How should agency agreements be completed for a team?

QUESTION: I am the big guy in charge of a real estate firm way up north…in North Carolina. I usually only concern myself with one huge event every year. However, my brightest go-getter has plans to create a new real estate team and just formed a corporation. He is planning to team with some who, not too long ago, wouldn’t let him join in any transactions, but who are now all ready to follow him anywhere in the world and eager to dance on every rooftop in the state to close a deal. They are promising to bring joy and spread Rudy’s famous sales techniques that brighten the darkest of unrenovated rooms. I just want to know how to best protect the whole firm in light of this new venture, comply with all NC regulations, and ensure this special team won’t dash away! with all the firm’s listings. Have you got any advice on completing agency agreements and how to ensure they will not fly off without this old guy in tow?

ANSWER: It must be quite an event to keep you busy the whole year! I understand from your question that your other agents want to work to create business the rest of the year, too. There is a wonderful summary of regulations and requirements for teams that was published as part of the 2020-2021 BICUP by the NC Real Estate Commission. You can find a link to that article here. This is an article you can review anytime you have a question about how brokers and their teams should advertise, complete agency agreements, and ensure compliance with NCREC licensure requirements.

For Rudy’s team, he will need to have a firm license and he will need to put his firm’s name in addition to your firm’s name on all agency agreements and all team advertising. Advertising is regulated under 21 NCAC 58A .0105, which is found here. With both Rudy’s company and your firm’s names on all agency agreements, it could lead to the possibility of confusion or disputes if Rudy ever did leave your firm and “dash away!” as you put it. The question would be who owns the listing or buyer agency agreement?

It is important for firms to have independent contractor agreements with its agents to define ownership of agency agreements or advertising materials, and for other reasons set out in the Q&A found here. Without a clear agreement between the firm and its agents, the rules governing teams create unique opportunities for disagreement, given that both your firm and the team’s firm will be listed on contracts with clients.

Lastly, if Rudy sets up his office away from your current “northern” location, he won’t be able to have provisional brokers on his team, as they could not be supervised by both you and Rudy in accordance with Real Estate Commission Rules. However, I’d be willing to bet Rudy’s prospective teammates also have quite a few miles under their hoofs, I mean feet, in the business.

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