Form-of-the-week: Office Manager Employment Agreement – Form 510

The supervisory role of an office manager

In July 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 policies, rules, procedures and reports 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]

For the employing broker who is too busy to provide continuous oversight over all the licensees they employ, the broker may also employ a licensee as an office manager to carry out their supervisory responsibility to review documents and maintain files.

The broker or office manager reviewing documents is to observe and take steps to correct any unacceptable documentation at the earliest possible moment.

Without corrective activity, the broker becomes exposed to liability for money losses incurred by others through an error or other malfeasance committed by their agents.

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 of 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.

The real estate licensee who is appointed by a broker as their office manager also assumes obligations for any sanctions and disciplinary actions by the CalBRE for the office manager’s failure to properly supervise the activities of licensees and administrative employees. [Bus & P C §10164(b)]

Broker retains liability on assigning oversight
A written agreement to carry out the broker’s responsibility for oversight and management of their employees’ activities in sales, leasing and mortgage transactions is always prepared and signed by the broker and the licensed office manager they employ. [Bus & P C §10164(c); see RPI Form 510]

While the broker may employ the services of an office manager, the broker retains the overall supervisorial responsibility. Thus, the broker, as the ultimate authority with responsibility for employees, needs to periodically review the actions of the office manager, and in turn, each employee. [CalBRE Regs. §2725]

Besides assigning the office manager administrative tasks, the office manager’s primary responsibility is to review all correspondence and documents made or received by the agents — employees — acting on behalf of the broker. The actions of a sales agent or associate broker, as well as administrative employees in the employ of a broker, are considered the acts of the employing broker. [Calif. Civil Code §2079.13(b)]

Conditions for appointing a branch office manager
An individual or corporate employing broker may appoint a real estate licensee as the office manager of a branch or division of the employing broker’s real estate business. Licensees who may be appointed as an office manager cannot 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 appoint an office manager, the employing broker and the office manager enter into a written employment contract, a copy of which the employing broker retains in their files. [See RPI Form 510]

The Office Manager Employment Agreement published by Realty Publications, Inc. (RPI) is used by an employing broker or designated officer when employing a licensee as an office manager for their broker operations. The agreement establishes the licensee’s:

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

On employing an office manager, the employing broker notifies 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, the employing broker will promptly notify the CalBRE in writing by filing the Branch or Division Manager Appointment form, which is also used to notify the CalBRE of a change or termination of a branch or division office manager. [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 associate broker, the office manager represents the broker in dealings with members of the public and the broker’s employees. [CalBRE Regs. §2724]

As an office manager, the manager owes the employing broker a duty to supervise all activities rising out of the operations of the branch or division they manage. In turn, the broker is 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 the broker for losses caused by the manager’s 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 supervisory responsibilities of an employing broker may be assigned to an office manager, the agency duty the broker owes to clients in their transactions handled by the broker’s employees may not be delegated to others. Thus, the broker’s agency obligations to members of the public cannot be avoided. [Barry v. Raskov (1991) 232 CA3d 447]