Broker Responsibility Runs Far Deeper than Just Running the Brokerage

By Gary Siegle, RECA Regulatory Compliance Advisor, Mortgage Brokers

Brokers play a vital role in the real estate industry. Not only are you responsible for overseeing the operations of your brokerage, but you are also responsible for ensuring your associates adhere to industry standards, the Real Estate Act, and its Rules and Regulations. To ensure you run a successful business, it is essential to understand the concepts of broker accountability and broker delegation.

No matter the industry (real estate, mortgage, condominium or property management), and no matter the business model you follow, you are part of a regulated profession. Brokers are accountable for their actions and also must meet requirements set out in the Real Estate Act and Rules.

A broker’s responsibilities are broader than you might think

Did you know a broker is always responsible for the actions of their employees and associates? This means you must supervise any work performed by associates and unlicensed staff of your brokerage. If a client were to have an issue with one of your brokerage employees or associates, they would also be able to look for recourse against you as the broker.

Take for example a situation where an associate of your brokerage neglects to enter into a written service agreement with a client. If an associate makes a mistake or willfully violates the legislation, they are not the only ones who have broken the rules, their broker is also responsible for their actions under their brokerage agreement. This is why it is very important for brokers to be aware of the work each and every associate of their brokerage performs.

Broker Accountability

This information bulletin highlights the importance of a broker’s fiduciary duty to clients and the public. Brokers are responsible for supervising their associates and ensuring they comply with industry regulations and ethical standards. Additionally, brokers are responsible for the brokerage trust accounts and must ensure the funds are used appropriately. Non-compliance can result in consequences such as fines, licence suspension, or cancellation.

Broker Delegation

This information bulletin discusses the concept of broker delegation and its importance. Oftentimes it makes sense for brokers to delegate some responsibilities to ensure the business runs smoothly. You may need some help if you run a large brokerage, are absent temporarily or have multiple physical locations. Yet asking someone to help does not mean you pass off all accountabilities.  As the broker, you remain accountable whether or not you assign an area of responsibility to another party.

For example, you may ask an associate or associate broker to train new associates, but ultimately it is still your responsibility to ensure the new associates follow the Real Estate Act.

It is also important you ensure the individuals you delegate hold an active licence with your brokerage and are qualified to carry out the tasks you delegate to them. Remember, unlicensed staff cannot perform duties which require a licence.

Delegation assignments must be in writing and communicated to all brokerage licensees and staff. Since you remain responsible for the delegated responsibilities, you should have a monitoring system in place.

Best Practices

Being a broker involves a lot of responsibility. Consider the following tips:

• communicate regularly with your associates. Associates who know what is expected of them and have the brokerage values regularly reiterated are more likely to operate within the Rules and ensure they do what is expected of the brokerage
• create a properly documented policies and procedures manual and make sure all employees of the brokerage review it
• provide regular training and support to your brokerage staff, including individual and team check-ins
• conduct periodic reviews of your employee’s activity to ensure they are working within the Rules as well as any specific brokerage policies

Regardless of the  sector you work in, brokers must adhere to industry regulations and ethical standards while ensuring their associates do the same. Many brokers aren’t aware of their significant responsibility to ensure their associates also follow the Rules. Adopting best practices will help ensure your brokerage staff are properly trained and know what’s expected of them. Ultimately, practicing proper accountability and delegation practices will help ensure your business is successful for years to come.

If you have any questions on your role as a broker and/or the concepts of broker delegation and accountability, please contact the RECA’s Regulatory Compliance Advisor for your industry.