1. A. An employing broker and a designated broker shall exercise reasonable supervision and control over the licensed activities of licensees and others in the employ of the broker. Reasonable supervision and control includes the establishment and enforcement of written policies, procedures, and systems to:

   1. 1. Review and manage:

      1. a. Transactions of all licensees;
      2. b. Use of disclosure forms and contracts;
      3. c. Filing, storing, and maintaining documents pertaining to transactions under subsection (A)(4)(a);
      4. d. Handling of trust funds;
      5. e. Use of unlicensed assistants by a licensee, and;
      6. f. Advertising.
   2. 2. Oversee delegation of authority to others to act on behalf of the broker;
   3. 3. Familiarize licensees with the requirements of federal, state, and local laws relating to the practice of real estate, or the sale of cemetery property or membership camping contracts; and

   4. 4. Review and inspect:

      1. a. Documents that may have a material effect upon the rights or obligations of a party to a transaction; and
      2. b. Advertising and marketing by licensees in the broker’s employ.
2. B. A designated broker shall establish a system for monitoring compliance with statutes, rules, and the employing broker’s policies, procedures, and systems. The established system is not limited to but must include a progressive disciplinary policy for managing violations of the employing broker’s policies which would also represent a violation of any statutory requirement or prohibition related to real estate activity and failure of an employing broker to enforce the disciplinary policy would be a violation of subsection (D).
3. C. A designated broker shall supervise licensees and employees of the employing broker and shall exercise reasonable supervision and control over activities by the employing broker for which a license is required.
4. D. An employing broker is responsible for the acts of all licensees and other employees acting within the scope of their employment.
5. E. A designated broker may use the services of employees to assist in administering the provisions of this Section but may not relinquish overall responsibility for supervision and control of the acts of the employing broker’s employees.
6. F. A designated broker who, upon learning of a violation of real estate statutes or rules by a licensee under the broker’s supervision, immediately reports the violation to the Department is not subject to disciplinary action by the Department for failure to supervise the licensee.
7. G. If an employing broker maintains one office and employs a designated broker, no more than one other licensed person, and no more than one unlicensed person, the employing broker and designated broker are not required to develop and maintain written policies, procedures, and systems as described in subsection (A).

Historical Note

New Section made by final rulemaking at 8 A.A.R. 3640, effective August 6, 2002 (Supp. 02-3). Amended by final rulemaking at 11 A.A.R. 506, effective March 5, 2005 (Supp. 05-1). Amended by final rulemaking at 11 A.A.R. 1496, effective June 4, 2005 (Supp. 05-2). Amended by final rulemaking at 31 A.A.R. 4267 (November 7, 2025), effective December 13, 2025 (Supp. 25-4).