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Use of Statutory Licensing Categories in Advertising - Real Estate Commission

An Advice of Counsel Memorandum has been issued by Commission Counsel Elizabeth H. Trimble regarding the use of statutory license categories in all advertising that involves the sale, rent, or offer to purchase real property.

The Memorandum indicates that the Real Estate Brokers Act does not contain a general mandate that the statutory license categories broker, associate broker, or salesperson must be used in such advertising. Rather, the statute contains a limited requirement that a licensee who offers to buy or sell property for his or her own account must disclose that they are licensed by the Commission in advertising relating to such properties.

While the Opinion leaves licensees free to decide whether or not to include their license category in advertising, the Commission and Counsel advise licensees to avoid using other terms that could mislead or cause consumer confusion. For example, a licensed salesperson should not use the term "sales associate," because there is a statutory licensing category "Associate Broker." The use of the term associate in any context other than Associate Broker could confuse a consumer and therefore should be avoided.

Fax: 410-333-6503

November 23, 2005

TO: Greg Safko, Commissioner, Occupational and Professional Licensing
Elizabeth Beggs, Executive Director, Real Estate Commission

FROM: Elizabeth H. Trimble, Assistant Attorney General

RE: Use of License Category in Licensee Advertising

You have asked whether Section 17-322(b)(18) of the Real Estate Brokers Act requires individuals holding real estate licenses to list their license category in all advertising that involves the sale, rent, or offer to purchase real property. My review of the disciplinary actions taken against licensees by the Real Estate Commission shows that, in the past, this section has been used where a licensee has offered his or her own property for sale and has not disclosed that he or she holds a real estate license. See, for example, MREC v. Brenda Grover, 01-RE-288; MREC v. Edward J. Hurley, 99-RE-152; and MREC v. Stephney Allen, 94-RE-272. There was no file I could identify in which this section has been used to charge a licensee for failing to include licensing category in a general advertisement. Given this pattern of enforcement, it seems appropriate to examine the statutory history of this provision to see why the Commission has consistently interpreted this section in this way.

In considering the basis for this interpretation of Section 17-322(b)(18), I first reviewed the legislative history of the provision. The General Assembly revised the real estate licensing law in the 1988 Session. (Chapter 563 of the 1988 Laws of Maryland) Prior to the revision, the disciplinary provisions were set forth in Section 224 of Article 56 of the Code. That law provided:

The following acts are prohibited:

(j) Any misleading or untruthful advertising, including advertising property for sale or for rent or offering to buy property as an agent or broker without disclosing in such advertising the name of the advertiser or the fact that he is an agent or broker, or where any such advertising is published over the name of a licensed real estate salesman, failure to disclose in such advertisement the name of the broker whom such salesman is licensed to represent.

In the revision, this section was divided into three parts, new subsections (18), (19), and (20). The subcommittee comments to the section states, "This section is new language, derived without substantive change from former Art. 56, Sections 217(d), 227A(c), and 227C(c), Section 224(b) through (o), and (r) through (v)…" It further states, "Throughout this section, the references to an 'associate real estate broker' are added in conformity with provisions added throughout this title to provide a licensing scheme for associate real estate brokers." In the only comment on subsection (18), the subcommittee states: "In item (18) of this section, the defined term "real estate salesperson" is substituted for the former references to an "agent", for clarity."

If, as the subcommittee stated, no substantive change in the previous law was intended, then the provisions of former subsection (j) are instructive in interpreting the provisions of (18). The activities focused on in subsection (j) were "advertising property for sale or rent or offering to buy property". There is no indication that this is activity being carried out for the benefit of a third party; rather the language focuses on the licensee acting on his own behalf ("offering to buy property"). The provision goes on to say " as an agent or broker without disclosing in such advertising the name of the advertiser or the fact that he is an agent or broker." The lead into this provision is that it is "misleading or untruthful advertising." As indicated above, the Commission has historically interpreted this provision as requiring a licensee who offers to sell his or her own property or to buy property for his or her own account to disclose that he or she is licensed. This interpretation fits the language as it existed prior to revision. The focus is not on the category of the license held, but on the status of the individual as a person holding a real estate license.

This interpretation is also consistent with the placement of the provision in the category of "misleading or untruthful advertising." Simply offering a property for sale does not have the potential for misleading the public. However, if the property is owned by a licensee, and that person does not disclose his licensing status, a member of the public could assume that the transaction would involve another layperson, not someone who is a professional in handling real estate transactions.

The Real Estate Commission has in the past addressed the content of advertising through regulation. See COMAR (Use of Trade Names) and (Advertisement). Both of these regulations appear in substantially the same form well before the revision of the licensing law. COMAR provides that a broker may not permit associate brokers or salespersons to use their individual names or telephone numbers unless the connection with the broker is obvious in the advertisement. Neither regulation addresses the issue of license category, and there is no indication in the disciplinary records available to our office that the Commission in the past has required the inclusion of this information in advertising.

In the 2002 Session, the General Assembly addressed the issue of the content of licensee advertising, adding Sections 17-527.2 and 527.3 to the Code. Section 17-527.2 (b) provides that a salesperson or associate broker may not advertise unless that person's name or trade name and the full name of the brokerage business are meaningfully and conspicuously included in the advertisement. In determining whether a licensee has met his or her statutory obligations as to advertising, the Commission should be directed by the language of the General Assembly. Where the legislators have set forth in specific language what information must appear in an advertisement, the Commission may not reinterpret another section of the law to add another requirement. If inclusion of the license category is to be mandated, that must be done by the General Assembly through a law change.

In summary, it is my conclusion that Section 17-322(b)(18) applies to situations where licensees offer to buy or sell property for their own account. The intent of the General Assembly to address these situations was set forth clearly in Article 56, Section 224(j), and there is no indication that it was altered by the 1988 revision of the Real Estate Brokers Act. Further, the Commission should look to the most recent enactments of the General Assembly on the issue of advertising in determining what information must be set forth in licensee advertising.