Understanding a Real Estate Agent’s Fiduciary Duties – Broker’s Duty to Supervise

Today, we wrap up our series on a real estate professionals fiduciary duties. Attorney, Laura Ferret, examines the broker’s duty supervise salepersons. The broker owes not only all of the duties previously discussed to their client but they also owe the independent duty to supervise the salespeople that work under their broker’s license. This is a hot topic for brokers and responsibility owed in managing those that work for them.

As always, if you have any questions about your real estate, business, estate planning, or any other legal issue, please let us know by e-mailing managing shareholder Keith Dunnagan at kbdunnagan@bpelaw.com.

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Understanding a Real Estate Agent’s Fiduciary Duties –
Broker’s Duty to Supervise
By: Laura Ferret, Esq.

Through this multi-part series on fiduciary duties, we have examined the various duties held by real estate brokers and salespersons alike. Today, we will examine a duty unique to brokers-the broker’s duty to supervise salespersons.

Under California Law, a licensed real estate salesperson may only act on behalf of, and in place of, the real estate broker under whom he or she is licensed. Brokers therefore may be disciplined and held liable based on salespersons’ conduct within the scope of the salesperson’s employment. For example, a broker may be held liable if a salesperson under their purview breaches one of the fiduciary duties previously discussed in this series-even if the broker did not actually breach any fiduciary duties themselves.

On top of this, a broker may also face professional discipline for breaching their duty to supervise their salespersons. The broker’s duty to supervise their salespersons is outlined in the Regulations of the California Real Estate Commissioner as well as the California Business and Professions Code. These laws require that the broker exercise “reasonable supervision” over all agents acting under the broker’s license.

“Reasonable supervision” generally means that the Broker should establish procedures for reviewing the actions of the agents working under the Broker’s license. This means that the Broker should have policies and rules governing the review of actions normally taken by salespersons including advertising, fees, communication with clients, and completion of CAR forms. A broker is permitted to delegate supervision to other brokers or salespersons but cannot completely relinquish their duty of supervision. Regardless of any delegation, the Broker will ultimately be responsible for the actions taken by their salespersons.

A recent California Supreme Court case may impose an additional layer to the broker’s duty of supervision. In Horiike v. Coldwell Banker Residential Brokerage Co (2016), the court found that if two agents working under the same broker represent the buyer and seller respectively, both agents are dual agents, even if they work out of separate offices. Therefore, brokers should have supervisory policies in place to recognize when two salespersons under one broker are participating in the same transaction.

Even where a broker’s breach of their duty to supervise their salespersons does not lead to civil liability, it can result in professional discipline. According to the DRE, brokers who fail to supervise their employees can be subject to licensing discipline including suspension and revocation of the real estate license. The Commissioner has the authority to suspend or revoke a broker’s license for a failure to supervise under Business and Professions code Section 10177(h).


The attorneys of BPE Law Group, PC. have been advising our clients on real estate, business and estate planning issues for over 20 years and have assisted numerous clients in business and real estate matters and have represented and advised brokers on their professional obligations as well as consumers on their rights. If you have questions concerning legal matters, give us a call at (916) 966-2260 or e-mail Keith at kbdunnagan@bpelaw.com. Our flat fee consult for new clients may get you the answers you need for the questions you have.

The information presented in this Article is not to be taken as legal advice. Every person’s situation is different. If you are facing a legal issue of any kind, get competent legal advice in your State immediately so that you can determine your best options.