California Real Estate SalespersonPractice of Real Estate and DisclosuresHard
A responsible broker fails to review and approve any of the purchase contracts prepared by the salespersons in the office over an 18-month period. The DRE later investigates a fraud complaint against one of the salespersons. What is the most likely basis for disciplinary action against the broker?
- AFailure to reasonably supervise licensed activities of salespersons
- BCommingling of trust funds
- CViolation of blind advertisement rules
- DFailure to disclose material facts to a buyer
Show answer & explanationAnswer & explanation
Correct answer: A. Failure to reasonably supervise licensed activities of salespersons
California Business and Professions Code requires a responsible broker to exercise reasonable supervision over the activities of salespersons, including review of transaction documents. Failing to review any contracts over an extended period constitutes a clear failure of supervisory duty, which is grounds for discipline against the broker's license, independent of the underlying salesperson misconduct.
Why the other options are wrong
- B. Commingling involves improper mixing of trust and personal funds, not a supervision issue here.
- C. Blind advertisement violations relate to omitting broker identity in ads, not supervision failures.
- D. Failure to disclose material facts relates to disclosure duties, not the broker's supervisory role.
Broker's Duty to Supervise
A responsible broker must reasonably supervise the licensed activities of salespersons, including reviewing transaction documents, and failure to do so is grounds for discipline.
- Broker must review contracts and disclosures
- Supervision failure is independently disciplinable
- Applies even if salesperson, not broker, committed misconduct
Memory trick: 'No review, no reprieve—broker's watch must never leave.'