13 Applicable Laws and Regulations Bus. & Prof. Code Section Responsibility of Corporate Officer in ChargeRegulation 2725 – Broker Supervision over activities of his or her salespersons
14 Broker-Salesperson Relationship Agreements Must be written.Contract provisions that attempt to limit liability for broker’s failure to supervise or salesperson’s wrongful acts committed while performing licensed activities are contrary to the law.
15 ResponsibilitiesSalespersons can only perform licensed activities under the real estate broker that they are licensed under.All compensation must be paid from the broker.
16 Fiduciary DutyLicensees owe a fiduciary duty to exercise reasonable care, skill, and diligence to their principal.Misrepresentations, concealment, dishonest dealing, or fraud committed by a salesperson may lead to discipline of broker’s license for violations of the Real Estate Law, including for the failure to supervise.
17 Broker’s Responsibilities Brokers are required to supervise the activities of salespersons and employees to ensure full compliance with the Real Estate Law.Brokers are required to review all documents prepared by the salesperson.Brokers are required to retain records for (3) three years.
18 Delegation of Duty to Supervise Regulation 2724 allows a broker to delegate the responsibility of supervising unlicensed persons acting as apartment, hotel, motel, or trailer park managers under certain conditions.Case example: Property management
19 Disciplinary ActionA broker may be subject to discipline if he or she fails to reasonably supervise the activities of his or her salesperson or, as the designated broker for a corporate broker, fails to supervise and control the activities of the corporation.
20 Guilty KnowledgeBus. and Prof. Code Section provides that no violation by a salesperson is grounds for the revocation or suspension of his or her employing broker unless, after a hearing, it is found that that the broker had guilty knowledge of the violation.
21 Willful BlindnessA broker who does not have guilty knowledge because he or she failed to supervise a salesperson, may still be disciplined for negligent supervision.
22 Case Example - DiazBrokers are required to supervise all of salesperson’s licensed activities, not just those that benefit the broker or corporation.
23 DON’Ts Fail to keep track of salesperson’s transactions. Fail to supervise branch office(s).Allow unlicensed entities to operate from your branch office.Allow your salespeople to work for or accept compensation from others for activities requiring a real estate license.
24 Bureau of Real Estate Audits Tom PoolAssistant Commissioner
25 Types of Audits Investigative - New Investigative Follow-Up Investigative – OtherRoutine - NewRoutine - Follow-Up
30 Trust Fund Shortages$6,483, in total trust fund shortages in 2014Breakdown by real estate activity:$5,622, – Property Management$194, – Mortgage Loans$568, – Broker Escrow$68, Subdivisions$28, – Sales
31 Broker Supervision The Basics: Policies, rules, procedures and systems to review, oversee, inspect and manageA broker shall establish a system for monitoring compliance with such policies, rules, procedures and systems.The form and extent of such policies, rules, procedures and systems shall take into consideration the # of salespersons employed and the # and location of branch offices.
32 Broker Supervision Considerations: Do signed, dated broker-salesperson agreements include duties and supervision?Is there regular reporting by agents to the broker, or scheduled update meetings?Is there a separation of duties in the area of trust fund handling and accounting?
33 Broker Supervision Considerations: Does broker look into activities of salesperson, broker-associates?Is there a visible, active presence?Is there a training program for salespersons?Given the private information contained in files, how are files secured?What does the trust account situation look like?
34 Bureau of Real Estate Audit Section Contact: Dan Sandri – Assistant Commissioner, Audits
35 Licensing LEGISLATION update Tom PoolAssistant CommissionerLicensing & Administration
36 Processing Time Frames Generally, on-time renewal applications are processed in received date order. Licensees who submit their renewal on time can continue working pursuant to after license expiration date.Late renewals on a priority basis as those individuals can not work while their license is expired.
38 The Career Compass Wellington Pendell CE ProviderLaw Requires Written Exams/Students Must PassCalBRE Received ComplaintsResulting InvestigationsThe Career Compass Issued Certificates w/o Exams5/28/14 CalBRE Withdrew all of Course Approvals5/28/14 Instructor Wellington Pendell Lost Approved StatusLicensees were denied CE CreditActions Posted
39 The Career Compass Wellington Pendell Continued to Operate after May 28, 2014 by:Associating with an approved CE providerTina L. ParkerWayne RappGold Coast SchoolsInvestigation Findings:Knowingly disseminated advertising or promotion materials that include false and/or misleading statements or representations as to CAREER COMPASS’s authorization to sponsor or promote CE coursework.
42 The Career Compass 1/1/18, 2015 Desist and Refrain Order Served Order states that the Career Compass Inc, Wellington D. Pendell, Tina L. Parker and Wayne Rapp must:“Desist and Refrain from stating or implying that they, or any of them, are approved by the Bureau to act as a sponsor of an educational offering without having complied will all the provisions of Code Section and Section 3006 et seq. of the Regulations.”
45 Legislation UpdateAB 2540 (Dababneh) – Contact InformationRequires current:mailing addresstelephone numberelectronic mail addressApplies only to contact information that he or she maintains or uses to perform any activity that requires a real estate licenseUpdate within 30 days after making the change.