1.3 Virginia License Types and Broker Supervision

Virginia recognizes several license categories, and each carries different authority and supervision duties. The state exam frequently asks who may act independently, who must be supervised, and who may be paid.

License Types

Salesperson

A salesperson may perform licensed real estate activities only while affiliated with a principal broker. A salesperson may not operate independently, may not accept compensation directly from a client, and may not supervise other licensees. All listings and client funds belong to the firm, not the individual salesperson.

Broker and principal broker

A broker has met the higher experience and education bar and may operate independently. The broker responsible for a firm's operations is the principal broker - every Virginia real estate firm must designate exactly one. The principal broker is ultimately answerable to the REB for the firm's compliance.

Associate broker

An associate broker holds a full broker license but chooses to work under another broker's firm. While doing so, the associate broker is supervised much like a salesperson - they cannot run the firm or hold themselves out as the principal broker.

Professional corporation (PC)

Virginia lets a salesperson or broker form a professional corporation (PC) or limited liability company to receive compensation:

• The PC itself cannot hold a real estate license and cannot perform licensed acts.
• The individual licensee remains personally responsible for all licensed activity.
• A salesperson's PC may receive the salesperson's commission from the principal broker - the one lawful pathway for indirect payment.

Principal Broker Responsibilities

The principal broker must:

1. Supervise all licensees affiliated with the firm and its branch offices.
2. Maintain written supervision and compliance policies.
3. Handle escrow/trust funds per REB regulation, keeping them separate from operating funds.
4. Review advertising so it is not false or misleading and identifies the firm.
5. Retain transaction records for at least 3 years from the closing or termination date.
6. Respond to REB inquiries and investigations.

Worked scenario: A salesperson at Blue Ridge Realty repeatedly fails to deposit earnest-money checks on time. The Board can discipline not only that salesperson but the principal broker for inadequate supervision of escrow handling - even if the broker never touched the checks. This vicarious responsibility is exactly why the written-policy and review duties above exist.

Exam Tip: "A salesperson collects their commission directly at closing" is always wrong in Virginia. Money flows client → firm/broker → salesperson (or the salesperson's PC, paid by the broker).

Supervision Requirements

Written policies

Principal brokers must keep written policies addressing supervision, escrow handling, advertising, transaction review, record retention (minimum 3 years), and compensation. "We do it verbally" is never an acceptable answer on the exam - supervision must be documented.

Broker liability for affiliated licensees

The principal broker can be disciplined for the acts of affiliated licensees when those acts result from inadequate supervision. The Board treats the principal broker as the firm's compliance backstop.

Business Entity (Firm) Licensing

A real estate business in Virginia is licensed as a firm, separate from the individuals:

Branch offices

A firm operating from more than one location must:

1. Notify the REB of each branch office address.
2. Designate a supervising broker for each branch.
3. Maintain or make available the branch's records at the branch or main office.

License Transfers Between Brokers

When a salesperson changes firms, the sequence matters:

1. The terminating (former) principal broker releases the salesperson in writing to the Board.
2. The new principal broker files association paperwork with the REB.
3. The salesperson may not perform any licensed activity during the gap - between release and new affiliation, the license is effectively inactive.
4. Pending listings and client funds stay with the former firm, not the departing salesperson.

Compensation Rules

In Virginia:

• A salesperson may be paid only by their own principal broker - never directly by a buyer, seller, or another firm's broker.
• Commission splits between broker and salesperson are negotiable and set by their agreement.
• Referral fees may be paid only to properly licensed parties, with required disclosure - paying an unlicensed person for referring real estate business is prohibited.
• A salesperson may direct earned compensation to a PC they own, paid through the principal broker.

Unlicensed Assistants

A firm may employ unlicensed assistants, but they are tightly limited. An unlicensed assistant may perform clerical and administrative tasks - scheduling, data entry, ordering supplies, assembling documents - but may not perform any activity that requires a license. Specifically, an unlicensed assistant may not:

• Show property or hold an open house unaccompanied,
• Negotiate or discuss price, terms, or contract conditions,
• Provide opinions about a property's condition or value, or
• Solicit listings or buyers.

An unlicensed assistant may be paid a salary or hourly wage, but not a commission or transaction-based bonus - commission-style pay is treated as compensation for licensed activity.

Firm Names and Advertising

All advertising must include the firm's licensed name, and a salesperson's personal advertising must clearly disclose the firm. Team names and trade names must be approved and used consistently. Misleading advertising - for example, a salesperson implying they operate independently of any broker - is a violation the principal broker is responsible for catching during the required advertising review.

Exam Tip: "An unlicensed assistant earns a percentage of each closing" is always wrong. Commission implies licensed activity; assistants receive wages only.