Teams & Risk Management

Team Regulations Broker Supervision Licensing Advertising Compensation Agency

What is a Team? No legal definition At least one licensee At least one other person Work together regularly One brokerage firm One entity to the public Common name

Who Regulates Teams? No Team-specific laws or regulations Individual Licensees Broker Supervision/Rules Other State statutes

Broker Supervision The principal broker shall have responsibility for the activities of the firm and all its licensees. (18 VAC §135-20-10. Definitions.)

Broker Supervision Brokerage Office Policy Manual E&O Insurance Supervision policies for Teams

Licensed Activities Showing Property Holding an Open House Answering questions on transaction-related legal documents Discussing, explaining, interpreting, or negotiating a contract, listing, lease agreement, or PM agreement with anyone outside the firm Negotiating or agreeing to any commission, commission split, management fee, or referral fee.

Unlicensed Activities Performing general clerical duties Submitting listings and changes to MLS Following up on loan commitments after contracts have been ratified Having keys made for listings Placing signs on properties Acting as a courier service Scheduling appointments

Unlicensed Activities Preparing contract forms for approval by licensee Preparing promotional materials and advertisements for approval by licensee Obtaining required public information from governmental entities Ordering routine repairs as directed by licensee Performing any other activities undertaken in the regular course of business for which a license is not required Are compensated for their work at a predetermined rate that is not contingent upon the occurrence of a real estate transaction

Teams – Advertising Disclosures Licensee Electronic Media Advertising Licensee’s name Firm name City and state of place of business States of Licensure Business Cards Licensee Name Firm Name Contact Info Licensee Print Advertising Licensee Name Firm Name Signs Firm Telephone Number

Team Advertising - Names Avoid misleading consumers Firm name must always be clearly and legibly displayed in all advertising Avoid using confusing terms, such as realty, real estate, associates, partners, company, sales, limited, and properties. Use of the terms “team” or “group” is less risky.

Teams & The Code of Ethics Article 12: REALTORS® shall be honest and truthful in their real estate communications and shall present a true picture in their advertising, marketing, and other representations. REALTORS® shall ensure that their status as real estate professionals is readily apparent in their advertising, marketing, and other representations, and that the recipients of all real estate communications are, or have been, notified that those communications are from a real estate professional. (Amended 1/08)

Teams & The Code of Ethics Standard of Practice 12-10 REALTORS®’ obligation to present a true picture in their advertising and representations to the public includes Internet content posted, and the URLs and domain names they use, and prohibits REALTORS® from . . . otherwise mislead[ing] consumers. (Adopted 1/07, Amended 1/13)

Team Compensation Brokers may only pay commissions to licensees, whether individuals or business entities. 

Teams & Agency Agency relationships – Dual or Designated? Agency Disclosure Additional Disclosures Best Practices

Agency Relationships Dual Agency: Occurs when one firm has a brokerage relationship with both the seller and buyer (or landlord and tenant) in the same transaction.

Agency Relationships Designated Agency: An alternative to dual agency where the supervising broker assigns one licensee in the firm to represent a party and a separate licensee in the firm to represent the other party in the same transaction.

Agency Disclosure Disclosure of agency and its potential consequences shall be made in writing to all parties Written consent required New disclosures required if agency relationship changes

Depends on Team structure and size! Conflicts of Interest Team Leader and another Team member representing two parties in the same transaction as designated agents. Referral fees among Team members Depends on Team structure and size!

Keeping Client Confidences Different work spaces Separate Team meetings Limit access to client files Training Written Policy

Questions

Resources Virginia REALTORS® Legal Hotline: https://www.virginiarealtors.org/legal-hotline/ Virginia REALTORS® Legal Videos, Articles & Webinars: https://www.virginiarealtors.org/for-members/legal/ Caveat REALTOR® with Virginia REALTORS® Podcast iTunes Google Play Music Stitcher