Texas Realtor Advertising Rules: What License Holders Must Know to Avoid the Bite of the TREC Watchdog
We work extensively with real estate brokers and agents in a wide variety of contexts, including real estate disputes, complaints to the Texas Real Estate Commission (TREC), broker commission disputes and arbitrations, regulatory compliance, and other matters.
In the course of our work, we see a lot of advertisements by real estate brokers and agents that do not comply with TREC’s detailed advertising guidelines. This is a brief review of some of the applicable advertising rules, to help you avoid the painful bite of the TREC watchdog. Feel free to contact this law firm if you need a consultation regarding advertising compliance or enforcement actions.
To begin, it is useful to understand TREC’s approach to advertising compliance. TREC does not have the personnel or resources to police all the websites, Facebook pages, signage, business cards, and other forms of advertising used by its licensees in Texas. As of December 2018, there were over 120,000 licensees in the Lone Star State—that is a lot of advertising territory to cover!
But you can raise the hackles of the TREC advertising watchdog in at least a couple of ways. First, any person can file a complaint with TREC targeting your advertising. Sadly, it is not uncommon for the complaining person to be another Realtor® using the rules as a weapon for competitive advantage or other improper purpose. Maybe he sees too many of your signs in his territory, and he wants to sic the dog on you. Complaining about signs and other advertisements is a really easy way to snap at the ankles of a competitor.
Second, you may find yourself the subject of a TREC complaint involving some other issue, and TREC—since it’s already got you in its cross-hairs—proceeds to “scrub” your website or other advertising for regulatory peccadillos. It is not unheard of for TREC to find that the subject matter of a complaint does not warrant discipline, only to fine the sales agent and broker for advertising missteps.
This may seem unfair, but from TREC’s perspective it generally can only “spot-check” advertising on an opportunistic basis; it does not have the wherewithal to review and approve all advertising across the state, or even to review proposed advertisements upon request (like the State Bar does for lawyers). Instead, it is primarily the duty of brokers and their sponsored agents to make sure advertisements comply with all the applicable rules of the road.
The threshold question to ask in an analysis of whether a communication with the public complies with the advertising rules, is: Is it an “advertisement”? Or more precisely, “Would TREC consider this an “advertisement”?
The Texas Real Estate License Act (TRELA) authorizes TREC to regulate advertising by license holders to the extent necessary “to prohibit false, misleading, or deceptive practices ….” TRELA § 1101.156(a). TRELA does not define what an “advertisement” is, so TREC has defined it broadly as:
“any form of communication by or on behalf of a license holder designed to attract the public to use real estate brokerage services and includes, but is not limited to, all publications, brochures, radio or television broadcasts, all electronic media including email, text messages, social media, the Internet, business stationery, business cards, displays, signs and billboards.” TREC Rule § 535.155(b).
Under this definition, “any form of communication” that is intended to “attract the public to use real estate brokerage services” qualifies as an advertisement subject to regulation by TREC. (However, the rule carves out two forms of communication that are excluded from the definition of “advertisement”: communications with a current client, and a “directional sign that may also contain only the broker’s name or logo.”) Thus, a wrapped vehicle touting the services of a real estate agent is an advertisement. So is a Realtor’s® Facebook or Instagram page that contains any content that would tend to “attract the public” to use the real estate services of a particular broker or agent. Promotional emails and flyers distributed to potential clients are obviously advertisements.
In most cases, it is clear enough whether a communication is an “advertisement.” But there are grey areas. One of these arises in connection with Facebook and similar social media platforms. A page that a Realtor® intends to be purely private and non-commercial can be inadvertently converted into a regulated advertisement based on postings that promote the page owner as a real estate professional who is open for business, or that publish the page owner’s listings.
The best practice is to maintain separate business and personal pages. Do all the advertising you want on your business page—just make sure it complies with the advertising rules (for example, pin your Information About Brokerage Services and Consumer Notice as a favorite image – see this TREC guidance. Keep your personal page strictly personal; do not post business solicitations or listings on it. It’s probably fine to identify yourself on your personal page as a Realtor®, name the broker who sponsors you, and link to your business page or website, but otherwise do not post any content that is designed or intended to “attract the public” to your professional services. If you are not sure how to ensure your social media pages do not violate the advertising rules, seek guidance from the TREC website and/or consult with an attorney who is familiar with the rules.
The first rule that applies to advertisements is that an ad must contain “the name of the license holder or team placing the advertisement; and 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.” TREC Rule § 535.155(a).
I see a lot of sales agent and team websites that fail to clearly identify the broker who sponsors the agent or team. This drives TREC crazy! Brokers have administrative legal duties to be responsible for the conduct of their agents. They also have to meet heightened educational requirements, including broker responsibility training. Texas real estate brokers do not have to be sponsored to practice their profession; if they have a broker’s license, they can hang a shingle and provide brokerage services all by themselves, without supervision by another license holder.
On the other hand, sales agents cannot provide brokerage services on their own. An agent’s license has to be sponsored by a broker. The broker is generally responsible, at least for administrative purposes, for any brokerage-related problems that might arise involving the sales agents it sponsors. TREC looks to brokers to help it regulate and police the conduct of sales agents.
For these reasons, TREC considers it very problematic if an advertisement fails to make clear that the Realtor® is a sales agent, rather than a broker, or fails to indicate that an advertised team is not a broker. In TREC’s view, a sales agent’s advertisement must conspicuously identify the broker responsible for the sales agent’s or team’s work, so that the consumer knows who to contact if there is a problem.
The broker must be identified in a type-size of at least half the size of the largest contact information in the ad. If there is an oversized phone number in 24-point font, the broker information will have to be at least 12-point in size. When in doubt, pull out a ruler and make sure the broker identification is not too small. Much better to make the broker information larger than required, rather than smaller than required.
Note that you are not required to identify yourself in an advertisement as a broker, sales agent, or associate broker, or to state your license number. The Texas Legislature passed a law in 2017 that prohibits TREC from requiring this information. TRELA § 1101.156(b)(5). But identifying yourself explicitly as a broker, sales, agent, or broker associate can be helpful, to the extent it avoids any ambiguity about the nature of your license and whether you are in charge of the brokerage.
Finally, the advertisement must identify the name of the license holder or team who is responsible for the advertisement. This name must comply with TREC’s naming restrictions. TREC regulates names in advertising in order to make sure that consumers are not misled as to who is responsible for a brokerage, and do not have difficulty searching for licensees on the TREC website. Here are the main name restrictions:
- A sales agent cannot use a title that suggests they are in charge of a brokerage, such as “president,” “CEO,” or “owner.” § 535.155(d)(4).
- A license holder must use the name shown on their TREC license, or an alternate name registered with TREC. § 535.155(d)(6). (Common derivations of names, like “Bill” for “William,” are not regulated by TREC. But other variations from the name appearing on the license, including nicknames, middle names, and married names, must be registered with TREC as alternative names).
- A license holder may use an assumed name or DBA (doing business as) name in an advertisement, as long as the name is registered with TREC and otherwise complies with the name rules. § 535.155(b)(3)(C).
- A sales agent cannot include his or her name in the name of a brokerage, because it implies to consumers that the sales agent is responsible for the brokerage. § 535.155(d)(7).
- If the advertisement includes the name, likeness, or photo of an employee or other person who is not a license holder, such as an unlicensed assistant, it must make clear the person is not licensed to provide brokerage services. § 535.155(d)(8)-(9).
- A team name cannot contain terms such as “brokerage,” “company,” or “associates,” which TREC believes imply that the team is providing services independently of its sponsoring broker. § 535.155(d)(5).
- A team name must end in “Team” or “Group,” in order to signal that it is a team rather than a brokerage. § 535.154(c)(2). (A team name may include the phrase “Real Estate,” but not “Real Estate Company.”)
To summarize, in reviewing your communications to the public for compliance with TREC’s rules, first determine whether it’s an advertisement. A personal Facebook page that does not solicit business, attract the public to your services, or contain listings is probably not an advertisement, and beyond TREC’s purview. Communications with existing clients are not advertisements; nor are communications with other license holders about transactions.
If a communication is an advertisement, make sure the broker is clearly identified, that the entity names used comply with the rules, that none of the prohibited words are used to refer to sales agents or teams, and that all names, alternate names, and assumed names (DBAs) are registered with TREC. If in doubt, consult with your broker and/or an attorney. A little effort on the front end can head off a scary and possibly expensive tussle with the TREC watchdog later on.
