How Real Estate Brokers Can Be Fully Compliant

Written by Posted On Friday, 01 May 2020 17:02

Real estate brokers are expected to follow more complex and tedious rules each year. If you don’t have a strategy that helps you meet all the requirements, you could face fines or lose your license for non-compliance.

The rules in the real estate industry aim to protect you as a real estate agent, as well as your clients to reduce the risk of fraud and corruption. Real estate transactions usually involve a large amount of money and legal documents. 

Ensuring you have a compliance strategy is important in helping you reduce your risks. Here are some ways for real estate brokers to achieve compliance:

How to avoid violations

Avoiding compliance is simpler if you have a strategy at hand, which ensures that you meet requirements and avoid lapses. However, following the rules is not enough is there is no accountability. During an audit, a broker is expected to show that the correct documents are completed and reviewed correctly. 

Following all the rules is not enough if your records are incomplete and incorrect. Each transaction requires dozens of forms that need to be stored for an extended period of time, so you need to employ an efficient record-keeping system.

Which rules apply?

Compliance rules are governed at the state level, and each jurisdiction has different policies that could result in an audit. In most states, you need to register with your state’s real estate commission before you can start operating. Once you are registered, you need to apply for a real estate license. 

For businesses with multiple locations, you need to have a license for each location. If you are unsure of the exact rules for compliance in your jurisdiction, you should approach the state’s real estate commission to obtain information and clarity. You also need federal compliance posters and Resourceful Compliance is the perfect resource for that.

Use a checklist

Despite being bound to state rules, your transactions might also be governed by local, state, and federal laws. These rules depend on the type and location of the property, so you need to define the regulations and requirements before completing the transaction. 

A checklist can help you ensure that you cover every legal aspect of the transaction without missing any steps. To simplify the checklist process, find common steps that apply to all transactions and create a template. 

However, you should update these templates regularly, as rules and laws change frequently. Using these checklists when finalizing a real estate transaction can keep you compliant and avoid legal problems.

Develop a system

If you have a system for archiving your records, you are less likely to lose vital documents. When you develop your document archiving system, make sure that it is secure and organized, and that all fully completed documents are stored with an unchangeable timestamp. Storing documents correctly and securely makes it easier to access the necessary information when there is an audit. 

To simplify the document storage process, you could also develop an electronic storage system that stores documents to the cloud. Storing in the cloud saves time and space, and makes the documents easier to locate.

Audit yourself

One way to ensure you are always compliant is to audit yourself. Self-audits can cost a bit extra, but they ensure that you are maintaining compliance and meeting requirements at all times. While you may have developed the necessary habits required for compliance, you might find them slipping at times. 

Self-auditing can keep you on your toes, while also ensuring the necessary requirements are in place when a routine audit actually occurs. In addition to making sure all your documents and regulations are ready, a self-audit can remind you and your team of the rules they need to follow.

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