As real estate agents go about their work, potential legal issues can lurk and strike unexpectedly. A legal expert took the stage at Inman Connect New York 2019 Tuesday morning to help agents and brokers avoid that fate.
“I was watching everyone walk in and none of y’all are going to do well in prison,” Trista Curzydlo, an attorney and instructor and facilitator at C4 Consulting, told conference attendees, prompting laughter.
She tackled six legal pitfalls agents and brokers can fall into if they’re not careful.
1. Copyright and intellectual property
The independent contractor agreement between an agent and a broker should address who owns the copyright of pictures taken by the agent, according to Curzydlo.
Should that agent leave and still have active listings, state law and the independent contractor agreement determine what happens to the listing, but may not say what happens to listing photos, she said.
“You need to have that in the agreement: Do the pictures stay, or do the pictures go? And then what happens to other intellectual property as well,” she said.
Those who want to claim statutory damages if someone uses their images without permission should register their copyright in those images ahead of time, she added.
For those tempted to use images found on Google or provided by the seller from a wedding at the listing last summer or taken by the previous listing agent for an expired listing, don’t.
Agents should know who took the photos they’re using and who the intellectual property belongs to, Curzydlo said.
2. Deceptive images
The ability to virtually stage properties has improved along with technology, so much so that homebuyers may not realize that what they’re looking at has been digitally enhanced.
Curzydlo and her husband (also an attorney) are looking for a home and came across a listing that did not match its photos at all. The online listing even featured a luxurious closet that didn’t exist.
“It was not just virtually staged, it was virtually remodeled,” she said. Attendees chuckled.
What could be the consequences of that, asked moderator Joseph Rand, managing broker and general counsel for Better Homes and Gardens Rand Realty.
“It is a deceptive trade practice under the Federal Trade Commission, or it could be misleading advertising under state law,” Curzydlo said.
“So you want to make sure you’re making full disclosure. ‘This property is virtually staged. This property is virtually landscaped. This property has a closet that’s been virtually created.’
“Have it in the remarks that it’s virtually staged. Put it in the ads that it’s virtually staged,” she said.
3. Audio-visual recording
Many homes have listening and recording devices such as Google Home or Amazon Echo. When an agent represents a seller and that seller is recording everything that’s happening in the property, including when it’s being shown or during an open house, it’s the agent’s responsibility to ask if the seller is recording, according to Curzydlo.
“You can’t bury your head on this one. You need to know. ‘What are you recording, when are you recording, where are the cameras. I want to know what’s going on,'” she said.
Even if the issue of recording is included in the listing agreement, don’t assume the seller has read that agreement, she added — ask.
“And then make that disclosure in writing as many times as you can, as many places as you can so that the buyer’s agent knows,” she said.
“And as a buyer’s agent, you want to have a conversation with your client in advance even if you don’t know it’s being recorded say ‘it’s likely that what you say is being recorded.'”
Agents should advise buyers not to reveal too much while on the property, thereby giving their negotiating power away. So buyers can say it’s a nice house, but not something like “What do I need to do to buy this house, I’ll do anything,” Rand said.
States around the country are legalizing marijuana for either medicinal or recreational purposes or both. But if a commercial real estate agent is approached by a marijuana business, a boilerplate lease is not going to work, according to Curzydlo.
Such leases usually say that the tenant will agree to follow all laws, for instance, which someone who handles marijuana cannot actually promise because the drug is still illegal under federal law.
5. Smart-home technology
“The legal issue is do you take it when you leave, or does it stay?” Curzydlo said.
Generally, if something is attached to the house, it stays. For instance, the doorbell Ring and the thermostat Nest are wired in, so when selling a home, the contract should spell out how these devices are going to be reset so that the previous owner doesn’t have access to them after closing, Curzydlo said.
If the blank contract that comes from the agent’s Realtor association doesn’t address issues such as recording, cannabis or smart home devices, that doesn’t mean agents and brokers should start adding to the contract, she added.
That could mean getting in trouble for the unauthorized practice of law. Instead, make friends with your attorney ahead of time, she said.
“Meet with me in advance and say, ‘As this is becoming an issue in my business, what language do I need to have included in my contract so that I can make it standard?'” she said.
The legal issue most salient in regards to agent teams is what you can require from an independent contractor, according to Curzydlo. Behavioral control, financial control and the possible liability that’s associated with an independent contractor as opposed to an employee are all factors.
“When you start looking at bringing in team members, you need to keep in mind ‘I can’t control everything the member of my team does. They are an agent of the broker. I just happen to be a conduit for them, and so I can’t mandate that they’re Monday through Friday, 9-to-5.’ That is behavioral control,” she said.
“If a broker couldn’t say that about an agent coming on board a brokerage without them becoming an employee, you can’t do it within the team. If you do [expect to have behavioral control], then they’re an employee. Start paying their taxes.”
Rand had one last piece of advice: “When you have a question, if you feel like you’re in a dangerous area, go find an attorney.”