Legal Question and Answers Part 1-BMC #3 – Supervision

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A Brokerage Firm May Not Pay A Referral Fee To A Moving Company

ISSUE:

A broker was approached by a moving company. The moving company has an employee that is a real estate licensee in the state of Arizona. The moving company would like to send leads to the broker for a referral fee. The broker would pay the referral fee to the licensed employee, who would, in turn, pay the full fee to the moving company.

Can a broker pay a referral fee to a moving company employee that is a licensee, who in turn would give the commission to the moving company?

ANSWER:

No.  Paying compensation to an unlicensed person is a violation of A.R.S. § 32-2153(A)(10). Additionally, pursuant to A.R.S. §32-2155(A) and (B): a real estate salesperson may accept compensation “only from the legally licensed broker to whom the licensee is licensed.

 Under Arizona law, only a real estate broker, not a salesperson, may directly earn a commission from a real estate transaction. SeeSherman v. First Am. Title Ins. Co., 201 Ariz. 564, 38 P.3d 1229 (2002).

 Inasmuch as the licensee may earn a referral fee, the fee would be payable to the licensee’s broker. The broker, in turn, would not be able to share or pay a fee to the moving company, as the moving company is not licensed and may not legally earn a commission.

Quick Quiz

Fill in the Blank:
Paying to an unlicensed person is a violation of A.R.S. § 32-2153(A)(10).

A Designated Broker Is Responsible To Reasonably Supervise Agents Licensed With The Brokerage Firm

ISSUE:

A real estate company has two franchise offices in Arizona, one in Scottsdale and one in Mesa. Each office has its own designated broker and operates separately. The Scottsdale office has a team that wishes to split into two parts, keep the same name, but works out of the Mesa office. The Mesa office will oversee the sales transactions of the new team and have supervision responsibilities over the same.  Will the Arizona Department of Real Estate allow a team to split, keep the same name, and work out of two separate brokerages?

ANSWER:  

Pursuant to Arizona Administrative Code R4-28-306(A)(2) an agent can only perform real estate services on behalf of the employing broker. Moreover, each brokerage has supervisory responsibility for agents licensed with that broker. The Scottsdale brokerage cannot delegate its supervision responsibilities to the Mesa brokerage. In a nutshell, the proposed split does not comply with licensing laws.

A Licensee May Conduct an Auction

ISSUE: 

A seller wishes to sell his business and the attendant real property in an auction.  May the broker perform the auction?

ANSWER: 

Yes.  Pursuant to A.R.S. § 32-2101(48)(e), a “real estate broker” is one who “auctions or offers, attempts or agrees to auction real estate, businesses and business opportunities or timeshare interests” for compensation.  As such, the broker may auction the business.  Arizona REALTOR® Magazine – August 2012
 

A Non-Licensed Employee May Collect Basic Demographic Information

ISSUE:

The broker is interested in having an unlicensed assistant contact prospective clients to solicit listings and buyer representation agreements and, potentially, to create search pages for prospective clients based on their specific criteria.  Is this conduct permissible for an unlicensed assistant?

ANSWER:

Yes, with some restrictions.  As set forth in the Arizona Department of Real Estate Substantive Policy Statement No. 2005.04, it is permissible for an unlicensed assistant to collect demographic information and to solicit interest in engaging the services of a licensee or brokerage.  On the other hand, discussion of property specifics such as price points and other search criteria, should not be performed by an unlicensed assistant.  Arizona REALTOR® Magazine – Reviewed June 2016 |Brokerage

ADRE Does Not Prohibit Serving Alcohol At A Marketing Event

ISSUE:

A broker wants to hold a cocktail party in a community to generate business and to promote his brand for housing he designed.  Can alcoholic beverages be provided at a broker marketing event?

ANSWER:

Yes. See discussion.  While the ADRE does not address the service of alcohol during a marketing event, persons/organizations who serve alcohol to a minor or an intoxicated person can be held liable, in a civil action, for damages resulting from that person’s consumption of liquor.

 A broker should take precautions to make sure local laws are followed and to assure appropriate supervision is provided to limit the amount of alcohol served at the event to individuals.

Agent Can Do BPOs for Lender

ISSUE:

The agent has a relationship with a lender that has resulted in numerous REO property listings for the agent from the lender. The lender has now requested that the agent furnishes broker price opinions (BPOs) on more than 300 of the lender’s properties in foreclosure. The lender will pay $75 for each BPO. Can the agent receive $75 compensation for each BPO?

ANSWER:

Yes. The agent is entitled to furnish BPOs to the REO lender. A.R.S. §32-3602(1). Inasmuch as the agent must be “acting” as a real estate agent, however, the $75 compensation should be paid to the agent’s broker.  Arizona REALTOR® December 2009
 

Quick Quiz

Fill in the Blank:
A should take precautions to make sure local laws are followed and to assure appropriate supervision is provided to limit the amount of alcohol served at the event to .

Agent Can Give Free Car Washes to Other Agents in the Brokerage Firm

ISSUE:

An Agent in a brokerage firm has a listing for the sale of a car wash. The Agent wants to offer a free car wash to any other agents in the brokerage firm that will come to the car wash and complete a questionnaire. Can an Agent give free car washes to other agents in the brokerage firm for completing a questionnaire?

ANSWER:

Yes. Not only can the Agent offer other agents in the brokerage firm free car washes for completing a questionnaire, the Agent can offer members of the public free car washes for completing a questionnaire if there is compliance with ADRE advertising rules.  Arizona REALTOR® Digest January 2005
 

Agent Generally has Right to Review E&O Insurance Policy

ISSUE:

The real estate agent is paying $75 to the broker for E & O coverage for each closed transaction. The real estate agent has requested from the broker a copy of the broker’s E & O Insurance policy. Is the broker required to provide a copy of this E & O Insurance policy to the real estate agent?

ANSWER:

Probably. If the real estate agent is paying the premium for the E & O Insurance policy which insures both the real estate agent and the broker, the real estate agent probably has the right to review this E & O Insurance policy.  Arizona REALTOR® Digest February 2006

Quick Quiz

Fill in the Blank:
If the real agent is paying the premium for the E & O Insurance policy which insures both the real estate agent and the  .

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