Florida Realtors 2018 Mid-Winter Business Meetings Legal Update Welcome Florida Realtors 2018 Mid-Winter Business Meetings Legal Update

MLS of Choice – Effective 7/1/2018 If a broker participates in multiple MLSs, licensees affiliated with that broker, regardless office location, may choose which MLS to join – if no choice is made, the broker will be assessed fees by least one MLS No-cost waiver of MLS fees Proof of subscribership/signed certificate of nonuse may be required (this is subject to local MLS discretion) Possible penalties for sharing unauthorized information/access Team members in separate MLSs cannot make references to team members who subscribe to a different MLS

Article 12: Standard of Practice 12-10 Realtors must present a true picture in their advertising and representations to the public include internet content, images, and the URLS and domain names they use . . . Realtors are prohibited from misleading consumers, including use of misleading images

Virtual Staging Today’s software tools allow agents to market property interiors and exteriors with the aid of computerized images such as of furnishings, fixtures and paint colors. The question is this kind of marketing allowed under the Code of Ethics? If the virtual alteration to the photos makes the property appear rehabbed, remodeled, and in pristine condition for move-in; but in reality it is not, it could be a violation of Article 12

Virtual Staging Solution: disclose in a conspicuous way that the images have been altered or enhanced so the viewer understands the property looks different than the image before them.

Proposed Team Advertising Rule Approved by FREC, currently headed to review by the Joint Administrative Procedures Committee (JAPC)

Proposed Team Advertising Rule Every team name may include the word “team” or “group” as part of the name. No team name may appear in larger print than the name or logo of the registered brokerage. No team name may include words like: Realty, Real Estate, Associates, Brokerage, Company, LLC, or similar words suggesting the team is a separate brokerage.

Proposed Team Advertising Rule Each team must file with the broker a designated licensee responsible for ensuring compliance with advertising rules. At least once monthly, the registered broker must maintain a current written record of each team’s members. All team advertisements must comply with this rule within 12 months after the effective date.

Associates Changing Brokerages Carefully review the entire independent contractor agreement (ICA), and look specifically for clauses such as the following: Term: when does the ICA term end? Notice: does either side need to give notice to terminate the ICA early? Listings: what happens after the ICA is terminated? Payment: what is the payment structure after the ICA is terminated?

Associates Changing Brokerages Every ICA is negotiable, so check your actual agreement first! As an example only, the Florida Realtors Form ICA provides the following: Term: Section 5 provides “This Agreement will be in effect for [ ] year(s) from the effective date.” Notice: Section 5 provides “Either party may terminate this agreement by [ ] days’ advance written notice to the other party.” Listings: Section 2(d) provides “…listings taken during the term of this Agreement are Broker’s property.” Payment: Section 3(c)(6) provides that the broker will pay associate any amount earned before termination “less amounts owed to Broker and amounts Broker must pay another licensee to complete pending transactions.”

Associates Changing Brokerages Associate and broker should collaborate to ensure a smooth transition, including informing clients and customers of the transition. When that is not feasible, broker should take the lead on communicating with clients and customers.

Associates Changing Brokerages Some ICAs will affirmatively direct that pending transactions and listings transfer with the associate to a new brokerage. Assuming the new broker is willing to accept the assignment, brokers should document this occasion with an assignment or possibly a formal letter from former broker to new broker. Communication with all parties (sellers, buyers, landlords, tenants, closing agents) is vital to ensuring a smooth transition.

Copyright of Photos Work for Hire: Work that an employee does a part of his job, or some other limited type of work that all parties agree to be a work for hire designation in writing. Means that the employer is owner of the copyright even though the employee actually did the work. Or, put otherwise, the hiring party steps into the shoes of the creator and becomes the author of the work for copyright purposes.

Copyright of Photos With a work made for hire, the employer or other person for whom the work was prepared is the initial owner of the copyright. Check your agreements closely to ensure who the work belongs to when hiring someone to take photos for your brokerage. The agreement should be signed before any of the work begins. You may even want to include copyright assignment language in your agreement just to be sure.

Copyright of Photos Copyright by License: Is granted by the person owning rights to the photo It is a legal document The license is explicitly created. It does not apply automatically. It grants users of the software specific, and limited, rights.

The Proverbial Hot Potato: Inspection Reports on Residential Property When One Lands in a Seller’s Possession

Common Hotline Fact Pattern: What responsibilities do sellers/listing agents have: if given a report from an inspection which was ordered by some other 3rd party ?

Common Questions on Listing Side Must the report in seller’s possession be provided to a future buyer ? No May it be provided to a future buyer, if seller didn’t pay for it? Typically yes (unless seller accepted it with this limitation) Can seller ignore an inspection report within their possession, as it relates to a future buyer? It depends!

When Can’t The Seller Ignore the Report with Regard to Future Sale of Property? 1985 Fl. S. Court decision Johnson v Davis facts materially affecting value of property, which are not readily observable and not known to buyer, Applies residential property Material – look at relationship of undisclosed fact and value of property Applies to as is sales

Seller’s/ Listing Agent’s Duties Disclose what is necessary per Johnson v Davis Verbal disclosure is sufficient under the law, but prefer you document that the verbal discussion occurred in writing, in your notes or email Update any existing seller disclosure form if using one

Are There Alternatives to Disclosing? No need to disclose if: non material matters (i.e. several roof tiles are missing vs. structural roof problem) disprove the report through experts OR correct defect and it is not a reoccurring or continuing defect

If Matters are Material, Talk to Seller: May consider negotiating with 1st buyer on inspection results, unless defect is disproved or corrected, as this will need to be disclosed to future buyers prior to contract. Note: Residential Contract contains language to resolve differences between buyer’s and seller’s inspections No requirement to provide inspection report to seller, per Residential Contract, unless seller requests it in writing.

What If the Seller Asks Listing Agent to Ignore Material Facts Noted in a Report? Can’t ignore. Explain this to seller: Disclosure duties apply re agents too- Failure to share, disprove or correct, exposes an agent/broker to civil liability, if the nondisclosure becomes the subject of litigation License law violation

What If Seller Terminates Listing If You Fail to Follow the Directive to Ignore? Potential Seller default under Florida Realtor listing Must you inform the new listing agent of the relevant content of the report? No

The Bottom Line is: Recommendation is to play it straight. In the words of the Florida Supreme Court the law appears to be working toward the ultimate conclusion that full disclosure of all material facts must be made whenever elementary fair conduct demands it.

More Questions? Call us at: 407.438.1400 Margy Grant – Ext. 2443 Marcia Tabak – Ext. 2422 Joel Maxson – Ext. 2433 Meredith Caruso – Ext. 2434 Anne Cockayne – Ext. 2106