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hi I'm Manny fit Simmons I'm your
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Washington realtor legal hotline lawyer
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this is the first in a thre part debrief
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series that's going to introduce a
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Friday video series and this is a a
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video series that I
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am extremely excited to bring to you um
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it's fun for me to work with these two
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people who you probably don't know going
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to tell you who they are in a minute um
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but it's I'm also excited for you
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because you are getting to hear from the
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ultimate source regarding audit issues
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and license law issues the whack
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requirement supporting license law
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issues from these two individuals Bill
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Dutra Kathy McDonald Bill who are you so
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I work with the Department of Licensing
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the business and professions division
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one of the great things that I get to do
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besides support 38 different professions
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is meet with our licensing Partners
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Washington realators Northwest Multiple
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Listing Service to name a few that's
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what I do for the department now I've
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been there for just over 30 years and I
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spent the majority of my time working
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with the real estate professions I will
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tell you that as a hotline lawyer if I
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have a question that I can't answer with
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regard to license law or the wax that
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support license law my my final stop for
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answers is Bill one of my preliminary
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stops might be Kathy McDonald Kathy who
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are you I am the audit supervisor for
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the real estate program um I have nine
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Auditors that I supervise I've worked
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with the Department in the audit unit
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for over 16 years and it's my pleasure
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and my staff's pleasure actually to get
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to work with the lenses um my Auditors
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love their jobs they like engaging with
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the lenses and helping them come into
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compliance so that's what we do and so
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the title of this video series and the
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Friday video series that we're
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introducing as well is called thriving
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through an audit we want to empower you
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as designated Brokers to have the tools
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that you need to believe that you will
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be equipped the next time an auditor
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shows up in your office or I guess
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online now electronically they show up
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in your office more currently remotely
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yeah um that you will be prepared to
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thrive through that audit so in this
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debrief episode we're going to cover the
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question of Delegation agreements and
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then in two additional debrief episodes
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we will cover uh proper folder
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management and required office
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policies we are also going to bring to
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you the three of us bring to you
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Educational Tools that you can use for
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with working with your the brokers in
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your office in the form of Friday videos
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talking about compliance issues that
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pertain directly to your Brokers and to
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you as well but specifically to your
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brokers so in this video I'm sorry in
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this episode let's discuss delegation
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agreements who wants to describe what is
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a delegation agreement so I'll start a
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delegation agreement is an agreement
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between the firm the designated broker
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and a managing broker licensed to your
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firm the delegation agreement allows
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that managing broker to have some duties
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and responsibilities in place of the
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designated broker however something to
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remember is that this does not eliminate
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ultimately the designated broker's
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responsibilities to that firm into that
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licensing law this is just adding
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another person there that can help the
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designated broker run the firm they're
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very common with really large firms or
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with people that work in cooperatives
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within those firms that there's a group
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of lenses working together there are
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many times where a delegation agreement
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will come in handy and is required okay
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let's pick up in a minute on on when it
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is required um but I want to give
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everybody a quotable quote that I
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learned from Bill long ago and this just
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summarizes so perfectly what he just
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said Annie here's what I can tell you
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about a delegation agreement a
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delegation agreement can delegate
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Authority it cannot delegate
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responsibility so while a designated
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broker can give authority to a managing
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broker to to provide certain services to
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provide to fulfill certain duties that
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the designated broker is required to
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fulfill the designated broker can never
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Shield themselves from responsibility or
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even liability by using a delegation
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agreement Kath there are some um
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specific requirements of a delegation
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agreement can you talk about what those
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are uh yeah from an audit perspective
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when we look at the delegation agreement
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we expect it to be signed by the
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designated broker and the managing
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broker that the duties are being
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delegated to we look for that during the
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course of an audit to make sure that
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exists we don't necessarily scrutinize
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the content of the delegation agreement
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that is something that would more come
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about in the like if there was a
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complaint during an investigation to see
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what type of Duties have been delegated
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if possibly there's supervision and
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within the complaint there's something
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in there that shows that okay what who
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was responsible for the supervision of
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this liy who is reviewing the contracts
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for this liy at this time when this
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complaint was made so then the the
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content of that delegation agreement
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would become much more important at that
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time due to the fact that we might need
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to see okay not only is the designated
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broker still responsible but what kind
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of responsibility does this this or this
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managing broker have in regard to this
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complaint okay so what I heard you just
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say correct me if I'm wrong is that you
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might be doing an audit you might be
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reviewing a folder transaction folder
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that was put together by a broker who's
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been licensed less than two years and
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maybe that folder indicates that Mary
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Smith not the designated broker but but
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a broker named Mary Smith has reviewed
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that that broker's work what I just
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heard you say is that your auditor is
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going to look for a delegation agreement
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where the designated broker has
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delegated the authority to review that
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broker who's been licensed less than two
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years work that that the authority to
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review that work has been delegated to
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Mary Smith correct right yeah and and
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what I heard you also say is so long as
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that delegation agreement is in place
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even if it not um sophisticatedly
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drafted as long as it's there you're the
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department the auditing department is
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satisfied right we we don't dictate that
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it has to be prepared by an attorney if
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if it's their own document we don't look
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at it from that perspective but what I
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also heard you say is that
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if somehow or another that transaction
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Finds Its way to be the subject of a
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complaint or even litigation then the
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actual form the content the language
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used in that delegation agreement could
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be scrutinized by lawyers by judges by
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administrative law judge and so it may
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turn out that having those delegation
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agreements drafted by legal council
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could be important in some circumstances
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yeah for sure so designated Brokers you
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and you're managing Brokers can create
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delegation agreements that will enable
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your managing Brokers to provide certain
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duties that you would have otherwise
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owed to your
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Brokers whether or not that delegation
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agreement is competent to withstand the
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scrutiny of litigation or um a complaint
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that might be filed against you or your
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firm that's a question that can only be
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answered in hindsight which means that
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you may want to at the front end of
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things hire legal counsel ask your
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firm's lawyer to assist you in drafting
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delegation agreements you're not
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required to Kathy doesn't say if it's
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not drafted by a lawyer then you're out
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of compliance she's not going to say
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that but if a push comes to shove and
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you have to stand on that delegation
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agreement then it might matter how it's
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drafted bill you said a few minutes ago
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um that the delegation agreement is
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required when a designated
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broker has has another broker managing
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broker take on certain duties for the
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designated Brer did I summarize that
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correctly so can you give any examples
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of that can you explain to us what you
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mean by that so if using your example um
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if you have a managing broker that is
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reviewing the the agreements for the
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firm especially for Brokers under
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heightened supervision then you need to
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delegate those authorities and that
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responsibility to a managing broker that
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would be one example that we' use having
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a delegation agreement again allows that
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man that designated broker to give some
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of those duties to a managing broker to
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uh deal with very difficult situations
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ation releasing a listing of all things
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if there's a problem with a with a
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customer a managing broker can do that
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they can't do that unless there's that
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delegation in place between the firm and
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the designated broker and that managing
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broker so you just made me think of
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something and and I will say that that
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bill and Cathy have taught me something
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today about the the use of Delegation
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agreements I think that I would have
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said on the hotline that you did not
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have to have a delegation agreement in
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as many circumstances as as Bill and
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Kathy think it would be important but
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here's what I have learned from them as
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they've spoken is that delegation
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agreements while they might be required
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under the law when you've assigned
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duties to somebody else I'm also hearing
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that they provide a layer of protection
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to designated Brokers and the firm by
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making it very clear in writing who is
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who is supposed to be doing certain
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actions within the firm because if
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there's no delegation agreement then
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designated
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Brokers and even when there is a
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delegation agreement but if there's no
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delegation agreement you clearly have
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every single
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responsibility um under Washington's
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license law the minimum duties under the
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agency law and all of the wax that
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support those those pieces of
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legislation but if you have delegated
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authority to another broker and that
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broker's uh or the the Fulfillment of
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those duties comes under scrutiny
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through a complaint
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legation then the fact that you have
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delegated that authority to somebody
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else if you can show that in
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writing that could be very important to
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the protection of you in your firm is
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that is that a fair summary I think it's
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a fair summary because when we receive
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complaints and we look at things before
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we make a decision that we're going to
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take action against someone's license we
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look at all of the aggravating and
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mitigating factors of what happens I
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would also mention is that um real
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estate has changed in the last 10 years
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it's changed in the last five years with
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the way that firms are set up and the
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way that people are working we have
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people that their licensed firm is in
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Seattle but they've set up shop in
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Spokane they're working in Spokane and
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if you have Brokers on the other side of
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the state I know with technology we all
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talk with each other via Zoom probably
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too much now but I think this is a great
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opportunity for designated Brokers to
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have a good look at what's going on in
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their terms have those conversations
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this allows them to set expectations set
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requirements of who's responsible for
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what and when and if that makes most
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sense for that designated broker to give
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some of those responsibilities to
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somebody who's a managing broker who's
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working in Spokane who's licensed in
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Seattle I think that's a great time to
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have those conversations and put in
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there what it is that you need them to
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do to make their job easier and to make
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your clients jobs easier and to make it
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really clear what that direction has
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been yes so okay I think that I think
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that's probably worth gold right there
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designated
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Brokers look be forward looking in what
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what is happening within your firm if
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your firm is isolated to one single
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physical location great if it's spread
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out all over the state great no rules
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about what that should look like but you
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are responsible for everything that's
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happening what whatever your firm
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structure might be and so what bill just
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said is designated Brokers take control
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of this issue and be Forward Thinking
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now forward looking now to see what is
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actually happening within your firm
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structure and to the extent a delegation
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agreement would not only clarify the
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role that managing Brokers are playing
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but even potentially protect you as the
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designated broker in an audit or an
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investigation
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scenario get those Des delegation
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agreements in place now one thing we
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haven't talked about yet what how does a
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delegation agreement play into Branch
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management what is what's the
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relationship there so so basically the
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expectation is the same so um as far as
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a branch manager they have they have
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certain responsibilities that are
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delegated just by them accepting that
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position and taking that designation
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because it's an actual ler Pro process
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right but in addition to that there may
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be other things that the delegation
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agreement may include with that branch
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manager so it isn't just the things that
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happen
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by license law it can also be other
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things that may be delegated and we have
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the same expectation during an audit
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that that will be signed by the
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designated broker and the branch manager
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we do run across that commonly that they
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don't realize they need them for branch
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managers but but it's required no matter
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no matter what whether it's a branch
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manager and a designated broker or
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whether it's a managing broker that's
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just delegated delegated specific duties
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or specific activities for that firm or
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Branch okay anything else on this topic
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no
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if you have questions on anything we've
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talked about in this
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episode send me a question W realtor.org
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following the links to the legal hotline
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I may need backup on the questions that
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you've asked and if so I'm coming back
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to you guys for that stay tuned though
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for two more episodes in the debrief
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Series where we're going to bring
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information specifically to you
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designated Brokers and then the Friday
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video series entitled thriving through
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an
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audit thank you for being a Washington
00:14:32
realtorss member
