Real estate teams continue to increase in popularity in Arizona and across the country, but as this business model evolves, questions abound. Below are some frequently asked questions about real estate teams, along with answers that Arizona real estate practitioners may find instructive.

Q: Must a real estate team possess a license issued by the Arizona Department of Real Estate (ADRE)?

A: No. A team is simply two or more licensees within a brokerage working together for a common purpose. There are no separate licensing requirements imposed upon real estate teams and teams are not specifically recognized under Arizona law.

Q: Does the ADRE regulate team names?

A: Arizona law does not directly impose regulations as to the name of a real estate team. As such, team names are not regulated by the ADRE. Nonetheless, the ADRE has opined that team names should not create the impression that the team is an independent entity separate and distinct from the employing broker. Terms such as “Realty” or “Associates” should therefore be avoided.

Q: Can a team member advertise identifying only the name of the team and the team leader?

A: No. The ADRE Commissioner’s Rules, A.A.C. R4-28-502, set forth the rules for all advertising. Pursuant to these rules, all advertising must identify in a “clear and prominent manner the employing broker’s legal name or the dba name contained on the employing broker’s license certificate.” Identifying only the team name and leader is therefore insufficient.

Q: Is the Designated Broker responsible for advertising undertaken by the team?

A: Yes. The designated broker must supervise all advertising for real estate, cemetery, or membership camping brokerage services. See A.A.C. R4-28-502(G).

Q: Can the Designated Broker delegate supervisory responsibilities to the team leader?

A: No. The Designated Broker is legally responsible for supervising those salespersons affiliated with the brokerage firm. In fact, a broker may be sanctioned for failing to “exercise reasonable supervision over the activities of salespersons, associate brokers or others under the broker’s employ.” See. A.R.S. § 32-2153(A)(21).

Q: Can a broker prohibit his or her salespersons from forming a team or using a team name?

A: Yes. The broker retains the right to prohibit their salespersons from forming a team or using a team name.

Q: Can a Designated Broker sever a team member without the consent of the team leader?

A: Yes. A Designated Broker can sever any salesperson affiliated with that brokerage.

Q: Must the team leader keep records of the team’s real estate transactions for a period of at least five years from the date of the termination of the transaction?

A: No. Pursuant to A.R.S. § 32-2151.01(A), this obligation is imposed only upon the licensed employing broker.

Q: Can a team member accept compensation as a licensee from their team leader?

A: Yes. As of September 2022, A.R.S. § 32-2155(A) allows a team leader to directly compensate a team member as long as the team leader hires the team member as a W-2 employee, the two are affiliated with the same brokerage, and written permission from the broker has been obtained.

Q: Can a team become a legal entity, such as a PLC?

A: Yes. While a team can function as a loosely organized group of licensees operating within the same brokerage, a team can also become a legal entity.

Q: Is it acceptable for the Residential Resale Real Estate Purchase Contract to identify only the name of the team leader, not the individual agent that is working directly with either the buyer or seller?

A: No. The licensee in direct contact with the consumer must be identified on the Purchase Contract. As of February 2017, the Arizona REALTORS^® Residential Resale Real Estate Purchase Contract allows each party the ability to identify two real estate licensees that represent them in that transaction. As a result, a team member and team leader can both be listed.

Scott M. Drucker, Esq., a licensed Arizona attorney, is Chief Executive Officer for the Arizona Association of REALTORS®. This article is of a general nature and reflects only the opinion of the author at the time it was drafted. It is not intended as definitive legal advice, and you should not act upon it without seeking independent legal counsel.