All negotiations in Arizona and with people owning property in. Arizona must be conducted through the Arizona broker. Commercial Leasing. Brokers must make sure
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Page 1 of 33 and Procedure Manual Page Numbers Table of Contents 1 – 3 Introduction 4 Notice of Disclaimer 4 D efinitions 5 ADRE Requirements 6 Office Policy Manual 6 C ompany Policies 7 Advertising 7 Affiliated Business Agreement (ABA) RESPA 8 Agency Relationships 8 Annual 1099 Reporting 9 Anti – Trust Compliance 9 Commissions / Compensation 9 Commission Disputes 1 0 Collection of Commissions 11 Compensation Agreement 11 Referral and Finder Fees 11 Deferred Commissions 1 2 Shared Commissions Between Licensees 12 Com pany Compensation Schedule 1 2 Out of State/Out of Area Co – Brokerage 12 Commercial Leasing 13 Data Security 1 3 Disclosure Policy and Documents 13 Affidavit of Disclosure 13 Buyer Advisory 1 3 Lead – Based Paint Disclosure / Brochure 1 4 Pool Barriers 14
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Page 2 of 33 1 4 Duties to Clients and Customers 1 5 Duty to Deal Fairly Obligations to Customers in Transaction 1 5 Customer Care (Dutie s to Client and Non – Client) 17 Representing Clients 17 Client Contact and Appointments 17 Obligations to the Non – Client (Duty to Deal Fairly) 17 Electronic Digital Signature 18 Employees (Office Staff) 1 8 Equipment 18 Equal Opportunity Employer 18 Fair Housing 19 Harassment 19 Independent Contractor vs. Employees (Agreement) 19 Insurance 2 0 Automobile 20 Errors and Omissions Insu rance 20 Health and Life Insurance 21 General Liability Insurance 21 Licensee Activity 2 1 Address Changes 21 Alcohol/Illegal Drug Use 21 Areas of Expertise and Unauthorized Activities 21 Disputes between Licensees 2 2 Earnest Money 22 Hiring / Severing 23 Licensee Expenses 2 3 License Renewal s 2 3 ADRE license renewal information 2 3 Leases 23
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Page 3 of 33 Listings 24 Multiple Listing Service (MLS) Other Listing Websites 2 4 Offer / Multiple Offers 24 Open Houses 2 4 Personal Safety 24 Prospecting 24 Pre – possession and Post Possession 24 Professional Affiliations 25 Sales Financing Alternatives 25 Signs 25 Special Programs 25 Submission of Documents 25 Teams 26 Termination Policy 26 Unlicensed Assistants 27 Vacations/Out of Town 28 Maintenance of Transaction Files 28 Property Management 30 Sales 3 1 Transaction Management 3 1 Trust Accounts 3 2 Weapons 3 3 Wire Transfer Fraud 33
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Page 4 of 33 ADRE Model Policy and Procedure Manual INTRODUCTION has been developed to provide a model for the broker’s written policies and procedures required by A.A.C. R4 – 28 – 1103. This Model Policy and Procedures Manual is not intended to serve as the final Broker Policy and Procedures Manual, or tell a broker how to run the broker’s office, but is a starting point for a broker to conv ey to licensed and unlicensed persons in the broker’s employ how that broker operates their business, and the manner in which the broker expects salespersons and associate brokers to handle the day – to – day activities of a real estate Sales Associate. The broker should A broker may use any or this entire model m anual as a guide to create a manual that brings the broker into compliance with the rule which requires a written policy The Manual is inte nded to serve as a model only, and the b roker may choose to adopt any portion of the Manual that is relevant to their brokerage s . Notice of Disclaimer The requirements set forth in this model are based upon a practical application of Arizona laws, ules, Substantive Policy Statements and custom , and are not intended to provide legal advice. Laws , , Substantive Policy Statements, forms, custom and requirements referenced in this manual may change. Neither the Real Estate Commissioner , nor any division, officer or employee of the Department of Real Estate warrants the accuracy, reliability or timelines s of any information in this model manual, and will not be responsible or liable for any loss, consequence, or damage resulting directly or indirectly from reliance on the accuracy, reliability, or timeliness of the information. Information in this model m ay have been derived from or repeated from other sources and may be applicable or not. The documents and materials found or referenced here may have been revised or replaced since the last printing of this model manual. Any person or entity that relies on information obtained from this manual does so at their own risk . The user assumes the risk of verifying any materials used or relied upon herein . The Company (Employing Broker) and/or Designated Broker is responsible for the acts of all licensees and other employees acting within the scope of their employment (A.A.C. R4 – 28 – 1103 (D) .
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Page 5 of 33 DEFINITIONS Definitions of many terms are found in the R eal E state L aw B ook . In addition to terms defined in A.R.S. § 32 – 2101, 32 – 2171, and A.A.C. R4 – 28 – 101, the following terms may appear in this manual which are defined below: A.A.C. – Arizona Administrative Code (unofficiall y, the Commissioner’s Rules) AAR – Arizona As sociation of REALTOR S ® ADRE – Ar izona Department of Real Estate A.R.S. – Arizona Revised Statute AMA Arizona Multihousing Association Associate Broker A licensed broker employed by another broker. Unless otherwise specifically provided, an associate broker has the same license privileges as a salesperson. AZREEA Arizona Real Estate Educators Association Broker Company (Company name here) D .B.A./dba Doing B usiness As name Designated Broker The natural person who is licensed as a broker under Title 32, Chapter 20, and who is either: designated to act on behalf of an employing real estate, cemetery or membership camping entity, or doing business as a sole proprietor, pursuant to A.R.S. § 32 – 21 01(A)(21) . Employing Broker A person who is licensed or is required to be licensed as a b roker entity pursuant to A.R.S. § 32 – 2125 (A) or a s ole proprietorship if the sole proprietor is a broker licensed pursuant to Title 32, Chapter 20. Licensee A person to whom a license for the current license period has been granted under any provision of Title 32, Chapter 20. Listing property. Buyer Broker Agreement An employmen t contract to represent a buyer in the intended purchase of property. MLS local multiple listing service NAR N ational Association of REALTOR S ® NARPM National Association of Residential Property Managers ® RESPA Real Estate Settlement Procedures Act
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Page 7 of 33 9 . Licensees are obligated to remain licensed, abide by all laws and rules and abide 10 . It shall be the responsibility of the broker, when out of the office for 24 – hours or more, or unable to perform normal daily duties, to des ignate in writing the authority to a licensee under their employ, or to another D esignated B roker, to handle the day to day operation of the C ompany. Each designation may not exceed 30 days. See A.R.S. § 32 – 2127(D) , click here . COMPANY POLICIES Advertising This section should cover all advertising media, including the Internet; websites, blogs , and social media. Review of advertising for Fair Housing compliance and use of the Fair Housing logo. Review of advertising for compliance with federal regulations , ie. Regulation Z and Truth in Lending laws. Set standards for social media and advertising . A salesperson or broker shall ensure that all advertising identifies in a clear and license certificate. , see R4 – 28 – 502 , click here . All a dvertising, including , but not limited to, Facebook, Linkedin, InstaGram , and other forms of social adverting must contain the name of the Employing Broker in the advertising. Broker review before placement of advertising. A.A.C. R4 – 28 – 502 , click here provides: A licensee shall not advertise property in a manner that implies that no salesperson or broker is taking part in the offer for sale, lease, or exchange. A licensee adve rtising their own property for sale, lease , or exchange shall disclose the status as a salesperson or broker, and as the property owner, by placing the A licensee shall ensure that all advertising contains accurate claims and representations , and fully states factual material relating to the information advertised. A licensee shall not misrepresent the facts or create misleading impressions. Pursuant to R4 – 28 – 502, a licensee shall ensure that all ad vertising identifies in a clear and legal name or the dba name as contained on the Employing B license record . o Note that the mploying b Arizona r eal estate licensees can locate their license record on the Online Public Database, click here .
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Page 8 of 33 A licensee who employment agreement shall display the name of the listing broker in a clear and prominent manner. Before placing or erecting a sign giving notice that a specific property is being off ered for sale, lease, rent, or exchange, a licensee shall secure the written consent of the property owner , and the sign shall be promptly removed upon request of the property owner. The licensee acknowledges that the use of an electronic medium, such as t he Internet or website technology, that targets residents of this state with the offering of a property interest or real estate brokerage services pertaining to property located in this state, constitutes the dissemination of advertising as defined by A.R.S. § 32 – 2101(A)(2) and is subject to the same Arizona policies and procedures as all other media . Aff iliated Business Agreement (ABA ) RESPA This section should include: Identification of relationships the Company has established with o ther companies that require disclosure under the Real Estate Settlement Procedures Act ( RESPA ) and the f orm that is required for disclosure. The Company policy concerning licensee referrals made to clients or customers, requirement of b rokers signature on all forms, including any required disclosure of compensation. When the disclosure of a relationship is required. Whether individual licensees can enter into ABAs or whether this right is reserved solely to the Company. Consumer Financi al Protection Bureau (CFPB) RESPA Information , click here A gency Relationships on agency and disclosure and/or the consent forms to be used . The following are examples of different forms of agency a company may implement : The Company represents the seller/landlord exclusively when the Company is the listing agent , but not the selling /leasing agent. The Company represents the buyer/tenant exclusively when the Company is the selling/leasing agent , and not the listing agent. The Company represents both the seller/landlord and buyer/tenant as a dual agent (Limited Repr esentation Disclosure Form required) when there is only one licensee or two licensees from the same Company. Agency is established with the broker, not the Sales Associates. The Company will cooperate with a selling/leasing agent from another brokerage that represents the seller/landlord exclusively , or represents the buyer/tenant exclusively. – agency.
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Page 9 of 33 Pursuant to A.R.S. §32 – 2153 (A)(2) , the ADRE may sanction a licensee if the licensee has more than one party in a transac tion without the knowledge or consent of all In transactions involving a commercial lease, representation must be identified and document ed as early in the negotiations as possible. Annual 1099 Report and Tax Compliance This section should cover: What IRS and A rizona D epartment of Revenue (ADOR) forms should be used , and who is responsible for tax liabilities and/or deductions identified by the Employing B roker. Who will issue the Independent Contractor 1099 Forms each year ? Contact information for IRS and ADOR . Include information from ADOR about registering for T ra nsaction Privilege T ax , if applicable . Whethe r IRS 1099 Forms will be issued to referral brokers , and other recurring payments and who is re sponsible for issuing the forms . Anti – Trust Compliance This section should include: Compliance with the anti – trust laws, describing the conduct of Licensees/Employees and results that are to be avoided. Licensees/Employees must avoid discussion with others , i ncluding competing firms regarding commission policies that could be construed to be agreements or conspiracies to fix, establish prices or otherwise restrain competition in violation of state and federal anti – trust laws . Caution regarding the distribution of listings exclusively to select and/ or closed groups of individuals . Federal T rade Commission , click here Commissions / Compensation Compensation means any fee, commission, salary, money, or other valuable consideration for services rendered, as well as, the promise of consideration whether contingent or not. (A.R.S. § 32 – 2101(16) , click here . This section should cover: Payment of Commissions Only licensees can be paid a commission through their employing broker . Refer to SPS 2005.08 regarding payment of commission after license expiration or transfer of employment, click here. Commissio agreement with the Company.
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Page 10 of 33 W hen the Designated Broker of the Company will authorize the escrow company to pay commissions on each specific transaction, directly to the licensees on the b Only the Designated Broker shall give written authorization to escrow on all splitting , and/or payments of commissions. o Upon direct ion in writing on each individual transaction, commission checks should be delivered by escrow directly to the Employing Broker along with the closing statement, for Designated Broker verification and documentation. What fees will be deducted from the commission, i.e., Errors and Omissions Insurance ( E&O ) . What date determines whi ch month the transaction closes , and when commission is earned? If commission checks received nee d to clear the bank before payment to the licensee is made. Time from delivery of checks from escrow to delivery of check to licensees . Whether Employing B processes, including requirement for Designated Broker signature. Pursuant to A.R.S. §32 – 2155 , click here A broker shall employ and pay only active licensees. A licensee shall accept employment and compensation as a licensee only from the legally licensed broker to whom the licensee is licensed. If the licensee is licensed through a professional corporation (PC) or a professional limited liability company (PLLC) , the employing broker may pay the licensee , and the licensee may receive compensation only through the licensed professional corporation (PC) of which the licensee is an officer and share holder, or the licensed professional limited liability (PLLC) company of which the licensee is a member or manager. Note: The PC or PLLC must not pay any licensee other than the licensees named as members of the PC or PLLC. A real estate PC or PLLC is a c orporation registered with the Arizona Corporation Commission, and licensed with ADRE. Refer again to SPS 2005.08 relating to payment of commission after license expiration or transfer of employment , click here . When a real estate licensee has rightfully earned a commission while in the employee of a broker, and in accordance with their agreement, that broker shall pay the licensee, even though the licensee may have le ft the employ of that broker. Commission Disputes This section should cover: How commission disputes between licensees under the Employing Broker are to be handl ed;
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