What a broker should do when offering assistance to solicit new agents

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02/09/2017 | Author: Editorial Staff

Can a broker solicit new sales agents by promising to provide them leads in exchange for a required payment?

Yes. However, this activity triggers the Business Opportunity Rule, which is a federal law requiring a brokerage to provide the sales agent with the Federal Trade Commission’s one-page disclosure notice, Disclosure of Important Information About Business Opportunity. A brokerage can offer advertising or training in its solicitation without triggering the Business Opportunity Rule if it does not promote these activities as leading to the sales agents’ success. Instead, the brokerage’s solicitation should focus only on the assistance provided.

Find more answers to legal questions on texasrealestate.com.

Categories: Legal
Tags: legal faq, brokers, business opportunity rule


Comments

Debbie Russell on 02/10/2017

@Rick Knowles - I am not interested in engaging past this point!  Other than, YES, I do look/hope to the future for less government regulation - which may or may not be connected in any way to TREC regulation.  Although much of TREC regulation does trickle down from Federal Regulation….

David Davis on 02/09/2017

@ Rick Knowles, No,  See here: https://www.law.cornell.edu/cfr/text/16/437.1

@DMW If you do not understand the need for the disclosure, it is likely you are not a broker who operates a brokerage and as such would not need to understand it.

@Debbie Russell, What makes you think that will happen?

DMW on 02/09/2017

I find the reason for the disclosure a bit confusing and the disclosure itself confusing.  Please help me to understand it better.

Rick Knowles on 02/09/2017

Would the offer to provide training also included providing the qualifying or CE courses needed to obtain or renew their real estate license?

Debbie Russell on 02/09/2017

It will be interesting to see if this sort of regulation also goes away in the near future!  Regulation Nation 101…


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The material provided here is for informational purposes only and is not intended and should not be considered as legal advice for your particular matter. You should contact your attorney to obtain advice with respect to any particular issue or problem. Applicability of the legal principles discussed in this material may differ substantially in individual situations.

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