Appointing a Temporary Principal Broker

The Commission's rules require the designation of a temporary principal broker in two cases: (1) when the principal broker will be absent for more than 30 calendar days, and (2) upon the death or incapacity of the principal broker. In either case, the designation may not exceed six months without the Commission's approval. (HAR §16-99-3(o)). While this article will concentrate on the designation of temporary principal brokers, the same guidelines apply to temporary brokers-in-charge.

If a principal broker will be absent for more than 30 calendar days and no broker in charge is registered with the principal place of business, the principal broker must designate a temporary principal broker. Use a Change Form to designate a temporary principal broker.

A temporary principal broker may be affiliated with another firm; however, if the temporary principal broker is a broker/salesperson, the principal broker of that firm must be notified of the designation. If the temporary broker's license is inactive, then the license must be activated with a Change Form, including payment of fees and submission of continuing education certificates.

In the event of a principal broker's death or incapacity, a temporary principal broker may be appointed. In the case of a corporation or partnership, it may be prudent to appoint another principal broker rather than a temporary principal broker. The following requirements, in addition to those listed above, apply in the event of death or incapacity:

a. The Change Form must be signed by a corporate officer in the case of a corporation, a general partner in the case of a partnership, or the guardian, court appointed representative, or spouse in the case of a sole proprietorship, rather than the principal broker.

b. If the principal broker is incapacitated, a letter from a physician documenting the illness should be attached to the Change Form.

c. If the principal broker has died, a copy of the death certificate should be attached to the Change Form.

Brokers who take on the responsibility of a temporary principal broker should understand that they step into the shoes of the principal broker for the period covered. If the temporary principal broker is a broker/salesperson affiliated with another brokerage, the principal broker of that brokerage must be informed of the temporary broker arrangement. It is strongly recommended that all parties involved discuss any questions of potential liability with their attorneys and errors and omissions carriers.