Q: I’m a broker with several sales associates working for me. In reviewing the file on a transaction that one of my sales associates closed recently, I discovered some questionable issues that suggest my associate assisted the buyer in engaging in lender fraud. I wasn’t involved with this transaction and had no idea this was going on. Had I known, I wouldn’t have allowed it. If anyone launches an investigation, could I bear any liability for fraud, or responsibility for my associate’s actions in this transaction?
A: Yes. As the broker, you are responsible for the activities of all your sales associates. Section 475.25(1)(u), Florida Statutes, states that FREC may discipline a broker who has failed “to direct, control or manage a broker associate or sales associate employed by such broker.”
As the broker, you’re responsible for monitoring your associates’ transactions and making sure they aren’t engaging in anything illegal. Your failure to catch the fraudulent activity before the transaction closed could expose you to liability—both in a lending fraud investigation and with FREC—if this matter is ever reported.