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LEGAL HOTLINE Q & A Susan L. Dioury, JD Senior Vice President, Risk Management Legal Counsel sdioury@mnrealtor.com Q Can A Agents an agent who is also an attorney put “attorney at law” on his or her business card? should always discuss advertising decisions with their brokers; however, there is no law or Code of Ethics provision that would prohibit placing additional licenses or qualifications on a business card, so long as they are true. Jonathan C. Kopecky, JD Associate Legal Counsel jkopecky@mnrealtor.com Anne V. Kealing, JD Associate Legal Counsel akealing@mnrealtor.com Ryan E. Hamilton, JD Associate Legal Counsel rhamilton@mnrealtor.com Q Can A Technically, REALTORS® advertise their commission rates publicly? real estate licensees are not prohibited from advertising their commission rates or structure in a truthful manner. (See MN Statute 82.81, Subd. 12(8) for more information on prohibited actions.) Article 12 of the Code of Ethics also allows such advertising, so long as anything presented shows a true picture — the REALTOR® cannot advertise in such a way that leads consumers to believe they will receive a certain rate when they may not receive that rate (e.g., bait and switch). Nevertheless, if a REALTOR® chooses to use this technique, he or she should know that there is a history of anti-trust litigation with the U.S. Department of Justice surrounding price-fixing of commission rates among brokers. Make sure that your brokerage establishes fees unilaterally continued on next page Minnesota REALTORS® — Supporting YOUR Success
continued from previous page Q Is A A without consultation or discussion with persons affiliated with other competing brokerages. it permissible to advertise a “pocket listing” to other agents in the same brokerage (or only to certain agents in the marketplace, whether at the same brokerage or not) when the property is not visible to all REALTORS®? property may be advertised for sale only after a real estate licensee has obtained written authorization to do so from the owner or another person authorized to offer the property for sale or lease. MN Statute 82.66 provides the required contents of any listing contract. The decision to advertise a listing internally, or to a limited group of people, should not be the decision of the agent; rather, it should be the decision of the owner. The agent should discuss the potential advantages and drawbacks with the owner prior to a decision being made. For instance, if a brokerage is offering a reduced commission rate if another agent of the same brokerage is the buyer’s agent or facilitator, the owner may want to attempt an “in-house” sale to avoid paying a higher commission rate. The owner might also wish to avoid broad advertising to preserve privacy or avoid inconvenience. However, limiting the market of potential buyers could also reduce the competition, and thus, the sale price of the property. Ultimately, if the owner determines that this is the route he or she wishes to take, the agent will want to document this decision in writing (and may be required to provide such a writing to the Multiple Listing Service). Furthermore, any attempt a REALTOR® makes to persuade a client to withhold from listing the property on the MLS or broadly advertising it to the general public, may raise questions as to their reasons and ultimately be a potential violation of Article 1 of the Code of Ethics, as the REALTOR® may be seen as acting in his or her own best interest rather than the client’s. Because REALTORS® are required to cooperate with other brokers, except when such cooperation is not in the best interest of their clients under Article 3 of the Code of Ethics, it could also be a potential violation of Article 3. Finally, such a listing could potentially raise issues with respect to the Fair Housing Act, as certain groups of clients that may be unserved or underserved within the group of REALTORS® to whom the property is marketed. (Note that if the property is marketed only to certain agents at competing brokerages who agree to share their pocket listing with each other and no one else, this could also become an antitrust problem.) NOTICE: Real Estate Brokers and Salespersons are invited to submit questions to the Minnesota REALTORS ® that they would like answered in the Legal Hotline Column. You can email requests to Heather Zebott at hzebott@mnrealtor.com. Please indicate that your question is for the Legal Hotline Column. Questions submitted will NOT be directly answered. <strong>REsource</strong>: August, 2016 13
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