In setting up your office structure, pay attention to the regulations concerning your place of business and obligations to provide “reasonable and adequate” supervision.
· Defining Place of Business
A. Within the meaning and intent of §54.1-2110 of the Code of Virginia, a place of business shall be an office where:
1. The principal broker, either through his own efforts or through the efforts of his employees or associates, regularly transacts the business of a real estate broker as defined in §54.1-2100 of the Code of Virginia; and
2. The principal broker and his employees or associates can receive business calls and direct business calls to be made.
B. No place of business shall be in a residence unless it is separate and distinct from the living quarters of the residence and is accessible by the public.
C. Every principal broker shall have readily available to the public in the main place of business the firm license, the principal broker license and the license of every salesperson and broker active with the firm. The branch office license and a roster of every salesperson or broker assigned to the branch office shall be posted in a conspicuous place in each branch office.
· Reasonable and Adequate
D. Each place of business and each branch office shall be supervised by a supervising broker. The supervising broker shall exercise reasonable and adequate supervision of the provision of real estate brokerage services by associate brokers and salespersons assigned to the branch office. The supervising broker may designate another broker to assist in administering the provisions of this subsection. The supervising broker does not relinquish overall responsibility for the supervision of the acts of all licensees assigned to the branch office. Factors to be considered in determining whether the supervision is reasonable and adequate include, but are not limited to, the following:
1. The availability of the supervising broker to all licensees under the supervision of the broker to review and approve all documents including but not limited to leases, contracts affecting the firm's clients, brokerage agreements and advertising;
2. The availability of training and written procedures and policies which provide, without limitation, clear guidance in the following areas:
a. Proper handling of escrow deposits;
b. Compliance with federal and state fair housing laws and regulations if the firm engages in residential brokerage, residential leasing, or residential property management;
c. Advertising;
d. Negotiating and drafting of contracts, leases and brokerage agreements;
e. Use of unlicensed individuals;
f. Agency relationships;
g. Distribution of information on new or changed statutory or regulatory requirements;
h. Disclosure of matters relating to the condition of the property.
i. Such other matters as necessary to assure the competence of licensees to comply with this chapter and Chapter 21 (§54.1-2100et seq.) of Title 54.1 of the Code of Virginia.
3. The availability of the supervising broker in a timely manner to supervise
the management of the brokerage services;
4. The supervising broker ensures the brokerage services are carried out competently and in accordance with the provisions of this chapter and Chapter 21 (§54.1-2100 et seq.) of Title 54.1 of the Code of Virginia;
5. The supervising broker undertakes reasonable steps to ensure compliance by all licensees assigned to the branch office;
6. If a supervising broker is located more than 50 miles from the branch office and there are licensees who regularly conduct business assigned to the branch office, the supervising broker must certify in writing on a quarterly basis on a form provided by the board that the supervising broker complied with the requirements in this subsection; and
7. The supervising broker must maintain the records required in this subsection for three years. The records must be furnished to the board's agent upon request.
(18 VAC 135-20-160. Place of business., eff. 2007)
· Please note that the regulations list subject matter about which brokers need to provide either training or accessibility to training. The key topics are:
o Proper Handling of Escrow Accounts
o Fair Housing
o Advertising (“disclosure” rules)
o Negotiating and Drafting Contracts
o Use of Unlicensed Assistants
o Agency Relationships
o Disclosure of Property Condition Issues
o Education
o NAR Code of Ethics
o Agent Commissions
VAR has helpful information for Virginia brokers on creating or updating their office policy manuals. See below for guidance.
Whether you operate a small independent brokerage or a large full service company, the importance of having and utilizing an office policy manual remains the same.
The Real Estate Board regulations require that you maintain in your “place of business”:
“The availability of training and written procedures and policies which provide, without limitation, clear guidance in the following areas:
- Proper handling of escrow deposits
- Compliance with federal and state fair housing laws and regulations if the firm engages in residential brokerage, residential leasing, or residential property management
- Advertising
- Negotiating and drafting of contracts, leases and brokerage agreements
- Use of unlicensed individuals
- Agency relationships
- Distribution of information on new or changed statutory or regulatory requirements
- Disclosure of matters relating to the condition of the property.
- Such other matters as necessary to assure the competence of licensees to comply with this chapter and Chapter 21 (§ 54.1-2100 et seq.) of Title 54.1 of the Code of Virginia.”
VAR was asked to develop a “template” that you can use to either a). compare your current manual to what the new regulations require or b). use as a model to draft your own policy manual from scratch.
We have drawn from the experience of other VAR members, staff and our own legal counsel. What we have developed to assist you is an outline of topics and links to other documents (the new regulations and our Code of Ethics) to provide additional information and guidance in shaping your own polices.
Office Policy Topic Areas and Prompts from New Virginia Real Estate Board Regulations
- Proper Handling of Escrow Accounts
- Earnest Money Deposits
- To whom presented?
- Within what period of time after full ratification?
- How do we deal with notes, post-dated checks, delayed delivery of checks? (Contract must reflect such arrangements.)
- New rules as to when the money can be returned.
- Security Deposits
- VRLTA requirements
- Common law: joint instructions
- VREB rules: Know when to say no to landlord.
- Who gets the interest? (The contract/lease must say.)
- What money goes into which account?
For more information on escrow requirements click here.
- Fair Housing
- Advertising
- “disclosure” rules on e-mails, websites, other electronic ads. What other things does the firm require on agent websites? Does the firm retain the right to consent to format, content?
- firm policy as to IDX
- How may teams, business entity salespersons advertise?
- use of company name, logo, Realtor name, logo.
- franchise rules, if appropriate
- NAR policies
- printed materials, newspaper and magazine, other print ads
- firm name
- broker review and approval requirements
- solicitations/general mailings
For more information on Advertising click here
- Negotiating and Drafting Contracts
- Drafting
- property descriptions (real and personal)
- financing provisions: familiarity with special programs
- buyer contingencies: Be specific about who benefits.
- seller contingencies
- Are blanks left unfilled?
- Property condition issues
- Inspections: Be careful about who has termination rights.
- Well (recovery) and septic (bedrooms)
- Title: Move quickly on time-sensitive issues.
- Occupancy
- POAA/Condo
- Megan's Law
- Negotiating Considerations
- How do we handle:
- multiple offers
- counteroffers
- addenda
- signatures and initials
- Are we familiar with all commonly used forms, and how they differ?
- Familiarity with new SOPs 1-15, 16-13.
- Code of Ethics limitations and our duties to our clients
- Maintenance of Records - For more information click here
- Use of Unlicensed Assistants
- Knowing the law: The difference between practice of real estate and ministerial, unlicensed activities
- What may our unlicensed assistants do? May they answer clients' questions about property?
- Team limitations
- What UA may NOT do: Show property, handle walk-throughs, negotiate contracts, addenda and amendments
- Who does the UA work for? The team? The firm? Both?
- Upon request by VAR, the REB in 2008 reiterated its longstanding position that unlicensed assistants may not hold houses open. They may assist at open houses but not staff them by themselves, as long as what they do is purely in assistance to the agent holding the house open (not answering questions, doing a sales job, etc.)
- Agency Relationships
- Who may sign for the firm?
- What authority do agents have to negotiate fees, terms?
- Must buyer agency agreements be in writing? Must they be exclusive? For a minimum duration? May they be terminable by client?
- Dual agency: What limitations? What is the firm attitude about dual agency? When is it inappropriate? May we create it with buyers who approach us about one of our listings? No dual agency when agent is buying the firm's listing, or selling to the firm's buyer client.
- Designated agency: What is the firm attitude?
- Open listings? Co-exclusives?
- What duties does the agent owe the client?
- Under Virginia Code
- Under the Code of Ethics
For more about Agency relationships and disclosure responsibilities click here
- Disclosure of Property Condition Issues
- Firm questionnaire? How do we counsel our sellers about existing defects?
- How do we deal with
- Previous inspection problems?
- Dueling/inconsistent inspections?
- Seller representations to us?
- Being familiar with the issue of misrepresentation. What to avoid saying (“The repairs have been done” versus “Here's the invoice.”)
- The requirements of the Virginia Code and VREB regulations
- Policy of the firm
- In writing
- When? How?
- LBP
- Radon
- Mold: (Do we recommend tests? Moisture audits? Do we know the source of mold, how to detect it?)
- Poly pipes: Settlement funds? Which fittings are present?
- Counseling the buyer client on the desirability of inspections. How do we make referrals of professionals for inspections, repairs?
- Required documentation.
- Education
- What the law requires.
- What the firm requires.
- Available sources of education and resources/materials.
- Could your firm benefit from appointing a staff member/associate broker to take on the position of director of firm education, to keep everyone up on available classes, materials, sources?
For more about education click here
For more information about a broker's supervisory responsibilities click here
VAR formed a Working group to review and recommend additional policy areas that could be included in an office policy manual. Here is a list of those additional policy areas:
I. General Office Information
A. Hours of Operation
B. Office Address
C. Office Opening / Closing Procedures
D. Sales Meetings - Time and Locations
II. NAR Code of Ethics
III. Listing Procedures - (from the Northern Virginia Association of Realtors Office Policies)
A. Completeness / Accuracy of Information
B. Tax Records
C. Existing Deeds of Trust or Liens
D. Legal Description
E. Room Sizes
F. Item that Convey
G. Well and Septic
H. Home Inspection
I. Water and Sewer Hook-Up Charges
J. Heating / Air Units
K. Floors
L. Open Houses
M. Other Advice to Sellers
N. Any other Individual Company Policies
IV. Showing Procedures (from the Northern Virginia Association of Realtors Office Policies)
A. General Procedures, Courtesies and Precautions
(Appointments, Safety Guidelines, Business Cards, Actions While Showing, Etc.)
V. Agent Commissions
These policies could include reference to the VREB regulations on “Improper Brokerage Commission” as well as Code of Ethics references.
For more information click here