San Antonio Board of Realtors® BY-Laws Change
LFRO Certification Form
Frequently Asked Questions and Answers

San Antonio Board of Realtors® By-Laws Change
 

Article X, section 2 (a) (1), of the San Antonio Board of REALTORS® Bylaws are amended as follows beginning January 1, 2010: (underscoring indicates additions)
 

SECTION 2. DUES.
 

Annual dues shall be determined each year by the Board of Directors and notification given between October 1 and October 30 for the ensuing year, such dues to be effective for the ensuing year only.
 

(a)     REALTOR® Members. The annual dues of each Designated REALTOR® Member shall be in such amount as established annually by the Board of Directors, plus an additional amount to be established annually by the Board of Directors times the number of real estate salespersons and licensed or certified appraisers or as a licensed, certified or trainee appraiser who (1) are employed by or affiliated as independent contractors, or who are otherwise directly or indirectly licensed with such REALTOR® Member, and (2) are not REALTOR® Members  of any Board in the state or a state contiguous thereto or Institute Affiliate Members of the Board.  In calculating the dues payable to the Board by a Designated REALTOR® Member, non‑member licensees as defined in (1) and (2) above shall not be included in the computation of dues if the Designated REALTOR® has paid dues based on said non‑member licensees in another Board in the state or a state contiguous thereto, provided the Designated REALTOR® notifies the Board in writing of the identity of the Board to which dues have been remitted.  In the case of a Designated REALTOR® Member in a firm, partnership, or corporation whose business activity is substantially all commercial, any assessments for non-member licensees shall be limited to licensees affiliated with the Designated REALTOR® (as defined in (1) and (2) of this paragraph) in the office where the Designated REALTOR® holds membership, and any other offices of the firm located within the jurisdiction of this board. * (Amended 1/05)
 

(1) For the purpose of this Section, a REALTOR® Member of a Member Board shall be held to be any Member who has a place or places of business within the state or a state contiguous thereto and who, as a principal, partner, corporate officer or branch office manager of a real estate firm, partnership, or corporation, is actively engaged in the real estate profession as defined in Article III, Section 1, of the Constitution of the NATIONAL ASSOCIATION OF REALTORS®.  An individual shall be deemed to be licensed with a REALTOR® if the license of the individual is held by the REALTOR®, or by any broker who is licensed with the REALTOR®, or by any entity in which the REALTOR® has a direct or indirect ownership interest and which is engaged in other aspects of the real estate business (except as provided for in Section 2 (a) (1) hereof)  provided that such licensee is not otherwise included in the computation of dues payable by the principal, partner, corporate officer,  or branch office manager  of the entity.
 

A REALTOR®  with a direct or indirect ownership interest in an entity engaged exclusively in soliciting and/or referring clients and customers to the REALTOR® for consideration on a substantially exclusive basis shall annually file with the association on a form approved by the association a list of the licensees affiliated with that entity and shall certify that all of the licensees affiliated with the entity are solely engaged in referring clients and customers and are not engaged in listing, selling, leasing, managing, counseling or appraising real property.  The individuals disclosed on such form shall not be deemed to be licensed with the REALTOR® filing the form for purposes of this Section and shall not be included in calculating the annual dues of the Designated REALTOR®.
 

The exemption for any licensee included on the certification form shall automatically be revoked upon the individual being engaged in real estate activities other than referral and dues for the current fiscal year shall be payable.
 
Membership dues shall not be prorated for any licensee included on a certification form submitted to the association who during the same calendar year applies for REALTOR® or REALTOR-Associate® membership in the association.  However, membership dues shall not be prorated if the licensee held REALTOR® or REALTOR-Associate® membership during the preceding calendar year.
 

Frequently Asked Questions Ref: Limited Referral Organization

(1) Can the Designated REALTOR® file the LFRO certification form for licensees simply sponsored under his personal broker's license?
No. Under these facts the LFRO is the Designated REALTOR and the Designated REALTOR® is not engaged solely in referring clients to himself or his firm. The LFRO must be a separate entity.

(2) Does the Designated REALTOR® have to have a separate corporate or LLC license with TREC in order to file the LFRO certification form?
No, but we believe that most LFROs will choose to maintain a separate corporate or LLC license. It is possible that the other entity may be a partnership or limited liability partnership. The LFRO must be a separate entity. The LFRO may not be a sole proprietorship owned by the Designated REALTOR® or his firm (regardless of whether an assumed name is filed for the LFRO), because a sole proprietorship is not a separate entity. If the LFRO is a partnership or limited liability partnership, a partner other than the Designated REALTOR® must sponsor the agents.

(3) If the Designated REALTOR® has a separate corporate or LLC license with TREC and opts to file the LFRO certification form for licensees under this separate entity, can the Designated REALTOR® mix licensed REALTOR® members in the same corporation or LLC?
No. The other licensees that may be "mixed-in" are potentially engaged in other brokerage activity such as listing, selling, buying, leasing, or managing real estate. When an agent acts, the entity that sponsors or is responsible for the agent also acts. Therefore, the LFRO would not qualify as being engaged solely in making referrals to the Designated REALTOR®.

(4) A broker has two businesses, a full service real estate company and an apartment locator referral company. The broker requires all of his associates to be licensed by TREC. He states that the licensees do only apartment location referrals and are paid a referral fee by the apartment projects. These licensees do not list, show or sell real property. If someone wants to lease or buy a house, they are referred to a REALTOR® in the same broker's real estate company. Does this apartment locator referral company qualify as a LFRO?
No, because the apartment locator company is engaged in brokerage activity that is more than referring prospective customers and clients to the broker or his brokerage firm. If the apartment locator company referred the prospective apartment dwellers to the broker or his firm in the same way as it referred prospective buyers and tenants of other real estate, the apartment locator company would then qualify as a LFRO. The type of real estate that is sought by the prospect does not control whether the entity qualifies as a LFRO or not. The referral act must be to the broker or his firm.

(5) Are only the agents listed on the certification form exempt from the nonmember license fee?
The LFRO may not sponsor agents who are active in brokerage activity. (See question No. 3.) Agents under the LFRO may only make referrals to the Designated REALTOR® or his firm. Otherwise, the LfRO
Would, through its agent, be engaged in some form of brokerage activity. Therefore, it financially benefits the Designated REALTOR® to list all agents affiliated with the LFRO and if the LFRO does not list all its agents, the entity may not then qualify as a LFRO. So, the answer to the question is that in order to qualify as a LFRO, all the agents associated with the LFRO should be listed in the certification form.

(6)Is the broker obligated during the year to provide information to the local association about additions and terminations from the LFRO?
The Designated REALTOR® is obligated to file the annual certification. Questions may arise during the Year as the association receives "UL Reports" from the state association. Therefore, the Designated REALTOR® may be asked to periodically amend the list in the certification if any new licensees are reported. If the local association learns of a new agent sponsored under the LFRO, the Designated REALTOR® will want to either remove the new agent from the LFRO's sponsorship or amend the list. Otherwise, the LFRO runs the risk of no longer qualifying as a LFRO.
LFRO would, through its agent, be engaged in some form of brokerage activity. Therefore, it financially benefits the Designat3d REALTOR® to list all agents affiliated with the LFRO and if the LFRO does not list all its agents, the entity may not then qualify as a LFRO. So, the answer to the question is that in order to qualify as a LFRO, all the agents associated with the LFRO should be listed in the certification form.

Limited Function Referral Office (LFRO) Certification Form
To Designated REALTORS®: Please complete the following and return to San Antonio Board of Realtors®, (9110 I-10 West, San Antonio, Texas 78230) office.
 
Limited Function Referral Office (LFRO) Certification Form - in .DOC format