Real Estate Unit 8
Compensation- Proper Procedure:
1)Client pays broker 2)Broker pays cooperating or referring broker (confirm license status if out of state) 3)Sponsoring broker pays his or her agent
Advertising by salesperson or associate broker
A group or team name may be used in an advertisement only with the approval of the sponsoring broker. Any person listed as a group or team member in the advertisement must be a licensee sponsored by the sponsoring broker. [§2501 (E)] The sponsoring broker must approve of the mention of any group or team in an advertisement, and licensees named as belonging to a group or team must be sponsored by that broker.
Broker supervision of advertising:
A licensed individual broker or qualifying broker must directly supervise any advertising of property or services for which that broker is responsible.
Date of advertisement of residential property
All printed advertisements for the sale or lease of residential real estate shall indicate the month and year the advertisement is printed, published, or distributed. Advertisements printed or published in newspapers, real estate trade publications and commercial magazines and brochures bearing an issue or publication date will be considered in compliance with this Section
Internet advertising by brokers
A real estate broker advertising or marketing on a site on the Internet must include the following data on each page of the site on which the advertisement appears: 1. The broker's name or trade name as registered with the Commission. 2. The city and state in which the broker's main office is located. 3. The regulatory jurisdiction(s) in which the broker holds a real estate brokerage license. [§2515 (A)] The brokerage firm's name must appear on the first and subsequent pages of the Website where ads appear. The name listed on each page of the Website must be exactly the same as that registered with the Louisiana Real Estate Commission.
What is the cardinal rule pertaining to licensees who want to advertise their own property to sell or rent or advertise their wish to buy or rent property?
If a licensee offers property in which he or she has as little as a 1% ownership interest without listing the property with a real estate brokerage firm, the licensee must place a sign on the property or ad that says "Licensed Real Estate Agent." The same words must appear on an ad notifying the public of the licensee's wish to buy or rent property.
Why do you think there is such emphasis on the visibility of trade names, registered company names, and sponsoring brokers' names in the laws about advertising?
This emphasis is there to make certain that an identifiable entity is responsible for the advertising's facts and claims.
The time for providing and explaining the Agency Disclosure document to all real estate consumers, other than when performing ministerial acts, is
at the first substantive contact
Thus a proper email introduction or signature would look like:
"Smith Realty, LLC, Baton Rouge, Louisiana. Licensed by the Louisiana Real Estate Commission."
Licensee as principal;
Any licensee who is a principal (buyer/seller or landlord/tenant) in a real estate transaction must disclose his or her true position in writing prior to entering into a contract.
Is Out-of-state broker cooperation legal in the state of Louisiana?
Cooperating with an out-of-state broker is allowed as long as all Louisiana laws, rules, and regulations are followed.
When does advertising's praise of a property become illegally misleading?
Exaggeration crosses the line into violation when it contains seemingly factual statements that are false.
Concurrent licenses and registrations
If a licensed real estate agent chooses to sell timeshares, he or she may do so without registering as a timeshare registrant with the LREC. Further, the LREC will not issue a real estate license and a time share registration to the same individual at the same time. Also, a single broker is not allowed to act as an individual broker and an associate broker at the same time.
Date of advertisement of residential property continued
If the advertisement is included in a newspaper, real estate "for sale" book, trade publication, or commercial magazine, no inclusion of month and year is required because these publications have dates on them which will be sufficient to comply with this regulation.
Trade names
In any advertisement under a trade name, the trade name must be clearly identifiable and distinguishable from that of other real estate brokers or brokerage firms.
"OPM"
Other People's Money
Referral fees are sometimes the backbone of a brokerage firm's business. The law specifies how these fees may be paid by the receiving company to the company sending business their way. It unlawful for a referring company to attempt to collect a fee for a referral unless the referring company has reasonable cause.
The client being referred must be new to the brokerage receiving the referral. The referring and receiving company must have a signed contract stating the relationship and the expected referral fee. The referral must be made BEFORE the client enters into a contract with the receiving brokerage firm.
What requirements do a licensee and the sponsoring broker have to meet for that licensee to be considered an independent contractor as far as the IRS is concerned?
The licensee must have a current real estate license, earn 90% of his or her money from the brokerage for production in the form of commissions rather than in the form of wages or salary. And said licensee must have a written agreement from the employing brokerage that it will not treat him or her as an employee for tax purposes.
Licensed business names
The only name a brokerage firm is authorized to use when advertising is the name on record at the Louisiana Real Estate Commission: if it is a trade name, the name must also be registered with the Secretary of State.
The required language on all written contracts on residential property in the state of Louisiana
The required language is included in the mandatory residential purchase agreement. Licensees are reminded to remember to include this language in commercial, raw land, or lease agreements. No further disclosure or information about the presence of offenders is required.
Describe the rules about advertising as a real estate team or individual.
The sponsoring broker's permission is needed to form a sales team and advertise as one with a particular name and slogan, as well as to advertise as an individual with personal logo and contact information. All members of a sales team must be licensees of the sponsoring broker giving approval to the ad. In all ads, the sponsoring broker's name and phone number must be "conspicuous, discernible and easily identifiable by the public."
Authorization to advertise
Written authorization to advertise real property for sale or rent must be acquired from the property owners prior to advertising in any way, shape, or form. Such written authority must be granted by ALL the owners or their authorized attorneys.
Licensees sometimes fall into the trap of being overzealous and attempting to paint a rosier picture than actually exists in order to attract a potential buyer. This overzealousness could end up as _________ by the licensee.
misrepresentation
The "Megan's Law"
required verbiage on all written contracts on residential property in the state of Louisiana
The required language is included in the _______
the mandatory residential purchase agreement
Louisiana law closely follows Internal Revenue Service guidelines for the treatment of licensees as independent contractors, which are:
§ Licensee must have a current real estate license. § At least 90% of the licensee's income must be based on production and not the number of hours worked. § Licensee must have a written contract with the broker stating that the salesperson will not be treated as an employee for federal tax purposes.
In a nutshell, a broker can pay commissions to:
· His or her sponsored licensees · Other brokers on a co-op or referral basis · His or her ex-licensees, as long as they are not currently in real estate and the real estate business for which they are being paid occurred while their license was current.
What can you say about the term "puffing" and when might it come up?
"Puffing" is merely mild exaggeration of the information. It is something like saying, "This property has the most gorgeous back yard in the world." People generally know that there is probably a castle or estate somewhere with a more beautiful yard. This rarely constitutes a negative experience for any of the parties.
What does substantive mean
"Substantive" means that the customer might disclose information that could be harmful to that person's interest in a transaction.
The advertisement satisfies the requirement to identify the licensee's status if it includes the words
"licensed real estate agent."
Should the consumer elect not to sign the Agency Disclosure document or acknowledgement of receipt, the licensee has to document the refusal, noting:
-the type of real estate transaction involved -the date and time the form was provided -the reason (if given) why the consumer refused to sign. *The licensee, not his or her broker, is required to keep a copy of the document for five years
What are some key rules about paying referral fees?
A broker can only pay a referral fee to someone with a real estate license. The recipient must receive any referral fee through his or her sponsoring broker. The client being referred must be new to the brokerage receiving the referral. The referring and receiving company must have a signed contract stating the relationship and the expected referral fee. And the referral must be made BEFORE the client enters into a contract with the receiving brokerage firm. Finally, there is no minimum or maximum referral fee. All such fees are negotiable.
Termination of relationship
A licensee whose business relationship with a sponsoring broker has been terminated for any reason shall immediately relinquish all business related property to the sponsoring broker, including: 1. the keys to any and all properties listed with the broker; 2. any documents that in any way pertain to real estate transactions wherein a broker or licensees sponsored by the broker has appeared in a licensing capacity. This does not preclude the licensee from retaining copies of such documents.
What are the rules about "psychologically impacted properties" and the reasons for these rules?
Agents for sellers of properties where bad things have happened, such as suicides, murders, or occupation by people with dread diseases like AIDS are not required by law to reveal these events to prospective buyers. Neither are they required to reveal that sexual predators live in the neighborhood, only to alert prospective buyers that they have access to a state database that gives the addresses of such predators. Making such information public would scare off buyers and make it impossible to sell such properties.
What must be disclosed regarding agency, dual agency, and licensee as principal?
All licensees acting as either the buyer's agent or the seller's or both must reveal this to all parties involved in a purchase or rental transaction. An agent who is also a principal in any purchase, sale or rental transaction must make this clear to the public. In other words, if a licensee is trying to sell or lease a property he or she owns or is trying to buy or rent a property for himself, that licensee must make it clear from the get-go that he or she is a licensed real estate agent.
Property condition
All sellers of residential real estate (single family, duplex, triplex or four-plex) must complete a property disclosure form developed by the Louisiana Real Estate Commission and provide the form to the buyer. This requirement exists no matter whether the seller is working with a real estate licensee or has chosen to market a property as "for sale by owner."
Franchise advertisement
Any licensed broker or salesperson affiliated with a franchise organization must disclose to the public that the real estate brokerage firm is independently owned and operated in all advertising. [§2509 (A)] The phrase "Independently owned and operated" or similar phrase must be included in advertising. This includes yard signs, business cards, property brochures, newspaper ads: in short, ALL forms of advertising.
Only one sponsor
Associate brokers and salespersons shall not be sponsored by more than one sponsoring broker. An associate broker or salesperson is only allowed to be sponsored by one broker at a time. In other words, one cannot be licensed under Broker "A" in Shreveport and Broker "B" in New Orleans. That does not mean that the associate broker or salesperson cannot conduct real estate business in both those cities. Once a Louisiana real estate license is issued, the licensee is licensed to conduct real estate business anywhere in the state, but must work for only one broker at one time.
Licensee ownership interest
If a licensee offers property in which he or she has any interest without listing the property with a real estate brokerage firm, the licensee must place a sign on the property that says "Licensed Real Estate Agent."
What is a A "cross/co-op" sale
A "cross/co-op" sale is one in which one brokerage firm has the property listed for sale and another brokerage firm finds the buyer for the property.
What are the rules about concurrent, multiple positions as qualifying broker and associate broker?
An associate broker can be the qualifying broker for multiple companies at the same time, but cannot be sponsored by multiple sponsoring brokers at the same time. A licensee must work under just one sponsoring broker at any given time.
What is the advertising rule for brokers, salespersons, or brokerages that are affiliated with a franchise organization?
Any licensed broker or salesperson affiliated with a franchise organization must disclose to the public in all advertising that the real estate brokerage firm is independently owned and operated in all advertising. Ads must contain the words "Independently owned and operated."
List the information that must appear on any internet advertising, taking care to differentiate what is required for brokers versus nonbroker licensees and website versus non-website ads.
Internet ads must display the name of the sponsoring broker or brokerage as registered with the LREC, the city and state of the broker's main office, and the regulatory jurisdiction. Licensees' ads must also display their name as registered with the LREC. In website ads, this information must appear on each and every page. In non-website ads, it need only appear on the first and last.
Licensees are reminded to remember to include this language in______________
Licensees are reminded to remember to include this language in commercial, raw land, or lease agreements.
Explain what items must be returned to the sponsoring broker by the sponsored licensee in the case of terminated sponsorship. Why can't such departing licensees take their business with them? What must the sponsoring broker return to the LREC?
Licensees who leave their sponsoring brokers must return all items related to the ongoing business they were doing for the broker, including keys to properties, sales contracts, and listing agreements. They can't keep working on these properties because the business, by law, belongs to the sponsoring broker. The sponsoring broker must return the departing licensee's real estate license to the LREC.
When might an advertisement not be in compliance?
Property flyers or brochures are instances where the agent may forget to add the month and year the publication was printed, published, or distributed. OR Another area where licensees sometimes fail to meet this requirement is when they send out "just listed" or "just sold" cards to neighbors near the subject property and include an advertisement that should have a date.
Compensation "old broker" vs. "new broker"
The "old" broker is allowed to pay a commission to his or her previous agent for business conducted during the agent's tenure at the broker's company. Such compensation must be made through the previous agent's "new" broker. Agent Alice is now working for a new broker, Broker Bennett. Old broker Bill is allowed to pay the fee earned by Alice, but he must give the commission to new broker Bennett, who in turn pays the commission to Alice.
When cooperating with an out-of-state broker, who is responsible for taking charge and attending to all real estate duties?
The Louisiana Broker The sale, exchange, purchase, rental, leasing, or management of Louisiana real property shall be handled under the direct supervision and control of the Louisiana broker who shall take full responsibility for all actions of the out-of-state broker.
"Psychologically impacted"
describes a property on which certain unpleasant events have occurred or been alleged to have occurred. Such events are NOT considered to be material facts that need to be disclosed. ex:If a residence was occupied by a person with AIDS, HIV, or similar disease, that information does not have to be disclosed. In fact, since these issues deal with people who fall under "handicap" status under Federal Fair Housing laws, their occupancy cannot be disclosed. The fact that the property was the scene of a crime or an unnatural death likewise does not have to be disclosed.
License law dictates that the licensee sponsored by the broker is an independent contractor if:
§ The agent has a current Louisiana real estate license. § The agent's compensation is based on production rather than the number of hours worked. In other words, the agent's compensation is commission, not salary. § There is a written, signed independent contractor's agreement between the broker and the agent specifically stating that the agent will not be treated as an employee.
What must be disclosed about mold and other defects in a property for sale?
Regarding mold, the sellers' agents have to do no more than give the prospective buyer the EPA pamphlet on mold, if they choose to. As for other defects, it is up to the seller to disclose them on the property condition form, and up to the seller's agent to get this form to the buyer. In addition, the agent should disclose defects he or she knows about to the buyer, even if the seller did not disclose them on the form.
What are the key features of the rules allowing but constraining cooperation between a Louisiana licensee and an out-of-state licensee?
The Louisiana broker must take complete responsibility for the out-of-state broker. All advertisements must contain the names of both brokers. All "OPM" (Other People's Money) must be maintained in the Louisiana Broker's escrow account unless special arrangements are made which conform to Louisiana laws, rules, and regulations. Copies of the agreement between the Louisiana broker and the out-of-state broker must be on file at the Louisiana Real Estate Commission prior to advertising or offering property in any way. A separate agreement must be signed for each separate transaction. The agreement must state that both brokers will sign all written reports and that all Louisiana laws, rules, and regulations will be complied with. All earned fees are to be received by the Louisiana broker, who in turn pays the out-of-state broker. Commissions are to be negotiated between the two brokers and agreed to in writing.
Agency relations
The Louisiana licensee must provide an agency disclosure document to everyone with whom he or she comes into contact relating to real estate services.
EPA
The United States Environmental Protection Agency (EPA)
Disclosures: mold
The United States Environmental Protection Agency (EPA) shall be the official source of any mold informational pamphlet approved by the Louisiana Real Estate Commission
