UPDATE: This information has been updated on a new blog post here.
The formation of teams within a real estate brokerage has become increasingly popular in the last decade. As you might guess, a team is a group of two or more people working together for a common purpose. Within real estate brokerages in Florida, team structures are easy to form because it’s not covered anywhere in the law.
Big News. In a workshop meeting held by the Florida Real Estate Commission (FREC) on June 14th 2016, the issue of team advertising was discussed in-depth. FREC has a clear mission to introduce legislation to change Florida Statutes 475 and possibly the rules contained in Chapter 61J2 of the Florida Administrative Code. The commission expressed that this issue has gone unchecked for too long and something needs to be done. This is big news and there were less than a dozen guests in the room and no media in sight. That’s why I am writing this blog.
FREC has a clear mission to introduce legislation to change Florida Statutes 475
The Goal. The laws and rules regarding real estate are for the protection of consumers. Consumers should reasonably know who they are working with and know that person is a licensed real estate professional. The current rule is that an agent must use their first name, last name, and brokerage name on advertisements. Nothing in law or rule references real estate teams, so they have basically been exempt from adhering to the law. Currently, team names and logos can be predominant in advertising and the brokerage name must appear, but in no specific size. Some agents, teams, and brokerages alike have taken advantage of the current rule and the team-centric advertising has become misleading. Consumers are now confusing teams with brokerages. This is a threat to the credibility of our industry and the safety of consumers.
Nothing in law or rule references real estate teams, so they have basically been exempt from adhering to the law.
It’s a Ghost. The first thing to understand is that the law and rule now currently require the use of real agent names and real brokerage names in advertising. Those agents and brokerages must be licensed and registered with the Division of Business and Professional Regulations (DBPR) where they can be researched and verified. Teams are not registered anywhere. They cannot be registered at the DBPR or the Florida Department of the State (sunbiz.org). The fact is, teams aren’t real entities and are completely unverifiable. The threat to consumers becomes more apparent – an industry that is supposed to be highly-regulated is allowing fictitious entities to participate in the market.
The fact is, teams aren’t real entities and are completely unverifiable.
The New Proposal. FREC intends to put forward legislation to change Chapter 475 in regards to team advertising. While the conversation at the June 14th workshop got a little muddled due to the complexity of the issue, it seems that there was a consensus from the commission: Team names and logos should not be larger than the brokerage name and logo in advertisements. This proposed law change would clarify the issue of advertising for teams, but would likely not change the rule for individual agents advertising under a brokerage. FREC looked toward six other jurisdictions that have adopted rules or laws regarding team advertising: British Columbia, Colorado, Louisiana, Maine, Maryland and Oregon. This surprisingly small list indicates the enormity of the future impact if this trend continues throughout the country. The new legislative proposal does not fix the most technical issue of teams – their licensure. Teams would still not be licensed entities and would not be registered anywhere. The law would simply define a team in nearly-textbook fashion.
It seems that there was a consensus from the commission: Team names and logos should not be larger than the brokerage name and logo in advertisements.
Cha-Ching. Did you hear the sound of millions of dollars being squeezed out of the Florida real estate industry? Surely, that will happen. While some advertising has a short lifespan, like newspapers business cards, others are more permanent or expensive. Yard signs, inventories of promotional items, websites, and more, will turn into millions of dollars spent for teams to rebrand. Florida law prohibits changes to rules of the Florida Administrative Code that would significantly impact small businesses, so a bill must be entered into legislation to change Florida Statute 475. While this change will be very costly for the state’s industry, there will most likely be an effective date that gives ample time for everyone to prepare.
The Outcome. While the bill is yet to be drafted, it seems that the changes will be simplistic and straight-forward. Given the highly-complex issue, this simple change to the advertising law would be a great first step in controlling an issue that has become unmanageable with the current real estate license laws. It’s my hope that, despite the cost and change, the industry will come together and graciously accept these proposed changes in the best interest of real estate consumers.