Looking back: A brief history of real estate team crackdowns

By Jim Dalrymple, Inman staffer

Last month, lawmakers in Connecticut passed a new law that will significantly regulate how teams can operate. The biggest news is that the law will limit what teams can call themselves, potentially forcing teams up and down the state to rebrand. However, the law also has various other components, such as the requirement for teams to register with the state. Connecticut is a small state, and in the grand scheme, the law will impact only a small percentage of the total number of teams in the U.S. But the episode also represents a standout chapter in a story about growing regulation for teams all across the country. Indeed, this isn’t the first time regulators have put real estate teams in their crosshairs, and it surely won’t be the last.

To get a sense of what team regulations already exist, here is some of the previous reporting done at Inman. A 2016 South Carolina law included a variety of regulations about advertising, management and team names — the most notable of which was that teams could no longer use the terms “realty,” “real estate,” “realtors,” or similar terms.

The rule emerged out of concerns that consumers were being misled into thinking teams were actually brokerages. At the time, Nick Kremydas — the CEO of South Carolina Realtors — cited complaints about teams and ultimately described the rule as a compromise. Despite that framing, however, brokers such as Stephen Cooley argued at the time that the rules would ultimately force teams to undertake costly rebranding efforts.

California’s real estate regulator appears to be getting fed up with agents who mislead consumers into believing they are brokers — and with the brokers that support the practice — and it’s not alone. What constitutes misleading consumers? It could be as simple as an agent using a fictitious business name ending in “Real Estate” or an agent branding him- or herself as an “independent” real estate professional.

In March, the California Bureau of Real Estate (CalBRE) issued a licensee alert warning that agents who violate these laws — and brokers who let their agents engage in such activities — risk significant fines, license revocations and even criminal prosecution.

Other states are also contending with the gray area of agent branding, and this latest advisory indicates that the issue will continue to be a regulatory focus in the Golden State and beyond.