Legal Question and Answers Part 4-BMC #3 – Supervision

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Change of Name of Brokerage Firm and Resignation of Designated Broker

ISSUE:

The brokerage firm is an Arizona corporation. The brokerage firm is becoming a national franchise and is changing the name of the brokerage firm. In addition, the designated broker is resigning from the brokerage firm. Does the brokerage firm need the consent of the sellers and buyers represented by the brokerage firm to these changes?

ANSWER:

No. If the Arizona corporation will still be representing the sellers and buyers, the consent of the sellers and buyers is not needed for the change of the name of the brokerage firm or the resignation of the designated broker.

 Note: the procedure to amend the name of an Arizona corporation requires an amendment to the Articles of Incorporation. This amendment must be filed with the Arizona Corporation Commission and must be published in a local newspaper.  Arizona REALTOR® Digest February 2005

Departing Agent May Not Work With Old Clients Unless Both Brokers Agree

ISSUE: 

The agent leaves Brokerage A and begins working with Brokerage B. The agent was representing several buyers at Brokerage A who have properties under contract. The agent now wants to bring those buyers to Brokerage B to ensure he can continue to work on the contracts.  May the buyer’s agent represent the buyers now that he is licensed with Brokerage B?

ANSWER:  

The buyer’s agent cannot represent the buyer if there is a broker employment agreement between Brokerage A and the buyer since the agent is no longer licensed with Brokerage A. Thus, Brokerage A and the buyer must agree in writing to terminate the broker employment agreement and the buyer must sign a new buyer/broker agreement with Brokerage B.  Arizona REALTOR® Magazine – October 2013 | Brokerage

Quick Quiz

Fill in the Blank:
The buyer’s agent represent the buyer if there is a broker employment agreement between Brokerage A and the buyer since the agent is no longer licensed with A.

Designated Broker May Appoint Replacement for 30-Days or Less

ISSUE:

What are a broker’s obligations if the broker intends to leave the state or country for one to four weeks?

ANSWER:

According to A.R.S. § 32-2127, if a designated broker is unable to act within 24 hours, he may designate a licensee whom he employs or another designated broker to act in his behalf. The designated broker shall make this designation in writing and shall keep the original designation at his office for one year from its effective date. A copy of this designation must be attached to any hire, sever or renewal form submitted to the department which is signed by the designated broker’s designee. This designation shall not exceed 30 days duration and may authorize the designee to perform any and all duties the designated broker may legally perform, except that a salesperson shall not be authorized to hire or sever licensees. A written designation is required for each temporary absence.

Designated Broker May Report Agent’s Misconduct to Arizona Department of Real Estate and Be Absolved of Administrative Liability

ISSUE:

The broker has a listing for a husband and wife, who live out of state. The broker discovers that, after the husband’s death, the agent continues to use blank, pre-signed status change forms signed only by the husband. The broker has since entered into an exclusive listing agreement with the wife to correct the issue.  Does the broker have an obligation to self-report this issue to the Arizona Department of Real Estate?

ANSWER:

No.  The Arizona Department of Real Estate does not require the reporting of this issue. However, A.A.C. § R4-28-1103(F) provides that “[a] designated broker who, upon learning of a violation of real estate statutes or rules by a salesperson or associate broker under the broker’s supervision, immediately reports the violation to the Department is not subject to disciplinary action by the Department for failure to supervise the salesperson or broker.” Accordingly, disclosure is not mandatory, but disclosure would absolve the broker of any administrative liability for failure to supervise the agent.  Arizona REALTOR® Magazine – May 2012

Quick Quiz

Fill in the Blank:
Accordingly, is not mandatory, but disclosure would absolve the broker of any administrative liability for failure to the agent.

Designated Broker Must Review, Initial Contracts & Listings Within 10 Days of Execution

ISSUE:                   

The broker originally understood that administrative review and initialing listing agreements and purchase contracts pursuant to A.R.S. § 32-2151.01(G) was ten days after close of escrow. Therefore, there were approximately twenty transactions handled by the brokerage firm where the broker did not initial the documents until after the close of escrow. The broker reviewed the documents in these circumstances as they were processed. However, he did not initial them within the time frame as required by the statute.  The broker is concerned about losing his license over this administrative mistake.  Is the broker’s license in jeopardy?

ANSWER:                

Probably not.  A.R.S. § 32-2151.01(G) does require that the designated broker “review each listing agreement, purchase or non-residential lease agreement or similar instrument within ten days of the date of execution by placing the broker’s initials and date of review on the instrument. . . .” Thus, the initials are required ten days after the document is fully executed, not ten days after the close of escrow. However, here the broker complied in substance with the rule by reviewing the transaction documents as they came in. The administrative error initialing after close of escrow instead of after the document was fully executed should not place the broker’s license in jeopardy. Nonetheless, it should be noted the broker may be penalized by the Department of Real Estate for their non-compliance.

Disclosure of Licensee Status by Business Cards

ISSUE:

The landlord is a real estate licensee. In the lease signed by the landlord and the tenant, there is no disclosure of the landlord’s status as a real estate licensee. Prior to the tenant signing the lease, however, the landlord gave the tenant a business card showing the landlord’s status as a real estate licensee. Has the landlord properly disclosed the landlord’s status as a real estate licensee to the tenant?

ANSWER:

Yes. A.A.C. R4-28-1101(E) requires disclosure by a principal in the transaction of the principal’s status as a real estate licensee, in writing, at or before the transaction. The landlord’s business card should fulfill this requirement.  Arizona REALTOR® Digest January 2006

Generally, Transaction Coordinators Cannot Work For Two Separate Brokerage Firms

ISSUE:                 

Two Designated Brokers enter into an agreement to allow a real estate licensee to work as a transaction coordinator for both offices.  Can a licensee work for two Designated Brokers at the same time?

ANSWER:                

Pursuant to A.A.C. R4-28-306(A)(2), an agent can only perform real estate services on behalf of the agent’s employing broker. Accordingly, the ADRE takes the position that a licensee cannot be shared by two separate brokerage firms.

Quick Quiz

Fill in the Blank:
Pursuant to A.A.C. R4-28-306(A)(2), an can only perform real estate services on behalf of the agent’s employing  .

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