4.3 Brokerage Operations, Advertising & Supervision
Key Takeaways
- A licensed broker must run the brokerage, supervise affiliated salespersons, and hold the trust account
- All advertising must identify the sponsoring brokerage; blind ads (no brokerage name) are prohibited
- Salespersons may be paid only by their sponsoring broker - never directly by the public or by another broker
- Team and personal-name marketing must still clearly include the brokerage and follow LREC rules and fair-housing limits
- Brokers are responsible for office records, agency disclosure compliance, and timely handling of offers and funds
Beyond individual transactions, the exam tests how a brokerage operates and how the broker supervises the people and money in it.
The Broker's Supervisory Role
Only a licensed broker may operate a real estate brokerage, sponsor salespersons, and hold the trust account. The broker is responsible for the conduct of affiliated salespersons within the scope of their licensed activity.
| Broker responsibility | Detail |
|---|---|
| Supervision | Oversee salespersons' transactions and conduct |
| Trust funds | Maintain and reconcile the trust account |
| Advertising compliance | Ensure all ads identify the brokerage |
| Records | Keep transaction and trust records for the required period |
| Disclosure compliance | Ensure timely agency and property disclosures |
Exam point: Because the broker is vicariously responsible for affiliated agents, a salesperson's misrepresentation or trust violation can also discipline the broker. Supervision is a duty, not a courtesy.
Advertising Rules
Louisiana requires that advertising identify the sponsoring brokerage. A blind ad - one that omits the brokerage name and makes it look like a private party is selling - is prohibited.
| Rule | Requirement |
|---|---|
| Brokerage identification | Ads must include the brokerage name |
| No blind ads | Cannot conceal that a licensee/brokerage is involved |
| Truthful content | No false or misleading property claims |
| Fair housing | No language implying a protected-class preference |
| Online/social | Same rules apply to websites, social posts, and listings |
When a salesperson advertises under a personal name or team brand, the brokerage must still be clearly identified; the salesperson's marketing cannot stand alone as if it were an independent business. Using the property without the owner's authorization, or advertising a listing belonging to another broker without permission, are also violations.
Trap: A "For Sale by Owner"-style ad placed by a licensee for a client - omitting the brokerage to attract calls - is a classic blind-ad violation.
Compensation: The One-Way Flow
Compensation rules are simple but heavily tested:
| Who can pay a salesperson | Who cannot |
|---|---|
| Only the sponsoring broker | The public/clients directly |
| Another brokerage directly | |
| An unlicensed person for licensed work |
A salesperson may not accept a commission directly from a buyer, seller, or another broker - all compensation flows through the sponsoring broker. Likewise, a broker may not pay an unlicensed person for activities that require a license (though ordinary referral thank-you gifts to a past customer, within LREC limits, differ from paying for unlicensed brokerage work).
Office, Records, and Handling of Offers
| Duty | Practical requirement |
|---|---|
| Present all offers | Deliver every written offer to the seller promptly, even after one is accepted (unless instructed otherwise in writing) |
| Recordkeeping | Maintain transaction files, agreements, disclosures, and trust records |
| Place of business | Operate from a recognized business location per LREC rules |
| Change reporting | Update LREC on address, name, and affiliation changes |
Exam point: "Present all offers" means the seller decides - the licensee does not screen out offers they personally dislike. Combine this with the trust-account and advertising rules and you have the operational backbone LREC expects every brokerage to follow: supervise, identify the brokerage, pay through the broker, present every offer, and keep clean records.
Listing Agreements and the Net-Listing Trap
Brokerages take listings under written agreements with a defined term and commission. Louisiana R.S. 37:1448.3 supplies a category-specific prohibition for net listings involving residential real estate or covered land.
| Listing type | Who earns the commission |
|---|---|
| Exclusive right to sell | The listing broker is paid no matter who sells |
| Exclusive agency | Listing broker paid unless the owner sells it themselves |
| Open listing | Only the broker who procures the buyer is paid |
| Net listing | Broker keeps everything above a set net to the seller — prohibited by R.S. 37:1448.3 for residential real estate and covered land |
A net listing fixes the seller's return while giving the broker the entire upside. R.S. 37:1448.3 bars a broker from advising, encouraging, or entering that arrangement for residential real estate or land defined in R.S. 47:2302. Commission is always negotiable and never set by law or by a board; agreeing with competitors to fix commissions would be an antitrust violation.
Property Management and Practical Compliance
Brokers who manage rentals for owners must run security deposits and rent through the trust account, account to owners, and follow Louisiana landlord-tenant and fair-housing rules. Resident on-site managers who are salaried employees may handle certain leasing tasks without a license, but a brokerage managing property for others for a fee is performing licensed activity under broker supervision.
Exam recap: The brokerage-operations cluster rewards a few reflexes - identify the brokerage in every ad, route all pay through the sponsoring broker, present every written offer, keep client money in the trust account, apply Louisiana's category-specific net-listing prohibition, and remember commissions are negotiable, not fixed.
Recordkeeping the Broker Owns
The broker, not the individual agent, ultimately owns the brokerage's files. When a salesperson leaves, the transaction records and listings generally stay with the brokerage, because the listing agreement is between the client and the broker - not the salesperson. The departing agent takes their license to a new sponsor, but the client relationships and files remain with the former broker unless the client chooses otherwise.
| Item | Stays with |
|---|---|
| Listing/buyer agreements | The brokerage (client contracts with the broker) |
| Transaction and trust records | The brokerage |
| The individual license | The salesperson (transfers to a new broker) |
Exam point: A salesperson cannot take a brokerage's listings to a new firm. The agency agreement belongs to the broker, which is why supervision, records, and client relationships are framed at the brokerage level throughout Louisiana's rules.
In Louisiana, who may pay a salesperson's commission?
An advertisement that hides the fact a brokerage is involved and looks like a private sale is:
After a seller accepts an offer, a second written offer arrives. The licensee should:
If an affiliated salesperson commits a trust-account violation, who else may face LREC discipline?
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