Real Estate Regulators Crack Down on "Individual Agent, Team Branding"

What constitutes misleading consumers? It could be as simple as an agent using a fictitious business name ending in “Real Estate” or an agent branding him- or herself as an “independent” real estate professional.

In March, the California Bureau of Real Estate (CalBRE) issued a licensee alert warning that agents who violate these laws — and brokers who let their agents engage in such activities — risk significant fines, license revocations and even criminal prosecution.

Other states are also contending with the gray area of agent branding, and this latest advisory indicates that the issue will continue to be a regulatory focus in the Golden State and beyond.

This year, a South Carolina bill banning the use of “real estate,” “realty” and related terms in agent team names went into effect, while a bill that makes many real estate signs prominently featuring agents (rather than the brokerage) illegal in Michigan was signed by the governor in January.

In general these regulations are designed to protect consumers from getting duped into thinking agents or teams are brokerages, but other stakeholders say these types of rules represent a nationwide push by traditional brokerages to curb the growth of teams and argue that they stifle the personal touch that an agent’s individual branding can convey.

CalBRE specifically outlined two unlawful scenarios the agency said it had seen repeatedly. The first is that an agent, say John Doe, uses a fictitious business name such as “Doe Real Estate” that would lead consumers to incorrectly believe that the business is run by a real estate broker.

“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,” CalBRE said.

“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.”

Secondly, many agents continue to brand and identify themselves as “independent” real estate practitioners and practice and advertise as such, the agency said.

Unless those agents are operating as teams and in compliance with state laws governing teams, representing themselves as independent is also unlawful, the agency added.