Legal FAQs for REALTORS® — Brokerage Liability Issues
Broker Sponsoring Employee of Builder

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Legal disclaimer

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.

Legal Disclaimer: 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.

While the Texas Association of REALTORS® has used reasonable efforts in collecting and preparing materials included here, due to the rapidly changing nature of the real estate marketplace and the law, and our reliance on information provided by outside sources, the Texas Association of REALTORS® makes no representation, warranty, or guarantee of the accuracy or reliability of any information provided here or elsewhere on Any legal or other information found here, on, or at other sites to which we link, should be verified before it is relied upon.

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