When a broker employs a salesperson, the broker needs to:
Correct Answer
B) exercise reasonable supervision over the activities performed by the agent.
California Business and Professions Code Section 10177 and DRE Regulation 2725 explicitly require brokers to exercise reasonable supervision over salespersons, including establishing written office policies and procedures for reviewing transactions, handling trust funds, and advertising. This is a legal obligation — not optional — and failure to supervise can result in license suspension or revocation for the broker even if the broker had no direct involvement in the salesperson's misconduct. Reasonable supervision is the foundational legal duty that defines the broker-salesperson relationship in California.
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