7 Ways You Might Be Violating License Portability Laws
2) The broker of record and out-of-state broker do not use a written co-brokerage agreement.A written co-brokerage agreement is not only usually required by the various state regulatory agencies, its also just good business practice. It explains the relationship, identifies how fees will be split, and makes it clear to the out-of-state licensee which activities are permitted/prohibited.
3) Contacting, marketing, or otherwise engaging with prospective clients BEFORE the broker of record is engaged.This one is a common violation by out-of-state licensees. Until the out-of-state licensee engages a broker of record, the out-of-state licensee cannot even pick up the phone and discuss providing representation services for a property.
4) The out-of-state licensee executes a client-representation agreement with a client BEFORE a broker of record is engaged.The regulators view this activity by the out-of-state licensee as performing unlicensed activity in their state. In this case, the out-of-state licensee risks disciplinary action for the unlicensed activity.
5) The broker of record and the out-of-state licensee are not adhering to state licensing laws regarding license portability.Since every state has different requirements, its important to select a broker of record who understands the various license portability laws across the country. Skipping a required step can be costly. Regulatory fines typically range from $300-$10,000 depending on the nature of the violation.
6) The out-of-state broker is operating in states that do not allow license portability.Such states, sometimes referred to as "turf states," do not recognize license portability. If the out-of-state licensee is caught performing activities which would require a license in the transaction state, they could face disciplinary action.
7) The out-of-state broker is advertising improperly.The out-of-state broker is typically required to identify the broker of record in all advertising and marketing materials. To ensure proper disclosure, the broker of record and its license number should be displayed in close proximity to the out-of-state licensee and its license number. Additionally, it should be in the same font size, type, and color as the out-of-state licensee. To ensure compliance, the out-of-state licensee should not distribute advertising or marketing materials without the prior written approval of the broker of record.