PROPER USE OF FOR SALE SIGNS

by Miriam J. Beer
Assistant Legal Counsel

In other words, this rule prohibits real estate salesmen and brokers from advertising property in such a way that it appears that the property is being offered for sale directly by the property owner. Instead, any real estate ad, including "For Sale" signs, must clearly reflect the licensee's involvement in the sale.

In addition, when property is offered for sale by a licensed salesman, the sign must state the brokerage firm with which the salesman is associated. A sign which reads, "For Sale, ABC Realty, Contact John Doe, salesman, at 555-1111" satisfies the requirements of the rule.

Real estate licensees must obtain permission from property owners before placing any signs on their property. Normally, the property owner will, in the listing contract, either grant or deny permission to place a sign on the property. If the property has not been listed for sale, licensees must be especially careful to obtain the owner's permission before placing a sign on the property. If permission is not granted, either in the listing contract or by a separate agreement, no sign is allowed.

Clearly, a real estate licensee should never place a sign on property which indicates that it is for sale when it is not. Licensees sometimes place "For Sale" signs on property hoping to find an interested purchaser, and then introduce the purchaser to the owner in the hope that the owner will agree to sell the property. This conduct, however, is deemed both a misrepresentation and improper conduct under the Real Estate License Law.

Similarly, a licensee may not place directional signs (signs which use arrows or other means of indicating the location of the property which is for sale) or other signs on property without the permission of the owner of such property.

State law also prohibits placement of private signs on a right-of-way, median or other property belonging to the state highway system. In addition, licensees should first obtain permission from their local government before placing signs on city street right-of-ways, even if the local government dues not prohibit signs on its property. Furthermore, local governments may have ordinances which limit the placement of "For Sale" signs anywhere other than on the owners' property, or which otherwise limit the size or placement of signs.

"SOLD" Riders Many licensees customarily place a "SOLD" rider on their "For Sale" signs at the time they secure a purchase contract signed by both the buyer and seller. Courts in other states have ruled that the word "sold" may be a misrepresentation because it implies that the transaction has been completed, when in fact, only a contract exists. Although the North Carolina courts have not addressed this issue, the Real Estate Commission recommends that licensees use riders which state "Under Contract," "Sale Pending," or "Contract Pending" instead of "Sold" riders. This will avoid any accusation of misleading or deceiving the public. Once the transaction has been closed, a "Sold" rider may then be placed on the "For Sale" sign.

Some licensees have been known to place "For Sale" signs on property when that property has already been sold. This occurs primarily in the area of new construction, where a residential property is being built pursuant to a contract with a known purchaser. In these cases, the property is not actually for sale at all; it is either sold, or a contract is pending. The sign is used to lure would-be purchasers to the property, and then to convince them to hire the builder or to buy another one of the builder's properties. In such circumstances, the use of a "For Sale" sign is misleading and constitutes a misrepresentation in violation of the Real Estate License Law. Licensees should instead use a "For Sale" sign with a "Contract Pending" or "SOLD" rider on it, depending upon whether the property is under contract or the transaction has already closed.

Careful attention to the above guidelines before, during and after any real estate transaction will help ensure the proper use of "For Sale" signs in compliance with the License Law and Commission Rules.