What is the first thing I must do with AREC to start my own real estate firm?
You must first have your firm name approved. Forms are available 24/7 for this from the agency’s website or by contacting AREC during normal business hours at (501) 683-8010. Once AREC reviews your choice of firm name, you will receive a letter of confirmation that will include a list of actions to take according to the licensee’s situation. Assuming there are no problems with the firm name you have requested, approval of firm name should be received within 5-7 business days.
Now that I have had my firm name approved, what should I do?
Before your firm can begin operation, a licensed real estate broker must agree to assume the responsibilities of Principal Broker for the firm. The Principal Broker is responsible for all real estate activities of those persons licensed under him/her. Each firm will have only one Principal Broker. As owner or part owner of the firm, you can be the Principal Broker, but that is not required.
We have a broker willing to assume the duties of a Principal Broker. What must we do next to begin operation?
You must furnish the following information and documents to AREC if the broker is currently an active Associate or Executive Broker: A firm name approval form. Once the name is approved, you are to submit your current license and pocket card making sure the license has a signature on the back, photograph of your permanently attached office sign with the name as approved by AREC, $30 processing fee, trust account form if applicable, Principal Broker form, statement of ownership of the firm.
OK, Do I Need A Trust Account?
Now is the time to make one of your first decisions regarding your operating procedures. The Principal Broker of your firm will be receiving monies that are considered “trust funds” as defined in Commission Regulation 10.8 (a). Commission Regulation 10.8 (c) allows the Principal Broker to maintain a separate trust account or to have an escrow agent for such funds. If you determine that you will hold trust funds, you will need to open a trust account in compliance with Commission Regulation 10.8 and furnish the trust account information to AREC on the appropriate form, which is available from the AREC website or by contacting AREC.
I’m now ready to staff my firm. Does everyone in my firm have to have a real estate license?
Only those persons who will be performing activities listed in A.C.A 17-42-103(12) are required to hold a real estate license. You will want to instruct unlicensed personnel that they are NOT to perform any activities on that list.
I’m the Principal Broker. Until I get the business off the ground, I plan to work at the local grocery to aid my cash flow and make some contacts. Is that OK?
Commission regulation 10.4(e) will not allow the Principal Broker to be engaged in a non-real estate related field if that Principal Broker is going to have persons licensed under him/her. If there are no other associates licensed with the Principal Broker, the Principal Broker may engage in a non-real estate related field.
While I am a licensed salesperson and owner of the real estate firm, I am not the Principal Broker. Can I be licensed under a Principal Broker who reports to me?
Business owners can be licensed under the Principal Broker. License Law holds the Principal Broker responsible for all real estate activities of all persons licensed under him/her, including those real estate activities of the business owner. The Principal Broker is not absolved of that responsibility because the person licensed with him/her owns the real estate firm or is considered the Principal Broker’s boss.
I don’t have a real estate license. Can I be the owner or part owner of the business?
License law only requires those persons who perform those activities listed in A.C.A. 17-42-103(12) to be licensed. A person who does not perform those activities and who is not licensed can have an ownership interest in the firm.
As my business grows, one Principal Broker may not be able to adequately supervise all the real estate activities of my firm. What can I do about that?
While the Principal Broker will always be ultimately responsible for all real estate activities of those persons license under him/her, licensed brokers may be designated through AREC as Executive Brokers, who can be assigned supervisory authority over other licensees. Executive Brokers may review and sign real estate contracts on behalf of the Principal Broker.