The Broker Died… Now What?

Tragically, some licensed brokers and good friends of PAR suddenly passed away this year. Their deaths prompted calls to the PAR Legal Hotline from the remaining members of their brokerages asking what to do. Fortunately, the State Real Estate Commission regulations offer straightforward guidance. 

If the broker was a sole proprietor, meaning that they held their license as an individual broker and not as a corporation, LLC or partnership and were not employed by another broker, then Section 252 applies. If a sole proprietor dies, then that broker’s estate has 15 days from the date of death to appoint another broker – perhaps someone who already knows how to be a broker, such as a broker of record for another company – and notify the Commission. The appointed broker will be responsible for wrapping up the business of the deceased, not carrying on the business. The appointed broker must have a current real estate broker’s license and must follow the rules for closing the business. 

The first and second rules are that no new listings may be taken, and no new licensees may be hired. Remember, the point of the substitute broker is to wrap things up, so it would not make sense to accept future business. As for any sales agreements or leases that the deceased broker had pending at the time of death, the third rule states that they may continue to settlement or conclusion. The final rule pertains to any active listings that the broker had. The regulations allow for the listings to continue to be marketed; however, the seller or lessor has the option to terminate those listing agreements. If the agreements are not terminated, then they will automatically expire 90 days after the death of the broker, and they cannot be renewed. 

The process of wrapping up will not be completed until the last transaction has closed and the last check has been written. This means that the escrow account for the business should remain open until the process has concluded.  

If the broker was broker of record for a company, or multiple companies, then Section 253 states that the surviving partner(s) or a corporate officer must notify the Commission within 15 days of the broker’s death. An application should be submitted to the Commission to designate another broker working for the company as broker of record. Aside from this step, business may carry on as usual. 

If the broker is ill or injured and they are unable to fulfill their duties as broker, then the Commission must also be notified within 15 days of the illness or injury. The Commission will allow substitution of the broker, with said notification being done by the broker’s attorney or someone with a power of attorney in the case of a broker sole proprietor or by a partner or corporate officer in the case of a standard or multi-licensed broker. The appointed broker may act as the interim broker until the absent broker is able to resume their duties. 

For specifics on how to notify the Commission about a death or injury, please contact them directly via PALS; PAR cannot provide details or assistance. Please keep in mind that these regulations only pertain to the licensure of the broker and the status of the office and do not speak to the broker’s business, assets or liabilities. If you haven’t done so, please speak with an attorney about creating an estate plan.