Nearly all of the rules related to listings and professional real estate agency are found in ORS 696 and OAR 863. There is a tendency amongst real estate licensees to treat the individuals they work with as “their clients,” in the same way that the car you drive is “your car.” When that broker transfers to a new brokerage, they tend to expect the clients to follow them because it was that broker who walked them through the showings, who pointed out the rickety staircase, who talked the client down after a rude email, etc. The simple legal fact, though, is that the client relationship is established between the buyer/seller and the brokerage through the Principal Broker. This can be most readily understood through the text of ORS 696.800(1) that defines an “agent” as:
- A principal real estate broker [note: context of the statute requires us to understand this as “a broker who has registered a business with OREA,” and not as “a broker who has principal broker education”] who has entered into (A) a listing agreement with seller; (B) a service contract with a buyer to represent the buyer; or (C) a disclosed limited agency agreement; or
- A real estate broker associated with a principal real estate broker to act as the principal real estate broker’s agent in connection with acts requiring a real estate license and to function under the principal real estate broker’s supervision.
There are other areas of the law that strengthen this implication. For example, ORS 696.290(2) and (3) prohibit a broker from receiving compensation from anyone but their associated principal broker, and prohibits a principal broker from paying real estate brokers of another principal broker except through the other principal broker. When the Seller pays the broker for the transaction, the seller is actually paying the brokerage, and the brokerage is the point of diversion from whence the money flows to the brokers. It’s a clunky metaphor and independent contracting makes it somewhat incompatible, but think of it like going to a hardware store. You ask a sales associate to help you look at lumber, and the sales associate shows you the perfect 2×4; elegant pine, no warping, tasteful thickness. “Oh my god, it even has a watermark!” You don’t pay the sales associate and walk that piece of wood out the door. If you did that, you’d get arrested for shoplifting. You go to the front and pay the hardware store.
Put in a different way, the client contracts with the company, the registered principal broker is the company [as far as OREA is concerned], and the brokers associated with the principal broker are deputized with the authority to act in the principal broker’s stead. Brokers, depending on the language of their independent contractor agreements and employment agreements with the Principal Broker, will have varying degrees of authority to act in the brokerage’s stead.
OAR 863-014-0063 then establishes the rules for disengagement and transfers of licenses. When a broker transfers to another brokerage, OAR 863-014-0063(6) allows that broker to continue to engage in professional real estate activities on those transactions only if there is approval from the client, approval from the sending brokerage, and approval from the receiving brokerage. When the agent moves from one brokerage to another, the clients don’t move with them. The clients stay with the former brokerage. If the former brokerage chooses to do so, it can form an agreement with the client and the new brokerage, defining the recordkeeping requirements [e.g. “I keep the stuff from pre-transfer, you keep the stuff from post-transfer.”], the effective date, the way agency will work, and how compensation will be handled.