A fire drill for California real estate brokers and agents licensed as branch and division managers
By Summer Goralik
Under the Real Estate law, a real estate broker or salesperson may be appointed by a responsible broker or corporate designated broker as a manager of a branch office or division of the broker’s real estate business and oversee day-to-day operations, supervise the licensed activities of licensees, and supervise clerical staff employed in the branch office or division [California Business and Professions Code (“B&P”) Section 10164]. This manager is formally recognized and licensed by the Department of Real Estate (“DRE”) as a “branch” or “division” manager and identified as such on the licensee’s, and responsible broker's, DRE licensing record.
This appointment is an effective tool used by many brokers in order to appropriately delegate responsibility as well as establish and maintain a compliant system of reasonable supervision over the brokerage, its licensees and employees. The benefits of this appointment and role could be discussed at length, but that is not the purpose of this message. Instead, this piece is intended to alert real estate licensees to a potential licensing situation that I recently discovered. Admittedly, this discovery could be a licensing anomaly or glitch, but to err on the side of caution and potentially help others, I am sharing what I found.
If you are a licensed real estate broker who has been appointed by a responsible broker or corporate brokerage to serve as a “branch” or “division” manager, this message (and fire drill) is especially for you. I recently came across an interesting situation where I learned of an individual broker, acting as a “division manager” for a responsible broker, but whose individual broker license was not actually affiliated as a “broker associate” with the license of the responsible broker.
Put another way, while the individual broker was appointed to oversee the day-to-day licensed activities of the responsible broker, which is one of the primary responsibilities of, and purposes of appointing, a DRE branch or division manager, this same broker was not actually affiliated as a broker associate with the license of the responsible broker. In fact, this individual broker was a broker associate for another brokerage firm.
I personally reviewed this broker’s license record and did verify the licensing inconsistency. Frankly, I was shocked to learn that this licensing scenario could exist. I began checking the licenses of other brokerage firms whom I know have “branch” or “division” managers in place to see if I could uncover any similar situations. Fortunately, it did not seem to be a widespread occurrence or issue.
However, based upon my experience working as a real estate compliance consultant, I know firsthand that if it could happen to one licensee, there may be others out there who are in the same predicament and unaware of the issue. Therefore, any brokers who are acting as a branch or division manager for another broker would be wise to check and verify their license status with the DRE and ensure that they are both a branch or division manager and a broker associate for the broker. To put it more simply, you should show up on the responsible broker or corporate broker’s DRE license record twice; as a branch or division manager and a broker associate.
As I noted earlier, a real estate salesperson may also serve as a branch or division manager for a brokerage. Although I assume a salesperson would be immune to this kind of licensing quandary, especially since a salesperson may only be affiliated with one broker at one time, it would be prudent for a salesperson, who works as a branch or division manager, to also verify their license status and brokerage affiliation.
At the end of the day, if you are a real estate licensee, it never hurts to check and verify your license and status with the DRE from time to time. Besides checking your license affiliation(s), you might be checking to ensure that your license is active and not expired, or that your contact information (e.g., mailing and office address) is up-to-date. For branch and division managers appointed under B&P 10164, this is just another reason to check and ensure that all is well in DRE licensing land.
Any opinions, suggestions or recommendations contained in this message are based on my experience working for, and knowledge of the laws enforced by, the Department of Real Estate, and must not be considered legal advice. For further clarification, please consult with appropriate legal counsel.
About the Article:
Summer Goralik is a Real Estate Compliance Consultant and licensed Real Estate Broker (#02022805). Summer offers real estate brokers a variety of consulting services including assistance with California Department of Real Estate investigations and audit preparation, mock audits, brokerage compliance guidance, advertising review, and training. She helps licensees evaluate their regulatory compliance and correct any non-compliant activities. Summer has an extensive background in real estate which includes private sector, regulatory and law enforcement experience. Prior to opening her consulting business in 2016, she worked for the Orange County District Attorney's Office as a Civilian Economic Crimes Investigator in their Real Estate Fraud Unit. Before that, Summer was employed as a Special Investigator for the DRE for six years. Among many achievements, she wrote several articles for the DRE, four of which were co-authored with former Real Estate Commissioner Wayne Bell. Prior to her career in government and law enforcement, Summer also worked in the escrow industry for nearly five years. For more information about Summer's background and services, please visit her website, www.expertdrecompliance.com.