A real estate team is a group of sales agents or broker-associates who pool resources and leads to promote and expand their practice. The use of real estate teams to increase listings and pool resources has taken off in recent years, but laws to protect the public from the potential risks created by teams have not kept up.
Here in California, a team consists of two or more licensees, none of which needs to be a licensed broker.
Licensees on a team are still technically under their employing broker’s supervision. But, in practice, teams can perform very independently from the rest of the brokerage. With few California Department of Real Estate (DRE) guidelines in place regarding team structure and operations, the potential for risky behavior abounds.
When team members behave with too much independence from the rest of the brokerage, this leaves the employing broker open to risks.
For example, specific advertisement requirements exist to inform the public about a team’s employing broker. This includes the requirement of the employing broker’s name to be displayed just as prominently as the team’s name on any advertising materials. [Calif. Business & Professions Code §10159.6(b)]
But when a team is behaving so independently from their brokerage that their supervising broker isn’t checking to ensure they are following advertising rules, they may — perhaps unintentionally — not follow proper advertising procedure and mislead clients. Worse, at the end of the day it’s the broker’s license on the line since they agreed to supervise their agents, team or no team.
Another legal issue teams run into is the use of unlicensed assistants to perform activities which require a license (such as entering into a listing agreement or taking part in negotiations). Again, the improper use of unlicensed assistants may be intentional or unintentional, but this is more likely to occur in teams that are less experienced and lacking proper supervision.
Requiring the team leader to hold a broker’s license protects not only the broker, but the public, too. One of the main jobs of the DRE and all employing brokers is to protect consumers in undertaking what is often the largest financial transaction of their lives. When teams are led and operated by agents, who are often inexperienced, important steps may be missed.
first tuesday proposes that these risks can be mitigated by requiring the team leader to be a licensed broker, who by virtue of their license has more education than sales agents and typically more experience.
Requiring a team leader to be a broker does not absolve the employing broker of responsibility. But, given a broker’s additional education and experience, it does add another layer of protection for consumers and the team’s employing broker.
Related article:
