Unit 5

Question 1

The basic relationship.

Answer 1

The affiliate broker:

is agent & fiduciary of broker
acts in broker's name
may not have two employers
may not be paid by other parties
may not bind clients contractually

Affiliate’s employment status:

employee or independent contractor
defined by agreement

Obligations and responsibilities:

Affiliate broker to broker:
obtain & sell listings
follow policies and employment provisions
promote ethics and broker’s reputation

Broker to affiliate broker:
provide data, office support, compensation, training
uphold ethics, policies, and employment agreement
supervise and train

Question 2

Broker’s Supervisory Responsibility

Answer 2

A licensee may engage in real estate activities only in an office where there is a principal broker who:

devotes full time to the management of the office
is engaged primarily in the real estate business
is accessible during normal daytime working hours
Exception: A principal broker employed outside the real estate profession can satisfy the requirements if:

He or she is reasonably accessible to licensees affiliated under him or her. Accessibility must include some period during normal daytime working hours.
A broker who engages an affiliate broker swears to actively supervise and train the affiliate during the period the affiliate’s license remains in effect.

The broker can be disciplined by the Commission for failing to exercise adequate supervision.

To be engaged by a principal broker, a licensee (other than a property manager) must live no more than fifty miles from the firm office, unless the principal broker demonstrates to the Commission’s satisfaction that adequate supervision can be provided.

For purposes of this rule, a property manager is defined as a licensee who engages exclusively in leasing and otherwise managing rental properties.
A principal broker must ensure that every broker, affiliate broker and time-share salesperson under his supervision:

has been issued a valid license
is covered by an Errors and Omissions insurance policy

Failure of a principal broker to ensure that his or her affiliate brokers have maintained Errors and Omissions insurance will result in a civil penalty of one thousand dollars per uninsured affiliate broker.

Question 3

Change of affiliation, location, or status

Answer 3

A licensee in a firm must obtain any change of affiliation or status by securing a release from the firm through the firm’s principal broker.

The principal broker must promptly and properly grant a licensee request for release from the firm.
When the contract between a broker and affiliate broker is terminated, the broker must sign and date the form provided by the Commission.
Upon the signing of the release form:

The principal broker’s supervisory responsibility over an affiliate ends.
The licensee may not engage in any real estate transactions or act under a contract with another firm until the change of affiliation form, accompanied with the proper fee, has been completed and transmitted to the Commission.
The licensee may not take or use any property listings secured through the firm, unless specifically authorized by the principal broker.
The licensee, within ten (10) days after the date of release, must complete the required administrative measures for change of affiliation, temporary retirement, or if ineligible for temporary retirement, placement in ‘‘inactive’’ status.
The affiliate broker must make sure that the form and fee are promptly submitted, and must display his or her license prominently at the new broker’s principal office.
Within ten days after any change of location of an office, all licensees registered at that office must notify the Commission in writing of their new business address and pay the established fee.

Question 4

Compensation

Answer 4

An affiliate broker may only receive compensation for acts subject to licensing from the broker with whom he or she is affiliated.

It is unlawful for a real estate licensee to pay a commission or proceeds from a commission to:

an unlicensed individual or company
a licensed person when they know that licensee will make unlawful payments of commission to unlicensed persons

It is not unlawful for a licensee to agree to a reduced rate of commission with a person or group of persons.

Commissions earned by an affiliate broker under a broker can be paid even after:

transferring to a new broker
retiring of the affiliate’s license
expiration of the affiliate’s license

The Commission will not intervene in the settlement of debts, loans, draws, or commission disputes between firms, brokers and/or affiliates.