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Legally speaking: When does “The #1 Agent” go from puffery to a license law violation?

By Peg Ritenour, OAR Vice President of Legal Services/Administration

The OAR Legal Assistance Hotline receives an array of real estate-related legal questions — including license law issues, disclosure, contract law, ethics and commission problems, among others. In an effort to help you work within the law, our “Legally Speaking” series spotlights some of the timely questions that are being asked by REALTORS. This one entails claims agents make in advertising…

Q: I have seen several ads in my area from agents and brokerages claiming to be the “#1” or “top” agent or that claim to have the highest number of listings, sales etc. Some brokerages will even use pie charts or graphs to compare their volume of business to other competitors. In some cases I question the accuracy of these claims. Do such ads violate the Ohio license law or Code of Ethics?

A: Your answer really depends on each specific ad. For example some ads are merely puffery (“Cleveland’s best agent”), while other are much more specific (“The #1 listing agent in Cincinnati in 2013”). It is the more specific claims that are likely to be questioned.

Both the license law and the Code of Ethics contain sections that prohibit false or misleading advertisements. Therefore, the first and most obvious requirement for any ad is that it must be accurate. This means that if someone (probably a competitor) files a complaint with the Division or with the local Board of REALTORS alleging an ad is false or misleading, that licensee could be asked to substantiate his claims or figures.

Secondly, if a REALTOR is basing his advertising in whole or in part on information provided by the MLS, the MLS rules probably require a disclosure that the claim is based on information from the MLS or the local Board/Association and the period of time over which the claims are based. These rules most likely require a statement in the ad similar to the following: “Based on the information from the Board/ Association of REALTORS (or MLS) for the period (date) through (date).” Therefore, a REALTOR should check the rules of the MLS if utilizing sold, comparable or statistical reports of the MLS as the basis for the claims made in an ad.

Finally, REALTORS also need to be careful about how they advertise sales awards they have received. For example, OAR’s sales award is the OAR President’s Sales Club. If an agent  received this award in 2011, but has not received the award since that time, it could be considered misleading for a REALTOR to include in current advertising that  she was a President’s Sales Club recipient without including the year the award was received. To avoid such potentially misleading advertising, under the rules for the OAR President’s Sales Club, any marketing must include the year or range of years the award was received (e.g. OAR President’s Sales Club-2014 or OAR President’s Sales Club-1999-2010). It is recommended that this practice also be followed by REALTORS when advertising other awards that have been received from your local Board/Association to avoid a complaint that the ad is misleading.

Tags: legal, Legally Speaking