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What Happens when a Broker License Expires?

Man-DisappointedThe Utah Real Estate Commission met in November to discuss some interesting ethical situations. There has been an incident where a real estate broker's license expired, and therefore all of his agents' licenses also expired. Mark Fagergren, the Director of Licensing and Education expressed that this is not an uncommon occurrence, and they are already putting new measures into place to ensure that brokers and agents are aware of their license expiration up to 45 days in advance. Usually the broker license is quickly renewed thereafter.

What makes this situation unusual is that the agents were not aware of the broker's license expiring, which then triggered their own licenses to revert to inactive status. Even more unusual, the broker did not notify his agents, and many of them did not become aware of these events until 3 months after the fact.

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You can imagine the difficult situation that this put the agents in. A real estate agent cannot sign any agreement as an agent or originate any transactions unless their license is in active status, and they are affiliated with an active broker. The commission was left with the unpleasant task of determining how to proceed with these agents who have continued working, unaware of their inactive status, and how to deal with the broker who's actions have created a crisis for each of his agents. From the tone of discussion, the commission was preparing to show leniency and compassion to those who were put in this situation against their knowledge, but to proceed with the broker in a manner that would discourage this type of situation from occurring again in the future.

What changes need to be made?

The Division Director Jonathan Stewart proposed a change to add language to Utah real estate license law that would require a broker to notify his agents if his license were to become inactive, which would then cause all of their licenses to inactivate. After some discussion, this proposal was approved and we can look for those changes to the statutes in the near future.

Other changes proposed by the commission involved proactive notification of agents when their broker's license becomes inactive, some favoring advance notice before expiration, and others wanting to address the broker directly. Mark Fagergren agreed to take their suggestions and evaluate with his team what methods they thought would be most appropriate.

Ethical behavior as taught by real estate schools in their live and online real estate courses and by the Association of Realtors® in their Code of Ethics class is intended to instill in agents and brokers that they have a duty to protect others.  The reputation of all real estate agents can be tarnished by even one story of unethical behavior.

 By Dan Naylor

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