Effective July 1 of this year, California brokers of large and/or multi-office real estate firms can, if they choose, take steps that will enable them to rest and breathe more easily. Now, as a result of last year’s Senate Bill 510, it is possible for a broker to appoint a real estate licensee as a branch office or division manager who will (1) take and have responsibility for the oversight and supervision of day-to-day operations in the branch or division real estate office and (2) be subject to potential sanctions and discipline from the California Department of Real Estate (DRE) for failure to properly supervise the activities of licensees.
Until now, while brokers could and did appoint branch managers, those managers were not subject to DRE discipline in the event that they failed to properly supervise the licensees at their office(s). Now, a branch manager may find a greater incentive to ensure that licensee activity is being conducted properly.
The DRE believes this new law will result in better supervision and more accountability to the public. In a recent advisory the department wrote, “If there is an appointment and supervisorial delegation under the new law, there are license disciplinary consequences to the branch manager. Therefore, in a brokerage with multiple divisions or branch offices, an appointment of branch managers under the new law will arguably better enable the Broker to ‘manage the branch managers’ while allowing the branch managers to ‘manage the line level sales agents’ who report to him or her at the branches or division offices.”
The particulars of the new law are to be found in California Business and Professions Code § 10164 and 10165. Some of the more relevant points are as follows:
- A broker does not have to appoint branch managers under the terms of this law. It is optional.
- If an appointment under the terms of the law is made, it must be in writing and the DRE must be notified (on a specified form) at the time the appointment is made, and when/if it is terminated.
- A real estate licensee cannot qualify to be a branch manager if he or she (a) holds a restricted license; (b) is or has been subject to a bar order; or (c) is a salesperson with less than two years of full-time real estate experience within 5 years preceding the appointment.
- If an appointment of a branch manager is intended to be within the terms of the new law, the branch manager must agree to accept the delegated responsibility in a written contract.
- Even if a branch manager is appointed under the terms of the new law, the broker is still not entirely off the hook. He still has ultimate responsibility and, if called for, could be disciplined for a failure to supervise.
The California Association of Realtors® (CAR) has developed a contract form (Form OMA) that may be used to appoint a branch manager within the terms of the new law. There is no statutory contract form. The CAR form is one that is developed for use by those who are members of Realtor® associations. For example, it includes a stipulation that the manager has not been previously disciplined by a local association of Realtors®.
There are other aspects to the CAR form that go beyond the requirements of the law. It assumes that the manager will be an employee. It includes various employee-related provisions. Salary options are included. Also, it calls for the manager’s stipulation that not only does he/she not have a restricted license, but also that there has been no previous restriction or suspension.
As noted above, when a branch manager, subject to the provisions of Business and Professions Code Business and Professions Code § 10164 and 10165, has been either appointed or dismissed, the DRE is to be notified on a specified form. That form is RE 242 and can be found on the DRE web site.
It can be expected that if branch managers are now appointed under the new law’s provisions - with increased liabilities - they will want additional compensation for that. That issue was not covered by Senate Bill 510.