There is currently a bill working its way through the California legislature that, if passed, will significantly increase the legal liability of individuals who are branch office managers for large real estate companies. Senate Bill 510 (Correa) is sponsored by the California Association of Realtors® (CAR). It came about as a result of recommendations from the Broker Supervision Task Force which was set up by the Real Estate Commissioner in 2009-2010.

In California, as in numerous states, the principal or designated broker of a real estate company is required “to exercise reasonable supervision over the activities of their salespersons.” Brokers may “assign to a branch manager supervisory responsibility over salespersons in branch offices,” but the broker cannot “relinquish overall responsibility for supervising the acts of salespersons licensed to the broker.”

The problem the Task Force found was that “Currently, there are no license disciplinary consequences to any subordinate licensee when supervisorial authority is delegated… [and there is a] failure to properly supervise.” If a branch manager is negligent in his or her supervision of salesperson activities, that fact has no disciplinary consequences from a Department of Real Estate (DRE) perspective. The principal broker might be punished (by license restriction, suspension, or revocation), but nothing would happen to the branch manager. Clearly, such a lack of accountability before the law has made it easier for some branch managers to become lax in the supervision area.

SB 510, if enacted, would provide for the following four changes:

  1. The appointment of a branch manager and delegation of supervisorial responsibility would require a written contract and notification to the DRE by means of a form to be developed.

  2. The termination or change of a branch manager would require notification to the DRE.

  3. A licensee could not be appointed to a branch manager position if (a) their license is restricted or (b) they are subject to disbarment or (c) they have less than two years of full-time real estate experience within the preceding five years.

  4. The license of a branch manager could be suspended or revoked for failure to properly oversee and supervise the operations of the branch office.

The provisions of the bill would become operative July 1, 2012.

The bill also makes clear that “nothing in this section shall be construed to limit the responsibilities of an employing broker.” The bill creates legal responsibilities for branch managers, but it does not diminish the existing responsibilities for principal brokers.

It might happen, for example, that in every case where a branch manager is disciplined for a lack of supervision, the principal broker will be disciplined also. The bill doesn’tthat, but it just might be the way things play out.

Regardless, if SB 510 becomes law, managers of real estate branch offices in California will have a significantly increased level of responsibility. That is probably a good thing; though they may want to be paid more.


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