This article is part of an ongoing series covering violations of real estate law. Here, the Department of Real Estate (DRE) revoked the California real estate license of a broker who advertised real estate services without disclosing his license identification number, claimed to perform mortgage loan originator (MLO) services without holding a valid license, and used unlicensed fictitious business names on his website.
In January 2022, the California Department of Real Estate (DRE) decided by default decision to revoke the license of E Olufunmilayo Ogunlalaka, a broker since 1994 operating out of Pasadena, California. The decision became effective March 2022.
Ogunlalaka was licensed to do business only under the fictitious business names “Earthscape Financial Services” and “Earthscape Realty.”
Ogunlalaka maintained a real estate website, “realestateworlds.com.” Despite advertising real estate services requiring a license, Ogunlalaka failed to display his real estate license number.
Further, he also advertised his services under unlicensed fictitious business names: “realestateworlds.com,” “Earthscape Real Estate Financing” and “Ed Layo.”
As an additional violation, Ogunlalaka claimed on his website to be an “Independent Mortgage Broker” and advertised services requiring an MLO endorsement. However, Ogunlalaka had never been issued an MLO license.
Ogunlalaka’s use of his real estate website contained three different violations, all of which constitute cause for the suspension or revocation of his license, including:
- his use of unlicensed fictitious business names to advertise activities requiring a real estate license [Calif. Business and Professions Code §10159.5; DRE Regulations §2731];
- his failure to list or display his real estate license number on solicitation materials, which includes his website [Bus & P C §10140.6; DRE Regs. §2773]; and
- his offer to engage in MLO activities without first obtaining an MLO license endorsement. [Bus & P C §10166.02]
The DRE incurred costs totaling around $2,090 through their investigation and enforcement of Ogunlalaka’s violations of real estate law.
The DRE’s mission is to safeguard and promote public interests in real estate matters. Their purpose is to effectively advocate for consumers by monitoring and regulating industry practices and licensee behavior.
Thus, when a website or other point of contact with consumers is found to willfully disregard real estate law and demonstrate negligence on behalf of the licensee, the DRE steps up and takes charge to advocate for consumer safety and the integrity of a real estate license — just as it is entrusted to do. [Bus & P C §§10177(d), 10177(g)]
Maintaining a DRE-compliant real estate website
Advertising is a fundamental part of a licensee’s ultimate success.
Advertising introduces the licensee, their activities and services and the messages they want to convey to potential clients. Advertising is a form of communication which uses signs, symbols or actions to create brand awareness and promote a positive image of the licensee.
Although real estate licensees may use different strategies for advertising, above all else, a licensee’s advertising needs to be lawful.
When advertising, on a website, in print or otherwise, real estate licensees are required to provide their name, DRE license number, Nationwide Mortgage Licensing System (NMLS) ID number (when applicable) and their responsible broker’s identity. [Bus & P C §10140.6]
Digital advertising: A compliance hot spot for brokers
Solicitation materials where this requirement applies include:
- business cards;
- websites owned and maintained by the soliciting real estate licensee;
- promotional and advertising flyers, brochures, postal mail, leaflets and FARM letters;
- advertisements in electronic media (including internet, email, radio, cinema and television);
- print advertising in any newspaper or periodical; and
- “for sale,” “for rent,” “for lease,” “open house,” and directional signs that display the name of the licensee. [DRE Regs. §2773]
The responsible broker’s identity refers to the employing broker’s name and license number, not merely a team name or fictitious business name filed by the sales agent with the broker’s authorization. [Bus & P C §10159.7]
A team name is not considered a fictitious business name when the team name:
- is used by two or more real estate licensees who work together to provide licensed real estate services under an employing broker;
- includes the surname of at least one of the licensees in conjunction with the term “associates,” “group” or “team”; and
- does not include the term “real estate broker,” “real estate brokerage,” “broker” or “brokerage,” or any other term suggesting the licensees are offering real estate brokerage services independent of a broker. [Bus & P C §10159.7]
Any marketing materials using a fictitious business name or team name need to conspicuously display:
- the licensees’ names and license numbers; and
- the broker of record’s identity prominently as the fictitious business name or team name. [Bus & P C §10159.6]
Under California law, real estate agents cannot provide or advertise real estate services independent of their employing brokers. In practice, agents are agents of the agent — their employing broker who is tasked with the legal obligation to review, oversee, inspect and manage the practices of the agents they employ.
Further, it is a violation of real estate law when a fictitious business name does not reference the affiliation of the agent’s employing broker. [See RPI e-book Office Management and Supervision, Chapter 5]
Noncompliance by an agent or employing broker may result in:
- disciplinary action by the DRE;
- criminal prosecution; or
- both DRE disciplinary action and criminal prosecution.
For more information about advertisement compliance, visit the DRE’s website and locate the DRE’s Real Estate Advertising Guidelines informational booklet. [See RE 27]
The virtual real estate broker in a DRE world
Want to learn more about marketing and advertising? Click the image below to download the RPI book cited in this article.