Temporary Principal Broker or Broker-In-Charge

General information on temporary principal broker or broker-in-charge.

Hawaii Administrative Rules (HAR), section 16-99-3(o) reads, “Prior to the time the principal broker or the broker in charge is absent from the principal place of business for more than thirty calendar days, and no other broker in charge is registered with the principal place of business, the principal broker shall submit to the commission a signed, written notification of the  absence designating a temporary principal broker or temporary broker in charge, who shall acknowledge the temporary designation by signing the notification. In case of prolonged illness or death where the principal broker or broker in charge is unable to act, another broker shall be designated as the temporary principal broker or broker in charge within thirty days of the illness or death with appropriate notification to the commission. A temporary principal broker or broker in charge arrangement shall not exceed a period of six months, with the right to extend prior to expiration for another six months for good cause and with the approval of the commission.”

The intent of this rule is to assist a brokerage in maintaining its day-to-day real estate activities should its principal broker be absent thirty or more days, or if an illness or death should affect the principal broker.  Although not required, principal brokers should prepare for unexpected events which may affect the operations of the entity. There should be at least one broker in charge in the brokerage. Having a designated broker in charge will allow the brokerage to function despite the absence of the principal broker for thirty or more days.

For the many small brokerages, of 2-5 agents, as an example, this is not often possible to have a broker in charge in place. Still, it’s best to be prepared should anything unexpected occur. For sole proprietorships, this is an even more difficult situation. The sole proprietor may have associating licensees, however, should anything happen to the sole proprietor, say a sudden death or debilitating accident, the associating licensees are faced with no principal broker, no way for the sole proprietorship to continue, as it is tied to the individual’s license, and the prospect of going involuntarily inactive.

The designation of a temporary principal broker or broker in charge is NOT for circumstances where a principal broker is leaving a brokerage. The above rule operates with the assumption that the principal broker is returning. The rule is not to be used if a brokerage has not decided who a new principal broker will be, but has decided they do not want the current principal broker to continue in that position.

The Change Form (“CF”) must be used to designate a temporary principal broker or broker in charge BEFORE the absence of the principal broker occurs. If no CF is filed, there will be no documentation that a licensee has been designated a temporary principal broker or broker in charge.

Note that when a principal broker initially designates a temporary principal broker, the time frame indicated may be up to 6 months in length. If the initial appointment is for 1 month, and PRIOR TO THE EXPIRATION of the appointment time frame, the time frame is extended, there is no requirement for Commission approval. In cases of illness, and the appointment period is extended beyond the first 6 months, a doctors note must accompany the CF, and the matter must go before the Commission for approval.