Dale, Rosa, and the Broker Who Looked the Other Way
Priya owns a four-agent brokerage in a Missouri suburb. Her unlicensed office assistant, Dale, handles phones, files, and social media. On Tuesday Dale texts a cooperating agent: 'My seller would probably take $8,000 under list if you can close by the 30th.' That afternoon Dale posts an ad reading 'Just listed! $249,900 - call Priya, 555-0100,' and at an open house he hands a visitor a blank sale contract and explains which contingencies she should strike. Separately, agent Rosa's license lapsed eleven days ago when her renewal payment failed. Priya knows about the lapse and told Rosa to 'keep showing until the state sorts it out.' Rosa has since written two offers and collected a $6,000 commission check that Priya split 60/40 with her.
1. Sort Dale's three activities into permitted and prohibited for an unlicensed assistant, and explain why each falls where it does.
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The dividing line is clerical/ministerial work versus activity that requires a license - negotiating, advising on terms, or holding oneself out as a real estate agent.
- The text about price. Prohibited. Disclosing the seller's negotiating position and floating a price concession is negotiation of terms. An unlicensed person cannot convey or solicit offers, terms, or price information, even if repeating something the seller said in the office.
- The Facebook ad. The content is close to acceptable (it names the price and routes calls to the licensed broker), but two problems remain: the ad must identify the brokerage's licensed name, and an unlicensed assistant may place advertising only under the broker's direction and after the broker approves the copy. Dale wrote and posted it unsupervised. Fixable, but a supervision failure.
- The blank contract and contingency advice. Prohibited on two grounds. Handing out a pre-printed form is arguably clerical; explaining which contingencies to strike is (a) advising on a contract, which is unlicensed brokerage activity, and (b) the unauthorized practice of law. Merely distributing a form without comment is the outer limit; interpreting it is over the line.
Framing for the exam: ask 'does this touch price, terms, or advice?' If yes, it needs a license. Volume of paperwork is irrelevant.
2. Rosa has been showing and writing business on a lapsed license for eleven days, with her broker's knowledge. Identify the exposure for Rosa, for Priya, and for the commission already paid and split.
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Rosa. Practicing without a current license is unlicensed activity. She cannot lawfully perform any act for which a license is required, and her own conduct is grounds for discipline - including denial or delay of the renewal, a reprimand, probation, or suspension.
Priya. A broker has an affirmative duty to supervise licensees and employees, and knowingly permitting an unlicensed person to transact business is itself a violation. 'Waiting on the state' is not a defense; the license was expired, not pending. Expect allegations of failure to supervise and aiding unlicensed practice, plus the separate advertising-supervision problem with Dale.
The money. Compensation cannot be paid to an unlicensed person for brokerage activity, and a broker generally may not collect or split a commission earned through unlicensed activity. The $6,000 is at risk of disgorgement; the 60/40 split compounds the problem because Priya shared a fee generated unlawfully. She should not treat the split as a bookkeeping issue - it is evidence of the violation.
Corrective sequence: suspend Rosa from all licensed activity immediately (in writing, dated), stop any payment, re-audit files Rosa touched to see whether buyers or sellers were harmed, retrain and restrict Dale to a written list of permitted tasks, pull and re-approve all advertising, and consult counsel about self-reporting to the Commission. Documenting the timeline is the difference between a supervision lapse and a cover-up.
3. A buyer who dealt with Rosa during the lapsed period now wants out of her contract. Does the license lapse void the contract? Explain.
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No, not automatically. The validity of the purchase contract turns on offer, acceptance, consideration, capacity, and compliance with the statute of frauds (a writing signed by the party to be charged). The agent's licensing status is not an element of contract formation. A contract signed by a competent buyer and seller on a proper written form is generally enforceable even if the facilitator was unlicensed.
What changes is the remedy landscape, not enforceability:
- The buyer may have a disciplinary complaint and, if she can show reliance damages, a civil claim against Rosa and possibly the broker for the unauthorized practice.
- Priya's right to a commission on that transaction is vulnerable even if the contract stands - the contract's validity and the broker's entitlement to compensation are separate questions.
- The listing or buyer-broker agreement's own terms (mediation, arbitration, attorney fees) still govern disputes between the parties.
Answer the client's real question: she probably wants out because she lost confidence, not because of a legal defect. If she has a contractual contingency still open (inspection, financing, appraisal), exercise it properly and in writing - that is the clean exit. Otherwise she is asking to breach, and the seller's remedies (earnest money, specific performance, actual damages) apply. Advising her that the lapse 'voids everything' would be both wrong and harmful.