Good Ol’ Article 12 – We Thought We Knew You
Article 12 is the ‘truth in advertising” article and is frequently quoted by consumers who feel wronged in a Real Estate transaction. As a reminder the Code of Ethics establishes an Article and then has “Standards of Practice” that better define the primary Article.
From time to time, NAR will release a new Case Interpretation based on a scenario in question. The most recently released interpretation defines Article 12 in saying that an agent who moves from one company to another may not advertise the production generated under a previous company. Read the scenario below.
Article 12
REALTORS® shall be honest and truthful in their real estate communications and shall present a true picture in their advertising, marketing, and other representations. REALTORS® shall ensure that their status as real estate professionals is readily apparent in their advertising, marketing, and other representations, and that the recipients of all real estate communications are, or have been, notified that those communications are from a real estate professional. (Amended 1/08)
Changes to the Interpretations of the Code of Ethics
• New Case Interpretation #12-25, Advertising Role in Sales After Changing Firm Affiliation, was adopted as follows:
REALTOR® Q was a non-principal broker licensed with ABC, REALTORS®. REALTOR® Q specialized in buyer representation. A prominent feature on her website carried the headline “I sold these – and I can help you buy or sell, too!”. Under the headline was a list of over a hundred street addresses of properties for which REALTOR® Q had found buyers.
For personal and professional reasons, REALTOR® Q chose to leave the ABC firm to affiliate with XYZ, REALTORS®. As she transitioned to her new firm, REALTOR® Q was careful to disclose the name of her new firm in a readily apparent manner on her website. Her website also continued to display the list of properties she had found buyers for during her time with the ABC firm.
REALTOR® Q’s parting with ABC had been amicable, so she was surprised to receive a complaint brought by her former principal broker, REALTOR® C, alleging a violation of Article 12, as interpreted by Standard of Practice 12-7, based on her website’s display of sales made while REALTOR® Q had been affiliated with ABC.
At the hearing, REALTOR® C, the complainant, noted that Standard of Practice 12-7 provides, in part, “Only REALTORS® who participated in the transaction as the listing broker or cooperating broker (selling broker) may claim to have ‘sold’ the property.” “It was ABC, REALTORS®,” REALTOR® C added, “that was the selling broker in these transactions, not our former sales associate REALTOR® Q. Her advertising our sales under the umbrella of her new firm, XYZ, REALTORS®, is confusing at best, and potentially misleading to consumers who may get the impression the XYZ firm was involved in these transactions when that’s not the case.”
REALTOR® Q defended herself and her website arguing that the fact that she had found the buyers for each of the properties listed on her website was still true, and that the only thing that had changed was her firm affiliation. “If it was true when I was licensed with ABC, then it’s still true even though I’m now licensed with XYZ,” she reasoned.
The hearing panel agreed that REALTOR® Q had, in fact, sold the properties, albeit while licensed with ABC. The ad, however, suggested that the sales were made while the REALTOR® Q was licensed with XYZ, which was not the case. Consequently REALTOR® Q was found in violation of Article 12.
Broker Reigns Supreme
This case study is yet another reminder that the transactions are performed under the brokerage. It seems fairly often that agents forget that client and agency agreements are between the consumer and the Broker.
There are many who would like to see this changed, but as of yet the agent is still the facilitator of the Broker’s business.
{ 2 comments… read them below or add one }
As staff liaison to our state ProStandards committee and a member of NAR's ProStandards committee I have discussed this issue at some length with committee leadership and NAR staff. They have taken pains to point out that the operative sentence in the decision is “The ad, however, suggested that the sales were made while the REALTOR® Q was licensed with XYZ, which was not the case.”
The intent in saying “the ad…suggested” was to try to signal that the facts in this particular case made the advertisement misleading, not that it would always be misleading to advertise sales made while affiliated with another broker. In fact, an earlier draft of the case interpretation was written to ban all advertising of prior sales, but they backed off to this wording.
The problem I see is that there really is no guidance in this case interpretation that suggests what circumstances would NOT be a violation. At the November NAR meeting the committee reviewed a companion interpretation that would have suggested that an advertisement like this was OK as long as their was some sort of disclaimer about the fact that some or all of the sales took place while affiliated with another firm. The interpretation wasn't adopted but was sent back for further clarification. You can find that proposed interpretation – along with the background – on the NAR site at http://bit.ly/aUByBP (login required).
Hank,
Thanks for the feedback. I was at Florida in 2008 when they discussed this at the Pro Standards Forum. I don't think anyone was happy with any of the solutions, so this was probably the best compromise.
This is a tough topic, just like the limitations of soliciting current clients to move with you to your new firm.
I'm on the Broker's side with this one, but I think I'm in the minority.