Employing Broker Supervision

Employing brokers must ensure that a high level of supervision is exercised over a newly licensed active broker during their first two years of real estate practice.

Additionally, one must demonstrate that their experience and knowledge are sufficient to enable the broker to employ and adequately supervise other brokers, as appropriate to the broker’s area of supervision. These requirements are referenced in Rule 2.5.C.

Rule 6.3 covers an Employing Broker’s Responsibilities and Supervision including:

• Exercising Authority, Direction, and Supervision;
• Responsibilities of an Employing Broker;
• Reasonable-Level of Supervision;
• High-Level of Supervision;
• Supervision of an Unlicensed On-Site Manager;
• Delegation of Supervision; and
• Confidential Information Revealed to Employing or Supervisory Broker.

Exercising Authority, Direction, and Supervision

An employing broker must exercise authority, direction, and supervision over any associate brokers to ensure conformance to the statutes and Commission rules in the performance of the associate broker’s activities. If a complaint is filed with the Commission against an associate broker, the employing broker may be investigated as to whether the employing broker failed to exercise reasonable supervision over that associate broker (§12-10-217(1)(r), C.R.S.).
 
In addition to associate brokers, employing brokers must also supervise all unlicensed employees, including, but not limited to, unlicensed on-site managers, secretaries, bookkeepers, and personal assistants of associate brokers.

Responsibilities of an Employing Broker

There are numerous responsibilities that an employing broker must undertake: 

• Maintain all trust and escrow accounts and records;
• Maintain all transaction records;
• Develop the Brokerage Firm’s written policies;
• Provide for a “Reasonable-Level of Supervision” for all associate brokers;
• Provide for a “High-Level of Supervision” for new associate brokers;
• Take reasonable steps to ensure that violations of statutes, rules, and office policies do not occur or reoccur; and
• Provide for adequate supervision of all branches or offices operated by the employing broker.

Reasonable-Level of Supervision

What is required for a reasonable level of supervision?

• Maintaining a written Office Policy Manual which must:
  • Be given to and signed by each associate broker; and
  • Be available for inspection, upon request, by any authorized representative of the Commission.
• Ensuring that all executed contracts are reviewed to maintain assurance of competent preparation. If the employing broker has concerns about the preparation of a contract, the employing broker should contact the associate broker.
• Ensuring that all transaction files are reviewed for the required documents. If required documents are not present, the employing broker should contact the associate broker.

High-Level of Supervision

What is considered a high level of supervision? An employing broker must provide a high level of supervision for new associate brokers which includes:

• Providing specific training in office policies and procedures;
• Being reasonably available for consultation;
• Providing assistance in preparing contracts;
• Monitoring transactions from contracting to closing;
• Reviewing documents in preparation for closing; and
• Ensuring that the employing broker or an experienced associate broker with more than two years’ active licensure attends closings with a new associate broker or is available for assistance.

Supervision of an Unlicensed On-Site Manager

When supervising an unlicensed on-site manager, an employing brokers must:

• Actively and diligently supervise all activities of any unlicensed on-site manager or delegate supervisory authority to another to do so on their behalf;
• Require the unlicensed on-site manager to report directly to either the employing broker or a supervisory broker;
• Require the unlicensed on-site manager to account for and remit all monies, including rents and security deposits, collected on behalf of the employing broker or owner to the employing broker or supervisory broker;
• Ensure that property maintenance scheduled by the unlicensed on-site manager is performed in accordance with the property management agreement; and
• Instruct the unlicensed on-site manager not to negotiate any of the material terms of a lease or rental agreement with a consumer.

Delegation of Supervision

Employing brokers have the ability to delegate supervisory authority to other experienced associate brokers for both “Reasonable-Level of Supervision” and “High-Level of Supervision” as follows:

• Supervisory Brokers must bear responsibility along with the employing broker for ensuring compliance with the Commission statutes and rules for those persons the delegated associate broker is supervising.
• Any delegation of authority must be in writing and signed by the supervisory broker. A copy of such delegation must be maintained by the employing broker for inspection, upon request, by any authorized Commission representative.
• The supervisory broker must meet the competency requirements in the area of practice in which the supervisory broker is supervising.
• An employing broker must not contract with any associate broker so as to
• circumvent the requirement that the employing broker supervise associate brokers.
• While an employing broker may delegate supervision duties, the employing broker is still ultimately responsible for the supervision provided.

Confidential Information Revealed to an Employing or Supervisory Broker

With regard to any confidential information, an associate broker may reveal to an employing broker or a supervisory broker confidential information about the associate broker’s client, and the associate brokers’ disclosure of such confidential information does not change or extend the brokerage relationship beyond the associate broker.

Additional Employing Broker Responsibilities

Rule 6.4 covers the Brokerage Firm’s Brokerage Relationship Policy and Office Policy Manual.

Regarding the brokerage firm’s brokerage relationship policy, an employing broker must:

• Adopt a written office policy which identifies and describes the relationships in which such employing broker and any associate brokers may engage with any consumers prior to providing any real estate brokerage services.
• An employing broker or associate broker must be designated in writing by the employing broker to serve as a single agent or transaction-broker for a consumer.

Office Policy Manual

Regarding an employing broker’s responsibility concerning having an office policy manual:

• Employing brokers must also adopt any written policies suitable to the brokerage firm’s business, subject to the following as applicable:
• Applies to all associate brokers in the brokerage firm.
• Be given to and signed by each associate broker.
• Identifies the procedures for the designation of brokers who are to work with consumers.
• Identifies and provides adequate means and procedures for the maintenance and protection of confidential information that:
  • The seller or landlord is willing to accept less;
  • The buyer or tenant is willing to pay more;
  • Information regarding motivating factors for the parties;
  • Information that a party will agree to other financing terms;
  • Material information about a party not required by law to be disclosed;
  • Facts or suspicions which may psychologically impact or stigmatize a property; and
  • All information required to be kept confidential.
  • Permits an employing broker to supervise a transaction and to participate in the same transaction as a designated broker.

The Directly from the Director series from the Division addressed many questions and aspects of employing broker supervision and responsibilities. Watch the recorded video presentation by Marcia Waters, the Director of the Division of Real Estate as she tackles many questions pertinent to these issues.