Do California agents need to disclose they are an agent?

Question

I am putting together a logo and a business card to pass out to potential sellers, and i was wondering if in California agents need to have their license numbers on every marketing they do or at least disclose that they are a real estate agent in the marketing? (i'll be getting my license in 4 days)

Thanks

Dev Horn · Answer

For all our clients who are LICENSED agents/brokers in CA and throughout the country, we provide disclosure of their RE license and the appropriate disclaimer on all our marketing materials.

I agree with those who mention that a disclosure is provided for activities for which a license is required, so you might say, no I don't have to because I'm acting as a principal.

The problem arises when someone SUES YOU and says you took Granny's house for pennies on the dollar, and in court they found out that you did not disclose to Granny that you were a licensed RE professional.  A judge or jury will likely feel that you had an ADVANTAGE over Granny because of your professional knowledge.

Another problem might be your broker, who finds out you're mailing out marketing materials for your "other" RE business, and you are not disclosing the fact that you're licensed on those materials. He/She may not be happy because he/she may feel that you are putting him/her at risk.

So, do HAVE to do it?  Maybe not.  SHOULD you do it (disclose, disclose, disclose)?  Absolutely.  As one client said to me recently, "There is no assignment fee that is worth losing my license."  And how about getting SUED for having an unfair advantage?

Disclosure is simple.  I'm not sure why you would NOT do it.

“Character is much easier kept than recovered.” ~ Thomas Paine

Michael Quarles · Answer

The key statement is; for which a real estate license is required.

If there is an expectation of Commissions or Agency then you must disclose. If you are the principal youre fine and in california you can't have agency with yourself.

My board challenged me on this very topic and I won.

Jay Hinrichs · Answer

@Gary Erdoglyan

That clause in which acting as an agent.. if you hang your hat on that one your going to get hosed if your challenged.. My dad won a very large case over this exact issue back in the day. Ed Bronson  of Carol Burnett V Enquirer fame  took the case and won it big time.

As an agent you must disclose that your a principal.. I don't know what the big deal is I have been doing it for 35 years.

Simply put your buying the property for profit or loss and that your a licensed agent end of story never lost a deal because of it.

Brian P. · Answer

Gary

The answer is no you do not need to disclose provided you are approaching and acting as a principle only, and in no way cross over to a agency situation real or implied. And remember in an implied situation it only matters what the other party believes not what you think.

Now the but comes into play, if you become a Realtor member the code of ethics requires you to disclose but you can't lose your license, just your Realtor status. Generally the first time is a fine and a strict tongue lashing.

Now the other but, most people like the idea of you being a licensed agent because they have the idea you know what your doing regarding the law and paperwork etc. So I recommend that you develop a disclosure form stating you are an agent acting as a principle and are representing only yourself, and in no way are you acting on behalf of the seller or buyer or any other party in any agency status, form of agency or capacity whatsoever. This will cut off any implied agency positions the other party may try to pull later down the road especially if a lawyer is brought into the game and plays the implied agency card.

Ron P. · Answer

According to the document you referenced disclosure only applies if you are " ... performing acts for which as real license is required" (B & P Code 10140.6.(a)).  In CA a license is not required when buying directly from seller, therefore no disclosure is required.  Do you read it differently?

Evelyn Jordan · Answer

When putting a property under a contract and then assigning it, You do not get a comission from your broker, because you do not process paperwork as a licensee and basically you do not get involved in any transaction. The fact that you are an agent adds credibility to any business relationship and I always disclose it.

Just to be on the safe side, and make sure you won't get in trouble in any way, call the California DRE and ask them.

Good luck!

Joel Owens · Answer

Gary if you call your DRE and ask them anything that is a GREY area then there is almost 100% chance they will say NO you can't do it. They do not want to lose their job for your gain answering a question. So the DRE for all a states tends to be ultra conservative.

I do not know about California but in other states it is a MUST you disclose your licensure. The reason is brokers/agents are trained in contracts and are deemed to have an unfair advantage in negotiations with the average consumer. You can still put deals together but must let them know you are licensed. At what point you need to let them know you are licensed I have seen it vary from state to state.

Buying and selling real estate including wholesaling is a real estate activity. Even if you do not have to disclose being licensed if you are a REALTOR with your local board they might require it. Even if not a REALTOR any action you take is covered under that principal broker.  Your independent contractor agreement might specify that all activity has to be approved through your broker. This means that even if you are not required to disclose per the DRE the brokerage you have your license with might require disclosure or may not want you trying this tactic at all. The brokerages have E & O policies that might not cover this type of activity etc.

So there are many layers and things to do this which is why the DRE and other brokers/agents will say disclose, disclose, disclose.

No legal advice.

Gary Erdoglyan · Answer

@Brie Schmidt Thanks for the link, but  it does say this

A real estate licensee shall not publish, circulate,

distribute, or cause to be published, circulated, or distributed in

any newspaper or periodical, or by mail, any matter pertaining to

any activity for which a real estate license is required that does

not contain a designation disclosing that he or she is performing

acts for which a real estate license is required.

A license is not required in wholesaling . Can a California agent please reply if they wholesale without disclosing!

Brie Schmidt · Answer

@Gary Erdoglyan - National license law requires disclosure on all marketing materials.  Here is a CA specific document http://www.dre.ca.gov/files/pdf/forms/re858.pdf

Do California agents need to disclose they are an agent?

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