Broker Accountability Part II Image

Broker Accountability Part II


Today’s blog is the second in a series of three on broker accountability and what it means in the day-to-day operation of a real estate or mortgage brokerage.

Broker accountability requires a variety of things – but perhaps two of the most important things for which brokers are responsible are:

  • providing all industry members of the brokerage and other personnel with written policies and procedures by which they are expected to operate, including written policies and procedures for personal trades.
  • ensuring there is an adequate level of supervision for associate brokers or associates,as the case may be, within the brokerage and employees who perform duties on behalf of the brokerage.

Policies and procedure manuals are living documents and need to include information about how the brokerage does business, the expectations for the conduct of employees and industry professionals registered with the brokerage, and the consequences of not abiding by the policies.

Brokers should have some acknowledgement document or form for employees or industry members, as the case may be, to acknowledge that they have read, understand and agree to abide by the brokerage’s policies and procedures.

A brokerage policy and procedures manual can and should include everything from simple things such as the hours of operation and access to the office after hours, to things relating more specifically to trades in real estate and deals in mortgages, such as trust deposit procedures, expectations for providing documents to the brokerage (timing of and which documents), broker review of advertising, expectations for personal trades/deals and dispute resolution processes for internal conflicts.

Of course, simply having policies and procedures is not enough. An adequate level of supervision needs to go hand in hand with those policies and procedures.

An adequate level of supervision may look somewhat different from brokerage to brokerage and with respect to different industry professionals within the same brokerage. For example, a recent graduate of the Real Estate Associates Program may be required to have his or her broker’s approval on any documents prior to presentation to clients for their first X number of transactions. Supervision of a new employee or industry professional may begin with required attendance at a brokerage orientation session.

On the other hand, a more experienced industry professional may not be supervised to such a great extent, as long as they have demonstrated consistent compliance with brokerage policies and legislation.

And, as employees and industry professionals are accountable to their broker for their trading and dealing activities, they need to acknowledge that all such activities are performed on behalf of the brokerage.

As part of the notion of adequate supervision, brokers need to clearly articulate the circumstances that require immediate contact with the broker or delegate as well as ongoing reporting requirements for employees and industry professionals.

To review Part I of the broker accountability series, click here.

In your brokerage, are new industry professionals supervised differently than those who are more experienced?