TEAMMANAGEMENT

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A REALTOR®’s Guide to Best Practices:

TEAMMANAGEMENT

Contents

INTRODUCTION . . . . . . . . . . . . . . . 1

What are real estate teams?

What are the principal broker’s duties?

FORMING TEAMS . . . . . . . . . . . . . . 2

INDEPENDENT CONTRACTOR REQUIREMENTS . . . . . . 3

Mandatory Documents

TEAM NAMES. . . . . . . . . . . . . . . . 4

LOGOS . . . . . . . . . . . . . . . . . . 4

ADVERTISING . . . . . . . . . . . . . . . . 4

Advertising Do’s & Don’ts

PENALTIES . . . . . . . . . . . . . . . . . 7

COMPENSATION . . . . . . . . . . . . . . . 7

LIMITED LIABILITY COMPANIES . . . . . . . . . . 7

DEPOSITS & ESCROW ACCOUNTS. . . . . . . . . . 7

REAL ESTATE RELATIONSHIPS & TEAM ADDENDUM . . . . 8

RECORD KEEPING . . . . . . . . . . . . . . 9

EMPLOYEES/UNLICENSED ASSISTANTS . . . . . . . . 9

TEAM CONTRACTS . . . . . . . . . . . . . . 10

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In 2022, the Rhode Island Department of Business Regulation adopted new

regulations to address real estate teams. This Team Guide has been updated to

cover those changes.

What are the principal broker’s duties?

The principal broker is legally responsible for the actions of all

affiliated real estate licensees, including the team leader,

team members, and employees of the team. This includes

compliance with real estate license law, employment law, tax

withholding, independent contractor laws, Multiple Listing

Service rules, the REALTOR

Code of Ethics, and more.

Rhode Island law requires a principal broker to “act in

a supervisory capacity for every real estate transaction

in which an affiliated licensee participates” in order to

protect consumers. No matter how involved a team

leader is, state law still holds the principal broker

accountable.

The principal broker should review any team

agreements or team procedures that the team wishes to

adopt or revise.

What are real estate teams?

Teams are two or more real estate licensees who

> who are affiliated with the same principal broker to perform activities that require a real estate

license

> who represent and market themselves to the public as being part of a team of group; and

> are designated by a team name that is approved by their principal broker and is different from the

name of the brokerage.

Introduction

SCAN FOR DBR

LICENSING REGULATIONS

RI REALTORS

Team Management Guide

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As a principal broker decides whether to allow teams or

do more to supervise existing teams, here are issues to

consider:

Determine whether team leaders should meet

a minimum level of experience or production or

complete a training course before becoming a

team leader.

Decide whether to allow a team to create its own

corporation or limited liability company (LLC).

Review the team name to make sure that it does

not seem like the team is a separate real estate

brokerage. Make sure that the team name

includes group or team.

Review reviewed proposed or current team

contracts and policies.

Have all team leaders sign a contract with the

principal broker.

Check whether there any special issues relating

to teams under the principal broker’s errors and

omissions or liability insurance policies.

Forming Teams

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Independent contractor requirements

INDEPENDENT CONTRACTOR REQUIREMENTS

Federal and Rhode Island law presume that all workers are employees who are

subject to tax withholding, workers’ compensation, minimum wage, unemployment

compensation and other laws. If the principal broker wishes to compensate

and treat a person as an independent contractor, the Mandatory Documents for

Independent Contractors listed below must be used. The principal broker must

make certain that the team leader is not treating the licensee as an employee. For

example, requiring rather than encouraging a licensee to participate in mandatory

floor time, team meetings, cold calling, etc. could make it appear that the licensee

is an employee.

INDEPENDENT CONTRACTOR AGREEMENT:

Rhode Island law allows real estate licensees to work as independent

contractors if they (a) sign an independent contractor agreement with their

broker; and (2) are paid commissions based on sales and output instead of

hourly work.

NOTICE OF DESIGNATION OF STATUS OF INDEPENDENT

CONTRACTOR FORM:

Rhode Island law requires all independent contractors to file a

Notice of Designation as an Independent Contractor form with

the (DLT).

NOTICE OF WITHDRAWAL OF DESIGNATION AS

INDEPENDENT CONTRACTOR FORM:

Rhode Island law requires all independent contractors to file

a Notice of Withdrawal of Designation as an Independent

Contractor form with the RI Department of Labor and Training

(“DLT”).

TIP: Search the DLT database to make sure that the licensee has registered

and withdrawn after leaving your company.

OFFICE POLICIES:

Rhode Island law and/or the REALTOR

Code of Ethics require brokers

to adopt office policies to address topics, including, but not limited to,

termination, confidentiality of client records, records retention, and others.

For more, scan QR code below

or visit the DLT Website at:

www.dlt.ri.gov

Mandatory Documents

SCAN TO

VIEW FORM

SCAN TO

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RI REALTORS

Team Management Guide

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When selecting a team name, make sure that it complies with Rhode Island regulations.

> Team names shall include the word “Team” or “Group” in all advertising.

> Team names shall not include the following words or any derivation thereof:

(1) Agency;

(2) Associates;

(3) Brokerage;

(4) Brokers;

(5) Company;

(6) Corporation, Corp. or Inc.;

(7) Firm;

(8) LLC, LP, LLP;

(9) Partners, Partnership;

(10) Property, Properties; or

(11) Realty

Teams may use logos that are approved by their principal broker as long as the name of the brokerage

is “present, larger and more prominent” than the team’s logo.

Teams spend time and money to promote their brand. Rhode Island law requires all advertising,

including signs, web sites, business cards, social media, print, video, radio, and more, to include the name

of the brokerage or principal broker under which the licensee is licensed to do business. The name of a

real estate brokerage must be “in close proximity to” and “larger and more prominent” than the name of

a team or licensee except on business cards.

Advertising

Team Names

Logos

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2.25 Advertising

A. Unless otherwise stated herein, categories of advertising include but are not limited to any publication, sign, radio, television or

internet broadcasts, billboards, business stationary, business cards, business and legal forms, email, websites, social media and

other internet media, printed materials, items, and documents.

B. A licensee shall not advertise in any way that is false or misleading.

C. General Requirements for all Advertising by Licensees

1. All advertising shall include the name of the brokerage or principal broker under which the Licensee and/or Team is

licensed to do business.

a. The name of the Brokerage shall be displayed so that it is larger and more prominent than any included

name of a Licensee or Team. The name of the Brokerage should be in close proximity to the Licensee’s name

and/or Team’s name.

b. When the name of a Licensee or Team is contained in any advertising, except on business cards, it shall be

in print smaller and less conspicuous.

Sample Social Media Post:

Sample Yard Sign:

Source: RI Commercial Licensing Regulations 2023.

DBR has also approved detailed advertising regulations about social media, print, Internet, radio,

television, and other forms of advertising.

Advertising Do’s & Don’ts

RI REALTORS® Team Management Guide

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Team Management Guide

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Since teams are not real estate brokerages, Rhode Island law requires all compensation must be paid

by the principal broker or brokerage to licensed team members; other affiliated real estate licensees; or

a corporation or LLC that is wholly owned by an affiliated real estate licensee. A team cannot legally

receive payment from a principal broker then write commission checks to a team member.

If a team has its own compensation arrangement among team members, it must be approved by the

principal broker because he or she is responsible for paying commissions.

Team leader and team agreements should address how compensation splits will be enforced.

Rhode Island law requires real estate deposits to be held in a principal broker’s escrow account and

prohibits teams from having a separate escrow account. It is a violation of Rhode Island law for deposits

to be made payable to a team or an individual team member.

The penalties for violating Rhode Island Department of Business Regulations or Rhode Island license law

are a maximum of $2,000 per offense, or suspension or revocation of license.

Penalties

Compensation

Deposits & Escrow Accounts

RI REALTORS® Team Management Guide

Limited Liability Companies

Since teams are not real estate brokerages, Rhode Island law requires all compensation must be paid

by the principal broker or brokerage to licensed team members; other affiliated real estate licensees; or

a corporation or LLC that is wholly owned by an affiliated real estate licensee. A team cannot legally

receive payment from a principal broker then write commission checks to a team member.

RI REALTORS

Team Management Guide

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A client or customer has a legal right to understand whether an entire team or only some of the team

members represents his or her interest.

OFFICE POLICIES: The office and team policies determine whether all licensed members of a team will

have the same relationships to a buyer, seller, landlord, or tenant or whether one team member may act

as a designated client representative

for the seller, while another team

member acts as designated buyer

representative or transaction facilitator

in the same transaction.

OPEN HOUSES: When a team

member agrees to cover another team

member’s open house, the team must

disclose whether the covering team

member is representing the seller as a

designated client representative or a

transaction facilitator.

DISCLOSURE: When a Team is

working with a prospective buyer,

seller, tenant or landlord, the

relationship of each licensee on

the team to the client(s) must be

disclosed to a customer or client.

The Rhode Island Real Estate

Commission approved the Rhode

Island Association of REALTORS®

Addendum to the Mandatory Real

Estate Relationship Disclosure for Real Estate Teams

Real Estate Relationships & Team Addendum

State Regulations:

Relationships in Residential

Real Estate Transactions

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The principal broker is responsible for keeping records of transactions for a minimum of three years. The

principal broker may authorize teams to create and store files for transactions as long as the principal

broker has oversight over the records.

Some teams wish to hire their own

unlicensed employees and assistants

to work exclusively for the team. The

principal broker and office policies

should address whether these workers

should be employed by the brokerage or

directly by a team and who is responsible

for compliance with these and other

requirements.

Minimum wage

Workers’ compensation

Overtime

Unemployment compensation

Tax withholding

Social Security

Record Keeping

Employees/Unlicensed Assistants

Rhode Island Department of Labor and Training

www.dlt.state.ri.us

RI REALTORS® Team Management Guide

RI REALTORS

Team Management Guide

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Team leaders and team members should sign a Team Member

Agreement that lists the duties of the team leader and the team

member and how compensation will be handled. The principal

broker of the office should also sign a Team Leader agreement with

the leader of the team to make sure that the leader complies with office

policies.

A principal broker is legally required to review and approve team agreements to make sure that it

is consistent with office policies and the office’s independent contractor agreement and consult with

the company’s legal counsel as needed. A team agreement can be a stand-alone document or an

addendum to the independent contractor agreement that the entire office uses.

The Rhode Island Association of REALTORS

(RIAR) recommends that the agreement be prepared and

reviewed by an attorney and that each party to the agreement consult with his or her own attorneys and/

or CPA. Here are some examples of issues that should be addressed:

PARTIES: List all parties to the contract: team leader, team member, principal broker, LLC, and/or

corporation. If the team has created a limited liability or corporate structure, include that also. It is a good

idea for the principal broker to be a party to the contract too since he or she is legally responsible for

actions of the team.

PURPOSE: The agreement is in addition to any office policies and independent contractor agreements

signed with the office.

DEPOSITS: All deposits must be made payable to the brokerage’s escrow account. Teams shall not

open a separate escrow account.

TEAM NAME: State whether the team name must be included in all marketing and branding, including

social media. Include requirements for use of office web site, phone, address, etc.

TERM: Agree on when the contract starts and ends and whether it renews automatically.

Team Contracts

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TERMINATION: State whether the contract can be terminated at any time with or without cause. Include

any notice requirements. State that a principal broker can require a team member or team leader to

leave the team or the brokerage.

TEAM MLS CODE: State-Wide Multiple Listing Service allows teams to obtain

a team code, so that team members can pool their transactions under a single

identification number. State whether team members must report all transactions

using a team code.

HIRING AND SUPERVISION: Refer to office policies that state whether team or

team members may hire their own employees or unlicensed assistants. State whether the team or broker

is responsible for hiring, supervising, and paying an administrator or other employees of the team.

INSURANCE: Decide whether team employees will be covered by the brokerage’s insurance policies.

INTELLECTUAL PROPERTY: Negotiate what belongs to the brokerage, the team or

the team member. Decide whether a team member may use any

or all of the following after leaving the team: photos, leads,

video tours, sketches, client databases, or proprietary

procedures.

INDEPENDENT CONTRACTOR STATUS:

State whether the team leader and

members will be working as an

independent contractor. The team leader

acknowledges that he or she and the

team members are 1099 independent

contractor and is solely responsible

for filing tax returns and paying

taxes owed on their income. Neither

the team nor broker is responsible

for withholding or paying taxes,

workers’ compensation, unemployment

compensation, etc. on behalf of the team

member.

MORE INFO ON

MLS TEAM CODES

RI REALTORS® Team Management Guide

RI REALTORS

Team Management Guide

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BROKERAGE REQUIREMENTS: The team leader and team members agree to comply with any

independent contractor or brokerage agreements signed with the principal broker.

DUTIES OF TEAM LEADER: List what the team and team leader will provide to a team member: leads,

coverage, training, administrative support, coaching, etc.

DUTIES OF TEAM MEMBERS: List the duties of team members, such as prospecting or lead generation,

holding open houses, showing properties, listing properties, working with buyers or tenants, etc. To

protect the independent contractor status of team members, the team may encourage but not require

a team member to attend regular meetings, cold call, attend training programs, handle floor coverage,

phone duty, etc. The team leader can set goals but cannot micromanage those team members who are

independent contractors to perform certain tasks to achieve them.

LEAD DISTRIBUTION: Describe how the team will generate and distribute leads.

CONFIDENTIALITY: Describe who will have access to client files and where they will be stored.

COMPLIANCE: The team member agrees to conduct business in a manner that will enhance the

goodwill and reputation of the team. The team member agrees to comply with all laws, rules, regulations,

State-Wide Multiple Listing Service regulations, and the REALTOR

Code of Ethics.

COMPENSATION: Describe how compensation and incentives will be calculated. Make sure that they

are consistent with the independent contractor agreement and brokerage policies. Rhode Island license

law requires compensation to be paid by the brokerage – not the team.

DISAFFILIATION: Must a team member give notice to leave the team? Who is responsible for paying

brokerage and monthly fees? May a team member take clients and transactions with him or her?

How does this fit with the brokerage’s independent contractor agreement? How are disputes over

compensation handled?

Team Contracts

(Continued)

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COMPENSATION AFTER TERMINATION: Describe how compensation will be paid after a team

member or team leader leaves the brokerage, whether any expenses or fees will be deducted. Make

sure that these are consistent with the independent contractor agreement and office policies.

EXPENSES: Include any expenses that the team will be expected to pay such as advertising, lead,

desk space, employees, and insurance.

RELATIONSHIPS: State whether team members must all have the same relationship with each client

or whether some can be transaction facilitators or designated client representatives. Describe how this

will be explained to customers and clients. The policy should remind team members to complete an

Addendum to the Mandatory Real Estate Relationship Disclosure for Real Estate Teams and provide

it with the Mandatory Real Estate Relationship Disclosure to clients and

customers.

DISPUTE RESOLUTION: Describe how disputes among

team members will be addressed and who will

handle them.

DISSOLVING A TEAM: State who will

determine whether a team dissolves.

Mention that the team will automatically

dissolve if the team leader loses his/her

real estate licensee.

RI REALTORS® Team Management Guide

RI REALTORS

Team Management Guide

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Last revision: January 2023

REALTOR

is a federally registered collective membership mark which identifies a real estate professional who is a

member of the NATIONAL ASSOCIATION OF REALTORS

and subscribes to its Code of Ethics.