Transactions and Regulatory Committee Legislative Committee
[This material is for discussion purposes only and has not been approved by the Transactions and Regulatory Committee, the Legislative Committee, Executive Committee or the Board of Directors]
Issue: Should C.A.R. sponsor the legislation recommended by the DRE Broker Supervision Task Force that would: 1. Require appointed office managers to supervise the sales agents in the office they are appointed to manage; 2. Require employing brokers to notify DRE of the office manager's employment; and, 3. Require employing brokers to supervise their appointed managers rather than the salespersons that report to those managers?
Action: Optional, but necessary to implementation of the DRE Task Force report.
Options: 1. Sponsor legislation as outlined in the Task Force report; 2. Wait for a "buy in" from the next Governor's administration before making a decision; 3. Do nothing; 4. Other.
Status / Summary: The DRE Broker Supervision Task Force has just issued its final report, in which it concludes that DRE does not have the authority to discipline office managers for misconduct of a salesperson that reports to them, and instead must pursue the broker of record. The report proposes legislation that would put primary responsibility for supervision of employed sales people on the office manager to whom the salesperson reports. The proposed change would also require the employing broker to notify DRE of the appointment.
Discussion: Please see the included Broker Supervision Task Force report for additional discussion.
In it's report the Task Force seemed to conclude that without personal liability for supervising their salespersons, an office manager does not have adequate incentive to control sales person behavior. On the other hand, if their license could be subject to sanction for a salesperson's misconduct then the manager will be more likely to act. Unfortunately, the existing statutes do not allow DRE to discipline the manager for failure to supervise.
Should the manager with hands on control be responsible for acts of employees that report to him or her?
The Task Force also seemed convinced that it is unfair to hold the employing broker of a large firm solely responsible for salesperson misconduct when the broker has appropriately delegated office management and was not actually managing the day to day activities of the agents. Put another way, the Task Force is suggesting that the broker of record is responsible for managing the managers, and not all the sales staff under each manger.
Should legislation clarify the responsibility of designated brokers as suggested by the Task Force? The Task Force discussions included concern that if the new law allowed brokers to delegate responsibility to managers, then there needed to be a written contract to formalize the relationship and there needed to be notice to DRE so that DRE staff knows which person to examine or audit.
Existing law and regulation already require a written contract between an employing broker and the sales agent. Existing law also requires DRE to be notified when the employing broker hires or fires (at least for cause) a sales agent. The proposal is to apply a similar rule to appointment of office managers.
Should C.A.R. Sponsor legislation as outlined above and in the Task Force report?