Investigator's Insights

Understanding Broker Teams

A real estate “Team” is two or more brokers within a brokerage firm that conduct their real estate brokerage business together. Although Teams are not issued their own real estate license number and were not officially defined until 2014 (in Commission Position 45), the Commission has long recognized their existence within the industry.

Teams can be an effective way for multiple licensees within a brokerage to pool their resources, leverage their time, and distinguish themselves from the other members of the brokerage. However, it’s often within this last endeavor that licensees unfortunately find themselves too successful in drawing a distinction between their Team and their brokerage. The desire of the Team to emphasize their brand can frequently conflict with the regulations that require all licensees to clearly and conspicuously identify their brokerage and not mislead the public as to the identity of the brokerage.

Team Advertising Considerations

In 2011, the Real Estate Commission adopted Commission Position 40 identifying compliance considerations in the operating and advertising of teams. In 2014, the Division further codified Team advertising regulations in Rule E-8. Some of the key considerations for teams in advertising include the following:

All Team advertising must clearly and conspicuously include the brokerage firm.
Teams may not mislead the public concerning the identity of their brokerage firm.
No Team may license its name for use outside the team’s brokerage firm.
Certain terms are prohibited from being used within a Team name, including “Realty” “Real Estate”, “Inc”,“LLC”, or any other term that may suggest that Team is a separate entity from the brokerage firm.
In electronic advertising, every website page must include the brokerage firm name.
Emails, chat, instant messages, newsgroups, blogs, etc., must include the brokerage firm name.
If space is limited in electronic advertising such as Twitter, Facebook, YouTube, banner ads, etc., the brokerage firm must be disclosed within 1 click of such ad.

Brokerage Relationship to Teams

In addition to the advertising concerns referenced above, special consideration also needs to be given to brokerage relationship regulations as they relate to Teams. Commission Rule E-38 identifies specific brokerage relationship restrictions and requirements including the following:

The individual team member(s) entering into a listing contract as a buyer’s agent, seller’s agent, or transaction broker will bind all team members to the same relationship.
When Teams work with both the buyer and seller, the Team members may work with both buyer and seller as transaction broker, or agent for one party treating the other party as customer.
Different members of the same team may not serve as both seller’s agent and buyer’s agent in the same transaction.

Other Considerations for Teams

Unlicensed persons may not sign real estate transaction documents on behalf of the Team.
If unlicensed assistants work for multiple Teams under one brokerage, brokers must ensure that information is not shared in a way that could be a violation of working relationships.
All Team members and all unlicensed assistants who are part of the team should be identified in every listing contract.

CP-40 Teams.pdf

Remember

As stated above, there can be many advantages associated with forming a Team. However, there are also a number of regulatory considerations that must be taken into account. Consequently, the Employing Broker must approve the formation of all Teams within a brokerage firm. Additionally, the Commission strongly recommends that a formal Team Agreement be drafted that clearly identifies the Team policies, such as who does and does not sign listing contracts. The Team Agreement should be signed by all members and be amended every time there is a change in one or more team members.

Minimum Service Requirements for Colorado Real Estate Brokers

There are many varying business models and commission models in the industry, with more emerging every day. No matter what a broker’s business model is, the law specifies certain duties that must be performed when acting as a real estate broker in Colorado. These obligations and responsibilities are outlined under C.R.S. §§ 12-61-804, 12-61-805, and 12-61-807.

Key points to remember:

There are certain duties and obligations that a broker must perform, no matter what commission or fee is being charged.
Reasonable skill and care is one of these duties, and requires the broker to be involved throughout the entire transaction.
Brokers cannot solely provide “additional duties”, i.e., cannot only list a property on the MLS but not perform minimum duties. A consumer cannot relieve their broker of the minimum services requirement.

Minimum Service Requirements Clarified

“Entry-Only” Listings: The position statement specifically clarifies that brokers are not solely allowed to perform “additional” services which require a real estate broker’s license. For example, the position states that “offering the real property of another for sale through advertisements, without providing the minimum duties required by single agency or transaction brokerage” is not allowed. This has also been known as a “MLS- only” or “entry only” listing. Consumers do not have the ability to relieve a broker of their requirement to perform minimum duties, even if the consumer only wants their property advertised. The Colorado Real Estate Commission has consistently disciplined brokers who are only providing a listing service without performing the minimum service requirements, regardless of whether there was any harm to the consumer.

Reasonable Skill & Care: One minimum service identified in the statute is exercising “reasonable skill and care.” This can encompass many situations and issues, and the broker needs to remain involved throughout the transaction to ensure they are providing this service. Brokers must always exercise reasonable skill and care regardless of the type of brokerage relationship they have entered into or amount of commission that has been agreed upon. The statute specifically spells out what “reasonable skill and care” means for transaction brokerage in §12-61-807 (2)(b), C.R.S. It is important to note that some of these definitions of reasonable skill and care are very all-encompassing; such as, “advising the parties regarding the transaction”, “keeping the parties fully informed regarding the transaction”, and “assisting the parties in complying with the terms and conditions of any contract including closing the transaction.” One can see how important it is for a broker to be involved from the beginning to the end of the transaction in order to perform these duties.

Brokers can also find clarification on the minimum service requirements and uniform duties in Commission Position 36.

CP-36 Minimum Service Agreements.pdf

Failure to Exercise Reasonable Skill and Care Examples

The Commission has rendered discipline to brokers who did not exercise reasonable skill and care, often resulting in harm to their clients. There are many examples of these situations:
A broker who does not notice that they did not receive due diligence documents by the deadline set forth in the contract;
Forwarding the wrong offer for a client’s signature;
Not informing a client of an on-site wastewater transfer permit or county inspection that is required prior to closing; or
Breezing right by the loan objection deadline without checking in on the loan.

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