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®.
There are 5 possible options:
Pay a Nonmember AssessmentYou, as the Designated REALTOR® (Broker), are billed a nonmember assessment of $520 for each individual who is a nonmember licensee. Even when this assessment 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 nonmember assessment.
How to Join
Drop Agent from your BrokerageYou terminate the nonmember licensee by removing the licensee from DRE 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 AgentsLicensees 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 non-member assessment. This form needs to be submitted annually.
Submit the LFRO Certification Form
Exemption for Mortgage Loan OriginatorsAffiliated 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”)'. This form needs to be submitted annually.
Submit the MLO Certification Form
Commercial CertificationIn 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. This form needs to be submitted annually.
Submit the Commercial Certification Form
You must submit the LFRO form because OCR’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 DRE, 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 OCR every calendar year.
The tool C.A.R. has provided to track broker compliance is refreshed weekly, when it compares DRE 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 DRE record for a broker’s firm but are not in any of these four categories, OCR 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.
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 OCR to suspend your benefits—this will include access to zipForms®.