1.3 Delaware License Types and Broker Supervision

The Three Individual License Types

Delaware recognizes three individual licenses. The dividing line is independence and supervisory power.

Salesperson

A salesperson may list, show, negotiate, and present offers, but only under a licensed broker. A salesperson may not:

• Operate independently or open a brokerage
• Accept compensation directly from a client or any other firm
• Supervise other licensees
• Maintain a personal escrow/trust account

Every commission must pass through the employing broker, who then pays the salesperson per their written agreement.

Associate broker

An associate broker has passed the broker exam and met broker qualifications but chooses to work under another broker rather than open an office. They:

• Hold full broker credentials
• Are still supervised like a salesperson while affiliated
• May take on delegated duties (e.g., assisting with transaction review) if the employing broker assigns them

Broker

A broker may operate independently. A broker may open a firm, supervise salespersons and associate brokers, hold and disburse escrow funds, and operate branch offices. With that authority comes liability for everyone under the license.

Compensation Rules — A Favorite Exam Theme

In Delaware, compensation flows down a single channel:

• A salesperson is paid only by their employing broker.
• A buyer or seller never pays a salesperson directly.
• Cooperating-firm commissions go broker-to-broker, not to the other firm's salesperson.
• Referral fees may be paid only to properly licensed persons; paying an unlicensed "bird dog" a fee is a prohibited act.

Worked scenario: A buyer tries to hand a $2,000 "thank-you" check directly to the salesperson at closing. The correct action is to decline and route any compensation through the employing broker — a direct payment violates Delaware law even when everyone is happy with the deal.

Broker Supervision and Liability

Delaware places heavy supervisory duties on the broker, and the exam probes whether you understand vicarious responsibility.

Written office policy

A broker must maintain written policies and procedures covering:

• Supervision of all licensed activity by affiliates
• Escrow/trust fund handling and reconciliation
• Advertising standards (every ad must identify the brokerage)
• Transaction file review and document retention

What the broker answers for

Key Point: A broker can be disciplined for an affiliate's conduct even if the broker was unaware, when the violation results from inadequate supervision. "I didn't know" is not a defense if the supervision system failed.

Definite Place of Business

Each broker must maintain a definite place of business:

Branch offices

A broker operating from more than one location must:

1. Register each branch separately with the Commission
2. Designate a supervisor responsible for that location
3. Display proper signage at each office
4. Maintain records appropriately for each branch

Changing Brokers — The Transfer Gap

When a salesperson moves firms, the license is held by the broker, so a transfer must be processed:

1. The releasing broker notifies the Commission that the affiliation ended.
2. The new broker submits transfer documentation.
3. The salesperson may not perform any licensed activity during the gap between release and the new affiliation being recorded.
4. The license itself remains valid — it is simply unaffiliated/inactive until transfer is complete.

Worked scenario: Devon is released by Broker A on Tuesday and files with Broker B on Friday. From Tuesday to Friday Devon cannot show property, negotiate, or earn commission — acting during the gap is unlicensed activity, a common exam distractor that wrongly assumes the license "floats" with the agent.

Escrow and Trust Accounts

Because only a broker may hold client money, escrow rules attach to the broker, not the salesperson. Earnest-money deposits must go into a designated trust/escrow account, kept separate from the broker's operating funds. Key prohibited acts:

• Commingling — mixing client funds with personal or business funds.
• Conversion — using client funds for any purpose other than the transaction.
• Delay — failing to deposit funds within the required timeframe.

A broker must be able to account for every dollar at any time and reconcile the account regularly. When a dispute arises over who is owed a deposit, the broker holds the funds and may seek the Commission's or a court's direction rather than unilaterally paying it out.

Unlicensed Assistants

Delaware lets brokers use unlicensed personal assistants for clerical and administrative work — scheduling, data entry, placing pre-approved ads, and answering factual office questions. They may not perform licensed acts: showing property, soliciting listings, negotiating terms, or discussing price and conditions with consumers. Paying an unlicensed assistant a commission or transaction-based fee is prohibited; they are paid by salary or hourly wage. This line — clerical (allowed) versus solicitation/negotiation (licensed only) — is a recurring state-portion question.