If my LLC joins a “team”, do I need to designate myself as broker-in-charge?

QUESTION:  I am a broker with XYZ Real Estate. At the suggestion of my accountant, I formed a Limited Liability Company for the purpose of receiving the compensation paid to me by XYZ. Although my LLC is licensed, I have never had anyone else associated with me and have never had to designate myself as broker-in-charge. I am now thinking of forming a “team” with another XYZ agent (John) to work together on transactions. XYZ’s broker-in-charge has told me that I should officially associate John with my LLC on the Real Estate Commission’s records. Doesn’t that mean I would have to designate myself as the broker-in-charge of my firm (and complete the required 12 hour course)?

ANSWER:  The answer is yes. The broker-in-charge rule includes a provision – Rule A.0110(d) – which states that a licensed real estate firm is not required to have a broker-in-charge if it meets four tests. One of those tests is that the firm “has no licensed or unlicensed person associated with it other than its qualifying broker”. If John associates with your firm, your firm no longer qualifies for the exemption.

In the Real Estate Commission’s 2013-2014 Broker-in-Charge Course Materials relating to “Advertising Issues”, the Commission suggests that there is a way for you to avoid the broker-in-charge requirement in the team context: do not have a separate licensed entity involved in your “team”. The Course Materials point out that some teams are comprised of brokers who are associated solely with one company but who have agreed to cooperate on transactions in some form, and to have all production reported primarily under one broker’s name. The Course Materials note: “So long as the team leader does not create an entity (thus requiring a firm license), she and all members of her team still only have one official affiliation in Commission records and that is with XYZ Realty under (its) broker-in-charge.”

If your LLC is not used to receive shared “team” compensation from XYZ, then XYZ’s broker-in-charge would bear full responsibility for fulfilling all of the broker-in-charge duties relating to its affiliated agents.

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