Legal FAQs for REALTORS®
— Brokerage Liability Issues
Broker Sponsoring Employee of Builder
One of the agents I sponsor wants to also work part time selling homes for a local home builder. Are there any risks I should be aware of before agreeing to this? (Updated April 4, 2014)
You should consult an attorney regarding the risks involved and how to protect yourself from liability before agreeing to this situation.
A person employed by a builder to sell the builder’s homes is exempt from the Real Estate License Act. If he were working exclusively for the builder, he would be exempt from the act and you would not be responsible for his activities. However, while working as a salesperson under you as his sponsoring broker, he is covered by the provisions of the act and you are responsible for his real estate-related activities. This includes possible civil liability for negligent or other inappropriate activities.
One risk you face is that the lines of activities, duties, and responsibilities between the two positions can become blurred, especially to a buyer. Things such as car signs, business cards, and client referrals could lead a buyer to believe that your agent was acting as a real estate salesperson while working for the builder. A court or TREC hearing officer might reach the same conclusion and assess liability or responsibility on the broker.
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