1.3 Pennsylvania License Types and Broker Supervision
Key Takeaways
- RELRA defines distinct license classes: salesperson, associate broker, broker, cemetery broker/salesperson, builder-owner salesperson, rental listing referral agent, and time-share salesperson
- Only a broker (or cemetery broker) may operate independently; salespersons and associate brokers must work under an employing broker
- An associate broker is a fully qualified broker who chooses to work under another broker — not a salesperson
- The employing broker is accountable for affiliated licensees and may be disciplined for failure to supervise
- Brokers must maintain a definite place of business with a street address, visible signage, and on-site records
Pennsylvania License Types
RELRA defines several classes of license, each with a defined scope of activity and supervision rule. The state portion frequently asks which license may do what, and which must work under a broker.
| License Type | Authority | Supervision |
|---|---|---|
| Salesperson | Performs licensed activity for an employing broker | Yes — by employing broker |
| Associate broker | Holds broker qualifications but works under another broker | Yes — by employing broker |
| Broker | Operates independently; supervises others | No — supervises others |
| Cemetery salesperson | Sells cemetery lots only | Yes — by cemetery broker |
| Cemetery broker | Operates a cemetery sales office | No — supervises cemetery salespersons |
| Builder-owner salesperson | Sells property the employing builder-owner built | Yes — by builder-owner |
| Rental listing referral agent | Sells prospective tenants rental-location information for a fee | Per regulation |
| Time-share salesperson | Sells time-share or campground membership interests | Yes |
Salesperson
A salesperson may show property, solicit listings, present offers, and negotiate, but only on behalf of one employing broker. A salesperson cannot operate independently, accept compensation directly from a client, supervise other licensees, or maintain an escrow account. Every commission flows through the employing broker.
Associate Broker
An associate broker has met all broker requirements (age 21, experience, 240 hours, broker exam) but chooses to work under another broker rather than run an office. They function like a salesperson for supervision purposes but may be delegated broader duties — reviewing transactions, mentoring, or managing files. Their license is also held by the employing broker.
Broker
A broker is the only individual license that may operate independently. A broker may open a company, supervise affiliated salespersons and associate brokers, receive and disburse commissions, maintain escrow accounts, and operate branch offices. The broker is the entity the public contracts with; salespersons act as the broker's agents.
Cemetery and Builder-Owner Licenses
Pennsylvania separately licenses cemetery brokers and salespersons (lot sales only) and builder-owner salespersons (who sell only property built by their employing builder-owner). These are limited to their named activity and are distinct from a standard salesperson license.
Exam trap: An "associate broker" is not a salesperson — it is a broker working under another broker. Distractors deliberately swap these two. Likewise, only a broker or cemetery broker may operate without supervision; everyone else must be supervised by an employing broker.
Broker Supervision Responsibilities
RELRA makes the employing broker accountable for the conduct of affiliated licensees. The Commission may discipline a broker for failure to supervise even when the broker did not personally commit the underlying violation.
Written Procedures
Brokers must maintain written policies and procedures covering:
- Supervision of all licensed activities of affiliated licensees
- Escrow (deposit money) handling, recordkeeping, and reconciliation
- Advertising standards and required disclosures
- Transaction review and document retention
What the Broker Is Responsible For
- Acts of affiliated licensees within the scope of their work
- Proper handling and timely deposit of escrow funds (Pennsylvania requires prompt deposit, generally by the end of the next business day after acceptance unless the agreement directs otherwise)
- Required consumer and property disclosures
- Accurate, retained transaction records
- Overall RELRA and Chapter 35 compliance
Key point: "I didn't know" is not a defense. A broker can be disciplined when inadequate supervision allowed a licensee's violation to occur.
Definite Place of Business
Each broker must maintain a definite place of business in Pennsylvania:
| Requirement | Detail |
|---|---|
| Physical location | A definite street address — not just a P.O. box |
| Signage | The broker's name displayed so the public can see it |
| Accessibility | Reasonably accessible to the public |
| Records | Required transaction and escrow records kept at the office |
A home office can qualify only if it meets the address, signage, and access requirements. A virtual or mail-drop address does not satisfy the rule.
Branch Offices
A broker operating from more than one location must:
- Register each branch with SREC and obtain a branch office license.
- Designate a supervising broker (or associate broker) for each branch.
- Display signage at each location.
- Maintain records appropriately for each office.
Changing Brokers (License Transfer)
When a salesperson moves to a new broker:
- The current broker releases the license through PALS.
- The new broker confirms the affiliation in PALS.
- The salesperson cannot perform licensed activity in the gap between release and the new affiliation taking effect.
Compensation Rules
- A salesperson is paid only by the employing broker — never directly by a buyer or seller.
- A broker may pay a referral fee only to a properly licensed person (or a cooperating broker), never to an unlicensed party.
- Paying or accepting a fee to or from an unlicensed person is a RELRA violation, and sharing commissions with an unlicensed individual is specifically prohibited.
Scenario: A buyer tries to hand a $500 "thank-you" check directly to the salesperson at closing. The salesperson must decline; any such payment must run through the employing broker, who then pays the salesperson per their written employment agreement.
What best describes a Pennsylvania associate broker?
Which arrangement satisfies the Pennsylvania 'definite place of business' requirement for a broker?
A licensed salesperson helps close a deal, and the grateful seller wants to hand the salesperson a $500 cash bonus at the closing table. What is the correct outcome under RELRA?