TREC Intends To Change Advertising Rules To Help Consumer Protection, Understanding

The rules also update, interpret and balance revised statutory requirements supporting free commerce and business competition with those protecting the consumer from misleading advertisements…

These new rules are the result of years of work by the Commission and key stakeholders focusing on clarity of advertisements for consumers with the least restrictions on license holders. The rules also update, interpret and balance revised statutory requirements supporting free commerce and business competition with those protecting the consumer from misleading advertisements.

A legislative change governing advertising for brokers and sales agents repealed a prior requirement that the advertiser be identified as a broker or agent in all advertising. But it also clarified that an advertisement is misleading if it fails to include the name of the broker or implies that a sales agent is responsible for the operation of a brokerage. It limited TREC’s authority to adopt rules requiring the use of the term broker or agent, a reference to the Real Estate Commission, or a license number in advertisements. Note that license holders can still choose to use those terms in advertisements if they wish.

License holders can still choose to use “Broker”, “Agent”, “Licensed by the Texas Real Estate Commission” or other similar terms in advertisements if they want.

Chapter 1101.652(b)(23) clearly states that license holder’s advertising cannot be misleading, cannot imply that a sales agent is the responsible party, and must include the name of the broker.

Chapter 1101.156(b), appropriately limits the commission from regulating certain forms, size or duration of advertising, personal appearance or voice, or the use of a registered assumed business name. Language was added to restrict the Commission from requiring the use of the term “broker,” “agent,” or a similar designation or term, a reference to the commission, or the person’s license number in an advertisement.

TREC’s Advertising Rules

Working closely with stakeholders and their representative professional association, the agency determined that the current advertising rule should be clarified to separate the requirements regarding names and their registration from the advertising requirements (§535.154 and §535.155).

TREC Rule §535.154 Registration and Use of Names

This rule defines alternate name, associated broker, assumed business name and team name. Each type of name must be registered with TREC before the name can be used in an advertisement. This is a change from the existing rule. The most significant change concerns team names. A team name is not an assumed business name of the broker, and cannot contain terms that imply that the team is offering brokerage services independent of the broker. Team names must end with the terms “team” or “group”.

TREC Rule §535.155 Advertisements

All license holders’ advertisements must include the license holder’s name or team name. It also must include the broker’s name in at least half the size of the largest contact information for any sales agent, associated broker, or team name contained in the advertisement.

Understanding that advertisements take many different forms today, the Commission revised the exception for social media to allow more flexibility. An advertisement on social media will comply with the rule as long as the license holder has linked to the required information in the account profile or the information is readily accessible by a direct link in the advertisement.

Subsection (d) – 20 instances of advertisements that may mislead the public

This subsection lays out 20 ways a license holder may violate statutory advertisement requirements. Most of these were in the existing rule too.  These examples are not the only ways a license holder’s advertisement can be misleading. Here are a few set out in the subsection:

1. Using a title, such as “owner”, “president”, “CEO”, “COO”, or another similar title, email or website address that implies a sales agent is responsible for the operation of a brokerage.
2. A team name with terms that imply the team is offering brokerage services independent from its sponsoring broker, including, but not limited to, “realty”, “brokerage”, “company”, and “associates”.
3. An ad that contains the name of a sales agent whose name is, in whole or in part, used in a broker’s name and that implies that the sales agent is responsible for the operation of the brokerage
4. Including the value of a property, unless it is based on an appraisal that is disclosed and readily available upon request by a party or it is given in compliance with § 535.17 (required disclaimer for estimated worth or sales price)

At a meeting on February 12, the Commission instructed agency staff to research and determine the steps necessary to remove the term “REALTY” from the list of terms that would imply a team is acting independently of a sponsoring broker and accept the term “REALTY” when used in a TEAM NAME.

The Gist

TREC knows there has been a lot of concerns and misinformation about advertising requirements. These new rules simplify requirements and ensure consumers know whom they are working with. We want to make sure we help you get into and stay in compliance with these new rules.

To read a presentation from TREC on this subject visit https://www.trec.texas.gov/sites /pdf/TREC-ADVERTISING-REQUIREMENTS-Presentation-For-Town-Hall.pdf.

For more information you can visit TREC’s website at https://www.trec.texas.gov/.