Real estate brokers are required to have written employment contracts with:
Question & Answer
Review the question and all answer choices
all clerical staff they employ.
While clerical staff may have employment agreements, California law does not specifically require written contracts with non-licensed administrative personnel. Their employment terms are typically governed by general labor laws rather than real estate-specific regulations.
non-licensees they employ.
Non-licensees (like administrative assistants or marketing staff) do not require written employment contracts under California real estate law. Their employment arrangements follow standard employment practices, not the specific requirements imposed for licensed salespersons.
salespersons they employ.
All of the above.
Since options A and B are incorrect, D cannot be correct. California law specifically requires written contracts only with licensed salespersons, not with all employees regardless of license status.
Why is this correct?
California Business and Professions Code requires brokers to have written employment contracts with all licensed salespersons they employ. These contracts specify commission splits, duration, and termination conditions, protecting both the broker and salesperson while establishing clear agency relationships.
Deep Analysis
AI-powered in-depth explanation of this concept
Agency relationships form the foundation of real estate transactions, defining the legal and ethical responsibilities between brokers, salespersons, and clients. This question tests your understanding of California's specific requirements regarding written employment contracts. The core concept revolves around who a broker must have written agreements with when employing others. In real estate practice, these contracts establish clear boundaries of authority, commission splits, and termination procedures. The correct answer hinges on recognizing that only licensed salespersons require written agreements, while other employees may be governed by different employment laws. This distinction is crucial because brokers who fail to properly document relationships with salespersons face significant legal and financial risks, including loss of commission rights and potential disciplinary action.
Knowledge Background
Essential context and foundational knowledge
In California, the relationship between a broker and salesperson is governed by the Business and Professions Code, particularly Section 10132. This statute mandates written employment contracts that specify the terms of the relationship, including commission splits, duration, and termination procedures. These contracts exist because salespersons act as agents of the broker, and the written agreement clarifies authority and responsibilities. The requirement stems from the need to protect consumers, ensure accountability, and prevent disputes over compensation and operational authority.
LIC - Licensed Individuals Contracts
Remember that written contracts are required only for Licensed Individuals who are Contractors working under the broker's license
When questions ask about written contracts, focus on licensed individuals only. Remember that salespersons specifically require written agreements under California law, while other employees do not.
Real World Application
How this concept applies in actual real estate practice
Imagine a broker hires a new salesperson without a written contract. After six months, the salesperson procures a buyer for a property listed by the broker. When the transaction closes, the salesperson expects a 50% commission split, while the broker intended to offer only 30%. Without a written agreement, the broker faces potential legal action, loss of commission rights, and damage to their professional reputation. This scenario highlights why written contracts with salespersons are not just a regulatory requirement but a fundamental business necessity.
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