This article is part of an ongoing series covering violations of real estate law. Here, salespersons associated with Real Estate Broker Services Inc. (REBS) violated multiple real estate laws — for which the brokerage was held responsible.

In November 2020, the California Department of Real Estate (DRE) accepted the voluntary surrender of the corporate license of Real Estate Broker Services Inc. (REBS), a brokerage operating out of Carlsbad.

In 2016 and 2019, REBS was involved in the purchase and refinancing, respectively, of two separate properties in Concord and Fair Oaks.

A salesperson employed at the time by REBS, Edward Opoku Le Grand Sawyer, represented principals in these transactions, under the doing-business-as name (DBA) “The Le Grand Group” — which was not registered with the DRE.

In doing so, Sawyer also represented himself as a real estate broker. While he later obtained his broker license, Sawyer was not a licensed broker at the time of either transaction.

In the refinancing of the Fair Oaks property, Sawyer also:

  • completed a Broker Price Opinion (BPO) / Broker Opinion of Value form, despite not being a licensed broker;
  • used an already-signed purchase agreement from a separate transaction by the owners and filled in information for the Fair Oaks transaction; and
  • failed to disclose that he was acting as an agent for both the buyer and the mortgage loan originator (MLO) in the transaction.

In both transactions, Sawyer received a loan origination fee and failed to disclose this compensation.

The MLO in these transactions, Matthew Paul Piro, also operated under an unregistered DBA: Feece Real Estate Group. He was not a licensed broker either, despite engaging in MLO activities.

However, much of the heat for these violations fell on higher-ups — namely Douglas James Feece, Piro’s employing broker, REBS and its designated broker officer, Gin Kazla.

Not only did the DRE hold REBS liable for Sawyer’s actions, it also found REBS failed to maintain records of these transactions, making an already bad situation worse.

The DRE ordered REBS to pay the cost of the investigation (around $8,000); however, the DRE’s acceptance of REBS’s license surrender precludes it from pursuing any further disciplinary action.

Related article:

Brokerage Reminder: The agent of the agent – reasonable supervision required

Supervisory advisory

A sales agent always operates on behalf of and dependent on their employing broker. They cannot independently contract in their own name — in this case, an unregistered DBA — or on behalf of anyone other than their employing broker. [Bus & P C §10160]

Thus, the DRE found REBS itself operated under the unregistered DBA “The Le Grand Group,” regardless of whether it had any knowledge of that operation. Either way, the brokerage is liable.

Further, a sales agent can only receive compensation for their real estate related services from their employing broker — and not for an activity for which the agent isn’t licensed.

Ultimately, brokers are responsible for all activities of their agents performed within the course and scope of their employment with the broker. [Gipson v. Davis Realty Company (1963) 215 CA2d 190]

Because of this, brokers are required to continuously exercise reasonable supervision over their agent’s activities. The sales agent’s duties owed to the broker’s clients and others in a transaction are equivalent to the duties owed to clients by the employing broker. [CC §2079.13(b)]

Even when an agent is technically classified as an independent contractor, they are always an employee of the broker under California’s labor laws. Thus, the broker is liable as an employer for their agent’s wrongful conduct and owes a duty of supervision to the DRE. Violations could lead to loss of license, heavy fines, or both.

Further, a broker’s failure to exercise reasonable supervision of its employed agents isn’t just a failure of its duty to the state — it’s a failure of public trust.