standard.
OAR 863-015-0125(5): With limited exceptions, all advertising must be submitted to the licensee”s principal broker and approval must be obtained prior to release. Licensees must keep a record of the approval and make it available to the Real Estate Agency upon request.
OAR 863-015-0125(5): The latest version of the advertising rule requires licensees to subject all advertising, except where the licensee is selling their own unlisted property, to their principal broker for approval prior to release of the add. The new rule places a new temporal requirement on advertising by demanding broker review and approval prior to release. How this will work as a practical matter remains to be seen. In addition to the new review and approval prior to release requirement, the rule requires licensees to keep record of the approval and make that approval available to the Real Estate Agency upon request. The new rule will require many to change their business practices. An approval form brokers can sign, date and give to licensees is going to be required, as are some record keeping changes so that advertising approval prior to release can be proved to Agency investigators upon request.
OAR 863-015-0125 (6): With limited exceptions, a principal broker must review the advertising of associated brokers and property managers and is responsible for all advertising approved by the principal broker that bears their name.
OAR 863-015-0125(6): This new provision incorporates the vicarious liability for principal brokers provision announced in the last version of the advertising rule with the new review and approval requirements. Except where an agent is selling their own property and has not listed it with the principal broker, the principal broker is “responsible for all advertising approved by the principal broker.” The principal broker is required to review all advertising. This rule creates direct vicarious license law liability for content of all agent advertising. How the Real Estate Agency will use this new vicarious liability provision is not clear. It is clear, however, that simply having processes and procedures in place to reasonably assure compliance with laws and rules is no longer the rule when it comes to advertising.
OAR 863-015-0125(7): A principal broker may, in writing, delegate supervisory authority and responsibility for advertising originating in a branch office to the principal broker managing the branch.
OAR 863-015-0125(7): A principal broker may delegate “direct supervisory authority and responsibility” for branch office advertising to the principal broker who manages the branch. The delegation must be done in writing. This provision allows the principal broker who registers the business name to escape responsibility for the advertising done in branch offices if that responsibility is assigned to a principal broker who manages the branch. No such delegation would be possible if the branch is not managed by a principal broker.
OAR 863-015-0125(8): A licensee associated with a principal real estate broker may advertise property owned by the licensee for sale, exchange or lease option, if they don”t list the property, the advertising states the owner is a licensee and they follow all other applicable real estate laws and rules.
OAR 863-015-0125(8): Subsection (8) of the latest version of the advertising rule contains the limited exceptions to the principal broker review and approval rules set out in subsections (5) & (6). No review or approval is required if a licensee is advertising their own property for sale, exchange or lease option, as long as the property is not listed with their principal broker. The advertisement must, however, state that the owner is a real estate licensee and comply with all other applicable license law provisions (e.g. be truthful and not misleading). If the property is listed with the principal broker, all advertising, even by its licensee owner, must be reviewed and approved.
OAR 863-015-0125(9): Advertising in electronic media or by electronic means must meet three specific requirements including that the first page of such advertising contain the licensed names required under the advertising rule.
OAR 863-015-0125(9): Electronic advertising has been subject to separate rules for many years. The latest version of the advertising rule brings back some of the old electronic advertising rules. Advertising in “electronic media” and by “electronic communications” must not only conform to the other provisions of the advertising rule, but must also have on the first page:
- The licensed name as required under subsection (3);
- The licensed name of the principal broker, sole practitioner or property manager; and
- A statement that the licensee is licensed in Oregon.
Sponsored links, which are paid advertisements located on search engine result pages, do not have to meet these three requirements as long as the first page following the link complies. In plain English that means that you don”t have to have name, rank and serial number on the link to your webpage that comes up on REALTOR.com or your local MLS when consumers are searching the web, but you do have to have it on the first page that comes up when the consumer clicks the link and goes to your webpage. Emails get an exception from the “first” page requirements as long as the “initial communication” contains all the required information.
OAR 863-015-0125(10): Advertising may not guarantee future profits.
OAR 863-015-0125(10): The latest version of the advertising rule contains a new provision that says “no advertising may guarantee future profits from any real estate activity.” It is not clear why this provision was included or its exact reach. “Guarantee” is an inexact term with a number of meanings. As an example, something like: “You will make a million dollars on this deal,” is probably the type of expression at which the provision is aimed. Whether this new provision of the advertising rule will reach more conduct than “truthful and misleading” remains to be seen.
OAR 863-015-0125(11): In order to advertise using the term “team” or “group” a licensee must meet six additional requirements.
OAR 863-015-0125(11): The last provision of the latest version of the advertising rule deals with advertising using the term “team” or “group.” The rule is written in the permissive as in a licensee may use their terms if”.. There are six “ifs” in the rule. The first attempts to enforce business license and trademark regulations by demanding that the use not unlawfully use a trade name or be deceptively similar to a name under which someone else is doing business. It is not clear why the Real Estate Agency would want to insert themselves into trade name battles, or their authority to do so, but the rule does just that. It also requires that the team or group include at least one person with a license; that the licensed members are all associated with the same principal broker; that licensed members use their licensed names as required under subsection (3); that if unlicensed persons are named, their lack of license be stated; and that the advertising comply with all other laws and rules.
Oregon Revised Statute (ORS) 696.020:License required to conduct professional real estate activity, including advertising. License law statutes and rules apply to personal transactions by licensees.
Oregon Revised Statute (ORS) 696.020 prohibits engaging in, among other things, advertising real property without having a valid real estate license. At first blush, this provision of state law would seem to affect real estate licensees very little. The statute, however, can cause considerable trouble if you miss a license renewal or change offices. If you miss a renewal, or if there is a gap between when your license is turned in and re-issued when changing offices, you become an unlicensed person until your license is re-issued. If you have any ads running or otherwise hold yourself out as an agent during that unlicensed period, you will have violated ORS 696.020. Your own ads can become evidence of unlicensed real estate activity.
Another way ORS 696.020 affects advertising is by imposing license law duties, including those that apply to advertising, to personal transactions. With limited exceptions discussed in the administrative rule section of this topic, advertising to sell your own home is no different for rule violation purposes than advertising to sell your clients home. That means being just as cautious with your advertising, and what you say to people, when dealing on your own behalf as when dealing on behalf of others. In fact, it might be a good idea to be more cautious because of the self interest involved.
Oregon Revised Statute (ORS) 696.200: Brokers, unless associated with another broker, must have a place of business designated by a business sign in the broker’s licensed name.
Oregon Revised Statute (ORS) 696.200: The statute that requires real estate brokers and organizations to maintain a place of business, also affects advertising rules. Not only do brokers and companies have to have a place of business but they must designate that place by a sign bearing the licensed name. Business signs are mandatory under Oregon real estate law. When your place of business changes, you must notify the Real Estate Agency. In addition to notifying the Agency, the broker must physically remove his office signs. Licensees cannot use a name on a business sign other than their licensed name.
Oregon Revised Statute (ORS) 696.301(1): Misrepresentations or false promises, in advertising or otherwise, are grounds for discipline.
Oregon Revised Statute (ORS) 696.301: The statutory provision under which the Real Estate Agency disciplines licensees, is by far the statute with the most effect on advertising rules. There are fifteen separate provisions of ORS 696.301. Two of those 15 have a very direct bearing on advertising.
ORS 696.301(1) makes material misrepresentation and false promises license law violations.
Oregon Revised Statute (ORS) 696.301(6): Misleading or untruthful advertising of any kind is grounds for discipline.
ORS 696.301(4) makes knowingly or recklessly published materially misleading or untruthful advertising a direct license law violation. Together, these two statutory provisions form the underlying “honesty” premise that supports the administrative rules that govern how real estate licensees advertise property and hold themselves out to the public. Administrative rules affecting advertising is the next subject in this topic.
Advertising doesn’t just mean putting your listings in the newspaper. Advertising, according to state administrative rule, “includes all forms of representation, promotion and solicitation disseminated in any manner and by any means of communication for any purpose related to professional real estate activity.”
The administrative rule makes it pretty clear everything you do as an agent that involves a member of the public is advertising. From your business card to your office sign to your email signature, to what you say about your competitors, it’s all advertising. Hunting for prospective clients, whether buyers or sellers, involves advertising even if all you do is call someone on the telephone.
What all this means is you have to have advertising rules and regulations down pat so you can conduct your business without worrying about violating some obscure rule or regulation. That is the object of this section.