New TREC Rule: Death of a Designated Broker

In the August TREC meeting, the Commission approved a new rule, 535.124, titled “Death of a Designated Broker.” The rule provides updated guidance in the event the designated broker of a licensed business entity which sponsors agents dies. Please note this new rule only modifies the procedures for the death of a designated broker for business entities sponsoring agents and does not apply to the death of individual brokers directly sponsoring agents. The new rule became effective on September 11, 2024.

Old Rule

Under previous TREC rules, when the designated broker of a licensed business entity passed away, all sales agents under the entity’s sponsorship were automatically inactivated. This means the agents were immediately prohibited from conducting any real estate activities that require a license, even if they are in the middle of ongoing transactions.

New Rule

Under the new TREC rule, specifically 535.124, when the designated broker of a licensed business entity dies, the entity and its sponsored agents will remain active for 14 days following the broker’s death before becoming inactive. This allows the business time to select a new designated broker, hopefully allowing continuity for the sponsored agents. If the business does not plan to find a new designated broker, the sponsored agents can use this time to find a new broker and move their license before being inactivated.

Please note that this rule change does not apply to individual brokers sponsoring agents directly. Agents sponsored by an individual broker who dies will become inactive with no grace period.

Questions?

We recommend contacting TREC with any questions regarding this rule change.  You can read more about the rule change here.