Modern Real Estate Practice in Illinois Eighth Edition Chapter 5: Real Estate Brokerage ©2014 Kaplan, Inc.

Broker-Sponsoring Broker Relationship Real Estate Broker –any person licensed to perform real estate activities on behalf of a licensed real estate sponsoring broker Sponsoring Broker –fully responsible for the actions performed in the course of the real estate business by all persons sponsored –all activities performed by a sponsored licensee must be performed in the name of the sponsoring broker

Independent Contractors/Employees Independent Contractor versus Employee –whether a sponsored licensee is treated as an employee or an independent contractor affects the structure of the sponsored licensee‘s responsibilities and the sponsoring broker’s liability to pay and withhold taxes from the sponsored licensee’s earnings

Independent Contractor/Employee Independent Contractor versus Employee –Three requirements must be met to establish an independent contractor status: Current real estate license Written contract specifying that the licensee will not be treated as an employee for federal tax purposes 90% of income based on production, not number of hours worked

Termination of Sponsorship Sponsored licensee terminates employment with the sponsoring broker Procedure –sponsoring broker signs & dates license / sends copy to state within 2 days –licensee gives old license (now inoperative) to new sponsoring broker –new broker issues sponsor card / sends copy to state for new license

Business Planning Real Estate License Act requires an office policy Exception is sole owner with no sponsored licensee Topics should include –agency policy –fair housing, nondiscrimination and harassment –confidentiality of client information –advertising

Real Estate Brokerage Personal Assistants –combination office manager, marketer, organizer, and facilitator with a fundamental understanding of the real estate industry –may or may not have a real estate license If licensed –must be paid by sponsoring broker – must have a written agreement with the sponsoring broker

Real Estate Brokerage Unlicensed Personal Assistants –May perform administrative and clerical functions –May Not host public open houses interpret information related to a real estate transaction explain or interpret real estate documents with anyone outside the employing licensee’s firm negotiate commission or fees on behalf of a licensee perform any other activity for which a license is required

Broker’s Compensation Specified in the contract with the principal Amount of a broker’s commission is negotiable in every case –attempting to impose uniform commission rates is a violation of antitrust laws –a sponsoring broker may set the minimum rate acceptable for that broker’s firm

Broker’s Compensation Broker must cause the action that results in a real estate transaction to be considered the procuring cause of sale Even if the transaction is not consummated, the broker may still be entitled to a commission

Sponsored Licensee’s Compensation Amount of compensation a sponsored licensee receives is set by mutual agreement between the sponsoring broker and the sponsored licensee

Technology and Brokerage Practitioners use blogs to exchange information Visitors use vlogs to download videos and see virtual tours of properties Virtual staging is also used by practitioners Social networking (Facebook®, You Tube®, My Space®, and Twitter®)

Antitrust Laws Price Fixing Group boycotting Allocation of Customers or Markets Tie-In Agreements

Penalties Federal Sherman Antitrust Act –price fixing or allocation of markets: maximum $1,000,000 fine and ten years in prison; for corporations, the penalty may as high as $100 million –Triple damages are available in civil lawsuits

National Do Not Call Registry To avoid penalties, managing brokers must demonstrate that: –they have written procedures to comply with the do-not-call requirement –they train personnel in those procedures –they monitor and enforce compliance with these procedures –they maintain a company-specific list of phone numbers that they may not call

National Do Not Call Registry (cont’d) To avoid penalties, managing brokers must demonstrate that: –they access the national registry every 30 days before calling any consumer and maintain records documenting this process –they must show that any call made in violation of the do-not-call rules was the result of an error

The CAN-SPAM Act of 2003 Controlling the Assault of Non-Solicited Pornography And Marketing –Establishes requirements for sending commercial –Spells out penalties for those who don’t comply –Gives consumers the right to have ers stop sending messages to them

The Junk Fax Prevention Act of 2005 Does not legalize unsolicited fax advertisements or solicitations, but it does allow for an established business relationship exception