DRE Hot Seat: A broker’s website must comply with real estate advertising laws

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This article is part of an ongoing series covering violations of real estate law. Here, the Department of Real Estate (DRE) revoked the California real estate license of a broker who advertised real estate services without disclosing his license identification number, claimed to provide mortgage originator services (MLO) without holding a valid license and used fictitious trade names on its website without a license.

In January 2022, the California Department of Real Estate (DRE) decided by default to revoke the license of E Olufunmilayo Ogunlalaka, a broker since 1994 operating in Pasadena, California. The decision entered into force in March 2022.

Ogunlalaka was authorized to do business only under the fictitious trade names “Earthscape Financial Services” and “Earthscape Realty”.

Ogunlalaka maintained a real estate website, “realestateworlds.com”. Despite advertising real estate services requiring a license, Ogunlalaka has not advertised his real estate license number.

Furthermore, he has also advertised his services under fictitious trade names not allowed: “realestateworlds.com”, “Earthscape Real Estate Financing” and “Ed Layo”.

As a further violation, Ogunlalaka claimed on his website that he was an “independent mortgage broker” and advertised services requiring a MLO Approval. However, Ogunlalaka had never received an MLO license.

Ogunlalaka’s use of his real estate website involved three different violations, all of which are grounds for suspension or revocation of his licence, including:

  • his use of fictitious trade names not allowed to advertise activities requiring a real estate license [Calif. Business and Professions Code §10159.5; DRE Regulations §2731];
  • its failure to list or display its real estate license number on solicitation materials, including its website [Bus & P C §10140.6; DRE Regs. §2773]; and
  • his offer to engage in MLO activities without first obtaining MLO license approval. [Bus & P C §10166.02]

The DRE incurred costs totaling approximately $2,090 as part of its investigation and enforcement of Ogunlalaka’s property law violations.

The DRE’s mission is to safeguard and promote public interests in real estate matters. Their goal is to effectively defend the interests of consumers by monitoring and regulating industry practices and the behavior of licensees.

So when it turns out that a website or other consumer touchpoint intentionally ignore real estate law and to be negligent on behalf of the licensee, the DRE steps in and takes on the defense of consumer safety and the integrity of a real estate license — just as it is charged with doing. [Bus & P C §§10177(d), 10177(g)]

Maintain an ERD-compliant real estate website

Advertising is fundamental to a licensee’s ultimate success.

Advertising introduces the holder, its activities and services and the messages it wants to convey to potential customers. Advertising is a form of Communication which uses signs, symbols or actions to create brand awareness and promote a positive image of the licensee.

Although real estate dealers may use different advertising strategies, a dealer’s advertising must above all be legit.

When advertising, on a website, in print or otherwise, real estate licensees are required to provide their name, DRE license number, National Mortgage Licensing System (NMLS) identification number (the if applicable) and their the identity of the responsible broker. [Bus & P C §10140.6]

Related article:

Digital Advertising: A Compliance Hot Spot for Brokers

Solicitation documents where this requirement applies, include:

  • business cards;
  • Stationary;
  • websites owned and operated by the requesting real estate licensee;
  • promotional and advertising leaflets, brochures, postal mail, leaflets and FARM letters;
  • advertisements in electronic media (including internet, email, radio, film and television);
  • print advertising in any newspaper or periodical; and
  • “for sale”, “for rent”, “for rent”, “free visit” and directional signs that display the name of the license holder. [DRE Regs. §2773]

The identity of responsible broker refers to the name and license number of the employing broker, not simply a Team name Where fictitious trade name deposited by the sales agent with the authorization of the broker. [Bus & P C §10159.7]

A Team name is not considered a fictitious trade name when the team name:

  • is used by two or more real estate licensees who work together to provide licensed real estate services under the direction of an employing broker;
  • includes the Last name at least one of the licensees in conjunction with the term “associates”, “group” or “team”; and
  • does not include the term “real estate broker”, “real estate brokerage”, “broker” or “brokerage”, or any other term suggesting that licensees offer real estate brokerage services independent of a broker. [Bus & P C §10159.7]

Any Promotional material using a fictitious company name or team name must clearly display:

  • the names and license numbers of licensees; and
  • Prominent official broker identity as a fictitious company name or team name. [Bus & P C §10159.6]

Under California law, real estate agents may not provide or advertise real estate services independently of the brokers who employ them. In practice, agents are agent agents — their employing broker who has a legal obligation to review, monitor, inspect and manage the practices of the agents they employ.

Additionally, it is a violation of real estate law when a fictitious business name does not refer to the affiliation of the broker who employs the agent. [See RPI e-book Office Management and Supervision, Chapter 5]

Noncompliance by an employing agent or broker may result in:

  • disciplinary sanction by the DRE;
  • legal pursuits; Where
  • both DRE disciplinary action and criminal prosecution.

For more information about advertising compliance, visit the DRE website and locate the DRE Real Estate Advertising Guidelines information booklet. [See RE 27]

Related article:

The virtual real estate broker in a DRE world

Want to know more about marketing and advertising? Click on the image below to download the RPI book cited in this article.

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