Application of TREC Requirements to Commercial

Real Estate License HoldersJune 2015

Non-Discriminatory Practices

TREC CCIM

May not discriminate on basis of protected class

May not steer May not inquire about,

respond to or facilitate inquiries which indicates any preference, limitation, or discrimination

May not deny equal professional services to any person based on protected class.

May not be part of any plan or agreement to discriminate

May not volunteer information regarding composition

May not engage in activity which may result in panic selling

May provide demographic information.

Non-Discriminatory Practices, cont.

CCIM

May not publish ads or statements that discriminate

May provide demographic information from a recognized, reliable, independent, and impartial source, with the source disclosed

Advertising

TREC CCIM

Ads may not be misleading and must identify the publisher as a licensed broker or agent

 Must have owner’s written consent to place a sign on property

May not offer to sell property without owner’s knowledge and consent

Must be honest and truthful in and present a true picture in Ads.

Must ensure status as real estate professional is apparent in Ads

May use term ‘free’ with disclosure of terms

May offer inducements if terms disclosed

Advertising, cont.

TREC CCIM

May not offer property on terms not authorized by owner

Ad must contain name of broker

Ad may not imply salesperson is responsible for the brokerage operation

Each page on website is a separate Ad

May not advertise without authorization

May not quote price different than agreed

Ads must contain name of firm

Must disclose any ownership interest in Ad

To claim “sold” must have participated in sale

Advertising, cont.

CCIM

May offer rebates if Ad contains disclosure of terms

Should keep info. on websites current

Unauthorized Practice of Law

TREC CCIM

May not drafts an instrument that transfers or affects an interest in real estate

May not advise a person regarding the validity or legal sufficiency of an instrument or title to real property.

May not engage in unauthorized practice of law

Must recommend party obtain legal counsel when transaction requires it.

Unauthorized Practice of Law, cont.

TREC

It is OK for broker to complete forms if forms are:◦ TREC forms;◦ Forms prepared by a Texas attorney; or◦ Forms prepared by owner

Must TREC forms except◦ When broker is a principal in transaction◦ Gov’t agency requires otherwise◦ when form attorney drafted and required by

principal’s attorney◦ When no TREC form exists and attorney has

drafted a standard form

Unauthorized Practice of Law, cont.

TREC

May only fill in blanks May not add to or strike, but may strike

only items desired by the principals and as is necessary to meet intent of the parties

May add factual statements and business details desired by the principals

May not add provisions for which a standard addendum exists

May not employ lawyer for principals

Disclosure of Property Defects

TREC CCIM

May not make a material misrepresentation of a significant defect, known to the licensee

May not fail to disclose known defect

Must avoid exaggeration, misrepresentation, or concealment

Not obligated to discover latent defects

Not obligated to disclose confidential facts

Only obligated to discover and disclose adverse factors reasonably apparent to a broker

Broker Price Opinions & Appraisals

TREC CCIM

Broker can give opinion of value if it is:◦ not referred to as an

appraisal;◦ provided in the ordinary

course of business; and◦ is related to the actual or

potential sale or lease May not perform

appraisal but may give BPO/CMA of disclosure is in in opinion, verbatim

May not act outside member’s area of expertise

If giving an opinion of value (outside obtaining listing or formulating offer), then must contain items in the standards

Negotiations with Clients of Other Brokers

TREC CCIM

May not negotiate with client of another broker knowing client is under an exclusive agency with another broker

Not prohibited from soliciting a listing from the owner while the owner is subject to an exclusive listing with another broker

May not take action inconsistent with exclusive brokerage relationship of another

Does not prohibit innovative , but ethical, business practices

Negotiations with Clients of Other Brokers

CCIM

May make general announcements about services, it not targeted at others’ clients

Not prohibited from contacting another’s client to enter into a different type of service contract

May not contact owner subject to a listing for purposes of entering into another listing, even upon expiration; but may respond if prospective client contacts broker

Negotiations with Clients of Other Brokers

CCIM

Fact client belonged to broker in past transactions does not preclude others from seeking client later

 Must make effort to determine whether the prospect is subject to a current exclusive relationship

Must disclose relationship at first contact and shall provide written confirmation of that disclosure to at time of contract.

Negotiations with Clients of Other Brokers

CCIM

All dealings shall be carried on with the client's broker, and not with the client, except with the consent of the client's broker or when initiated by the client.

May not knowingly obligate the client to pay more than one commission except with their informed consent

May not induce clients to break existing agency agreements

Information about Brokerage Services. Agency Disclosure, and Intermediary

TREC CCIM

Must make clear to all parties for whom broker is acting

Must give IABS form at first substantive dialogue

May act as an intermediary if authorized in writing and acts impartially

May appoint associated licensees (in writing)

Must disclose at time of listing or representation agreement, policies about multiple representation

Commission DisputesCausing Interference with a Transaction

TREC CCIM

TREC does not mediate or arbitrate commission disputes

Primary duty is to that of client

Have duty to arbitrate in accordance with requirements under Art. 17

Commission DisputesLack of Written Agreements

TREC CCIM

To maintain cause of action to enforce a commission must: (i) prove one is licensed; and (ii) produce the written commission agreement.

Does not apply to agreements between brokers

Must insure that all agreements are in writing, whenever possible, and kept current

Commission Disputes:Construction of Commission Agreements

Commission Disputes:Defending against the Defense when the Broker sues a Client for a Fee