Broker Supervision & Management

Question 1

Key Terms

Answer 1

Real Estate Entity
This is not an actual person, but a company: a corporation, partnership, LLC, or sole proprietorship. It’s also known as the employing broker. There are no testing or education requirements (although that would be cute, a big ol’ company trying to squeeze into a little testing chair).

Designated Broker
The designated broker is in charge of all real estate operations of a firm. They supervise everyone else: salespersons, associate brokers, and unlicensed assistants. They are also responsible for branch offices. There is only one designated broker per firm.

Once the employing broker’s license is in place, the company can then hire the designated broker to be in charge of everything.

Salesperson
That’s gonna be you, Anthony! You will be supervised by the designated broker in all your real estate activities. A brokerage can have any number of salespersons.

Associate Broker
An associate broker has a broker’s license, but does not have broker responsibilities. Instead, like a salesperson, they work for and are supervised by the designated broker. However, they are qualified to become a designated broker or managing broker, or to open a brokerage, at any time. A brokerage can have any number of associate brokers.

Delegated Associate Broker
A designated broker may choose to appoint a delegated associate broker, also known as the managing broker. This person assists the designated broker in their daily duties.

Unlicensed Assistants
A brokerage may also employ unlicensed assistants, who do not have real estate licenses. Instead, they perform secretarial duties in a brokerage. They, too, are supervised by the designated broker. More about them in a little while!

Answer 2

Chapter Summary
All good things must come to an end, Anthony. So it is with life, and so it is with this chapter. But before you go, let’s review some of the important terms, concepts, and principles you’ve learned along the way.

Key Terms
Here are the key terms you learned in this chapter:

branch office
any office where business is conducted other than the principal office

designated broker
responsible for all real estate operations of a firm, including supervision of brokers, salesperson, and unlicensed assistants; also responsible for branch offices; only one designated broker per firm

independent contractor
one who contracts to do work according to their own methods, and is responsible to their employer only as to the results of that work

Key Concepts & Principles
Here are the concepts and principles you’ll want to master from this chapter.

What All Licensees Owe Their Clients
This information appears in Article 11 (“Professional Conduct”) in the Arizona Administrative Code. Here’s a summary!

A review of dos and don’ts for licensees.

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Reasonable Supervision and Control by Broker
Under the Arizona Administrative Code, the employing broker and designated broker must exercise “reasonable supervision and control” over brokers, salespersons, and anyone else employed. Because the employing broker is a company, not a person, this falls to the designated broker.

The designated broker must:

Supervise associate brokers, salespersons, and employees.

Establish a system for monitoring compliance.

Maintain overall responsibility even if some duties are delegated.

Establish written policies, procedures, and systems. This includes reviewing and managing transactions, contracts, disclosure forms, employment agreements, and advertising; handling trust accounts; managing unlicensed assistants, and more.

Liability
In Arizona, if a designated broker immediately reports a violation of a salesperson or associate broker under their supervision to the Arizona Department of Real Estate, they will not be subject to discipline for failure to supervise.

Unlicensed Assistants
An unlicensed assistant is hired by a real estate broker or salesperson to perform clerical, bookkeeping, accounting, and other administrative and support duties. An unlicensed assistant cannot do anything that requires a real estate license.

Independent Contractors
Here’s a comparison of independent contractors and employees.

A Venn diagrams shows the similarities and differences between independent contractors and employees.
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Trust Accounts
A trust account is an account that is separate from a designated broker’s operational or personal accounts. This account is used to maintain and account for transaction-related funds.

Essentially, the designated broker “holds” other people’s funds in this account until the funds are ready to be disbursed (i.e. paid out to the various recipients).