Each year, Michigan real estate professionals make dozens of phone calls to the Michigan Department of Labor & Economic Growth ("DLEG") requesting information about activities that an unlicensed individual may perform. In an effort to provide guidance and to help reduce a broker's exposure to potential risk in the utilization of unlicensed assistants, the DLEG published a list of guidelines, which were modeled after an article written by Tom Kotzian (Macomb County Association of Realtors) and approved by Ann Millben (Licensing Administrator for Real Estate for the DLEG).
Here are the guidelines provided by the DLEG:
Unlicensed Assistants MAY:
- Assist licensees during an open house, performing the following functions as a "host" or "hostess"
- Open the door and greet prospects as they arrive at the open house
- Hand out prepared printed material
- Have prospects sign a register (guest book) to record names, addresses and phone numbers for the listing
- Accompany prospects through the home for security purposes (only the licensee should answer any questions pertaining to the material aspects of the house or its price and terms)
- Perform strictly clerical tasks
- Function as a courier in picking up or delivering documents on behalf of the employing licensee
- Note: Keys should not be given to unlicensed persons for the purpose of showing a listed property. Brokers are responsible for the properties in their listing inventory and should only give a key to a licensee who is able to show proper I.D. (e.g., valid pocket card and driver's license with photo)
Unlicensed Assistants MAY NOT:
- Independently show or demonstrate property to prospective buyers
- Make cold calls by telephone or in person to potential listers, purchasers, tenants or landlords
- Answer any questions on title insurance, financing or closings
- Independently hold open houses for brokers, or staff booths in home shows or fairs
- Solicit business through telephone prospecting
- Give additional information not included in prepared written promotional material that has been distributed to the public (e.g., newspaper ads, flyers, brochures)
- Represent themselves as an agent for a real estate broker or the owner/seller of property
- Have their name printed on business cards or stationery that would imply they are an agent for the real estate broker
- Conduct telephone solicitation calls. For example, if John Doe, an unlicensed assistant, calls and indicates he represents ABC Realty, one is led to believe the purpose of the call is to engage in real estate activities. The definition of broker and salesperson in the Occupational Code includes one who "lists or attempts to list." Therefore, a call by an unlicensed assistant identifying him or herself as a "representative" of a real estate company is an attempt to list even if specific terms are not discussed at that time.
- Perform any of the acts for which a license is required under Michigan Real Estate License Law. See M.C.L.A. 339.2501 et seq.)
Licensees who violate State license law by allowing unlicensed assistants to practice real estate on their behalf subject themselves to one or more of the following penalties:
- Placement of a limitation on the license
- Suspension of license
- Denial of license renewal
- Revocation of license
- A civil fine not to exceed $10,000 per offense
- Censure
- Probation
- Restitution.
(M.C.L.A. 339.602)
Brokers and managers must also be aware of their liability in allowing licensees to employ unlicensed assistants. Factors such as worker's compensation laws, agency law, income tax reporting and withholding requirements, sexual harassment, employment discrimination and a myriad of state and federal employment statutes must be carefully reviewed when allowing licensees to hire unlicensed assistants.
Brokers need to remember that they are responsible for the acts of their licensed salespersons and associate brokers and "shall not contract with an individual who is licensed to the broker so as to lose the authority to supervise the licensee." M.C.L.A. 339.22325. It is, therefore, the broker's responsibility to supervise all personnel acting under the scope of the broker's authority.
Brokers need to consider these issues when writing independent contracts with their salespersons and associate brokers. It is recommended that, prior to drafting any independent contract section on this subject, brokers consult with an attorney who is knowledgeable in employment discrimination and related employment laws. Good research and preparation will help avoid many of the problems addressed in this posting.
For more information or answers to specific questions, you should contact the DLEG directly by calling (517) 241-9288.
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