Before selecting a real estate agent to represent you during a sale or purchase transaction, please be aware that "bigger isn't better" when it comes to real estate brokerages. Just because a real estate agent works for a large company, it does not necessarily translate into them having more experience or knowledge. I am a licensed broker in the state of Texas, and I am the owner of my real estate company. The buck stops with me.
The Texas Real Estate Commission recently issued this letter to brokers:
The Texas Real Estate Commission (TREC) is duly concerned about the ability of one sponsor to adequately supervise a large number of licensees. We would like to take this opportunity to
remind you of your obligations as a sponsor under The Real Estate License Act (“TRELA”) and of the Commission’s intention to diligently enforce these provisions.
As a sponsoring broker, you are responsible for the authorized acts of your salespeople. [TRELA §1101.803, Rule 535.2] A broker should also be aware that a complaint filed against a sponsored salesperson is also a complaint against the broker for the purpose of determining the broker’s involvement in the alleged violation and whether the broker properly supervised the salesperson. [Rule 535.141(c) and (d)] Corporations or LLCs can only provide the required level of adequate supervision through the personal involvement of the designated officer (DO), or where the broker or designated officer clearly delegates certain responsibilities to a qualified supervisor who fulfills these obligations.
The sponsoring broker and the DO are always responsible for the salesperson's actions, even when the salesperson does not work out of the broker’s main office or when the salesperson owns his or her own real estate company. [TRELA §1101.803, Rule 535.2(a)] A salesperson may not lawfully engage in brokerage activity unless the salesperson is associated with, and acting for, a sponsoring broker at all times. [TRELA §1101.351(c)] The broker will also need to obtain a branch office license for the office location from which the salesperson transacts business. [Rule 535.112] If the salesperson’s company engages in business under an assumed name, the broker must notify TREC in writing within 30 days after the salesperson or the sponsoring broker starts or stops using the assumed name. [Rule 535.154(c)]
Although a broker’s responsibility to supervise the broker’s sponsored agents may be delegated to another person with the proper level of experience and expertise, adequate supervision under the law must be maintained for all agents and entities in every location. Brokers operating at a significant distance from the entities for which they serve as DOs, or who have a significant number of agents or entities that they sponsor have a very high hurdle to overcome to ensure the methods and tools of adequate supervision are in place, are workable, and are effective. Formal written policies and procedures should be available, should be reasonable, should be actually used, and sponsored agents should be adequately trained on them, and such training documented. There are many practical matters which must be dealt with, such as client access to the broker or DO, advertising methods and disclosures, to ensure consumers are adequately protected and not misled.
For example, all advertisements by a broker’s sponsored agents must comply with TRELA §1101.652(b)(23) and Rule 535.154. At minimum, subsection (e) of this rule requires an advertisement placed by a licensee to "include information identifying the advertiser as a real estate broker or agent. The name of a salesperson sponsored by the broker may also be included in the advertisement, but in no case shall a broker or salesperson place an advertisement which in any way implies that the salesperson is the person responsible for the operation of a real estate brokerage." A broker may be held liable for a sponsored agent’s violation of any advertising requirement and we suggest that the broker conduct a careful review of all sections of Rule 535.154 and have proper advertising guidelines and/or an advertising review procedure in place to ensure compliance at all times prior to placement of any advertisement.
This message is a reminder to live up to the high standards of the profession you enjoy. We know that most brokers take these responsibilities seriously and strive to make them a part of their daily business practices. The Commission’s Broker Responsibility Working Group is currently developing enhanced professional standards for brokers to better enable the Commission to carry out its primary mission of consumer protection. We hope that you will continue to take your supervisory responsibilities as a broker seriously and will join us in working for the betterment of the profession as a whole. By doing so, we will surely gain increased trust and respect from the people of Texas whom we all serve.
Sincerely,
Douglas E. Oldmixon, Administrator
Texas Real Estate Commission
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