By Marilyn E. Tomei, Associate Legal Counsel
This is required reading for Brokers-In-Charge of of flees of real estate firms owned by another person or entity and offices with salesmen in managerial positions.
The Commission's Rules require that every firm and branch office have a Broker-In-Charge, and that no broker may be Broker-In-Charge of more than one office or branch office "Office" is defined as any place where activities requiring licensure are performed. However, the rules do not require that owners of real estate firms be licensed brokers, or that they be licensed at all! Consequently, some real estate firms are either wholly or partially owned by licensed salesmen or unlicensed persons.
Problems are likely to arise whenever a Broker-In-Charge is not the "boss" at the office for which he or she is responsible especially when the "real boss" is a licensed salesman or is not licensed at all. The following examples illustrate the type of problems that may be encountered:
Scenario # 1
A real estate firm is owned by a licensed salesman who has retained the services of a broker to act as Broker-In-Charge of the firm's office. On the first day of work, the Broker-In-Charge asks the receptionist/bookkeeper to make sure that he gets the bank statement for the escrow account, every month so that he can balance the account and keep his records of the escrow account in proper order. Two months pass and the broker has not yet seen a bank statement. He asks the receptionist about this and is told that the salesman-owner gave instructions for all bank statements to be given directly to her, and that since the receptionist was employed by the salesman-owner, she feels obligated to follow the salesman-owner's instructions.
The Broker-In-Charge approaches the salesman-owner and asks to see the bank statements for the escrow account, but the salesman-owner responds that she is taking responsibility for balancing the escrow account checkbook. The Broker-In-Charge points out that, as Broker-In-Charge it is his responsibility to keep the escrow account in proper order and that he is also responsible for supervising the salesman-owner. The Broker-In-Charge is reminded, however, that the salesman is the owner of the firm and that he is merely an associate
The Broker-In-Charge is faced with a dilemma: On the one hand, he needs his rather comfortable salary to pay his bills, but on the other hand, he feels strongly about carrying out his Broker-In-Charge duties, recognizing that if the escrow records of the firm are audited by the Real Estate Commission and found not to be in order, his broker's license will be in jeopardy.
Scenario # 2
A similar dilemma arises when a licensed salesman assumes a managerial position in a real estate firm.
For example, a licensed salesman who has been a successful producer of listings and sales for a real estate firm is named by the Broker-In-Charge to be the firm's sales manager. As sales manager, can the salesman assume responsibility for supervising other salesmen (or brokers) in the office? No. Although the Broker-In-Charge may delegate certain functions to the sales manager (such as training the firm's sales associates in sales techniques and directing its marketing program), the Broker-In-Charge must continue to personally and actively supervise the activities of all salesmen in the office and to perform those other duties which, under the Commission's rules; only the Broker-In-Charge may perform.
Indeed the fact that the sales manager is a licensed salesman imposes a special obligation on the Broker-In-Charge to monitor the activities of the sales manager and assure that the other salesmen associated with the firm clearly understand that they are under the supervision of the Broker-In-Charge—not the sales manager.
Caveat
Brokers-In-Charge must constantly be mindful of their dudes under the Real Estate License Law and the Commission's Rules, especially if they are the Broker-In-Charge of an office which is owned by a salesman or an unlicensed person or where a salesman is in a managerial position. Even if the salesman is experienced or the unlicensed person is knowledgeable in real estate matters, the Broker-In-Charge should not assume that they are competent to take care of those aspects of the firm's operations for which the Broker-In-Charge is legally responsible.
Whenever Brokers-In-Charge see a "red flag" warning of danger ahead (such as access being denied to the trust account records) or they are placed in a position where it is impossible to carry out their statutory duties, they should discontinue their association with the firm and immediately notify the Commission. By doing so, they may be avoiding an unwanted "association" with the Commission's legal and investigative stuff.