Real Estate Journal — Brokerage Directory — July 29 - August 11, 2016 — 9C
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any commercial bro- kers have little rea- son to think about By Neil Stein, Kaplin|Stewart The federal government traps commercial real estate brokers in its regulatory scheme M authority to examine privacy policies and practices for de- ception and unfairness. mortgage industry and ap- plies to all entities within the FTC’s jurisdiction (including
civil penalties. FTC Green Guides. The FTC enforces regulations designed to penalize market- ers who make untrue claims about the environmental at- tributes of real estate. FTC regulations apply to bro- kers who have made broad, unqualified claims that a building is “environmentally friendly”, “eco-friendly” or en- vironmentally “certified.” The FTC believes that such claims are likely to be exaggerated. If a broker makes an inaccurate written or verbal statement extolling the environmental or energy saving virtues of a
building, or that some level of environmental certification has been conferred when it has not, harsh civil penalties for deceptive practices may be the result. There is good and bad news. The bad news is that I didn’t cover any of the state regula- tions. The good news is that there are too few regulators. However, if you don’t want to play those odds, there are protective measures you can take. Unfortunately, I have already hit my word limit. Neil Stein is a principal at Kaplin|Stewart in Blue Bell, PA. n
being sued. Their clients are typically sophisticat- ed par t i es who want to make a deal a n d mo s t d e a l s a r e l awy e r e d -
“While everyone is enjoying a fruitful comeback from the nasty real estate downturn, Congress has been creating a new regulatory framework that may be beyond your E & O coverage.”
The MAP Rule. The Mort- gage Acts and Practices - Advertising Rule (the MAP Rule) gives the FTC the power to seek civil penal- ties for deceptive mortgage advertising and for breach of record-keeping requirements. The Rule extends beyond the
real estate agents and bro- kers). Anyone subject to the rule must maintain records of specific forms of communica- tion for 24 months. Failure to retain these records my constitute a violation of the MAP Rule and subject the violator to some very harsh
Neil Stein
up. Disclosure issues do not pop up as frequently in commercial transactions as in residential transactions. However (you knew it was coming), trouble may be on the way from the biggest and most well-funded antago- nist, the federal government. While everyone is enjoying a fruitful comeback from the nasty real estate downturn, Congress has been creating a new regulatory framework that may be beyond your E & O coverage. Securities Laws . Brokers sometimes partner with con- tractors and developers, and may raise capital from in- vestors. When a deal sours, it’s not just your partner or investor who may file suit. I’m willing to bet that some aspect of your transaction may have violated the Securities Act of 1933 or the Securities Exchange Act of 1934. You may have inadvertently sold a security, e.g., a partnership or LLC interest, which must either be registered with the SEC or fall within an exemp- tion. Even an exempt sale is subject to certain compliance requirements. The penalties for non-compliance may be both civil and criminal. Privacy Regulations. The Federal Trade Commis- sion’s “Privacy Act” requires “financial institutions” (de- fined broadly to include com- mercial brokers) to explain their information-sharing practices to customers and to safeguard sensitive data. You all have “sensitive data” in your files, Brokers have become increasingly depen- dent on social media. Data breaches pose a series of risks, from financial to rep- utational. Liability could result from simply using the wrong photos of a property. The FTC may bring an en- forcement action in federal district court and may seek the full scope of injunctive and ancillary equitable re- lief. The FTC also has the
Firmly Rooted in the Law and in the Community We are well grounded in every facet of real estate law, from acquisition to construction. We are committed to serving the needs of our clients and our communities.
Contact: NEIL A. STEIN • nstein@kaplaw.com 910 Harvest Drive, Blue Bell, PA 19422-0765 • 610-941-2469 • www.kaplaw.com Visit our Real Estate Blog: www.philadelphiarealestatelaw.com Visit our Construction Blog: www.pennsylvaniaconstructionlawyer.com Other Offices: Cherry Hill, NJ 856-675-1550 • Philadelphia, PA 215-567-3120 Kaplin Stewart A t t o r ne y s a t L aw
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