Q: As part of my efforts to build a local reputation, I have been advertising on Nextdoor. I generally do not read what other people have been posting on that site but I just took a listing from a client who frequently uses the site to post her complaints about her neighbors. I believe my Seller should disclose her knowledge but am I required to research that site to see what is posted about the Property and/or the neighborhood? If I see something posted on that site, do I have an obligation to disclose the information that I discover? Are there any other issues that I should be aware of in using social media to advertise my services?
A: Yes, there are significant, potential legal and regulatory consequences for Agents advertising on social media sites, whether they are local, such as Nextdoor, or are larger in scope, such as Facebook.
REGULATORY ISSUES
DRE Regulation 2725 details the Broker Supervision duties and responsibilities. “Reasonable” supervision includes establishing policies and procedures to “review, oversee, inspect and manage” various transaction documents and activities including, but not limited to, “advertising of any service for which a license is required.” Thus, Broker Supervision includes the responsibility to oversee all Agent advertisements.
The DRE recently filed a complaint against eXp (a virtual brokerage) documenting 72 state regulatory violations. Many of the cited violations are for website and social media advertisements that were not in compliance with the “first point of contact” advertising regulations that mandate including the Agent’s DRE license number in a font size that is no smaller than anything else in the ad.
See prior Weekly Practice Tip: “DRE Advertising Requirement Changes.”
WARNING: Social media postings are routinely being reviewed by DRE investigators. Violators can receive cease and desist notifications and/or a cite and fine letter of up to $2,500 for each violation.
LEGAL CONSIDERATIONS – AGENTS
When there is a claim that an Agent failed to disclose an issue, Buyers’ attorneys often search for information (known as “discovery”) online, including websites and blogs. Efforts to over-sell an Agent’s knowledge and experience have been used against Agents (and their Brokerage). For example, and Agent who proclaimed that she was an “area specialist” led one Arbitrator to conclude that the Agent must have known far more information about the neighborhood than she actually disclosed.
The statutory scope of the Agent’s inspection duty in Civil Code Section 2079.3 is limited to the Property itself, and does not entail an investigation into off-site matters such as public records. Thus, Agents are not obligated to go online and conduct a search for information about the Property or the neighborhood. HOWEVER, if the Agent goes online, then the Agent must disclose all that the Agent could have discovered from that site. It is for this reason that risk management attorneys warn Agents not to visit the Megan’s Law website.
WARNING: Agents who advertise on social media sites may have a difficult time claiming that they are not reviewing any or all of the material that is posted on that site by others and Agents should consider using a disclaimer in their disclosures that they are not conducting an online search.
LEGAL CONSIDERATIONS – SELLERS
Sellers are at risk if they do not disclose their knowledge about online complaints. An attorney in Marin County, California found that a Seller had complained bitterly in a neighborhood blog about her tenants’ methamphetamine operation that was shut down by drug enforcement officers and ultimately led to the tenants’ eviction; yet, in her disclosure documents, the Seller denied that there had ever been any illegal activity at the Property.
Both the Disclosure Information Advisory (C.A.R. form DIA) and the PRDS® Seller Advisory Regarding Completing Disclosure Forms (Form SARC) remind Sellers to disclose all of their knowledge regardless of the source of that information, even what they know that is contained online.
PRACTICE TIPS
- All Agents’ advertising material (whether promoting a Property or the Agent) in any medium including, but not limited to, websites and other forms of social media, should be reviewed to make certain it complies with DRE regulations including the need to display the Agent’s license number (in a font no smaller than the font size of anything else on the page or site) and the Agent or Team name/logo should be displayed in a manner that is “equally prominent” in size and location with the name/logo of the Brokerage.
- All Agents’ self-promotional advertising material should be completely truthful about the Agent’s level of knowledge and experience; should avoid terms such as “expert” or “specialist” since the use of those terms could create the possibility that the Agent will be held to a higher standard of care on the topics that the Agent has claimed to have superior knowledge.
- Agents who use neighborhood blogs or other social media sites to advertise their real estate services should consider adding a disclaimer to their written Agent disclosure documents (e.g., the AVID) such as:
Agent uses __________, a form of social networking, to advertise real estate services. Agent does not review or verify any information that may be on that site or any other social media or neighborhood blog that may exist. Online sources may contain opinion, speculation, unfounded assertions or rumor, making it difficult to determine what is factual and what is not. Buyer is encouraged to go to all online sites that may exist regarding the neighborhood and to investigate all available neighborhood information that Buyer deems relevant to the purchase of the Property.
- The best practice for Listing Agents is to always give Sellers an Advisory (such as the CAR DIA or the PRDS® SARC) at the same time that they give the Sellers the blank disclosure forms so that Sellers will be reminded to disclose all of their knowledge including anything that they know is posted online.
WEEKLY PRACTICE TIP: DO NOT FORWARD TO CLIENTS. This Weekly Practice Tip is for the exclusive use of clients of Broker Risk Management and their agents. It may not be reproduced or distributed without the express written consent of Broker Risk Management. The advice and recommendations contained herein are not necessarily indicative of standards of care in the industry, but rather are intended to suggest good risk management practices.
© Copyright Broker Risk Management 2019 08/9/19