Trade names Codes of ethics Disclosure / Fraud and negligence Brokerage cooperation


Trade Names

Brokers register their brokerages under the broker’s legal name or the business’s legal name. They may also register under a trade name, a fictitious name other than their own name that the broker would like to use for the brokerage. The trade name must appear on the broker’s license and registration and must be unique from any other business or trade name.

The broker may only register under one trade name and must have a new license issued if he or she changes the trade name. The registered trade name must appear on all brokerage signage and advertising.

Sales associates are not permitted to use a trade name or fictitious name. They must register under their real names and have only the real name show on the license.

Display of names. FREC administrative rules prohibit licensees from using or displaying any name, insignia, or designation of a real estate association or organization unless they are authorized to do so.


Codes of ethics          

The real estate industry has developed a code of professional standards and ethics as a guideline in serving the real estate needs of consumers. This professional code has emerged from three primary sources:

  • federal and state legislation
  • state real estate licensing regulation
  • industry self-regulation through trade associations and institutes

Federal legislation focuses primarily on anti-discrimination laws and fair trade practices. State laws and licensing regulations focus on agency and disclosure requirements and regulating certain brokerage practices within the state jurisdiction. Real estate trade groups focus on professional standards of conduct in every facet of the business.

By observing professional ethics and standards, licensees will serve clients and customers better, foster a professional image in the community, and avoid regulatory sanctions and lawsuits.

Today’s professional ethics are not only important for one’s career; they are also legal imperatives. Unethical practice, such as misrepresentation of material facts, fraud, and culpable negligence, is prohibited and punishable in all aspects of real estate practice.

Disclosure                   

Proper disclosures are an integral part of ethical behavior. In compliance with applicable laws and to promote respect for the real estate profession, licensees should be careful to disclose

  • that the agent is going to receive compensation from more than one party in a transaction
  • property defects if they are reasonably apparent; however there is no duty to disclose a defect which it would require technical expertise to discover
  • any interest the agent has in a listed property if the agent is representing a party concerning the property
  • any profits made on a client’s money
  • the agent’s identity in advertisements
  • the agent’s representation of both parties in a transaction
  • the existence of accepted offers
  • identity of broker and firm in advertising as required by state law

 

Fraud and negligence                  

Fraud. Fraud is a misrepresentation of a material fact used to induce someone to do something, like sign a contract. Actual fraud occurs when one person intentionally deceives another person by misrepresenting a material fact that induces the person to rely upon the fact. Negative fraud is intentionally failing to disclose a material fact.

For a cause of action for fraud to be initiated, the following elements must exist:

  • The licensee must have misrepresented a material fact or must have failed to disclose the material fact.
  • The licensee must have known or should have known that he or she was misrepresenting the fact or that he or she should have disclosed the fact.
  • The buyer or other party to whom the licensee misrepresented the fact relied on what the licensee said.
  • The buyer or other party to whom the licensee misrepresented the fact or failed to disclose the fact was damaged as a result of the misrepresentation or omission.

Culpable negligence. Culpable negligence occurs when a person, such as a real estate broker, does not perform his or her required duties and responsibilities as the broker knows he or she should. The failure to perform need not be intentional to be considered negligent. It is more of a disregard of the duties and consequences of not performing them. Remember, one fiduciary duty of brokers is skill, care, and diligence. Failure to perform real estate activities with skill, care, and diligence may be ruled culpable negligence. In Florida, culpable negligence is not only unethical but is also a misdemeanor of the second degree.

Brokerage cooperation                

Professional conduct excludes disparagement of competitors. Real estate professionals also

  • forgo pursuit of unfair advantage
  • arbitrate rather than litigate disputes
  • respect the agency relationships of others
  • conform to accepted standards of co-brokerage practices