Arizona Department Of Real Estate Releases Advertising Requirements For Owner Operators
Arizona Department Of Real Estate Releases Advertising Requirements For Owner Operators
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BROKER’S AND ADVERTISING DUTIES
Recently, the Arizona Department of Real Estate (“AZDRE”) published a guidance regarding advertising rules for licensed agents (“Guidance”). The Guidance caused a lot of concern amongst multifamily operators about potential new obligations. While management companies do have to comply with this Guidance, it’s important to understand what is, and what is not required. Most companies likely already comply with the majority of the Guidance and likely just need a few tweaks or revisions to their advertising policies to become compliant. (Don’t worry, I highlight some important takeaways near the end of the article).
Initially, let’s get something simple out of the way. Under A.R.S. § 32-2171, a property management company that manages real estate for another is required to be licensed by the AZDRE. There are exceptions to this rule, such as on-site managers who manage only one property daily, and people managing their own properties. However, for companies that manage rental properties for others, the default presumption is that they are required to be licensed. The company must have a designated broker, with other licensed agents working under that broker’s license.
Since a property management company must have a real estate broker (which I suspect all AMA companies do), then it becomes obvious that the rules that apply for brokers selling homes, apply to brokers managing rental properties. This is incredibly important as there are rules regarding information that must be in advertisements from brokers.
Advertisement is defined as “attempt by publication, dissemination, exhibition, solicitation or circulation, oral or written, or for broadcast on radio or television to induce directly or indirectly any person to enter into any obligation or acquire any title or interest in lands subject to this chapter, including the land sales contract to be used and any photographs, drawings or artist's presentations of physical conditions or facilities existing or to exist on the property.”
In its Guidance, the AZDRE states that any publication including social media, internet postings, emails and texts can be advertisements when they are used to target residents with offering an interest in property or brokerage services for a property in Arizona. This means that a website for a management company that has a listing and information on all managed properties, constitutes an advertisement, but also postings on LinkedIn, Facebook, Instagram, Twitter or even TikTok, could also qualify, as well as print newsletters. Basically, any promotional information to offer a rental property that is in Arizona, its likely considered an “advertisement” and covered by the AZDREA rules.
This sounds incredibly broad (and it is) but thankfully the AZDRE did provide some qualifying language. It said that “press releases or other communications delivered to news media for general information or public relations purposes for no charge,” or investor information, are not considered advertising. Also, if the publication is not about renting a specific property, then its not an advertisement for the purpose of this rule. Therefore, if you are merely posting about your company or employees, you need not include the information about the employing broker.
Once it’s determined that a management company is dealing with an advertisement, they must comply with the applicable administrative code (A.A.C. R4-28-502). For example, the advertisement must contain “accurate claims and representations, and fully states factual material relating to the information advertised.”
The Guidance focuses on one requirement – that the employing broker’s name (as set on their license) must be included in all advertisement in a “clear and prominent manner.”
This can be broken down into two parts:
- (1) who must be identified; and
- (2) how the identification is to be displayed. First, the Guidance notes that the employing broker is the company licensed as the broker, which is different from the designated broker, which is the individual. The employing broker’s information must be included in advertisements. Second, the name must be placed in a “Clear and prominent” manner, which means that it must be readily noticeable. Basically, when designing ads, make it the same size as other printed words so it can be easily seen.
Important Take Aways:
For most property management companies, they already list their company name on most advertisements, but here are a few points that should be give special attention.
- First, the rule requires that the advertisement has the “legal name or the dba name” contained on the company’s license. Therefore, the proper entity name must be used, and a logo or trade name alone is insufficient.
- Second, if you have vendors that advertise your properties for you on their websites, make sure that they are also putting the company’s proper legal name.
- Third, if you are posting on social media advertising the property for rent, make sure that the post includes a informational disclaimer such as “this property is listed for rent by ABC Property Management, LLC.” Again, as noted above, if the social media isn’t referring to a specific property, but merely a social media post about your company, the disclosure isn’t needed.