On May 12, 2016, Governor Nikki Haley signed into law a sweeping revision to the South Carolina Real Estate Licensee Law. The changes to South Carolina Code §40-57-10 et. al. will impact the way you practice real estate effective January 1, 2017.
Today, we examine how the statute affects the real estate team.
Our contacts inform us that the Real Estate Commission and state legislature felt there was a significant problem with the operation of some real estate teams. The public was often confused when seeing team advertising because it had the propensity to lead the public to believe that the team was a separate entity from the agency and the broker-in-charge. In some areas of the state, mega-teams often acted outside of the supervision of the broker-in-charge or were set up to avoid trust accounting rules. The legislature felt some teams had no supervision so these statutory provisions and the anticipated Commission regulations are designed to create greater supervision, establish written policies regarding teams and to eliminate confusion by the consumer. Will the statute do this? Only time will tell. In the interim this could be painful for some licensees.
Section 40-57-30 defines a team as “two or more associated licensees working together as a single unit within an office established with the commission and supervised by a broker-in-charge.” The statute now requires the broker-in-charge to adopt written company policies that identify and describe the types of real estate brokerage relationships in which an associated licensee may engage, including teams. The new law requires the BIC to be responsible for supervising the team and all licensed members of the team. The BIC may not delegate any supervisory responsibilities to the team leader or team members. S.C. Code §40-57-360(A). The means your company policy manual will be revised as it deals with team issues. It also means that team leaders can no longer take on the roll of supervising the licensees as that responsibility lies solely with the BIC. This is no different than how the previous statute operated; it simply makes it clearer. This revision to the law appears to be well-thought out and drafted.
However, the law gets more arduous in Paragraph C where all team members are required to conduct all real estate activities from their commission-established office under the supervision of a broker-in-charge. If your team operates at a different location than the BIC the commission will have to approve the BIC supervising two offices or you may have to move your office back to your BIC’s location.
Additionally, Paragraph D requires all team advertising to contain the team name and the full name of the real estate brokerage firm in a clearly evident manner. State law has always required a licensee to include the name of their brokerage firm when advertising. The new language now includes “in a conspicuous way.” What that means is up to the Real Estate Commission. Paragraph F reiterates this new requirement by holding “The team, and any and all team members, must display and promote that they are directly connected to the brokerage firm under which the team works. “The brokerage firm name under which the team works is to be displayed prominently and visibly in a meaningful and conspicuous way on all methods of advertising.” It appears the intent is for the brokerage firm name to be equal to or more prominent than your team name.Clearly the legislature wanted to ensure there is no confusion between a real estate team and an agency in your advertising.
Paragraph E will have the most lasting affect and greatest impact on licensees. The provision says “No team may imply that the team is a separate entity from the brokerage firm of its employment. Team names may not include the terms ‘realty’, ‘real estate’, ‘realtors’, or similar terms suggesting a brokerage.” This is obviously a problem for many teams in the Midlands as you will no longer be able to use any word that denotes what you do. It is unclear if you can use any word that would let the public know you are in real estate. The statute also uses the vague limitation of “similar terms suggesting a brokerage.” What that means is also up to interpretation by the Real Estate Commission. For those agents that have these terms in your team name, this means the cost of rebranding. You will also have the cost of legally changing your name with the Secretary of State if you formed a company.
Enforcement of a violation of this statute will continue to lie with the Real Estate Commission. The South Carolina Realtors Association’s Legislative Committee is working to get LLR to allow a grace period or to issue “warnings” on team names while it works on a solution at the legislative level. Unfortunately, the next legislative session does not begin until 2017 so you should plan to make the appropriate changes immediately.
Historical Fact: The Wateree River took its name from Wateree Indians, a Siouan-Catawba tribe who occupied the valley until about 1715. The tribe mainly settled along the river at present-day Camden. Once a large tribe, their numbers diminished during the Yamasee War of 1715. The Wateree became extinct as a tribe by the end of the 18th Century. It is likely that some present day Catawba are genetic descendants of the Wateree.
Photo by Newtown grafitti