What is Broker Compliance?
The California Association of REALTORS® (C.A.R.) holds local REALTOR® associations responsible for ensuring broker compliance with the National Association of REALTORS® (NAR) Variable Dues Formula. The formula was crafted to ensure fairness by basing member dues on the number of individuals licensed with REALTOR® principals (known as Designated REALTORS®, or DRs).
The premise is that every licensee in a firm benefits from the DR’s membership in the Association, and the DR’s dues payment should reflect all licensees in the firm—even those who are not REALTORS®.
What do I have to do to be compliant?
There are 5 possible options:
Pay a Nonmember Assessment
You, as the Designated REALTOR® (Broker), are billed a nonmember assessment of $454 for each individual who is a nonmember licensee. Even when this $454 is paid, the licensee is not a REALTOR® member and there are no association benefits or services provided. Use of the REALTOR® trademark is prohibited.
Licensee Joins as a REALTOR®
The licensee joins and pays REALTOR® dues and receives all the benefits of being a REALTOR®. With this option, you do not pay the $454 nonmember assessment.
Drop Agent from your Brokerage
You terminate the nonmember licensee by removing the licensee from CalBRE records. This can be done via eLicensing or submitting Form 214. You will not be charged the nonmember assessment for this licensee.
Exemption for Referral Agents
Licensees working for a separate entity owned by the Designated REALTOR® (Broker), which is exclusively engaged in referring clients, can be excluded from your dues calculation. Any licensees identified on the Limited Function Referral Office (LFRO) Certification Form are excluded from paying REALTOR® Dues and the Designated REALTOR® (Broker) is not responsible for paying the $454 non-member assessment.
Exemption for Mortgage Loan Originators
Affiliated MLO licensees in your firm may be excluded from your dues calculation. You must provide a list of the affiliated MLO licensees and certify that all of the listed licensees: (1) have an MLO license or endorsement; (2) are not engaged in real estate licensed activities except those for which an MLO is required; and (3) are not participants or subscribers in any 'Multiple Listing Service (“MLS”)'.
In the case of a Designated REALTOR® member in a firm, partnership, or corporation whose business activity is substantially all commercial, any assessments for non-member licensees shall be limited to licensees affiliated with the Designated REALTOR® in the office where the Designated REALTOR® holds membership, and any other offices of the firm located within the jurisdiction of this Association. In order for a commercial agent to qualify for the exemption status, all three conditions must apply: (1) the office must be substantially all commercial; (2) the office must be outside of the board’s jurisdiction; and (3) the office must not be the broker’s main office that he/she works out of.
Why do I need to submit a LFRO form and create a separate entity for Referral Agents?
You must submit the LFRO form because OCAR’s records indicate that your office is an active real estate office, and LFROs are required to be in a separate entity or a registered Doing Business As (DBA).
For example, if the name on record for your office is “ABC Realty and Associates” and our records indicate that this is an active real estate office, the LFRO agents can be in the “XYZ Real Estate Group” instead of “ABC Realty and Associates.”
If you do not have a separate entity or DBA on file with the CalBRE, you need to do the paperwork necessary to create another entity and/or file a DBA as soon as possible.
You must resubmit the LFRO and MLO certifications to OCAR every calendar year.
Why do I receive out-of-compliance notices every couple of months?
The tool C.A.R. has provided to track broker compliance is refreshed weekly, when it compares CalBRE records (the names of agents affiliated with your firm) with those tagged as a paid REALTOR®, a referral agent, Mortgage Loan Originator, or paid nonmember. If agents are found on the CalBRE record for a broker’s firm but are not in any of these four categories, OCAR is required to contact the broker.
What if a Designated REALTOR® (Broker) refuses to pay dues according to the NAR Variable Dues Formula?
Full payment of dues owed is required for membership in a local Association of REALTORS® (AOR). Partial payment does not satisfy the dues obligation. If a Designated REALTOR® (Broker) refuses to pay his or her full dues under the Variable Dues Formula, he or she, along with his or her entire office, will have their local membership suspended—this is will also suspend C.A.R. and NAR membership.
If I don’t pay now, when will my services be interrupted?
Because this process has been mandated by C.A.R., if you do not pay, your account will be active only until C.A.R. notifies OCAR to suspend your benefits—this will include access to zipForms®.
I have questions about Broker Compliance, who do I contact?
Review the Broker Compliance Q&A from C.A.R.
Contact OCAR Broker Compliance & Store Specialist, Heather Reynolds. Email is the preferred method of communication as it provides a record of our correspondence with you on this issue.