Division of Real Estate Considers Regulation of Team Names
August 24, 2018 |
The Division of Real Estate has circulated a draft administrative rule to real estate industry stakeholders for review and comment. One such draft proposes to add restrictions on words a real estate team may include in their team name. Real estate teams have operated in Ohio for more than fifteen years, spending significant resources on advertising, and promoting the team and the services its members provide. Although teams are accustomed to complying with equal prominence and other advertising requirements, the Division has not historically regulated the actual name of a team.
The proposed rule requires the following:
- Include in any advertising, the name and license number of at least one of the team members;
- Display the broker or brokerage’s name in equal or greater prominence than the team name;
- Identify as “unlicensed” any persons whose names appear in advertising that are not licensed;
- Include the term “group” or “team” in any advertising;
- Not use the word “realty”, “real estate”, or “associates” in the team name.
The proposed restrictions on team names (i.e. requiring the use of “group” or team” and restricting the use of “realty”, “real estate,”, or associates”) may impact existing team names. Currently, the Division has operated under a policy prohibiting the use of the word “realty” in any team name. This policy was published in the Division’s Winter 2016 Newsletter. It is possible the Superintendent’s policy objective was to assure consumers are not confused that an unlicensed team is a properly licensed real estate brokerage. However, those that began using a team name prior to the announcement of the policy may have a property right in the name and therefore be grandfathered from any change in the law as it relates team names. Grandfathering would prohibit the Division from retroactively applying the new law to existing team names.
A couple of considerations will be whether the team name pre-dated the 2016 policy announcements and whether the name is a recognized service mark or trademark having been used in commerce for many years. If so, the Ohio Supreme Court has ruled that the goodwill of a trademark is a valuable property right.
The Ohio Constitution specifically prohibits retroactive statutes and rules, as unconstitutional, unless certain conditions are met to allow the statute or rule to be applied retroactively. First, the statute (or in this case rule) must specifically say it is to be applied retroactively. Second, the statute or rule cannot substantively impair a vested property right. Because the Ohio Supreme Court has already held that the goodwill from a service mark or trademark is a valuable property right, there is an argument that any retroactive rule would substantively impair a vested property right and therefore be unconstitutional. For example, a rule prohibiting the use of the word “realty” in a team name could not be applied retroactively, as such a rule would impair the owner’s vested right in the team’s service mark or trademark.
Likely exiting teams have expended thousands of dollars on advertising and years building a reputable team name in central Ohio. The Division’s proposed rule prohibiting use of the word “realty”, “real estate”, or “associates” in a team name would likely impair a licensee’s “valuable property right” in the service marked or trademarked team name.
As discussed above, the proposed rules are currently in draft form, and have not been formally filed for adoption. Once they are filed, they will be published in the Register of Ohio and will be subjected to a public hearing where licensees can comment on their possible impact on the industry and a licensee’s practice.