Real estate compliance tips – managing and growing branch offices!
When your real estate business is growing fast, you may need to appoint supervisors to manage your branch offices. In California, this is legal, but you have to make sure you are following the rules. We have seen this issue pop up in real estate audits.
California real estate brokers need to understand the branch office. The broker must notify the BRE of all branches (any other office where licensed real estate activities take place), and a branch office application must be filed. Section 10163 of the business and professions code applies:
“If the applicant for a real estate broker’s license maintains more than one place of business within the State he shall apply for and procure an additional license for each branch office so maintained by him. Every such application shall state the name of the person and the location of the place or places of business for which such license is desired. The commissioner may determine whether or not a real estate broker is doing a real estate brokerage business at or from any particular location which requires him to have a branch office license. See Cal. Bus. & Prof. Code § 10163.”
Click to watch a video discussing branch office compliance in CAL
California Business & Professions Code Section 10164
A broker may want to appoint a licensee to oversee and manage a branch office. This is authorized under the California business and professions code. Here is what Cal B&P 10164 says:
10164. (a) An employing broker or corporate designated broker officer may appoint a licensee as a manager of a branch office or division of the employing broker’s or employing corporate designated broker officer’s real estate business and delegate to the appointed manager the responsibility to oversee day-to-day operations, supervise the licensed activities of licensees, and supervise clerical staff employed in the branch office or division.
(b) Notwithstanding subdivision (a), nothing in this section shall be construed to limit the responsibilities of an employing broker or a corporate designated broker officer pursuant to subdivision (h) of Section 10177. A licensee accepting appointment as a manager shall be subject to disciplinary action pursuant to Section 10165 for failure to properly supervise licensed activity pursuant to subdivision (a).
(c) Appointment of a manager shall only be made by means of a written contract in which the manager accepts the delegated responsibility. The appointing employing broker or corporate designated broker officer shall retain a copy of the contract and send a notice to the department, in a form approved by the commissioner, identifying the appointed manager and the branch office or division the manager is appointed to supervise.
(d) A licensee shall not be appointed as a manager if any of the following apply:
(1) The licensee holds a restricted license.
(2) The licensee is or has been subject to an order of debarment.
(3) The licensee is a salesperson with less than two years of full-time real estate experience within five years preceding the appointment.
(e) Whenever an appointment of a branch manager is terminated or changed, the employing broker or corporate designated broker officer shall immediately notify the commissioner thereof in writing.
(f) This section shall become operative on July 1, 2012.
As you can see, there are certain limitations and rules that apply. If a broker does not apply with these rules, an accusation is possible which could lead to suspension or revocation of the real estate license.
Contact a Real Estate Compliance Law Firm
We can help brokers and sales with licensing issues, including branch office agreements, partnership agreements, written designation of authority, broker policies and procedures manuals, duty of supervision issues, real estate arbitration, mediation, admissions and other compliance matters before both the BRE and DBO and the DRE in Arizona. We can be reached at (877) 276-5084 or fill out the contact form below to have one of our real estate lawyers contact you, normally within the hour. We offer flexible legal fees, including flat rate fees for many cases.
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