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Advertising

Topics:

The Basic Rules
Blind Ads
Disclosing Financing Terms in Advertisements
Offering Gifts Rebates, or Other Inducements
Internet Advertising
Broker Responsibility for Advertising

(Clicking on one of the links above will take you directly to that specific topic.)

"I can't live with it!" said the licensee about his competitor's advertising. "I can't live without it!" said the licensee about his own advertising.

For most licensees the only thing worse than an advertisement which violates the law is a competitor's advertisement that make the licensee feel that he or she must match it in order to be competitive. The most frequent complaints that the Commission receives about advertising involve 'blind ads," advertisements that fail to fully disclose financial terms, and advertisements that offer prizes or rebates to prospects.

The Basic Rules

In 2004, the Commission identified a need to revisit its rules on advertising (see Substantive Regulations 520-1-.09 and 520-1-.11). To varying degrees changing needs of consumers, new forms of advertising, new business practices and entities, and new statutes had made at least parts of the Agency's advertising rules obsolete. In addition to those considerations, the Commission had to ensure that any advertising rule was consistent with the provision of the license law that prohibits licensees from intentionally advertising in a misleading or inaccurate manner or in any way misrepresenting any property, terms, values, policies, or services of the business conducted. The Commission also sought to identify “safe harbors” for licensees seeking to comply with the Rules.

Before acting in this area, the Commission obtained input from the affected industry. The Georgia and Atlanta Apartment Owners and Managers Association, the Building Owners and Managers Association, the Community Associations Institute, the Empire Real Estate Board, the Georgia Association of Realtors, and the Georgia Real Estate Educators Association examined the Commission's rules on advertising and made recommendations to the Commission.

After publishing a proposed rule in July, the Commission received comments from over fifty licensees and others. The Commission made a number of changes to its proposed rule based on those comments. In September of 2004, the Commission adopted new rules to be effective January 1, 2005.

The major new provisions include:

Clarified the media to which advertising rules apply.

Rule 520-1-.09 (1) Media. This rule regulates advertising whether done personally by a licensee or through any media. The term “media” includes, but is not limited to, print, photographic, broadcast, and computer media including, but not limited to, such examples as newspapers, magazines, flyers, posters, business cards, billboards, radio, television, signs (including, but not limited to, office, directional, for sale, for lease, sold, or vehicle signs) , newsletters, and the Internet.

[Editor's Note: (New language is underscored. Deleted language is struck through . Unchanged language is not marked.)

Required that when licensees advertise a specific property or properties for sale, for rent, or for exchange, the name of the licensed firm offering the property must appear in equal or greater size, prominence, and frequency than the name or names of any affiliated licensees or groups of licensees.

Rule 520-1-.09 (7) Firm Names and Telephone Numbers in Advertising. In advertising a specific property or specific properties for sale, for rent, or for exchange in any media:

(a) all firms must include in the advertisement a name of the firm that is registered with the Commission and a telephone number for the firm, except when complying with lawful restrictions (such as covenants or local governmental ordinances) that forbid the use of the firm's name on a particular type of sign;

(b) the name of the licensed firm offering the property for sale, for rent, or for exchange shall appear in equal or greater size, prominence, and frequency than the name or names of any affiliated licensee or groups of licensees;

(c) the firm's telephone number shall appear in equal or greater size, prominence, and frequency than the telephone number of any affiliated licensee or groups of licensees, and it must be a number at which the public can reach the broker or a manager without going through the affiliated licensee(s) listed in the advertisement;

(d) whether contained in a logo or standing alone, the name of the firm as registered with the Commission must be in equal or greater size, prominence, and frequency than the name of any affiliated licensee or group of licensees; and

(e) a block advertisement in any print media that advertises various listings of a brokerage firm and includes the name of the listing agent next to each listing shall be in compliance with this rule if the name of the brokerage firm appears only once at the top of the advertisement in equal or greater prominence and print size than any of the listing agent's names. The firm's name may be located in other positions in such block advertisements if the firm name appears clearly larger and more prominently than the name of any other licensee in the advertisement.

Note: The broker may always impose more stringent requirements as company policy.

The Commission decided to require the firm's name and telephone number for a variety of reasons including, but not limited to, the following. First, since the firm is the legally responsible party, the public should know the legally responsible party with whom it is doing business. Second, including both the firm's name and telephone number as well as the individual agent's name and telephone number on the sign gives the public both the initial contact person to call and an alternative if that person is not available. Both the seller and the prospective purchaser would therefore have better opportunities for quicker service. Third, customers dissatisfied with the individual agent's service can more easily contact the broker.

Deleted the requirement that franchisees include on signs that each franchisee office is independently owned and operated.

Rule 520-1-.09 (6) (b) Any firm using a trade name, the use of which requires obtaining permission from another who has an existing and continuing right in that trade name by virtue of any state or federal law, in advertising other than of specific properties for sale or advertising of specific properties for sale jointly with other firms under a trade name shall cause the following legend to appear in a manner reasonably calculated to attract the attention of the public: “Each (Actual Trade Name) office is independently owned and operated.”

Required a franchise firm to register its name with the Commission so that it includes both the franchise trade name and the name of the franchisee.

Rules 520-1-.04 (e) & 520-1-.09 (6) (e) The trade name of any franchisee applying for licensure as a broker shall include the franchise name in a manner reasonably calculated to discern it from any other firm registered with the Commission by including both the franchise name and either:
said firm's name as it appears on its corporate charter, partnership agreement, or certificate of authority to transact business in Georgia; or
said firm's trade name, unique from the franchise name, as registered with each county in which it is doing business.

Deleted the provision requiring written permissions to advertise must have a definite date of expiration (this change did not eliminate the requirement that brokerage engagements have a definite date of expiration).

Rule 520-1-.09 (3) Written Permission to Advertise. A licensee shall not advertise any property for sale, rent, lease, or exchange unless the licensee has first secured the written permission of the owner or the owner's authorized agent and said permission has a definite date of expiration. Where such permission is granted, a licensee advertising property that is listed with another licensee shall clearly and conspicuously disclose that fact and the name of the listing licensee unless the listing licensee has expressly agreed to waive those clear and conspicuous disclosures.

Required license numbers in offers and brokerage engagements. (License numbers are not required in advertisements, but they are not prohibited.)

Rule 520-1-.10 (1.1) License Numbers in Offers and Brokerage Engagements. A licensee preparing or signing a brokerage engagement or an offer to purchase, sell, lease, or exchange real property shall include the license number issued by the Commission of each firm and of each licensee participating in the transaction. The license number shall include both the single alphabetic letter and the six digit number issued by the Commission (for example, for Firms H000001, for brokers B000002, for associate brokers A000003, or for salespersons S000004).

Gave licensees advertising real property they own an additional option for disclosing to the public their licensed status in advertisements.

Rule 520-1-.11 (3) (a) (2.) [R]egardless of whether the licensee's license is affiliated with a broker or on inactive status, any advertisement must include either the legend “(seller, buyer, landlord, tenant – select the appropriate name) holds a real estate license;or the legend “Georgia Real Estate License # (insert licensee's six digit numeric number with its preceding alphabetical designation; for example, S000001).” “Georgia Real Estate License” may be abbreviated to “GA R. E. Lic.”

The information contained in this article is believed to be current and accurate. The GREC staff reviews the contents periodically and updates it when appropriate. If you have questions or comments about this article, you may contact us at grecmail@grec.state.ga.us . Last reviewed August, 2006.

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Blind Ads

Generally, the Commission has its clearest authority to regulate the first of these types of advertisements, "blind ads." A "blind ad" is one in which a licensee does not make clear that a real estate firm is acting for the owner. Many "blind ads" are unintentional. The printer prints the advertisement and telephone number and inadvertently omits the brokerage firm name. Thus, when a licensee suspects that an advertisement is a "blind ad," he or she should consider contacting the firm running it in order to call attention to the fact that the name of the firm does not appear in the advertisement. (Addresses and phone numbers are optional.) If the firm does not correct the advertisement promptly, the licensee may want to request that the Commission investigate the matter and take appropriate disciplinary action.

The information contained in this article is believed to be current and accurate. The GREC staff reviews the contents periodically and updates it when appropriate. If you have questions or comments about this article, you may contact us at grecmail@grec.state.ga.us . Last reviewed August, 2006.


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Disclosing Financing Terms in Advertisements

The second type of problem advertisements more likely violate federal law than the license law. Those are advertisements which cite financial terms but only make partial disclosures. For example, an advertisement that describes the amenities of property and asserts "only 5% down" or "no closing costs." Federal Truth and Lending laws require that advertisements which include such specific statements about financing terms must include all of the financing terms including the annual percentage rate. Advertisements may include general statements about financing such as "low down payment" or "loan assumption possible." However, the Commission does not regulate such advertisements. That regulation is by the Federal Trade Commission. Licensee's can find a discussion of that law's requirements in the Georgia Brokers Manual elsewhere on this web site.

The information contained in this article is believed to be current and accurate. The GREC staff reviews the contents periodically and updates it when appropriate. If you have questions or comments about this article, you may contact us at grecmail@grec.state.ga.us . Last reviewed August, 2006.


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Offering Gifts, Rebates or Other Inducements

The third type of problem advertisements probably provokes the most calls and complaints to the Commission. Those are advertisements that promise a rebate or a gift to a prospective customer or client. In the 1970s the Commission had rules which prohibited advertisements which offered prizes, gifts, or rebates to prospects. Federal and state court rulings in the early 1980s overturned such rules. In rejecting such rules, the courts held that the first amendment to the Constitution protects what they termed "commercial free speech." Therefore, most advertisements which promise gifts, prizes, or other compensation to prospects or clients are acceptable as long as they are not misleading or inaccurate in any material fact and the licensee provides the item as promised. While giving gifts or other compensation directly to clients, customers, or prospective clients or customers is permissible, offering anything of value to unlicensed persons for providing leads to prospective clients or customers is not. (For additional information, please refer to, " SOLICITING PROSPECTS AND PAYING REFERRAL FEES .")

The information contained in this article is believed to be current and accurate. The GREC staff reviews the contents periodically and updates it when appropriate. If you have questions or comments about this article, you may contact us at grecmail@grec.state.ga.us . Last reviewed August, 2006.

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Internet Advertising

The Internet has become the new wave in real estate advertising. It has many attractive features for real estate advertising, not the least of which are lower costs than traditional advertising and an audience with generally higher incomes. It offers licensees the opportunity to control directly both the content and the visual impact of their advertising and to update it instantly.

Yet with all those attractive features, advertising on the Internet has its pitfalls. There are several key issues that licensees using the Internet should remember. All of the advertising laws and rules of the license law that apply to other advertising media apply to the Internet.

The Internet provides almost unlimited opportunities for licensees to describe their services. However, that unlimited opportunity also provides unlimited opportunity for error. Thus, all Internet advertising probably requires even more careful review by the broker than traditional forms of advertising. Yet, licensees who follow the old guidelines cited above should be able to ride the new wave safely to shore.

The information contained in this article is believed to be current and accurate. The GREC staff reviews the contents periodically and updates it when appropriate. If you have questions or comments about this article, you may contact us at grecmail@grec.state.ga.us . Last reviewed August, 2006.


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Broker Responsibility for Advertising

The real estate brokerage firm always bears the responsibility for an advertisement's compliance with the license law regardless of whether firm or one of its affiliated licensees places the advertisement. Some licensees want to believe that the person who pays for an advertisement bears the responsibility. That is not the case.

If an affiliated licensee pays for an advertisement that violates the law, the Commission may impose a disciplinary action on both the licenses of that affiliated licensee and the licensee's firm. Similarly, if the owner of a property pays for an advertisement that violates the license law, the Commission may impose a disciplinary action on the listing firm if it did not act to prevent or halt such advertisement in a timely manner. Thus, the firm must have someone designated to review all advertisements before they appear in any media.

"The Most Effective Advertising Arises From Careful Planning."

Any licensee or any size brokerage firm has only limited funds for advertising. In order to maximize the benefit from advertising dollars, each licensee and every firm must plan for advertising carefully in order to assure effective advertising.

The license law's provisions on advertising reflect both the need for that cost consciousness and the need to protect the public from misrepresentations of material facts. The central idea underlying the license law is that a broker is responsible for the acts of his or her sales associates.

Accordingly, the law makes the broker or qualifying broker of a firm responsible for establishing, implementing, and continuing procedures for reviewing all advertising by the firm and its affiliated licensees in order to assure compliance with the license law and other statutes. That requirement gives the broker the opportunity not only to assure that licensees comply with laws regulating advertising, but to assure that all advertising by the firm and its licensees is consistent with company policy in terms of content, market focus, and cost.

To accomplish that goal, the broker (or the broker's designee) should review each advertisement prepared for the firm by licensees or by professionals. At a minimum, that review should seek to determine that all advertising:

  1. is consistent with company policy or content. For example, company policy may prohibit inclusion of financing terms in any advertisement but permit discussion of amenities and price;
  2. properly addresses the focus market. For example, an advertisement on a property in county A might not reach the desired audience if it is run in a local newspaper in county B;
  3. does not lead the public to believe that it is being made by a private party not licensed by the Commission. Thus, at a minimum, advertisements must include the firm's name as registered with the Commission and a phone number at which a caller can reach the firm's management without going through the licensee;
  4. complies with the requirements of the fair housing laws and Georgia's Fair Business Practices Act;
  5. does not misrepresent any material facts about the property advertised. For example, statements about zoning must be accurate;
  6. does not misrepresent any terms, values, policies, or services of the firm's business;
  7. is consistent with the trade name and franchise name requirements in Rule 520-1-.09 if the firm operates under a franchise name.

The public will accept (and perhaps even expects) a certain level of exaggeration in advertising. They do not accept misrepresentations and inaccuracies. Thus, a program of advertising consistent with the law is really a prescription for effective advertising.

The Commission has very limited authority to regulate advertising. In addition, it faces substantial evidentiary problems in proving a misrepresentation in advertising. Nevertheless, the Commission can and does seek to discipline licensees whose advertisements include misrepresentations of material facts. Neither the public nor other licensees should have to live with that kind of advertising.

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The information contained in this article is believed to be current and accurate. The GREC staff reviews the contents periodically and updates it when appropriate. If you have questions or comments about this article, you may contact us at grecmail@grec.state.ga.us . Last reviewed August, 2006.