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Real Estate Agency Supervision Responsibilities

Instructor: Shawn Grimsley
Licensed real estate salespersons and licensed and unlicensed people assisting them are not allowed to act without supervision. In this lesson, you'll learn about the supervisory responsibilities imposed upon brokers under state law.

Supervision at Brokerage Firms

Barney is the licensed broker who founded the WeSell4U real estate brokerage firm. He's licensed to serve as another person's agent for the sale or purchase of real estate. Barney works with Melvin, who is a freshly minted licensed real estate salesperson. While Melvin is licensed by his state to help people buy and sell real estate, he's not permitted to do this on his own. Instead, Marvin acts on behalf of Barney, his broker, subject to Barney's supervision.

Barney also has supervisory responsibilities concerning unlicensed employees at the firm such as secretaries, administrative assistants, and IT professionals. While a licensed salesperson may have managerial authority over his unlicensed real estate assistant, the broker will ultimately be responsible for the supervision of all unlicensed employees at the firm. In other words, while Barney may delegate supervisory authority to Melvin regarding Melvin's assistant, Barney is ultimately responsible for the actions of Melvin's assistant.

You should note that Barney may even be liable for the actions of a real estate assistant used by a licensed salesperson when the licensed salesperson is an independent contractor rather than an employee and the real estate assistant is not an employee of the broker. For example, Melvin is not an employee but rather works as an independent contractor. Melvin hires Betty as an unlicensed real estate assistant. Betty is employed by Melvin, not Barney's brokerage. Nevertheless, depending on the facts and circumstances and Barney's state law, it's possible that Barney will be liable for Betty's actions because he has supervisory responsibility over Melvin. Of course, Melvin may be responsible for the acts of his assistant to the same extent any other employer is responsible for the acts of its employees.

State law generally determines the supervisory duties and responsibilities of brokers. As you probably can guess, the law can vary a bit from state to state. We'll use Minnesota as an example, but you should keep in mind that your state may impose different requirements.

Responsibilities

Under Minnesota law, brokers like Barney are required to effectively oversee the conduct of both salespersons and employees under their management. The scope of Barney's supervisory responsibilities is pretty broad. Barney is responsible for monitoring all real estate documents (e.g., listing and purchase agreements) either produced by his salespersons or other employees or received by the real estate firm. Importantly, Barney as a broker is held accountable for the preparation of the documents, the accuracy of the documents and their custody and security. This is the case even if Barney delegates these activities to someone else at the firm, like Melvin. He also has to review all the trust account books and records to make sure the money is where it's supposed to be since that money doesn't belong to the brokerage firm.

Brokers like Barney are also responsible for addressing complaints lodged against Melvin and other licensed individuals under his supervision. This means he has to investigate the complaint and try to resolve it. Under Minnesota law, Barney has to maintain a complaint file containing all material information relating to each complaint for at least three years.

Multiple Offices & Brokers

Barney has built a successful real estate brokerage firm with offices in cities and towns across the state. Barney is required to have a designated broker licensed to act on behalf of the firm at each place of business.

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