ADVERTISING

The Arizona Department of Real Estate ("ADRE") receives numerous advertising complaints each month. The ADRE investigates advertising complaints and takes action against those licensees whose advertising violates the ADRE Commissioner’s Rules, so it is important to be familiar with the advertising laws and ensure that your advertising is in compliance.

Advertising means "the attempt by publication, dissemination, exhibition, solicitation or circulation, oral or written, or for broadcast on radio or television to induce directly or indirectly any person to enter into any obligation or acquire any title or interest in [property] and any photographs, drawings or artist's presentations of physical conditions or facilities existing or to exist on the property." A.R.S. §32-2101(2). Nearly anything salespersons or brokers do to circulate their names among people, other than "keep in touch" or "thank-you" items such as gifts or birthday cards to clients, falls under the definition of advertising.

The Commissioner’s Rules, A.A.C. R4-28-502, set forth the rules for all advertising. A salesperson or broker acting as an agent is prohibited from advertising property in a manner which implies that no salesperson or broker is taking part in the offer for sale or lease. The designated broker must supervise all advertising, however, associate brokers and salespeople are responsible for insuring that their advertising is in compliance with the Rules.

All advertising must identify in a "clear and prominent manner the employing broker's legal name or the licensed dba name." The employing broker is the corporation, limited liability company, partnership or sole proprietorship licensed as a broker that has engaged the services of salespersons and associate brokers. The employing broker designates a natural person to act as the designated broker.

The requirement that all advertising identify the employing broker’s name in a "clear and prominent manner" is by far the most common subject of complaints. Although the Rules do not specify precisely what constitutes "clear and prominent," Webster defines prominent as "thrusts itself into attention" or "conspicuous in position or importance." A primary guideline to consider when creating an advertisement is that the employing broker represents the client in the transaction and the associate broker or salesperson represents the employing broker. This relationship must be indicated in the advertisement; that is, the ad must be clear that the employing broker is involved in the process. Consider the following guidelines:

Web sites or emails that target Arizona residents with the offering of a property interest or real estate service also constitute advertising and is a regulated activity. A.R.S. 32-2163(D) and A.A.C. R4-28-502(L). The employing broker’s name must be visible on the first page of the web page, without the necessity of scrolling down, regardless on the screen size of the computer. Web pages should identify the broker on each page because it is possible to link to a single page and, if that is done, the broker’s name needs to be visible. In contrast, if the employing broker produces a magazine that includes only the broker's listings, the broker can be identified on just the front cover, not every page, because a consumer picks up the whole magazine, not just one page.

In addition, the Rules also require that:

When the ADRE determines that an advertisement is in violation of the Rule, the ADRE will hold both the salesperson or associate broker and the designated broker responsible. Penalties for advertising violations can include monetary fines, suspension or revocation of a license, denial of the issuance or renewal of a license, issuance of a Letter of Concern or issuance of a provisional license. The ADRE will often first issue both the salesperson or associate broker and the designated broker a Letter of Concern, which will be placed in the salesperson’s and broker’s file. A "Letter of Concern" is an advisory letter to notify a licensee that, while the conduct or evidence does not warrant other disciplinary action, the Commissioner believes that the licensee should modify or eliminate certain practices and that continuation of the activities may result in disciplinary action against the licensee. A.R.S. §32-2153(F)(1). Further violations will generally result in disciplinary action, with the Letter of Concern as part of the evidence indicating the licensee was made aware of the violation and supporting the discipline.