Licensing Law Advertising Rules

Kate Krieter, RWSSC July 2004

In the Professional Standards department, I am faced with a multitude of questions regarding ethics and arbitration issues. However, I do try to answer questions on License Law to the best of my ability. The many questions that I get concerning License Law are with regards to advertising.

What needs to be on the signs that I put in front of the house? Does my broker's name have to be on my business cards? What about the office phone number? The list goes on.

This month I have taken the time to answer many questions on advertising rules in our License Law and how it applies to you, the agent, the broker, and sometimes, the consumer.

According to the Illinois Real Estate License Act Section 10-30, no advertising can be fraudulent, deceptive, inherently misleading, or proven to be misleading in practice. Advertising shall be considered misleading or untruthful if, when taken as a whole, there is a distinct and reasonable possibility that it will be misunderstood or will deceive the ordinary purchaser, seller, lessee, lessor, or the owner. Advertising must contain all information necessary to communicate the information contained therein to the public in a direct and readily comprehensible manner. For example, many people fax me ads that they are concerned with that include the phrase, Just listed in your area! with the addresses of listed properties. These ads, if no listing broker is mentioned, can be inherently misleading. To the consumer, it looks as though you have listed those properties in that area. Without the name or consent of the listing broker, there could be a possible violation of License Law or the Code of Ethics (article 12, Standard of Practice 12-4 & 12-5). The listing office may have cause for an ethics complaint, because you are now marketing their property without their informed consent that was given to them by the owner. Disclosure is an absolute must in advertising. If you are interested in advertising properties that are listed in a particular area, the names of the listing brokers must be included, or a statement that indicates that you are not the listing broker and that the listed properties are indeed listed with various firms. Please note, that an ad that is large in scale and a disclosure statement that is very hard to read, still in essence, may be misleading to the public.

Blind advertisements, or any real estate advertisement that does not include the name of the sponsoring broker's business name is not allowed under the advertising section of License Law. The licensee must include the business name of the broker regarding any sale or lease of real estate even his or her own. The business name of the broker must also appear in any licensed activities, or in hiring new licensees. In the instance that the broker's business name is a franchise, the franchise name as well as the name of the individual firm must be displayed. Therefore, for signage outside listed or sold property or business cards, the business name of your broker must be present. As far as telephone numbers go on business cards, check with your broker and see if they have a preferred number. License law is silent on any phone numbers, so a direct line or cell phone, if approved by your broker, is in accordance with the law.

When selling your own home, it is important to notify the public and other REALTORS^® that you are a licensed real estate agent. As a REALTOR^® you have an advantage over the consumer with the knowledge that you have in real estate. Therefore, when selling your home through your broker or as a For Sale By Owner (FSBO), your status must be disclosed. Your home does not need to be put in the Multiple Listing Service, however, check with your broker prior to selling it on your own. It depends on your company policy and there may not be a clause in your E&O insurance to cover any liability you may incur when selling it as a FSBO. If your property is listed in the MLS, your ownership can be disclosed in the AOI field, which stands for Agent Owned Interest. This is the only disclosure that is necessary with regards to the MLS through License Law, however, it is recommended to have that information placed on any flyers or brochures that are left in the house. This way you are actively disclosing your status. If you are selling your own home as a FSBO (and for the sake of space, let's assume that you have 100% ownership), the sign outside your home must display Agent Owned or Broker Owned. I would recommend again actively disclosing your status on any flyers or brochures that the public will see. Basically License Law is concerned that when selling your own home, the public and other REALTORS^® are well aware that you are a REALTOR^®. The law goes as far as stating that your ownership must be disclosed to all persons responding to any advertisement or any sign. Also remember that in Illinois, you cannot be a dual agent when selling your own home. You may refer your buyers out if your property is listed, and direct your buyers to their attorney if selling as a FSBO.

On the flip side, if you are running an advertisement for the purpose of purchasing or leasing real estate, you must disclose your status in the advertisement.

The range of what can be displayed in your advertisements is as wide as what can't be in them. Essentially, License Law wants all your advertising to be truthful to the public. By keeping this in mind when running new ads, you are sure to communicate to the public in a readily comprehensible manner.

Illinois Association of REALTORS^®. Section 10-30. Advertising. Illinois Law: Governing Real Estate Licenses Sept. 2003: 18.