Category : Risk Management

News Risk Management

New Airbnb disclosure law in California

New Airbnb disclosure law in California

In a matter of a few years, Airbnb has developed a global presence that has attracted many enthusiastic supporters as well as numerous vocal critics, especially those living in the neighborhood. Interestingly, during Airbnb initial attempts to gain venture capital funding, it seems that Brian Chesky, co-founder, took his idea to seven venture capital firms – five threw him out the door after 15 minutes and the other two didn’t even return his phone call. After all, why would anyone give the keys to their house to a stranger who might be a serial killer? And today, that goofball idea has a valuation of $10 Billion.

Airbnb has also attracted the attention of government regulators who have attempted to assert some controls over what is called “hosting platforms.” One law recently enacted in California is of special interest to landlords and property managers. The law — Business and Professions Code Sec. 22590, 22592, and 22594, effective January 1, 2016 — requires a “hosting platform” to warn a tenant that subletting the tenant’s residence may violate his/her lease and could result in eviction.

A “hosting platform” is a marketplace that is created to facilitate the rental of a residential unit offered for tourist or transient use for compensation to the offeror of that unit, and the operator of the hosting platform derives revenues, including booking fees or advertising revenues, from providing or maintaining that marketplace. Airbnb is an example of such a platform.

This law requires a “hosting platform” to provide notice to an occupant listing a residence for short-term rental that states:

“if you are a tenant who is listing a room, home, condominium, or apartment, please refer to your rental contract or lease, or contact your landlord, prior to listing the property to determine whether your lease or contract contains restrictions that would limit your ability to list your room, home, condominium, or apartment. Listing your room, home, condominium, or apartment may be a violation of your lease or contract, and could result in legal action against you by your landlord, including possible eviction.”

The notice must be in a particular font size and be provided immediately before the occupant lists each real property on the hosting platform’s Internet Web site in a manner that requires the occupant to interact with the hosting platform’s Internet Web site to affirmatively acknowledge he or she has read the notice.

Well, that’s the latest from California. It’s a disclosure law, one that probably doesn’t have compliance or enforcement teeth.

So, what’s the status of these Airbnb type short-term rentals in your neighborhood? Are they drawing the attention of local regulators?

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Copyright Data Licensing MLS (Multiple Listing Service) Risk Management

Copyright Infringement Issues with Listing Photos

Forget about baseball being the national pastime. I think today’s pastime is surfing the web and checking the wonderful photos of real estate properties, whether they be exterior or interior shots, luxury homes, aerial views, video tours, 3D Imaging, you name it.

But who owns the photograph and what rights do they have to stop a third party from infringing on those rights? Those and related issues are the focus of several Risk Management articles prepared by the legal staff at the National Association of REALTORS®.

In a September 2015 article “Who Owns Your Property Photos?” the author points out that: “Improper use of listing photographs, however, can create legal problems for agents, brokerages and MLSs. Authorship and ownership of photographs within the real estate industry is “fractured”. Who authored the photograph and who can use what photograph and in what way varies across the industry. Listing photographs may be taken by homeowners, real estate agents, MLS or brokerage employees, or professional photographers. Photographs may be owned or licensed to different parties in a variety of ways. A misunderstanding of how you may use the photographs for property listings could make you vulnerable to a copyright lawsuit.” http://www.realtor.org/law-and-ethics/who-owns-your-property-photos

The article cites an ongoing case alleging that Zillow continued to use the listing photos in connection with “sold” properties and that this use exceeded the scope of the photographer’s limited license to use the photographs only in connection with active property listings. VHT, Inc. v. Zillow Group, Inc., No. 2:15-cv-1096 (W.D. Wash. 2015). http://www.realtor.org/sites/default/files/court-records/2015/vht-complaint-2015-09-23.pdf

As part of a Risk Management Strategy, the article recommends that you:

  1. Review photography agreements to assess how you can use the photographs
  2. Audit photographs to ensure compliance with the relevant agreements
  3. Determine how you want to use listing photographs and ensure that future agreements permit those uses
  4. Maintain a record of all photography agreements

To that end, NAR provides some Sample Photography Agreements for you to review with your attorney:

So, what happens when you display on your website listing photos provided by other brokers under IDX rules and it turns out that one of those photos is now the subject of a copyright infringement claim by the photographer? There was no way for you to know about the infringement claim. How can you protect yourself?

As suggested by NAR’s Associate Counsel Chloe Hecht in a five minute video clip “Window to the Law: Listing Photo Copyright Issues,” you can limit your liability for copyright infringement by complying with the federal Digital Millennium Copyright Act (DMCA) which provides a “safe harbor” if a third party uploads infringing content on your website. You’ll need to designate a copyright agent on your website and with the Copyright Office; implement a DMCA-compliant website policy; comply with the DMCA takedown procedure; and have no knowledge of the complained-of infringing activity.
http://www.realtor.org/videos/window-to-the-law-listing-video-copyright-issues?cid=RISVID0022

 

In short, be respectful of the photography rights of others and be clear about what rights you grant others to use your listing photographs. And, as recommended in these articles, carefully review the relevant photography agreements.

 

 

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Data Licensing Personal Information Risk Management Uncategorized

How's Your PII Data Awareness?

It is time to come up to speed with your awareness of PII and its impact on real estate practices.

REALTOR® University recently launched a 4 hour online training course for REALTORS® and Association and MLS staff on privacy and data security. “Enhance Your Brand & Protect Your Clients with Data Privacy & Security.” This Data Security and Privacy Course aims to educate real estate associations, brokers, agents, and multiple listing services about the need for data security and privacy; and to assist them in complying with legal responsibilities.

In a NAR Legal Update presentation, NAR Associate General Counsel Ralph Holmen made these key points on Data Security and Privacy:

  • « Not just an issue for “big companies.”
  • « Every brokerage office maintains personally identifiable information (PII).
  • « Extensive state regulation of collection and retention of PII
  • « Most states address collection, disposal, and breach notification of PII.
  • « Some real estate license regulations address licensees securely maintaining and destroying records, including transaction docs.
    • Tennessee regulation requires principal brokers to develop and utilize a retention schedule.
    • South Dakota applies a policy describing 11 requirements for safeguarding electronically stored records.
  • «No Federal data security, privacy, and breach notification laws yet, but being considered.
  •  What is personally identifiable information?
  •  Defined by state law, but generally means:

« First name/initial and last name in combination with any of the following:
« Social Security Number
« Driver’s license or state-issued ID number
« Financial account number
« Medical/health information

  •  Social Security Numbers found in:
    •  Sales contracts
    • Credit/background checks on renters
    • W9s (collected by listing brokers from individuals receiving more than $600 cooperating commission)
  • « Driver’s license or state-issued ID numbers found in:
    •  Clients’ driver’s licenses (collected as safety precaution)
    •  Rental applications; credit/background checks
  • « Financial account number found in:
    •  Personal checks given as earnest money
    •  Mortgage account number on HUD-1
    •  Credit/background checks on renters
    • Earnest money checks
  • « Other:
    • Employee/agent records maintained in HR files contain many PII elements
    •  Copies of loan documents or credit card payments related to transaction even without asking clients to provide such information
  • Where is PII stored?
  • « Broker email systems and networks
  • « Scanners, copiers, and fax machines
  • « Agents’ personal email
  • « Agents’ mobile text
  • « Agents’ personal home computer/laptop
  • « Cloud storage facilities
  • « Physical file cabinets
  • What’s the cost of a breach?
  • « Operational expenses (i.e., damage to systems; time spent investigating breach and working with law enforcement)
  • « Cost of breach notification (avg. $194 per record)
  • « Civil penalties
  • « Annual audit/reporting requirements
  • « Negative public perception
  • « Potential future liability (i.e., ID theft)

Five Step Program – http://www.realtor.org/articles/five-steps-towards-achieving-data-security

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Risk Management Uncategorized

'Cite and Fine' Regulations

Most states have very comprehensive real estate licensing laws. I’ve written about them in several books, as well as taught them for years in pre-license and continuing education courses. The problem has been with the lack of enforcement due greatly to the human resources and expense required for disciplinary administrative hearings.

California has just introduced a “cite and fine” program for real estate — it is not unlike the issuance of traffic citations. According to the California Bureau of Real Estate, “a citation or other formal action will be considered when a violation is found after an investigation, audit, or examination of a licensee’s records by CalBRE in response to a complaint, through random selection of a licensee for an office visit, or from completion of a routine audit. Depending upon the nature (such as the level of seriousness and potential for harm) and type of the violation, the appropriate action will be determined.”

The Bureau says that “a citation is likely the appropriate action” in cases of “relatively minor and technical violations, especially in those instances where there has been no injury or loss to a consumer…The citation will identify the violation(s) you committed, provide information on how to pay the fine, describe any corrective action needed (if necessary), and explain the process for contesting the citation, if you choose to.”

The new law is found in Business and Professions Code 10080.9 and Commissioner’s Regulations 2907 (effective July 1, 2014). It applies to licensees as well as to unlicensed persons who are doing things that require licensure.  The Bureau “considers the issuance of citations an opportunity to help educate both licensees and nonlicensees alike and to encourage and reinforce compliance with Real Estate Law.”

Last week I happened to drive by a neighborhood in which I counted 12 Open House signs by one broker within 100 yards of the subject property. In addition to confiscating the signs, I wonder if the government’s issuance of a fine would help persuade the broker to take a more common sense approach to promoting the open house.

Source: Bob Hunt, Realty Times 

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Risk Management Uncategorized

Are You A Team Player?

We are starting to see more jurisdictions addressing the issue of advertising by real estate “teams.”

In addition to pending legislation in California , New York has amended its advertising rules to specifically cover real estate teams. It is absolutely essential under both state’s rules that the name of the brokerage appear whenever there is a real estate ad in the name of a team.

On our regular neighborhood bike ride last week, Saul pointed at a For Sale sign that named the broker and also contained a rider that instead of saying, say, “The Reilly Team” said “The Reilly Office” — under the New York rule cited below, that would be a violation.

Let’s highlight some of the key final-advertising-regulations on 19 NYCRR section 175.25 Advertising that went into effect in January 2014:

* “Team” means two or more persons, one of whom must be an associate real estate broker or real estate salesperson, associated with the same real estate brokerage who hold themselves out or operate as a team.

* Team names shall either: (i) include the full licensed name of the real estate brokers, associate brokers or real estate salespersons who are part of said team, or (ii) if the names are not included, the team name must be immediately followed by “at/of [full name of the broker/brokerage].” Team names shall use the term “team.” The use of any other terms besides “team,” such as “associate,” “realty” or “group” is prohibited. The use of the name of a non-licensed individual in a team name is prohibited. For twelve months after the adoption of this regulation, teams that have changed their name to comply with this provision shall be entitled to state in advertisements under their new name that they were ‘formerly known as’ their prior team name.
If any unlicensed individuals are named in advertising for a team, the advertisement must clearly and conspicuously state which individuals are real estate licensees and which ones are not.

* Only a real estate broker is permitted to place or cause to be published advertisements related to the sale or lease of property. Advertisements placed or caused to be published by an associate real estate broker, a real estate salesperson or a team for the sale or lease of property listed with or represented by a real estate broker are not permitted except where the property is listed with or represented by the real estate broker with whom the associate real estate broker, real estate salesperson or team placing the ad is associated and said real estate broker approved placement of the advertisement.

* Where an advertisement includes the name of an associate broker, real estate salesperson or a team, the name of the real estate broker and/or real estate brokerage must also be printed in the advertisement.

* Logos. A real estate team, associate real estate broker or real estate salesperson may use a logo different from that of the real estate broker or real estate brokerage with whom they are associated, provided that the name or logo of the real estate broker or real estate brokerage is also printed in the advertisement. “Logo” means a graphic mark used to identify a real estate broker, associate broker, salesperson or team, but not a photograph of a real estate broker, associate broker, salesperson or team contained in an advertisement.

* Web-based advertising —  Websites created and maintained by associate real estate brokers, real estate salespersons and teams are permitted, provided that said associate real estate brokers, real estate salespersons and teams are duly authorized by their supervising real estate broker to create and maintain such websites and such websites remain subject to the supervision of the real estate broker with whom the licensees are associated while the website is live.  Every page of such a website shall include the information required by these rules and regulations. In addition, a link to the broker or brokerage website with whom the associate broker, salesperson or team is associated is required on the homepage of the associate broker, salesperson or team website unless the broker or brokerage does not have a website.

Also, here’s an interesting part of the New York law that might be directed at pre-MLS ads: Advertisements referencing property not listed with broker — Any advertisement that references or includes information about a property that is not listed with the advertising broker or was not sold by the advertising broker shall prominently display the following disclaimer: “This advertisement does not suggest that the broker has a listing in this property or properties or that any property is currently available.” Such advertisement: (i) shall not suggest, directly or indirectly, that the advertising broker was involved in the transaction and (ii) shall not refer to property currently listed with another broker absent consent…”

The pending legislation in California that is likely to pass shortly addresses a concern that the increased use of team names made it difficult for consumers to identify who were the actual responsible parties of real estate activity conducted by agents affiliated with a team. All marketing material and “for sale” signage using the Team Name must include the broker’s identity in an “equally as prominent” format. California brokers will need to take this pending law into consideration as they evaluate purchasing signs for next year.

 

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Education & Training Risk Management

New Risk Management Resource

Legal Pulse

There’s a great new real estate risk management resource available on Realtor.org. The National Association of REALTORS® Legal staff recently introduced the online quarterly Legal Pulse Newsletter “where law and statistics come together to keep you informed on real estate liability issues.”

The first edition of The Legal Pulse examines three areas where licensees can face liability – agency, property condition disclosures, and RESPA, as well as some employment issues that can cause legal problems.

There is also a short video by NAR’s Senior Counsel, Finley Maxon, who discusses the First Quarter 2014 Legal Pulse Newsletter. This video covers highlights from the newsletter, including cases and statutes related to Agency, RESPA, Property Condition Disclosure, and Employment Issues.

AND, here’s a bonus for you Legal Eagles out there:  a great resource of references and Internet links to state by state sample legislation and administrative regulations addressing legal topics of interest. The NAR/ARELLO Archive is a compilation of new types of laws collected over the past few years.  This resource is helpful to guide states that may want to adopt similar laws in their state. There is a Table of Content by State and By Topic. Note that there is a pretty powerful “Enter Search Term” feature – for example, enter the term “procuring cause” and enjoy!

These resources should give us all some help with our Risk Management practices.

You can also find Risk Management issues discussed in the Facebook Real Estate Risk Management Group managed by Frances Flynn Thorsen. This is a closed group (875 members) so you’ll need to ask to Join Group.

Be careful out there!

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