Since January, applicants for salesman licenses have no longer been required to have a supervising broker in order to take the licensing examination. However, a designated supervising broker is still required before an active license can be issued to a salesman and before the salesman can engage in the real estate business. However, despite this more lenient policy, we find that a number of applicants prefer to have active salesman licenses even though they do not intend to use the license. To obtain an active license, they find a broker who will agree to "sponsor" them and to "warehouse" their license. We are even aware of incidents where the broker gives the license certificate to the salesman. Warehousing the licenses of inactive salesmen and relinquishing possession of licenses to salesmen can have very serious consequences for both the supervising broker and the salesman.
Regarding the broker, there is the danger that the salesman may occasionally engage in licensed activity without the broker's knowledge. For example, "helping" a relative purchase a home, or referring a prospective buyer or seller to another broker upon the promise or expectation of compensation. Should the salesman perform these or any other acts which require a real estate license without his broker's supervision, the broker could be held to be in violation of the License Law.
As to the salesman, should the salesman represent and/or receive any compensation from a broker other than his designated supervising broker, or otherwise operate as a salesman without the supervision of his broker, such salesman may also be considered to be in violation of the License Law.
CAVEAT: Brokers should not agree to sponsor or supervise salesmen unless they in fact intend to exercise proper supervision over the salesman. Failure to properly supervise a salesman can result in loss of licensure to both the supervising broker and the salesman.