Running a clean practice: antitrust, do-not-call, social media, employee vs contractor, supervision

Bottom line: Most licenses are lost over money handling, supervision, or sloppy advertising, not over exotic law. Learn these habits.

Antitrust

Antitrust laws protect competition. The Sherman Act bans agreements that unreasonably restrain trade. Four violations to know:

• Price fixing: competitors agree on prices or commission rates. Even a casual talk like "none of us will go below 6%" is illegal.
• Group boycott: competitors agree not to deal with a person or firm (for example, refusing to show a discount broker's listings).
• Market allocation: competitors agree to split territories, customers, or property types.
• Tie-in (tying): forcing a client to buy one service in order to get another, such as "list with me and you must use my affiliated title company."

Commissions are always negotiable. No law sets a rate. Each brokerage sets its own, in its own listing agreement.

Calling and texting rules

• National Do-Not-Call Registry: a federal list of numbers that telemarketers may not call. Under the Telemarketing Sales Rule, sales calls may be made only between 8 a.m. and 9 p.m. in the called person's local time, and you must check ("scrub") the registry at least every 31 days (16 CFR 310.4). Exceptions include people with an established business relationship or who gave written permission. Keep your own internal do-not-call list too.
• TCPA (Telephone Consumer Protection Act): restricts autodialed calls, prerecorded messages, and texts to cell phones. You need the consumer's prior express consent (written consent for marketing) before using an autodialer or sending marketing texts.
• CAN-SPAM: governs commercial email. Do not use false headers or misleading subject lines, include your physical mailing address, and give a clear way to opt out and honor it promptly.

Social media and internet advertising

"Advertising" under the Commission rules includes websites, social media, email signatures, mailings, signs, and business cards (Rule 1.2). All advertising must be done clearly and conspicuously in the name of your brokerage firm, with your name on file with the Commission, and must not mislead about who you are (Rule 6.10). Teams must show the firm's name with the team's name (Rule 6.10.B). Brokers must make sure ads are accurate and follow copyright law, including MLS data. Never post a client's address or deal without permission; never post anything that suggests a preference based on a protected class.

Employee vs independent contractor

Most brokers work as independent contractors, not employees. The IRS has a safe harbor for a "qualified real estate agent" (26 U.S.C. 3508): the person holds a license, nearly all pay is tied to sales (not hours worked), and a written contract says the agent will not be treated as an employee for tax purposes. The brokerage then does not withhold payroll taxes; the broker pays self-employment tax. The test is the real working relationship, not the label alone.

Clients' personal information

You will hold Social Security numbers, bank statements, and IDs. Keep them locked or encrypted, share only when needed, shred old paper, and use secure transfer for wires. Wire fraud (a criminal pretending to be the title company and sending wrong wiring instructions) is a leading threat: always confirm by a known phone number.

Other people's money

Money Belonging to Others (earnest money, rents, deposits) must be placed in a trust or escrow account. It may not be used for the brokerage's benefit (Rule 5.2), and the broker's personal or business funds may not be mixed with it, which is commingling (Rule 5.10). Non-property-management money must be deposited within three business days of receipt or mutual execution of the contract, whichever is later; property management money within five business days (Rule 5.7).

Due diligence

Due diligence is the buyer's investigation period: inspections, title, HOA documents, loan, and survey. The broker does not do the buyer's inspecting (C.R.S. 12-10-407(4)) but should point the client to experts and track the deadlines.

Supervision, teams, and assistants

A broker can lose a license for failing to exercise reasonable supervision over licensed employees (C.R.S. 12-10-217(1)(r)). The employing broker must give "Reasonable-Level" supervision: a written office policy manual signed by each associate, review of executed contracts, and review of transaction files for required documents (Rule 6.3.C). New associates (under two years' active experience) need a higher level. Delegating does not erase the employing broker's final responsibility (Rule 6.3).

A team is two or more brokers in one firm who work together on an ongoing basis (Rule 1.52). A team is not its own brokerage; it must advertise under the firm's name.

An unlicensed assistant may do clerical work such as scheduling, paperwork, and photos, but may not negotiate, discuss price, give advice, or do other activities that need a license. (Check the state rule on unlicensed assistants for the full list.)

Example with real numbers

A $500,000 sale pays the listing side 2.5%.

1. Commission: 0.025 x $500,000 = $12,500.
2. The firm keeps 20%: 0.20 x $12,500 = $2,500. The agent gets $10,000 on a 1099 (not a W-2), with no tax withheld. The agent sets aside, for example, 25% = $2,500 for taxes.
3. Do-not-call scrub: the registry was scrubbed on March 1. 31 days later is April 1, so the list must be scrubbed again by April 1 or calling must stop.
4. Earnest money of $10,000 received Tuesday must be deposited in trust by Friday (three business days).
5. A 7:30 p.m. call to a Denver number from a Dallas caller is fine only if it is within 8 a.m. to 9 p.m. in Denver time; 9:30 p.m. Denver time is not.