A Realtor sold personal property outside her brokerage as a FSBO (for sale by owner). After the sale, though, the buyer filed a complaint and she was found in violation of Article 12. If it’s a FSBO sale, how is that a violation?

ORLANDO, Fla. – Dear Shannon: I’m seeking clarification here on the Code of Ethics for a situation I thought I did correctly. I own a residential investment property that I decided to sell. Instead of listing with my real estate firm, however, I decided to advertise it as a “For Sale by Owner” (FSBO). My advertisement included only my name and home telephone number.

A buyer responded to the ad, purchased the property and moved in. All seemed well until the buyer filed a complaint with my local real estate association, alleging that I violated Article 12 of the Realtor® Code of Ethics by failing to disclose my status as a real estate broker in the advertisement or during negotiations.

The buyer said he bought the property without knowing I was a real estate broker, but I don’t think that’s possible. Everyone in town knows me because I’m one of the top local real estate brokers. Still, the buyer said he might have made different decisions had he known; that my “specialized knowledge” placed him at a disadvantage.

It’s my understanding that the obligations in Article 12 of the Code of Ethics primarily apply to listed properties when a Realtor acts as an agent for the seller. By advertising the property as a FSBO, I ensured there was no agency relationship to disclose. I believe I was complying with the “true picture” test of Article 12.

However, I was found in violation of Article 12, even though my ad clearly said it was a FSBO. If everyone knows I’m a local broker, how is this an issue? – Confused

Dear Confused: I understand your concerns and confusion in this challenging situation. It’s vital to shed light on the intricacies of Article 12 and Standard of Practice 12-6 to provide clarity.

Article 12 states: Realtors shall be honest and truthful in their real estate communications and shall present a true picture in their advertising, marketing, and other representations. Realtors shall ensure that their status as real estate professionals is readily apparent in their advertising, marketing, and other representations, and that the recipients of all real estate communications are, or have been, notified that those communications are from a real estate professional. (Amended 1/08)

This Article emphasizes the importance of honesty, transparency and presenting a true picture in real estate communications – including disclosing your status as a real estate broker when advertising properties.

Standard of Practice 12-6 states, Realtors, when advertising unlisted real property for sale/ lease in which they have an ownership interest, shall disclose their status as both owners/landlords and as Realtors or real estate licensees. (Amended 1/93)

Standard of Practice 12-6 emphasizes transparency by making it clear that you must disclose not only that you are the owner of the property – which you did in your FSBO advertisement – but also that you are a Realtor or real estate licensee, which you assumed everyone would know.

Look closely and notice “Everyone in town knows me because I’m one of the top local real estate brokers” is not an element referenced under Standard of Practice 12-6. There is no exception included here for “community knowledge.”

The requirement under Standard of Practice 12-6 is plain: If you have an ownership interest in property you are advertising, then you must disclose both your status as the owner and as a Realtor in your advertisement. You must ensure that potential buyers are fully aware of your twofold role, as both the property owner and a real estate professional.

Thank you for reaching out. In the future, consider taking a more cautious approach with regard to transparency. The Code of Ethics and its Standards of Practice are in place to protect both the public and the integrity of our profession. While the nuances can sometimes be complex, adhering to these ethical standards ensures that all parties in a transaction can make well-informed decisions.

Inspired by Case Study #12-8. Other laws and rules may apply.

Shannon Allen is an attorney and Florida Realtors Director of Local Association Services
Note: Information deemed accurate on date of publication

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