Topic 1: Broker’s Role and Responsibilities


A broker is responsible for the actions of their sales agents because sales agents operate under the supervision and authority of the broker. The broker is responsible for ensuring that their sales agents follow all the rules, regulations, and ethical standards required in the real estate industry. If a sales agent violates any of these standards or engages in any misconduct, the broker may be held accountable for their actions. Therefore, it’s crucial for the broker to supervise and monitor the activities of their sales agents to minimize the risks associated with their actions. The broker can provide training, establish policies and procedures, and implement appropriate monitoring and oversight mechanisms to ensure that the sales agents comply with the applicable laws and regulations.

Importance of Written Agreement

A written agreement between a real estate agent and a salesperson is essential for several reasons:

Clarity: The agreement clearly outlines the roles, responsibilities, and expectations of both parties. This ensures that there is no confusion or misunderstanding regarding the tasks to be performed, the commission structure, and other important details of the relationship.

Protection: The agreement helps to protect both parties in case of any disputes or misunderstandings. It lays out the terms of the agreement and provides a reference point for resolving any issues that may arise.

Professionalism: A written agreement shows that both parties are committed to a professional working relationship. It indicates that they take their roles and responsibilities seriously and are willing to put their commitments in writing.

Legal Compliance: Real estate agents are required to comply with various laws and regulations, and a written agreement can help ensure that they meet these obligations. It can include clauses related to confidentiality, non-compete agreements, and other legal requirements that help protect both parties.

Accountability: A written agreement creates a sense of accountability for both parties. Each party is responsible for meeting their obligations as outlined in the agreement, and failure to do so can result in consequences such as termination of the agreement.


To comply with the law, a broker is obligated to provide reasonable supervision over the activities of their salespeople and associate brokers. This involves setting up policies, rules, procedures, and systems to oversee, review, inspect, and manage various aspects of their business, such as:

  • Real estate transactions
  • Real estate advertising
  • Documents related to transactions
  • Licensee reports
  • Proper filing, storage, and maintenance of documents
  • Trust funds
  • Training salespeople on federal and state laws pertaining to illegal discrimination

Keeping Track of License Status

To manage risk effectively, brokers should adopt the best practice of establishing a procedure for monitoring the expiration dates of all affiliated licensees. In certain situations, such as unpaid child support or recover fund payouts, a licensee may be subject to suspension during their four-year license term. Regularly checking the license status of salespersons and broker associates on the DRE website is a useful way for brokers to confirm that everyone engaged in real estate activities holds an active license.

Information about a licensee’s status, including whether they are an associate licensee or a broker, and which responsible broker they are associated with as a salesperson, is available online. This public information also includes details about license suspensions and revocations, as well as accusations filed against individuals or businesses licensed or regulated by the DRE. Employing brokers and broker associates must promptly notify the commissioner in writing when they act as a salesperson and enter or end a contract, to ensure that the DRE can accurately track these relationships.

Supervising Unlicensed Employees

As per Regulation 2724, brokers have the option to delegate the responsibility and authority to supervise and control the activities of non-licensed individuals. However, any tasks carried out by an unlicensed assistant should only be conducted with the broker’s complete awareness and permission.

It can be challenging to identify licensed activities, particularly with the introduction of new laws, technologies, and standards. Certain tasks in the real estate industry do not require a license, such as:

  • Aiding a licensed individual at an open house through tasks such as putting up signs, welcoming visitors, providing factual details from pre-approved materials, or distributing printed materials prepared or evaluated by the licensed individual.
  • Supplying factual property information to the public
  • Arranging or scheduling appointments for licensed individuals (although only a licensed individual can show the property or negotiate terms and conditions of a possible sale)
  • Cold calling
  • Creating and designing transaction-related advertising (but only if the advertising has been assessed and authorized for publication by the broker or associate licensee)

Referral companies that hold an active license.

When clients and customers request home improvement referrals from real estate brokers and salespersons, licensees have a professional obligation to verify the Home Improvement Salesperson’s (HIS) license and the license of any other contractor, such as electricians or plumbers, who are required to hold a license. The California Contractors State License Board website can be used to verify a contractor’s licensing information (accessible through your resources). Regardless of how well a licensee knows a contractor, verification of their license status and compliance with licensing requirements must be conducted to ensure their license is current. If a licensee endorses an unlicensed contractor, it constitutes a failure to fulfill their duty of care to the client. Brokers must ensure that all affiliated salespersons are aware of this responsibility and comply with it.