The supervisory role of an office manager

In 2015, nearly 12,000 individual and corporate broker licensees employed two or more real estate agents to represent them and render real estate services on their behalf. As employers of licensees, these brokers are required under the California Bureau of Real Estate’s (CalBRE’s) supervisory scheme to reasonably supervise the activities of their employees to protect members of the public with whom they deal.

Reasonable supervision includes establishing written policies, rules, procedures and reports for the broker to review and manage:

  • transactions and conduct requiring a real estate license;
  • documents materially affecting the rights or obligations of clients in transactions;
  • the filing, storage and maintenance of documents related to the real estate services rendered;
  • the handling and documentation of trust funds;
  • advertisement of real estate services requiring a license;
  • employee’s knowledge of anti-discrimination, fair housing and agency laws; and
  • reports on the activities of employees. [California Bureau of Real Estate Regulations §2725]

When you as the employing broker become too busy to provide continuous oversight over all the licensees you employ, you may employ a licensee to act as your office manager and carry out your supervisory responsibility to review documents and maintain files.

You or your office manager are charged with reviewing documents and observing unacceptable or incorrect activity, and then taking the steps necessary to make corrections at the earliest possible moment.

Without corrective action, you expose yourself to liability for money losses incurred by others through an error, a failure or other malfeasance committed by your agents.

Responsibilities of an office manager

In addition to reviewing documents, the responsibilities of the appointed office manager include:

  • the oversight and supervision of day-to-day operations of all licensed activities in the real estate branch or division [Calif. Business and Professions Code §10164(a)];
  • supervising the on-the-job activities of employed licensees; and
  • managing clerical staff employed in the branch office or division. [See RPI Form 507]

The real estate licensee you appoint as your office manager also assumes obligations for any sanctions and disciplinary actions by the CalBRE for their failure to properly supervise the activities of licensees and administrative employees on your behalf. [Bus & P C §10164(b)]

Broker retains liability on assigning oversight

When employing a licensee to carry out your responsibility for oversight and management of your employees’ activities in sales, leasing and mortgage transactions, you always prepare a written agreement which is signed by you and the licensed office manager you employ. [Bus & P C §10164(c); See RPI Form 510]

While you may employ the services of an office manager to carry out your duty to supervise your employees, you do retain the overall supervisorial responsibility. An employing broker’s duty to supervise cannot be delegated to others to relieve you of your duty owed to the CalBRE and members of the public. Thus, you, with the ultimate authority and responsibility for employees, need to periodically audit and review the actions of your office manager, and in turn, each employee. [CalBRE Regs. §2725]

Besides the administrative tasks you assign to your office manager, their primary responsibility is to review all correspondence and documents made or received by the agents — employees — who act on your behalf. The actions of a sales agent or broker-associate, as well as administrative employees you employ, are considered to be acts performed on your behalf as their employing broker. [Calif. Civil Code §2079.13(b)]

Conditions for appointing a branch office manager

You, an individual or corporate employing broker, may employ a real estate licensee as the office manager of a branch or division of your real estate business.

Licensees who may not be employed as an office manager include individuals who:

  • hold a restricted CalBRE license;
  • have been debarred by the CalBRE; or
  • are salespersons with less than two years of full-time real estate experience within the past five years prior to the appointment. [Bus & P C §10164(d)]

To employ an office manager, you and the office manager enter into a written employment contract, a copy of which you retain in your files. [See RPI Form 510]

The Office Manager Employment Agreement published by RPI (Realty Publications, Inc.) is used by employing brokers or designated officers when employing a licensee as an office manager for their broker operations.

The agreement establishes the licensee’s:

  • duties as the office manager; and
  • fee schedule for their compensation. [See RPI Form 510]

On employing an office manager, you are required to notify the CalBRE by preparing and filing the Branch or Division Manager Appointment form provided by the CalBRE. [See RE 242]

Likewise, on termination or change in the appointment of an office manager, you will you need to promptly notify the CalBRE in writing by filing the Branch or Division Manager Appointment form. [See RE 242]

The office manager’s exposure to personal liability

An office manager is a CalBRE-licensed employee who is authorized to represent the broker. Like a sales agent or broker-associate, the office manager represents the broker in dealings with members of the public and the broker’s employees. [CalBRE Regs. §2724]

The office manager owes you, as their employing broker, a duty to supervise all activities arising out of the operations of the branch or division they manage. In turn, you are responsible to clients for any breach in agency duty caused by the office manager’s failure to supervise agents and intercept and correct errors or omissions.

Thus, the office manager indemnifies you for losses caused by their failure to properly supervise employees and their work product. [Walters v. Marler (1978) 83 CA3d 1]

An office manager is also subject to disciplinary action by the CalBRE when they fail to properly supervise licensed activity of employees in the office they manage. When an office manager fails to properly supervise the licensed activities of a branch office or division, the CalBRE Commissioner may suspend or revoke the manager’s license. [Bus & P C §§10164(b), 10165]

While most of your supervisory responsibilities may be assigned to an office manager, the agency duty you owe to clients in transactions handled by your employees may not be delegated to others. Thus, your agency obligations to members of the public cannot be avoided. [Barry v. Raskov (1991) 232 CA3d 447]