Contractors, Employment Law, and Broker-Principal Relationships Flashcards
What are agreements between brokers and clients called?
Employee Contracts
What are the 3 ways a broker enters into an employment contract with a principal?
Listing/Landlord Agreement
Buyer/Tenant Agreement
Property Management Agreement
What two topics do all broker and principal contracts discuss?
Terms of Employment and Compensation
What are the 4 requirements for a judge to hear a case regarding commission not being paid by a client?
Have a written agreement.
The agreement must be signed by at least the party to pay the commission.
Broker must show he/she had an active license at the time of the transaction.
The buyer was told at the time of making the offer that he or she should have a title search and/or a title insurance policy.
A broker can hire a salesperson as
An employee
An independent contractor
What is the main difference between an employee and an independent contractor?
The main difference between the two is an issue of control, as established by income tax laws.
What are the three common-law categories that determine the level of control an employer has?
Behavioral
Financial
Type of relationship
If a salesperson is classified as an employee, what must the broker withhold from their wages?
Federal income tax
State income tax
Social Security tax
Medicare tax
What are the conditions of the IRS safe harbor test?
The person must be a properly licensed real estate agent.
Gross income from all output must be based on production and not on hours worked.
A written agreement must exist between the independent contractor and the broker stating that the contractor will not be treated as an employee for income tax purposes.
What section of an independent contractor agreement gives a licensee the ability to represent the broker and enter into agreements with clients?
The section discussing the Associate’s authority
Why is it especially important for licensees to be clear on conditions for termination of an Independent Contractor Agreement?
They need to know the procedures for handling outstanding commissions at the time of termination.
Why is keeping easy to find records of the agreement a good idea for both the broker and licensee?
The agreement will need to be provided to the TREC board when the licensee applies. The information will also include the licensee’s social security numbers, so should be in a safe place.
It is especially important for the licensee to have easy access to the agreement if any conflict occurs between the licensee and broker. The agreement contents should clear up most issues.
When is a broker required to provide a Form 1099- MISC to the IRS?
When an independent contractor earns more than $600 in a calendar year.
What are some factors a salesperson should consider when choosing a brokerage to work with?
The type of person he/she works well with
Type of office environment preferred
Does the brokerage have a nicely designed website?
What type of attitude should a salesperson have when interviewing a broker?
That it’s up to the salesperson to decide if a broker is worthy of his or her services. Also, the salesperson needs to remember that choosing a broker is a very important decision.
