Key Takeaways
- Arizona salespersons must work under a designated broker who is responsible for supervising all their activities
- The designated broker is the broker who supervises a real estate entity and its licensees
- Arizona allows corporations, LLCs, partnerships, and other entities to hold real estate licenses
- Brokers must maintain written supervisory policies and are responsible for licensee conduct
- Branch offices require notification to ADRE and supervision by the designated broker or branch manager
Arizona License Types and Broker Supervision
Arizona recognizes several types of real estate licenses with specific requirements and authorities.
License Types
Individual Licenses
| License Type | Authority | Supervision Required |
|---|---|---|
| Salesperson | Must work under broker | Yes - by designated broker |
| Broker | Can operate independently | No - supervises others |
| Associate Broker | Broker working under another broker | Yes - by designated broker |
Salesperson
A salesperson is licensed to perform real estate activities but must work under a designated broker. Salespersons cannot:
- Operate independently
- Receive compensation directly from the public
- Supervise other licensees
Broker
A broker can operate independently and supervise salespersons. In Arizona, a broker who supervises an office or entity is called the designated broker.
Entity Licenses
Arizona allows various business entities to hold real estate licenses:
| Entity Type | Requirement |
|---|---|
| Corporation | Must have a designated broker |
| LLC | Must have a designated broker |
| Partnership | Must have a designated broker partner |
| Professional Corporation | Must have a designated broker |
The designated broker is personally responsible for:
- Supervision of all licensees
- Trust account management
- Compliance with ADRE rules
- All real estate activities of the entity
Designated Broker Responsibilities
The designated broker must:
- Supervise all licensees affiliated with the brokerage
- Maintain written policies for supervision and compliance
- Handle trust funds in accordance with ADRE rules
- Review advertising and marketing materials
- Retain records for required periods (5 years)
- Respond to ADRE inquiries and audits
Supervision Requirements
Written Policies
Designated brokers must establish written policies covering:
- Supervision of licensed activities
- Trust fund handling procedures
- Advertising guidelines
- Transaction review processes
- Record retention (5 years minimum)
- Compensation arrangements
Broker Liability
The designated broker is responsible for:
- Acts of affiliated licensees within scope of license
- Trust account compliance
- Proper supervision
- Timely response to complaints
Key Point: The designated broker can be disciplined for the acts of affiliated licensees if those acts result from inadequate supervision.
Branch Offices
Brokers operating from multiple locations must:
- Notify ADRE of each branch office location
- Maintain supervision at each location
- Keep records accessible
Temporary License Location
For special events or off-site activities, licensees may operate temporarily from a location other than the licensed office, but must:
- Have written authorization from designated broker
- Display proper identification
- Comply with all ADRE rules
License Transfers
When a salesperson changes employing brokers:
- Terminating broker releases the salesperson
- New broker submits employment paperwork to ADRE
- Salesperson cannot practice during the gap
- License remains valid but inactive until new employment is filed
Compensation Rules
In Arizona:
- Salespersons receive compensation only from their employing broker
- No direct payment from clients to salespersons
- Commission splits are negotiable between broker and salesperson
- Referral fees to licensed parties only (with disclosure)
Who is responsible for supervising all licensees in an Arizona brokerage?
How long must Arizona brokers retain transaction records?