Real Estate Advertising Guidelines, New August 2020

Real Estate

Advertising

Guidelines

CALIFORNIA DEPARTMENT OF REAL ESTATE

August 2020

GAVIN NEWSOM

Governor

LOURDES M. CASTRO RAMÍREZ

Secretary

Business, Consumer Services and Housing Agency

DOUGLAS R. McCAULEY

Commissioner

Department of Real Estate

…………………………………….

Official Publication of the California Department of Real Estate

CALIFORNIA DEPARTMENT OF REAL ESTATE

651 BANNON STREET, STE 500

SACRAMENTO, CA 95811

WWW.DRE.CA.GOV

(877) 373-4542

RE 27 (New 8/2020)

Disclaimer

These guidelines are intended to assist California real estate licensees—brokers

and salespersons—in understanding the many advertising requirements they are

expected to know and follow.

Not all advertising and licensee-related obligations and responsibilities under the

Real Estate Law or other local, state, and federal laws are addressed in this

publication. However, we try to identify the most frequently asked questions and

the most often misunderstood requirements. This is a quick reference guide to

current statutory and regulatory requirements. Nothing in this guide should be

interpreted as legal advice. Given the ever-evolving tapestry of business

practices, technological advances, and changes in law, this guide is designed to

be a living document. Check the Department’s website for periodic updates and

advisories.

Unless otherwise noted, all references to “Bus. & Prof. Code section” refer to the

California Business and Professions Code, while “CCR” references refer to

regulations of the California Code of Regulations, also known as the Regulations

of the Real Estate Commissioner. All laws and regulations cited are located in

the Department’s Real Estate Law Book, which is available on the Department

of Real Estate’s (DRE) website at

www.dre.ca.gov/Publications/RealEstateLaw.html.

Contents

Introduction

.......................................................................................................................................................................... 1

Basic Definitions ................................................................................................................................................................. 1

Supervision Responsibility .................................................................................................................................................. 2

Compliance Expectation ...................................................................................................................................................... 2

Advertising

........................................................................................................................................................................... 3

What is Advertising? ........................................................................................................................................................... 3

Basic Requirements ............................................................................................................................................................. 3

License Required to Advertise ......................................................................................................................................... 3

False, Deceptive, or Misleading Advertisements ............................................................................................................ 4

Avoid Bait and Switch ..................................................................................................................................................... 4

Font Size .......................................................................................................................................................................... 4

License Designation ......................................................................................................................................................... 5

Disclosure of License Number - First Point of Contact Material .................................................................................... 5

Keep Advertisements Current .......................................................................................................................................... 5

Specific Advertising Requirements

................................................................................................................................ 6

Fictitious Business Names or “Doing Business As” (DBAs) – Brokers ............................................................................. 6

Fictitious Business Names or DBAs – Salespersons ........................................................................................................... 6

Team Names ........................................................................................................................................................................ 7

Escrow Services .................................................................................................................................................................. 8

Mortgage Loan Advertising ................................................................................................................................................ 8

Inducements Prohibited ....................................................................................................................................................... 8

Advance Fee Agreements and Materials ............................................................................................................................. 8

Subdivision Advertising ...................................................................................................................................................... 9

Timeshare Advertising ........................................................................................................................................................ 9

Mobile Homes ..................................................................................................................................................................... 9

Prepaid Rental Listing Services (PRLS) ........................................................................................................................... 10

Private Vocational School Advertising ............................................................................................................................. 10

Other Advertising Issues ....................................................................................................................................................... 11

“Coming Soon” Signs ....................................................................................................................................................... 11

Discrimination, Advertising, and Fair Housing ................................................................................................................ 12

Social Media and On-line Advertising .............................................................................................................................. 12

Professional Designations ................................................................................................................................................. 12

Years of Experience .......................................................................................................................................................... 13

Advertised Inducement or Offer of Referral Fee............................................................................................................... 13

Appendix ............................................................................................................................................................................... 14

License Disclosure Requirements For Advertising (RE 559) ........................................................................................... 14

Mortgage Loan Advertising Submittal (RE 884) .............................................................................................................. 14

Real Estate Advertising Guidelines 1

Introduction

hatever one’s role may be in the real

estate industry, advertising most likely

plays a key part in their activities and

ultimate success. Advertising identifies the licensee

and their activities, and it spotlights the message that

one wishes to convey to potential clients. The

effectiveness of one’s advertising may determine

why only a single client visits the office or why

people are lined up outside the door. Effective

advertising may bring the rewards that one seeks, but

a real estate licensee’s advertising must also be

lawful.

Each real estate licensee, depending upon the type

of license held—and nature of licensed activities

conducted—must comply with all real estate laws.

It behooves the licensee, then, to become familiar

with, understand, and take steps to meet all

advertising requirements set forth by code or

regulation. Failure to know the standards of the

occupation may impact the good standing of one’s

license. Licensees should know the requirements,

stay in compliance, and avoid the pitfalls that may

adversely affect one’s license.

This guide will identify and highlight the many

advertising requirements a licensee should know.

Let’s start by identifying a few basic definitions.

Basic Definitions

When considering licensed real estate activities,

become familiar with these basic definitions.

Licensee: a person, whether broker or salesperson,

licensed by the DRE. (Bus. & Prof. Code section

10011)

Real Estate Broker: a person licensed as a broker.

(Bus. & Prof. Code section 10012)

Real Estate Salesperson: a natural person licensed

as a salesperson and who, for a compensation or in

expectation of compensation, is retained by a real

estate broker to conduct licensed real estate activities.

(Bus. & Prof. Code sections 10013 and 10016)

Designated Officer: the corporate officer designated

by a licensed corporation to engage in the business of

real estate broker on behalf of the corporation.

Responsible Broker: the real estate broker

responsible for supervising and overseeing the

licensed acts of real estate salespersons and broker-

associates affiliated with and working under the

broker’s supervision, regardless of independent

contractor or an employment relationship. (Bus. &

Prof. Code sections 10010.5(b)(1) and 10015.1)

Manager: a real estate licensee authorized to perform

supervisorial services for a responsible broker. (Bus.

& Prof. Code section 10015.2)

Broker-Associate: a broker retained by a responsible

broker to provide services requiring a real estate

license on behalf of the responsible broker, often

working in the capacity of a salesperson. (Bus. &

Prof. Code section 10015.3)

Responsible Broker’s Identity: the name under

which the responsible broker is currently licensed by

DRE and conducts business in general or is a

substantial division of the real estate firm, or both the

name and associated license identification number.

(Bus. & Prof. Code section 10015.4)

Professional Identity: includes “responsible broker’s

identity” and the identity under which the licensee is

authorized to do business. (Bus. & Prof. Code section

10015.5)

Real Estate Advertising Guidelines 2

Supervision Responsibility

Whatever the type of license held, real estate licensees

must know and comply with all aspects of Real Estate

Law that govern licensed real estate conduct in

California. More importantly, responsible brokers

(i.e., brokers and designated officers of corporations)

should know that they are responsible for the actions

or negligence of salespersons or broker-associates

retained by the responsible broker. The failure to

properly supervise may result in disciplinary action.

(Bus. & Prof. Code sections 10010.5(b)(2) and

10015.1)

The Real Estate Law requires responsible brokers and

corporations to exercise reasonable supervision over

the activities of their salespersons and broker

associates. Reasonable supervision includes the

establishment of policies, rules, procedures, and

systems necessary to review, oversee, inspect, and

manage all aspects of the business, including the

following:

• Transactions requiring a real estate license;

• Documents that may have a material effect upon

the rights or obligations of a party to the

transaction;

• Filing, storage, and maintenance of such

documents;

• The handling of trust funds;

• Advertising of any service for which a license is

required;

• Familiarizing salespersons and broker associates

with the requirements of federal and state laws

relating to the prohibition of discrimination; and

• Regular and consistent reports of licensed

activities of salespersons and broker associates.

Responsible brokers must establish and have in place

a system for monitoring compliance with policies,

rules, procedures, and systems. This means that they,

along with those persons they designate to manage or

supervise on their behalf, must actively supervise the

conduct of licensees.

Generally, this means that responsible brokers—and

the managers, branch managers, and supervisors

they retain—should review the licensed real estate

activities and advertising conducted by their

affiliates, businesses, and offices with methods

sufficient to ensure compliance with the Real Estate

Law.

The responsible broker is accountable for proper

supervision. While the DRE does not set forth

specific requirements of what each real estate office

must do to ensure compliance, the form and extent

of a responsible broker’s policies, rules, procedures,

and systems must be sufficient to ensure

compliance. Whatever the size or nature of the

business, the responsible broker’s procedures and

policies should also take into consideration the

number of salespersons and broker-associates

retained and the number and location of branch

offices.

An active involvement with and supervision of those

persons working under the responsible broker’s

license will go a long way towards being and staying

in compliance.

Compliance Expectation

Real estate licensees are expected to comply with all

applicable laws and regulations, including those

pertaining to advertising. The failure to comply could

result in the issuance of a citation and assessment of a

fine or, where more serious violations are involved,

more formal disciplinary action. Depending upon the

Real Estate Advertising Guidelines 3

nature of the violation, formal discipline may take the

form of a public reproval, license suspension, restricted

license or an outright license revocation. In addition to

these administrative consequences, other local, state, or

federal laws may apply and violators may also find

themselves subject to criminal or civil charges. (CCR

2725)

Advertising

What is Advertising?

dvertising is a form of communication that

uses signs, symbols, or actions to create or

raise awareness of a business or products,

promote a brand, or bring in customers.

Advertising for real estate attracts sellers, buyers,

investors, renters, or other persons interested in the

services or products offered. Some of the forms of

advertising may include any one or a combination

of the following:

• Social media ads;

• Printed material (flyers, handouts, newspapers,

magazines, brochures, business cards);

• Electronic media (internet, websites, text

messages, telephone calls, emails, television,

radio, cinema, streaming video and audio);

• Promotional events, including open houses;

• Billboards;

• Signs.

Basic Requirements

License Required to Advertise

With few exceptions, only real estate licensees may

offer their services and solicit clients. If a person is a

principal and acting on that person’s own behalf, a

real estate license is not required. However, if a

person represents another party (i.e., act for or on

behalf of another person in an agency capacity),

expect or receive compensation, and perform any of

the following regulated activities, then a real estate

license is required:

• Solicit prospective sellers or purchasers of real

estate or a business opportunity;

• Lease or rent, offer to lease, or rent, or place for

rent, or solicit listings of places for rent, or

solicit for prospective tenants, or negotiate the

sale, purchase or negotiate the sale, purchase or

exchanges of leases on real property, or collect

rents from real property, or improvements

thereon, or from business opportunities;

• Assist or offer to assist in filing an application

for the purchase or lease of, or in locating or

entering, upon lands owned by the state or

federal government;

• Solicit borrowers or lenders, offer to negotiate

loans, collect payments, or perform services for

borrowers or lenders or note owners in

connection with loans secured by liens or real

property or on a business opportunity;

• Sell or offer to sell, buy or offer to buy, exchange

or offer to exchange a real property secured by a

lien on real property or on a business opportunity

and perform services for the holders.

Before engaging in the business of or advertising as

a real estate broker or real estate salesperson, one

must first be licensed in this state as a real estate

broker or salesperson. Failing to obtain a license

before conducting licensed real estate activities (the

activities identified above) is unlawful and may

Real Estate Advertising Guidelines 4

result in administrative, civil, and criminal

sanctions. If in doubt, check with the Department

before opening a business, starting activities, or

advertising services. (Bus. & Prof. Code sections

10130 and 10131; CCR 2770.1, 2773, 2847.3, and

2848)

False, Deceptive, or Misleading

Advertisements

Real estate licensees may not publish, advertise,

distribute, or circulate any material or information

that is false, deceptive, or misleading. While

deliberate efforts to mislead or deceive are clear

violations of the law, making false or misleading

statements that one should have known are untrue

may also lead to disciplinary action. Claiming

ignorance when one should have known the truth is

not a defense, nor is carelessness or negligence.

Putting advertising together that is false, misleading,

or deceptive may subject a licensee to disciplinary

action. Licensees have a clear responsibility for

ensuring their advertising is not misleading or

deceptive.

When advertising, a licensee should be able to

substantiate any of the information in the

advertisement on request.

Avoid Bait and Switch

On occasion, licensees may offer in their

advertisements and solicitation materials incentives

and/or terms that are at first glance more favorable

than those offered by other licensees in the same

marketplace. This could take the form of lower

interest rates, lower fees, merchandise, or other

goods.

For example, a prospective customer may be baited

to call a licensee by a “too good to be true” teaser

price in an advertisement, only to be told the

advertised price is no longer available. The

advertiser then tries to sell to the consumer the more

expensive product. Is there an issue here? Maybe.

In some instances, there may be exclusionary or

limiting terms, such as making the offer good for a

limited number of transactions or only good for a

limited period of time. Use of the terms “terms and

conditions apply”, however, should not materially

change or reduce the offer. If the terms and

conditions materially alter the program from the

description in the headline, then that may be

considered “bait and switch” and is unlawful.

Details of all restrictions or terms and conditions

must be available to consumers before the consumer

is asked to sign a contract or otherwise become

obligated. Furthermore, if it is found that the teaser

price or conditions were never available, then the

advertisement would be dishonest and may become

the basis for disciplinary action. (Bus. & Prof. Code

section 10140)

Font Size

Depending on the message that one wants to convey,

the advertising medium used, or the size of the

advertisement intended, a number of different fonts

and font sizes may be used. When considering the

size of the font to use for required disclosures (e.g.,

license identification number, name of responsible

broker, identification of licensing authority, etc.), use

a font size that is no smaller than that used in the

advertisement. If the font size of the smallest text

used in the advertisement is 12-point, then required

disclosures should be in an equal or greater font size.

Licensees should avoid “mice type” or material that is

sized so small that it cannot be clearly read. (Bus. &

Prof. Code sections 10140.6, 10159.5, 10159.6, and

10159.7; CCR 2773)

Real Estate Advertising Guidelines 5

License Designation

Real estate licensees advertising in print media, such

as newspapers and periodicals, must disclose that

they are licensed as a real estate salesperson or broker

by the State of California. This requirement may be

satisfied by use of the following terms: broker, agent,

realtor, loan correspondent, or the abbreviations bro.,

agt., or other similar terms or abbreviations. (Bus. &

Prof. Code section 10140.6; CCR 2770.1)

Disclosure of License Number - First Point of

Contact Material

Solicitation or promotional materials intended to be

the first point of contact with consumers include the

following:

• Business cards;

• Stationery;

• Websites owned, controlled, and/or maintained by

the soliciting real estate licensee;

• Promotional and advertising flyers, postal mail,

leaflets, and any marketing or promotional

materials designed to solicit the creation of a

professional relationship between the licensee and

a consumer, or which is intended to incentivize,

induce, or entice a consumer to contact the

licensee about any service for which a license is

required;

• Advertisements in electronic media (including,

without limitation, internet, email, radio, cinema,

and television advertisements, and the opening

section of streaming video and audio);

• Print advertising in any newspaper or periodical;

and

• “For sale,” “for rent,” “for lease,” “open house,”

and directional signs that display the name of the

licensee.

For first point of contact materials, a real estate

broker or salesperson is required to disclose, at a

minimum: (1) the real estate license identification

number; (2) the responsible broker’s licensed name;

and (3) the Nationwide Mortgage Licensing System

(NMLS) unique identifier endorsement number (if a

mortgage loan originator). If the name of more than

one licensee appears in the solicitation, then the

license number of each licensee must also be

disclosed.

The license identification numbers of responsible or

corporate brokers whose names, logos, or trademarks

appear on solicitation materials along with the names

and license numbers of salespersons or broker

associates do not need to appear on those materials.

Finally, if the advertising is in written form, then the

type size of the license identification number must be

no smaller than the smallest size type used in the

advertisement. (Bus. & Prof. Code section 10140.6;

CCR 2773)

Keep Advertisements Current

Long lasting advertisements may present a special

challenge for real estate licensees. Advertisements,

such as telephone directories, billboards, Internet

websites, or other signage may last for months or

years after initially created. Conditions and terms

may have changed over time, such that the

advertising no longer reflects current conditions,

name changes, or changes of the brokerage that were

in place at the time the advertisements were

purchased. Changes may have occurred from the

time a print advertisement is bought, printed and/or

distributed.

The old advertisement may not reflect an address

change, change of business name, change of

Real Estate Advertising Guidelines 6

business ownership, or current, available terms and

conditions. One should consider the lifespan of the

advertising before placing advertisements. Licensees

should track and monitor advertisements

periodically and look out for when circumstances

and conditions change to be able to identify needed

updates. Licensees also should make every effort

possible to update or remove advertising that is no

longer accurate to avoid misleading, deceptive, or

false statements. (Bus. & Prof. Code section 10140)

Specific Advertising

Requirements

Fictitious Business Names or “Doing

Business As” (DBAs) – Brokers

A real estate broker (individual or corporate) may

only conduct licensed real estate activities in the

legal name in which the Department has issued a real

estate license, unless the broker has properly filed for

and licensed a fictitious business name.

A fictitious business name or DBA is an alternative

name for the broker—individual or corporate—

licensee, who prefers to use a name other than their

legal name to conduct business. It is defined as “the

professional identity or brand name under which

activity requiring a real estate license is conducted

and the use of which is subject to approval by the

Department….”

Only real estate brokers may file a fictitious business

name with the Department and be approved to

conduct business through the issuance of a license

under the fictitious business name. A real estate

broker may not use a fictitious business name unless

the responsible broker is the holder of the license

bearing the fictitious name and/or a retained affiliate

of the responsible broker who is permitted to use the

fictitious name. The Department may refuse to

approve a fictitious name for use if the fictitious

name:

• Is misleading or would constitute false

advertising;

• Implies a partnership or corporation when a

partnership or corporation does not exist;

• Includes the name of a real estate salesperson; or

• Is the name formerly used by a licensee whose

license has since been revoked.

There is no limit on the number of DBAs a licensee

may obtain and use. (Bus. & Prof. Code section

10159.5; CCR 2731)

Fictitious Business Names or DBAs –

Salespersons

There may be times when real estate salespersons

would like to use a particular fictitious business

name…and would like to “own” the name to be able

to take the name with them should they change

responsible brokers. While the Department only

approves fictitious business names for brokers, a

responsible broker may, by contract, permit a

salesperson to “own” and use a fictitious business

name. This fictitious business name may then be

submitted to the Department for approval.

If a responsible broker permits an affiliated

salesperson to use a fictitious business name, then

the process to obtain Departmental approval is to:

• File an application on behalf of the responsible

broker with a county clerk to obtain a fictitious

business name;

• Deliver to the Department an application, signed

by the responsible broker, requesting the

Department’s approval to use a county-approved

fictitious business name to be identified with the

responsible broker’s license number;

Real Estate Advertising Guidelines 7

• Pay for any fees associated with filing an

application with a county or the Department to

obtain or use a fictitious business name; and

• Maintain ownership of a fictitious business name

that may be used subject to the supervision of the

responsible broker.

If a fictitious business name is “owned” by a

salesperson, then advertisements and solicitation

materials using the fictitious business name must

include the name and license number of the

salesperson using the fictitious business name, as

well as the responsible broker’s identity in a manner

equally as prominent as the fictitious business name.

Remember, the use of a salesperson “owned”

fictitious business name is subject to the supervision

and approval of the responsible broker. (Bus. & Prof.

Code sections 10159.5 and 10159.7; CCR 2731)

Team Names

A team name is the professional identity or brand

name used by two or more real estate licensees who

work together to provide licensed real estate services.

It is not considered a fictitious business name under

the Real Estate Law, so there is no paperwork that

needs to be submitted to the Department. Some basic

requirements for using a team name include the

following:

• The team must include two or more real estate

licensees.

• It must include the surname of at least one

member of the team.

• It must include the term “team,” “group,” or

“associates” in the team name.

• The name cannot use the words “broker,” “real

estate broker,” “real estate brokerage” or any

other term that would lead a member of the public

to believe the team is offering real estate

brokerage services or implies the existence of a

real estate entity independent of a responsible

broker. (Bus. & Prof. Code section 10159.7)

When advertising, the team must display in a

conspicuous and clear manner the team name, and the

surname and license number of at least one member

of the licensed members of the team on all

advertisements and solicitation materials. In addition,

the advertisement and solicitation materials must

include the name of the responsible broker or the

broker’s name and license number. (Bus. & Prof.

Code section 10159.6)

COMPLIANT TEAM NAME

EXAMPLES

ISLAND TEAM

Jay Island

DRE #00124523

Hopkins Realty

• Includes surname of team member

• Includes required group, team, or associates

• Includes license number of team member

• Includes responsible broker name

TORRE Group

Diane Torre

DRE #00124532

Ide Real Estate

• Includes surname of team member

• Includes required group, team, or associates

• Includes license number of team member

• Includes responsible broker name

NON-COMPLIANT TEAM NAME

EXAMPLES

A+ Partners

Jim Smith

Short Sale

CCR Realty

• Includes surname of team member

• Does not include required group, team, or

associates

• License number of team member missing

• Includes responsible broker name

• Implies unlicensed partnership

Real Estate Advertising Guidelines 8

ISLE BROKERS

Julie Hopkins Realty

• Does not include surname of team member

• Does not include required group, team, or

associates

• License number of team member missing

• Includes responsible broker name

• Implies brokerage

Escrow Services

A real estate escrow is a transaction where a party

places something, such as money or a real estate

deed, into the hands of a neutral, third party until

particular conditions have been met. It has become an

essential element in most real estate transactions in

this state. While escrow activities in California are

mainly regulated by other agencies, licensed real

estate brokers may perform escrows subject to an

exemption in the Escrow Law of the California

Financial Code.

When advertising escrow services, a real estate

broker cannot imply or indicate that escrows can be

conducted without specifying in the advertisement

that such services are only in connection with the

broker’s real estate brokerage business. The broker

may not use a fictitious or corporate name containing

the word “escrow” unless the fictitious business name

includes the term, “a non-independent broker

escrow” following the name.

Licensees who have been or are issued a license with

a fictitious business name with the term “escrow” or

any term which implies that escrow services are

provided, must include the term “a non-independent

broker escrow” in any advertising, signs, or electronic

promotional material. Advertising “escrow” services

that are unrelated to the business would be

misleading to the public. (CA Financial Code 17006)

Mortgage Loan Advertising

Mortgage loan originators operating under a real

estate license offering mortgage loan rates, terms,

and conditions for making, purchasing, or

negotiating loans or real property sales contracts

must disclose in their advertisements their license

name, the responsible broker’s identity, their DRE

license identification number, the responsible

broker’s DRE license identification number, the

licensee’s NMLS unique identifier endorsement

number (if applicable), the responsible broker’s

NMLS unique identifier endorsement number (if

applicable), and the disclosure of licensure and

licensing department. (Bus. & Prof. Code sections

10235.5, 10236.4, and 17539.4; CCR 2847.3)

Real estate brokers who conduct mortgage loan

activities may submit proposed advertisements for

the Department’s review and approval.

Advertisements are reviewed for compliance with

the requirements of the Business and Professions

Code and the Regulations of the Real Estate

Commissioner.

The Department does not review advertisements for

compliance with federal law or laws of other states.

Advertisements sent for review must be submitted

in person or mailed to the Department’s Sacramento

office, attention Mortgage Loan Activities (MLA)

section. The fee for reviewing mortgage loan

advertising is forty dollars ($40). The

Commissioner may disapprove of false or

misleading advertising or require verifications of

representations in advertising submitted for review.

(Bus. & Prof. Code section 10232.1; CCR 2847)

For a detailed list of specific requirements for

mortgage-related advertising, see CCR 2848.

Inducements Prohibited

Real estate licensees may not advertise to give or

offer to give a prospective purchaser or lender any

premium, gift, or any other object of value as an

inducement for making a loan, or purchasing a

promissory note secured directly or collaterally by a

lien on real property or a real property sales contract.

(Bus. & Prof. Code section 10236.1)

Advance Fee Agreements and Materials

An advance fee is a fee that is claimed, demanded,

charged, received, or collected by a licensee for

services requiring a license before the service has

Real Estate Advertising Guidelines 9

been fully completed.

If a broker intends to collect an advance fee before

performing licensed activities then, before soliciting

prospective clients, the broker will need to submit all

materials to be used in advertising, promoting,

soliciting, and negotiating for an advance fee to the

Department for review before they are used. Failure

to submit such material may result in disciplinary

action and/or criminal prosecution. (Bus. & Prof.

Code sections 10026, 10085, and 10131.2)

Subdivision Advertising

The advertising requirements for the sale or lease of

subdivision interests are fairly simple, in that all

claims and representations made in the advertising

must be accurate and verifiable. The application (or

notice of intention), questionnaire, and the public

report itself must be factual. Making inflated

statements or using misleading photographs or

illustrations creates false and misleading impressions

and is unlawful. A list of specific criteria that is used

to determine whether subdivision advertising is false,

untrue, or misleading may be found in CCR 2799.1.

There are also specific disclaimer disclosures that

are required for persons in California who sell or

lease or offer for sale or lease lots, parcels, or

interest in a subdivision that is outside of California

but within the United States, or for subdivisions

located outside of the United States. (Bus. & Prof.

Code sections 10249.8 and 10249.9)

Developers are reminded that they are responsible for

advertising published on their behalf by marketing

representatives and salespersons, who may or may

not be licensed with the Department.

While developers are not required to submit

advertising for review and approval, proposed

advertising may be submitted to the Department for

review approval prior to its use, publication,

distribution, or circulation. The fee for reviewing

each advertisement is seventy-five dollars ($75).

(Bus. & Prof. Code section 11022; CCR 2799.1)

Timeshare Advertising

A timeshare is an arrangement in which a property is

divided into a number of units and the owners of the

units have the right to use the property during a

specific period of time, often the same week every

year. They are typically vacation or resort properties.

Similar to the general advertising requirements for

subdivision offerings, timeshare advertising must be

straightforward and not contain deceptive or

misleading material. Timeshare advertising includes

any written, oral, or electronic communications

containing a promotion, inducement, or offer to sell

a timeshare plan. This may be in the form of

brochures, pamphlets, radio and television scripts,

electronic media, telephone, direct mail solicitations,

and other means of promotion.

Developers are responsible for supervising,

managing, and controlling all aspects of the offering

of a timeshare plan, including its promotion and

advertising, and must avoid any advertising that is

false, untrue, or misleading. The Department uses

CCR Regulation 2799.1 and Bus. & Prof. Code

sections 17500 through 17539 to evaluate such

advertising for compliance. (Bus. & Prof. Code

sections 11212, 11214, and 17500 – 17539; CCR

2799.1 and 2811)

Mobile Homes

Subject to specific limitations, a real estate broker

may be involved with the sale or purchase (i.e.,

representing buyers or sellers, negotiating

transactions, or obtaining listings for sale) of

manufactured homes or mobile homes.

Real Estate Advertising Guidelines 10

When advertising these transactions, the broker:

• Cannot advertise any manufactured or mobile

home unless it is either in place on a lot rented or

leased for habitation within an established mobile

home park;

• Cannot advertise or offer for sale if the

advertising for sale is contrary to any terms of a

contract between the seller of a manufactured

home or mobile home and the owner of the

mobile home park;

• Must withdraw any advertisement of a

manufactured home or mobile home for sale,

lease, or exchange after receipt of notice that the

manufactured home or mobile home is no longer

available for sale, lease, or exchange;

• Cannot advertise a mobile home as a new mobile

home or a manufactured home as a new

manufactured home;

• Cannot include as an added cost to the selling

price of a mobile home, an amount for licensing;

• Cannot make any representation that a

manufactured home or mobile home is capable of

being transported on California highways if the

manufactured home or mobile home does not

meet all of the equipment requirements applicable

to manufactured homes or mobile homes or fail to

disclose any material fact respecting those

equipment requirements; and

• Cannot advertise or otherwise represent, or

knowingly allow to be advertised or represented

on the real estate licensee’s behalf or at the real

estate licensee’s place of business, that no down

payment is required in connection with the sale of

a manufactured home or mobile home when

down payment is in fact required and the buyer is

advised or induced to finance the down payment

by a loan. (Bus. & Prof. Code section 10131.7)

Prepaid Rental Listing Services (PRLS)

A prepaid rental listing service supplies prospective

tenants with listings of residential real properties for

tenancy under an arrangement where prospective

tenants are required to pay a fee to obtain the listings.

When advertising the PRLS, the licensee should

make every effort to avoid making any false,

misleading, or deceptive advertisements or

representations concerning the services that will be

provided to prospective tenants. Advertising or

describing the property in a false, misleading, or

deceptive manner; referring a property that does not

exist or is unavailable; and failing beforehand to

obtain permission from the property owner, manager,

or other authorized agent to list the property are

violations of law. (Bus. & Prof. Code sections 10167

and 10167.11)

Private Vocational School Advertising

In addition to private and public colleges and

universities that offer real estate courses to qualify

for licensure, there are many private vocational

schools that have been approved by the DRE to offer

equivalent statutory courses and/or courses that may

be applied towards continuing education

requirements.

Advertising or promotional material by or on behalf

of a private school or other sponsor of an equivalent

course of study is considered deceptive or misleading

if it does not comply with the following standards:

• An advertisement shall clearly identify and

include the name of the entity.

• Advertising making reference to courses of study

approved by the Commissioner must identify the

specific courses that have been approved by

Real Estate Advertising Guidelines 11

listing the DRE sponsor approval number.

• Advertising or materials promoting approved

courses may not contain language implying or

stating that a course can be completed in less time

than the number of hours for which it is approved.

• Advertising or materials may not include false or

misleading statements.

• Advertising must contain the sponsor

identification number assigned by the

Department. (CCR 3004, 3007.6)

Other Advertising Issues

“Coming Soon” Signs

“Coming soon” signs are generally used for homes

that will be for sale soon but have not yet been

placed on the market. This could be because the

property is undergoing work that has not been

completed, or because the seller is waiting for a

particular time. “Coming soon” signs provide a

number of benefits. They get people talking, create

anticipation, and alert potential buyers and agents in

the area. By the time the property is ready and

placed on the market, interest has already been

generated.

Unfortunately, “coming soon” signs have also been

used to limit exposure to the property for a

licensee’s benefit. Some licensees may use a

“coming soon” strategy to obtain an exclusive

advantage over other agents. Rather than place the

property on the market and be receptive to all offers,

the licensee limits exposure to the property and

begins accepting offers before the property has been

fully marketed. A client’s best interests may not be

served by such a strategy and such offers may not be

totally reflective of the marketplace.

Agents have a fiduciary duty to act in the best

interests of their client and to place the client’s

interests above all others. Licensees are also

obligated to disclose everything material in the

transaction that may affect their client’s decision.

An agent may not limit exposure to the property and

keep a property from the market when it is not to the

benefit of the client. Licensees acting in such a

manner expose themselves to the potential for an

increased chance of civil liability and regulatory

action.

A “coming soon” advertising strategy may be used

when it is to a seller’s benefit and if handled

properly. The following are some best practices for

agents when representing a seller:

• Market the property via the multiple listing

service or other broad advertising means.

• Make sure the seller agrees to and understands

how the property will be marketed.

• If using a “coming soon” strategy, do not accept

and act on offers until the property has been

broadly marketed.

• If the property will not be fully marketed, obtain

prior written permission from the seller that

demonstrates understanding that such a “coming

soon” strategy may not result in receiving the

best sales price.

• Avoid double-ending a property that is not fully

marketed—it is best to refer potential buyers to

another agent.

Always remember that working as an agent in real

estate brings with it a responsibility to act in the best

interests of the client with a high standard of care

and adopt strategies that truly benefit the client.

Such practices will enhance professionalism.

Real Estate Advertising Guidelines 12

Discrimination, Advertising, and Fair

Housing

California law protects individuals from illegal

discrimination based on race, color, sex/gender,

religion, ancestry, disability, sexual orientation,

marital status, medical condition, national origin,

gender identity, age, and other classes. When

conducting licensed real estate activities, licensees are

prohibited from making, printing, publishing, or using

advertisements that are discriminatory.

Some examples of prohibited discriminatory

advertising include:

• Making advertisements that indicate

preferences, limitations, or discriminations

because of race, color, sex, religion, ancestry,

disability, marital status, national origin and

other classes, or any intention to make such

preference, limitation, or discrimination.

• Using any words, phrases, sentences,

descriptions, or visual aids advertisements

describing real property or the area in which

real property is located which indicates any

preference, limitation, or discrimination

because of race, color, sex/gender, religion,

ancestry, disability, marital status, national

origin, or other classes.

• Selectively using, placing or designing

advertisements having to do with the sale,

rental or financing of the purchase of real

property which cause or increase

discrimination by restricting or enhancing the

exposure or appeal to persons of a particular

race, color, sex/gender, ancestry, disability,

marital status, national origin, or other classes.

When marketing services, a licensee’s advertising

should present no limitations on the consumer who is

sought and, moreover, the licensee must be prepared

to reasonably accommodate any consumer who seeks

the advertised services of the industry professional.

(CCR 2780.)

Social Media and On-line Advertising

In addition to the basic advertising requirements for

traditional media, such as print, radio, or television,

licensees are also required to disclose the same

information when advertising on the Internet or on

social media platforms. If a licensee owns a website

or controls its content, the website must include the

license identification number of the person or entity

offering the advertised service or property. Similarly,

for social media, licensees must disclose their license

status, satisfy the first point of contact materials

requirements, and generally ensure their advertising

is clear and truthful.

There are also additional requirements if a licensee is

advertising escrow services or originating mortgage

loans. (See sections on Advertising Escrow Services

and Mortgage Loan Advertising.) (Bus. & Prof.

Code sections 10140.6, 10235, 10235.5, 10236.1,

10236.4, and 10240.3; CCR 2770.1, 2773, 2847.3,

and 2848)

Professional Designations

An industry professional who is licensed in another

profession, such as an engineer or lawyer, may

include such information in their advertising as long

as they are a member in good standing and/or

appropriately licensed in that profession.

Similarly, real estate professionals may hold a

professional designation or certification given to

them through a professional or industry association.

Designations that licensees have earned and have

been awarded may be included in advertising, if they

are valid and current. (Bus. & Prof. Code section

10176(a) and 10176(c))

Real Estate Advertising Guidelines 13

Additionally, it is unlawful for a licensee to falsely

claim membership in an association or to wrongfully

use the logo or trademarks of an association to create

the impression that the licensee is a member of an

association. The term “REALTOR” and the capital

“R” logo are associated with the National

Association of REALTORS and are both registered

trademarks. Claiming to be a REALTOR when not a

member is a violation of the trademark and the Real

Estate Law. It is also false, deceptive and

misleading. (Bus. & Prof. Code section 10177(e))

Years of Experience

Industry professionals may want to indicate the

number of years of experience they have working in

real estate, but any such statement must clearly

indicate the actual experience gained in those years.

For example, five years of experience as an

unlicensed assistant in a real estate office plus five

years of experience as a licensed real estate broker

does not equal 10 years of experience as a broker.

While a broker may be able to advertise having 10

years of experience working in the industry, the

broker’s advertising is deceptive if it creates the

impression that the broker has held a real estate

broker’s license for 10 years. (Bus. & Prof. Code

section 10176(a) and 10176(c))

Advertised Inducement or Offer of

Referral Fee

It is lawful for industry professionals to advertise that

they will give any or all of their compensation to

either party in the transaction. Rebating commission

back to one of the parties, either in the form of cash

or a gift, is nothing more than a reduction in the

compensation charged to a consumer, and industry

professionals are free to reduce their compensation.

If funds or a gift are being given to a buyer who is

obtaining financing, then the buyer’s lender must be

made aware of the commission rebate or gift. Some

lenders have regulations restricting or prohibiting

payment of money or gifts to a buyer.

RESPA, or the Real Estate Settlement Procedures

Act, should also be a factor when considering

whether to offer a referral fee or gift to a settlement

service provider. RESPA, a federal law, states that

any payment made in direct exchange for a referral is

prohibited. RESPA prohibits settlement service

providers from giving or receiving anything of value

in exchange for a referral. “Settlement service

provider” is a broadly defined term that could

include unlicensed, non-professional individuals.

Possible RESPA concerns aside, before paying a

referral fee to an unlicensed person, make sure that

person has not conducted activity requiring a real

estate license. While the real estate law does not set

a limit on the amount of a referral fee that may be

paid, a licensee may not compensate any person for

performing acts requiring real estate licensure who is

not a licensed real estate broker or a real estate

salesperson licensed under a responsible broker.

If a licensee receives referrals from unlicensed

persons, consider the following two-prong test:

1) Did the unlicensed, third party who brought

the referral have an existing relationship with

the buyer or seller?

2) If there was no existing relationship, how did

the unlicensed person come to make the

referral?

If they solicited the buyer or seller, knowing that the

licensee had offered to pay compensation for each

referral, then there may be a problem. Secondly,

consider the number of referrals forwarded. Has

there been one or have there been multiple referrals?

A single referral may be indicative of

“happenstance” (that is, a referral from an existing

relationship), while multiple referrals may indicate,

instead, deliberate targeting (e.g., a side business) to

Real Estate Advertising Guidelines 14

find potential buyers and sellers, knowing that a

licensee will pay a referral fee for every referral

made. Remember, paying any compensation to

unlicensed persons for performing acts requiring a

license is unlawful.

A Final Thought

Technology is moving at a rapid rate and bringing

major changes to the real estate industry. Although

traditional modes of advertising have moved from

the printed flyer distributed to door handles of a

neighborhoods, to now being able to reach tens of

thousands of potential clients with a few keystrokes,

the need for professionalism remains. One must still

meet the basic compliance requirements regarding

disclosure and identification but, more importantly,

advertisements must be clear and truthful…and of

value and benefit to consumers.

Appendix

License Disclosure Requirements For

Advertising (RE 559)

Mortgage Loan Advertising Submittal (RE

884)

…………………………………….

Official Publication of the California Department of Real

Estate

CALIFORNIA DEPARTMENT OF REAL ESTATE

651 BANNON STREET, STE 500

SACRAMENTO, CA 95811

WWW.DRE.CA.GOV

(877) 373-4542

RE 27 (New 8/2020)