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21 Cards in this Set
- Front
- Back
1
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The responsible broker is the agent of the client; a salesperson or broker who
associates their license with the responsible broker is an agent of the responsible broker and works under the direction and supervision of the responsible broker. Furthermore, 22TAC 535.154(e)) states: Because salespersons may lawfully engage in brokerage activity only when they are associated with, and acting for, a broker, a listing may be solicited and accepted only in a brokers name. Advertisements concerning a brokers listings must include information identifying the advertiser as a real estate broker or agent. Furthermore, the associate may not accept compensation directly without the consent of the sponsoring broker [TRELA 1(d); 22 TAC 535.3 |
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2
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Listing agreements, buyer-representation agreements and property
management agreement create the agency relationship between the responsible broker and the client (buyer/tenant or seller/landlord). An independent contractor agreement would exist between a broker and a salesperson or broker licensee whose license was associated with the principal broker. |
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3
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The employer-employee relationship would allow the broker to exercise
control over such activities as what, where, when, and how duties are performed. A broker treating an associated licensee as an independent contractor more generally controls what the independent contractor does but not necessarily how the work is perform. The more control the broker exerts over the sponsored licensees, the more likely IRS would consider the sponsored licensee to be an employee instead of an independent contractor. |
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4
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The state license held by a broker associate is the same as that of the
responsible, or principal, broker. The associate broker may theoretically do any of the things the principal broker is authorized to do under TRELA, including advertising and taking listings in their own name and actually running another brokerage operation. Such freedom of action is generally not permitted by the principal broker who may be held just as accountable for the acts of broker associates. In fact, TRELA 1.(c) holds the principal broker responsible for all acts and conduct performed under this Act by the broker or by a real estate salesperson associated with or acting for the broker. TRELA 2.(4) does not limit the definition of a salesperson to those holding a salesperson license but rather a person associated with a Texas licensed real estate broker for the purposes of performing brokerage activities on behalf of the broker. |
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5
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IRS would of course prefer that licensees be classified as employees because
the broker could then be held accountable for collecting and paying taxes on behalf of the employee. However, the broker would not necessarily be shielded from IRS regulations simply because the written contract with associates states the associates are independent contractors (i.e., self-employed and thus responsible for paying their own business expenses and taxes). The more control the broker exerts over what, how, when and where the duties are performed, the more likely IRS might rule that if it walks like a duck, quacks like a duck it must be an employer! |
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6
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(p.226) Compensation between brokers and their associates is set by mutual
agreement between the two parties. TRELA and TRELA are silent on this matter. |
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7
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(p.227) 22 TAC 535.1.(c) states that a person must be licensed
to show a brokers
listings, solicit listings of real property.. or perform any other act of brokerage. The personal assistants will frequently act as host or hostess at an open house provided the unlicensed person engages in no activity for which a license is required. |
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8
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(p.227) MLSs are sometimes viewed as employment agreements amongst the
members of the MLS. As discussed in detail in Chapter 6, offers of subagency through the MLS are now at the discretion of the listing broker. |
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9
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(p.227) Only REALTORS® are eligible to participate in MLS activities sponsored
by local REALTOR® boards; however, non-REALTOR® broker licensee may still voluntarily contract with any broker licensee to arrange for cooperation and/or compensation between brokerage firms. |
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10
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(p.229) TRELA 14(a) states that a licensed broker may pay a commission to a
licensed broker of another state if the foreign broker does not conduct in this state any of the negotiations for which the fee, compensation, or commission is paid. 22 TAC 535.147(a) defines any other state as the states, territories, and possessions of the United States and any foreign country or governmental subdivision thereof. |
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Employment Contracts with Consumers
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Listing and/or Buyer’s Representative Agreements
Property Management Agreements |
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Employment: Brokers & Principals….
Financial Duties |
Pay Brokerage Expenses
Income Tax on Compensation Received |
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Employment: Brokers & Principals
Requirements For Recovery of Commission |
Duly licensed at time service began
Written & Signed Compensation Agreement Buyer Advised To Check Title |
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Employment: Brokers & Associates…
General guidelines |
Sponsoring broker, aka principal broker
Respondeat Superior Associate = agent of the broker Rules for salespersons and broker associates TREC Not Involved in Contractual Agreements |
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Between Brokers and Associates…
Employee vs. Independent Contractor… |
Employee vs. Independent Contractor…
Broker engages associates as employees or Independent contractors May establish either Agreement should be in form of written contract |
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Between Brokers and Associates…
…Employee vs Independent Contractor |
Employer-employee:
Broker exercises certain controls Withholds taxes, Social Security, benefits Independent contractor Broker controls what, not how Broker must not furnish normal employee benefits Contract should specify tax responsibility |
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Between Brokers and Associates
Salesperson Compensation |
Established by mutual agreement of broker and associate
Typically associate shares in commissions earned by broker Many compensation plans available |
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Personal Assistants
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Licensed vs Non Licensed
Not Likely an Independent Contractor Consult Competent Tax Advisor |
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Between Brokers & Subagents
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MLS Subagency Agreements
Non-MLS Subagency Agreements Agreements Between Brokers Listing Commissions Buyer Broker Agreement for Compensation Potential Problems |
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Other Compensation Issues
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Sharing commission with non licensee prohibited except:
Principal $50 rule Unlicensed Brokerage Owners Sharing income vs. performing brokerage activities Foreign Brokers Another state or another country |
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Suggestions for Brokers
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Document Relationships with Associates in Written Employment Contract
Follow IRS Guidelines re: Independent Contractor Status |