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I. Preliminary Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4 A. Business Entities and Tax Requirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4 (1) Sole Proprietorship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4 (2) Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4 (a) General Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4 (b) Limited Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4 (3) Limited Liability Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4 (4) Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5 (a) C Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5 (b) S Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5 B. Employee Based Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5 (1) What Constitutes Employee Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5 (2) If You Have No Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6 (3) All Business Entity Employers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6 (4) Federal Income Tax, Social Security and Medicare Taxes . . . . . . . . . . . . . . . . . . . . . . . . .6 (5) Federal Unemployment Tax (FUTA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6 (6) VA Unemployment Insurance (UI) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6 (7) Employers Liable for Unemployment Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6 (8) How Much Does Unemployment Insurance Coverage Cost Employers . . . . . . . . . . . . . . .6 (9) Workers’ Compensation Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7 C. Other Employee Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7 (1) Employee Manual (see Addendum 1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7 (2) Required postings from Fed and VEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7 (3) Equal Opportunity (employer part) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7 II. Opening the Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7 A. Organization of Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7 (1) Location . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7 (2) Physical Layout . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7 B. Sales Associates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8 (1) Recruiting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8 (2) Training . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8 (3) Education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9 (4) Policies and Procedures (see Office Policy Manual) . . . . . . . . . . . . . . . . . . . . . . . . . . . .10 C. Secretarial or Administrative Assistant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10 (1) Secretarial or Administrative Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10 (2) Bookkeeping . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10 (3) Banking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 (4) Recordkeeping . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 D. Opening for Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 (1) Advertising and Promotion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 (2) Checklist of Miscellaneous Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 III. Existing Firms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12 A. Buying or Selling a Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12 B. Valuing the Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12

10231 Telegraph Road, Glen Allen, VA 23059-4561 Phone: (804) 264-5033 Fax: (804) 262-0497 Toll Free: (800) 755-8271

C. Factors Determining the Value of the Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12 (1) Internal Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12 (2) External Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13

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D. Techniques for Valuation of a Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13 (1) Asset-Based Methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14 (a) Net Asset Technique . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14 (b) Total Asset (Summation) Technique . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14 (2) Replacement Cash Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14 (3) Cash Flow Methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15 (a) Earnings or Income Multiplier . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15 (b) Discounted value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15 (4) Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15 IV. Risk Management Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16 A. RESPA Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16 (1) Prohibition against Kickbacks & Unearned Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16 (a) What is permitted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16 (b) Key Referral Fee Reminders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16 (2) Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17 B. Antitrust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17 (1) Summary of Principal Federal Antitrust Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17 (a) The Sherman Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17 (b) The Clayton Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18 (c) The Robinson-Patman Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18 (d) The Federal Trade Commission Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18 C. Antitrust Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18 1. DO NOT Discuss Your Business With Competitors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19 2. Written Communications Must Be Clear and Explicit . . . . . . . . . . . . . . . . . . . . . . . . . . . .19 3. DO NOT Talk Unless You Know Who You're Talking To And What You're Talking About .19 4. DO NOT Deceive Yourself Or Let Anyone Else Deceive You Into Believing That Any . . . . . .

Transgression Of The Antitrust Laws Has Little Risk Of Discovery . . . . . . . . . . . . . . . . . . .19 5. DO NOT Use Such Terms As "Please Destroy When Read", "For Your Eyes Only", "No Copies", Or Similar Terms and Phrases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20 6. DO NOT-At Any Time-Use Any Of The Words And Phrases Which NAR's Program For . . . . .

Compliance Designated As "Dangerous" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20 7. If In Doubt, Consult . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20 8. Without Clearance: Don't Do It . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21 D. Document Retention Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21

10231 Telegraph Road, Glen Allen, VA 23059-4561 Phone: (804) 264-5033 Fax: (804) 262-0497 Toll Free: (800) 755-8271

E. Consequences & Costs of Failure to Comply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21 (1) Criminal Prosecution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21 (2) Private Treble Damage Suits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21 (3) Injunctions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21 (4) Consent Decrees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21 (5) Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22 (6) High Cost of Antitrust Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22 (7) Adverse Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22 (8) Internal Strife and Tension . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22 (9) Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22 F. Environmental Concerns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23 (1) Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23 (2) Common Environmental Hazards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24 (a) Asbestos . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24 (b) Formaledehyde Gas & UFF1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25 (c) Lead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26 (d) Radon Gas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26 (e) Underground Storage Tanks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27 (f) Groundwater Contamination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28 (g) Electromagnetic Fields (EMFs) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29 (h) Waste Disposal Sites . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30 (3) Environmental Contacts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31

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G. Lead Based Paint (LBP) Disclosure Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32 (1) Disclosure Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32 (a) Disclose the presence of known lead based paint (LBP) and LBP hazards . . . . . . .32 (b) Provide buyers and tenants with any available records or reports about any LBP present in the housing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32 (c) Provide buyers and tenants with a federally-approved lead hazard information pamphlet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32 (2) Properties & Transactions Subject to LBP Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32 (3) Target Housing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32 (4) Excluded Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32 (a) Housing for the Elderly (No Resident Children Under 6) . . . . . . . . . . . . . . . . . . . . . .32 (b) Housing for Persons with Disabilities (No Resident Children Under 6) . . . . . . . . . . .32 (c) “0-Bedroom" Dwellings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33 (5) Transactions Subject to LBP Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33 (6) Exempted Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33 (a) Foreclosure sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33 (b) Leases of Housing Found to be Lead Free . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33 (c) Short-Term Leases of 100 Days or Less (No Renewals or Extensions) . . . . . . . . . . .33 (d) Lease Renewals if Disclosures Done and No New Information . . . . . . . . . . . . . . . . . .33 (e) Purchase, Sale or Servicing of Mortgages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33 (7) Agents Covered . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33 (8) Buyer Opportunity to Inspect for LBP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33 (9) Timing of LBP Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34 (10) Agent Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34 (11) Listing the Residential Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34 (a) Determine if the property is target housing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35 (b) Look for painted surfaces in bad condition while inspecting the property. . . . . . . . .35 (c) Advise the seller of his or her obligations under the LBP rules. . . . . . . . . . . . . . . . .35 (d) Ask the seller if he or she has any knowledge of LBP or LBP hazards on the property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35 (e) Obtain copies of any available LBP records pertaining to the property . . . . . . . . . . .35 V. Additional Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35 A. Internet Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35 B. Fair Housing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35 C. Do Not Call . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35 D. Non discriminatory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35 E. Professional Courtesies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35 F. Internet Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35 G. Relocation Procedures and Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36 H. Property Management Procedures and Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36 I. Opening a Real Estate Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36 J. Links to NAR site – small business administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36 K. Do Not Call . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36 L. Agent Safety . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36 M. Internet Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36 N. Opening a Real Estate Brokerage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36 Addendum 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37 Addendum 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39

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A. Business Entities & Tax Requirements There are several types of business entities recognized in Virginia. They are sole proprietorships, partnerships, limited liability companies, corporations, and professional associations.

In addition, there are different types of partnerships and corporations.

(1) Sole Proprietorship The sole proprietorship is the simplest method of doing business. There is no formal paperwork required. The owner needs a business license from the city or county and federal employer identification number (if he has employees) (EIN Form SS-4). All income and expense of the business is reported on the owner’s personal tax return (on Schedule C, Form 1040). There is no filing requirement with the State Corporation Commission.

The major disadvantage of this form of business is the lack of liability protection for the owner. He is responsible for all of the actions of the business.

(2) Partnership A partnership consists of two or more individual owners. There are two types of partnerships available in Virginia, general and limited. Both are required to have a business license and a federal employer identification number. Keep in mind that a partnership agreement is useful not only in establishing the duties and responsibilities of each of the partners, but should set forth what happens upon the withdrawal of any partner and the subsequent dissolution of the partnership. The advantages and disadvantages are: (a) General partnerships consist of two or more individuals operating the business and sharing the risks and rewards. As with a sole proprietorship, no filing is required with the State Corporation Commission, but filing of a partnership certificate in locality of the business is required. A partnership agreement is strongly suggested to avoid future disagreements. Use of an attorney recommended. Annually, the partnership files a tax return with the Internal Revenue Service (Form 1065). The net profit or loss of the business is reported to each partner on a K-1 form. The partner includes this information on his personal return. Like a sole proprietorship, a general partnership does not offer liability protection to the partners. Partners can be liable for the acts of the other partners if they are acting in the name of the business (b) Limited partnerships are generally formed to raise capital. One company or individual serves as the general partner, and assumes most of the legal liability. The limited partners are usually liable only for the money they invest in the business in return for a passive role in management. Limited partnerships must file with the State Corporation Commission and an attorney is required. This type of structure would not be used in most day-to-day businesses since the limited partners would have no say in the management decisions of the partnership.

10231 Telegraph Road, Glen Allen, VA 23059-4561 Phone: (804) 264-5033 Fax: (804) 262-0497 Toll Free: (800) 755-8271

(3) Limited Liability Companies The Limited Liability Company (LLC) form of business is most attractive to those who want the tax treatment of a partnership with corporate type liability protection. An LLC can have one or more members (partners) and must file with the State Corporation Commission.

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I. PRELIMINARY CONSIDERATIONS

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Annually, the LLC files a partnership tax return (Form 1065). Like a partnership, the member’s share of income and expense is reported to them on a K-1 form, which is then included on the member’s personal tax return. Limited liability companies offer enormous corporate flexibility combined with limited liability and advantageous tax treatment.

(4) Corporations The corporate form of business offers the maximum liability protection for the owners (called stockholders) of the business. A corporation must file with the State Corporation Commission, have a board of directors and keep formal minutes of all meetings.

Corporate resolutions are required to borrow money, buy real estate — to obligate the corporation beyond routine business transactions. An attorney is generally required to incorporate a business. Like a partnership, a corporation must have a business license and an employer identification number. An annual report is filed annually with the State Corporation Commission.

There are two common types of corporation used most often, the C and S corporations.

Both offer the corporate liability protection and are subject to the requirements noted above. There are several differences: (a) C corporations are subject to federal income tax at the entity level. The rates range from 15–34%. They can have an unlimited number of shareholders. Double taxation arises since not only are the profits of the corporation taxed, but shareholders are also taxed on any income they receive from the corporation in the form of didivends. The federal tax return (Form 1120) is filed annually. (b) S corporations are limited to 75 shareholders and the form of shareholder is limited. There can be only one class of stock. S corporations file federal Form 1120S to report the income and expense for the year. Like a partnership, each shareholder receives a K-1 form showing his pro rata share of income and expense which is then included on his personal tax return. S corporation status is not automatic. Form 2553 must be filed with the Internal Revenue Service to request to be taxed as an S corporation. It is important to file for S corporation status on a timely basis as filing after the deadline is a common and expensive error.

Payments to shareholders are provided through dividends. Shareholders can also receive a salary if they are employees of the corporation.

There are limitations on how much of a pass-through loss from a partnership or S corporation an individual may deduct on his tax return. The individual must be materially participating in the business (usually defined as working at least 500 hours per year) and have adequate capital invested. These passive activity and basis limitation rules are quite complex. Your situation may require the assistance of a tax professional.

B. Employee Based Taxes 10231 Telegraph Road, Glen Allen, VA 23059-4561 Phone: (804) 264-5033 Fax: (804) 262-0497 Toll Free: (800) 755-8271

(1) What Constitutes Employee Status?

Individuals performing services for the broker for wages are presumed to be employees.

In general, an employer-employee relationship exists when a person has the right to control and direct an individual’s work.• Real estate agent working for a broker for federal

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and state income tax purposes may act as an independent contractor by entering into a writtenagreement with the broker. The agent might be considered an employee for other purposes such as tort and professional liability and worker’s compensation.

There are other qualifications as well as exclusions. For further clarification, please contact: Virginia Employment Commission 703 East Main Street Richmond, VA 23219 804/786-1425 http://www.vec.virginia.gov (2) If You Have No Employees Individuals who work for themselves with no employees must pay a self-employment tax consisting of Social Security and Medicare tax components.

(3) All Business Entity Employers Brokers who have employees must pay employment taxes, which include: • Federal income tax withholding • Social Security and Medicare taxes • Federal Unemployment Tax (4) Federal Income Tax, Social Security and Medicare Taxes Federal income tax, Social Security and Medicare taxes must be withheld from your employees’ wages. The employer is required to pay a matching amount of the withheld Social Security and Medicare taxes. (Form 941) (5) Federal Unemployment Tax (FUTA) Employers must report and pay FUTA tax separately from Social Security and Medicare taxes using Form 940 or 940EZ. (6) Virginia Unemployment Insurance (UI) Unemployment Insurance provides benefits to unemployed workers who have lost their jobs through no fault of their own. The Virginia Employment Commission administers the program.

(7) Determining Employer Liability for Unemployment Insurance Employers are subject to the provisions of the Virginia Unemployment Compensation Act. An employer is liable if he meets one of the following conditions: • Has a total payroll of $1500 in any calendar quarter of the current or preceding year

10231 Telegraph Road, Glen Allen, VA 23059-4561 Phone: (804) 264-5033 Fax: (804) 262-0497 Toll Free: (800) 755-8271

• Employs one or more persons during some part of a day in each of the 20 work weeks in the current or preceding calendar year • Is liable under FUTA and has at least one employee in Virginia (8) How Much Does Unemployment Insurance Coverage Cost Employers?

Full details of employers’ obligations are set forth in the Virginia Unemployment

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(9) Workers’ Compensation Insurance Every employer using the service of five or more employees must provide workers’ compensation insurance coverage. General contractors are required to have Workers’ Comp for even one person because of their liability for uninsured subcontractors. Premiums are based on industry classification and job classification within the industry. Subsequent premiums factor in a company’s accident rate and claims experience.

C. Other Employee Issues (1) Employee Manual: See Addendum 2.

(2) Required postings from Fed and VEC (3) Equal Opportunity (employer part)

II. OPENING THE OFFICE A. Organization of the Office (1) Location The choice of geographic location depends largely on the goals and objectives in relation to your real estate specialization. You must consider if the market area is growing, what is the turnover rate; does the community attract commerce and industry, what is the per capita target? The general location will depend greatly on the demographics and economic impacts in the service area. The actual site of your office will take into consideration what you think is most important: building exposure, traffic, parking, or, in other words, what will catch the attention and provide the most convenience for your market, tempered by your financial capabilities. It is useful to remember that the first impression to project and establish your identity with the community will be in the presentation of the building exterior. The theme you carry with your building should be consistent with your advertising, logos, letterhead, signs, business cards, etc. The goal is to imprint upon the minds of the community recognition through name, logos, colors, slogans and other promotional materials.

(2) Physical Layout As your exterior is important, your interior design is important as well. Functionality and the projection of a business atmosphere are important to your office layout. Many hard decisions will have to be made due to space allotments, placement of desks, phones, equipment, storage, offices, etc. Space must be used productively. In regards to the number of sales associates, the cost of providing the opportunity of doing business (desk costs) must be calculated. Desk cost = Total Annual Firm Expenses/number of sales associates.

10231 Telegraph Road, Glen Allen, VA 23059-4561

For example: $80,000 Total Expenses/10 associates = $8000. On a 50/50 split, the sales associate would not begin to earn a profit until the gross commissions amount of $8000 is

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Compensation Act, Sections 60.2 – 100 et. seq. of the Code of Virginia or are available from the Virginia Employment Commission.

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• Customer or client semiprivate or private consultation areas • Foot traffic • Sales staff accessibility to managing broker and the public • Relaxing atmosphere for clients and customers • Lighting • Functionality of greeting, consulting, and operational procedures for clients and customers Every office is different and much will depend on your specific requirements based on the size of your sales force and other employees, your target audience, personal taste, and the image you want to project to customers and clients.

B. Sales Associates Once you have planned the preliminary considerations for your business, you need to acquire a sales force, possible employee personnel and open your office to the public.

(1) Recruiting Interviewing potential associates is very subjective. It is very difficult to ascertain whether or not a potential associate will succeed or fail. However, remember to ask open-ended questions rather than “yes”/“no” type questions. This will enable you to hear detail in an answer that you would otherwise not have gotten through closed-ended questioning.

Diversity in your sales staff is a good thing and can be very productive. Of course you want all of your associates to be producers, however, and to exploit each of their individual strengths to the firm’s advantage. The type of questioning should be formatted to achieve answers to questions on motivation, knowledge, availability, personality, intelligence, compatibility, ambition, ethics, loyalty, team spirit, and reactions to high pressure situations.

Good salesmanship attributes are an ego-drive and empathy. Ego-drive is the pleasure and self-gratification one gets from the act of successful persuasion. Empathy is the perception and awareness of another’s feelings without becoming emotionally involved. These are two key things to look for in an applicant. Be thorough in your determinations. After all, your evaluation and decision will be one you will have to live with in the months and possibly years ahead.

(2) Training Proper training of associates is needed for a prosperous and productive sales force. You essentially will become a mentor for all new associates in passing on your knowledge and providing enough training for their survival and livelihood. Sales associates you have hired who have previously worked in the industry bring experience as well as bad habits they may have formed in their previous environment. As the saying goes, “Bad habits are hard to break.”

10231 Telegraph Road, Glen Allen, VA 23059-4561 Phone: (804) 264-5033 Fax: (804) 262-0497 Toll Free: (800) 755-8271

Nevertheless, training is essential for even experienced associates. Before unleashing your new associates to the public, you must adequately train them to follow good work habits, increase their profits, manage their time, produce more efficiently, and learn from the mistakes of others as well as their own. By investing time in the training of your associates, you can see a return in boosting your reputation among the community, identifying promising associates as well as not so promising ones, reducing the amount of time spent in direct supervision, increasing morale, experiencing less turnover, and motivating your

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met per associate. Begin by listing the space allocations absolutely needed followed up with a desirable list. Some things to consider before actual arrangement takes place are:

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associates. In training your associates, you must find out what motivates them. What are their long term goals? Now, help them to set objectives to meet those goals, and in the process, meet your objectives and your company goals.

Determine what the threshold of a successful associate is in terms of listings, units of production (closings), and intangibles such as prospecting, on a monthly basis. At the minimum, implement these objectives as each associate’s personal objectives. Those that do not meet your minimum objectives need to be evaluated and possibly have their affiliation terminated if this is a repeated behavior pattern.

To achieve objectives, there are many daily practices that can be exercised to keep the momentum going and growing. Some suggestions include: • Check unclosed transactions for anything needlessly holding them up • Write ads for any new listings • Match customers with new listings in the MLS • Follow up on renewing listings that may be expiring • Inspect any new listings in the MLS • Provide handouts and mailings to farm areas with high turnover rates • Write promotional ads listing your specialty or specialties • Follow up with post-sale inquiries • Follow up with former buyers who may be ready to upgrade • Contact a prepared list of FSBOs in your market • Cold canvass neighborhoods by knocking on doors and asking questions Discipline in maintaining daily practices can lead to increased productivity. It is essential to keep the fire stoked. In times of economic upturn, some associates may not feel the pressure to maintain such essential and common practices and get lazy. Discipline in this area will prepare you and your associates for times of economic downturn.

(3) Education Along with training comes education. All associates should be encouraged to continue their education above and beyond the requirements of the Virginia Real Estate Board.

10231 Telegraph Road, Glen Allen, VA 23059-4561

The VREB requires continuing education every two years for the retention of licensing as well as additional education for new agents and special training in Virginia agency law.

However, professionalism goes way beyond the basics and minimum requirements. There are many designations for specialization status available to REALTORS® . Your local association, as well as state, and national associations provide the opportunity for your associates to set themselves apart through the earning of certain designations such as ABR, GRI, CRS, CCIM, etc. There are also designations for managing brokers such as CRB, and a broker can set the example for associates as well as gain valuable knowledge.

Professionalism and prescribing to a higher set of standards than most licensees is what can place your firm and your associates ahead of the competition. Clients and customers recognize the designations of specialty. After all, if you’re looking for a business accountant, you should look for a CPA simply because you’ve identified that he or she is a professional and expert in their field through the designation of CPA. The same is true for real estate professionals. The public looks for these designations. Set yourself apart from your

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competition and encourage continuing education for the promotion of your associates as well as your firm. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Under EDUCATION refer to DPOR Code § 54.1-2105.01.

(4) Policies and Procedures The regulations of the Virginia Real Estate Board require all firms to have written policies and procedures. It is also a prudent tool to provide to your staff for guidance, discipline, equitability, compensation, and standards of practice.

Add link to Broker Policy Manual currently on VAR website

C. Secretarial or Administrative Assistant / Bookkeeping Personnel Most brokers will find that they will not be doing all of the administrative duties themselves and may need assistance, depending on their type of contribution to the firm. Keep in mind the federal and state requirements of employment when hiring staff personnel. Employees cannot perform any duties covered under Virginia license law unless they are licensed real estate agents. Severe penalties can result from violations of Virginia’s license laws.

(1) Secretarial or Administrative Duties Examples of Daily Tasks for a Secretary are as follows: • Open and sort the mail - categorize into: 1) Bills to pay 2) Letters to answer 3) Requests for donations 4) Things to read 5) Property brochures 6) Junk mail 7) Personal letters (not to be opened) • Update master listings book and prospect register • Type official letters, leases, reports, appraisals, etc.

• Inventory office supplies and order replacements • Maintain a tickler file • Maintain a “Solds” file and organize by valuable information for future listings • Phone answering, message retrieval • Maintain the appearance of the office • Screen vendors and solicitations • Help make appointments for associates • Greet customers and clients A good secretary can save you valuable time and headaches. Use the same type of questioning used with associates for selecting a secretary/bookkeeper, modifying the questioning to fit this position.

10231 Telegraph Road, Glen Allen, VA 23059-4561 Phone: (804) 264-5033 Fax: (804) 262-0497 Toll Free: (800) 755-8271

(2) Bookkeeping Because of the possibility of embezzlement, there should be a checks and balance system and auditing process. Some suggestions are as follows: • The bookkeeper should not be allowed to sign checks.

• The bookkeeper should not be the person to reconcile the bank statement.

• If you must allow the bookkeeper to reconcile the bank statement, then have the bank statement sent to your home. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• The assistance of an accounting firm auditing your records on a timely basis may be prudent and can help avoid financial problems.

• The principal broker must always maintain control over escrow accounts.

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(3) Banking DPOR requires that operating funds and escrow accounts be kept separate at all times. It is highly recommended that the firm open separate checking accounts for each. It is important that client funds entrusted to the firm are deposited promptly according contracts specifications or as directed in writing.

Go to DPOR site for escrow info. http://www.dpor.virginia.gov/dporweb/dpormainsitesearch.cfm Under BANKING refer to DPOR Code § 54.1-2108.

(4) Record Keeping There are certain requirements for records maintenance. DPOR regulations list those requirements. It is suggested that an accountant to contacted for additional financial accounting requirements.

D. Opening for Business (1) Advertising and Promotion Of course you will want to advertise your grand opening. Depending on your advertising budget, generally higher in your first month of business, you should consider different types of media for announcing your grand opening: newspaper, radio, TV, and cable. A grand opening party, “Open for Business”, inviting community, family and friends is a great way of establishing a presence in your select market. Announcements and invitations through your church, local association, chamber of commerce, social clubs, and business contacts including banks, title companies, closing attorneys, accounting firms, mortgage companies, etc., is a great way to establish a referral network. Know your community beforehand to find the avenues of promotion.

Insert link for DPOR advertising info

10231 Telegraph Road, Glen Allen, VA 23059-4561 Phone: (804) 264-5033 Fax: (804) 262-0497 Toll Free: (800) 755-8271

(2) Checklist of Miscellaneous Considerations Before swinging the doors open for business, you must consider a few things: - Place Yellow Page ads in advance or you may find that it will be a year later before you can place an ad - Register your new firm in advance with your local association to avoid delaying MLS privileges - Remember licensing requirements - Display required fair housing information - Display all required license information - Sign requirements - Zoning requirements - Signed contracts of affiliation and employment - Letterhead, business cards, and brochures or any other promotional material - Have an Office Policy Manual in effect - Establish bank accounts - Send out announcements - Obtain proper insurance coverage - For effective and productive communication, acquire access to the internet and email accounts for all associates - Equipment and other technology needs - Errors & Omissions Insurance

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- Decision on standard forms usage - Relocation issues - Property mgt. Issues

III. EXISTING FIRMS A. Buying or Selling a Firm There comes a time for brokers when the buying or selling of a firm will take place. In actual transactions of buying or selling a real estate firm, buyer’s reasons include continued expansion, desirable location, a desire to have a business, or to purchase an established firm. Sellers generally sell because of retirement plans, personal or financial reasons, weariness in managing a firm, or actually moving on to another industry.

B. Valuing the Firm Knowing how much your business is worth or knowing how to value a firm can aid you considerably in the selling or the purchasing of a firm. Because there are always unique sets of circumstances for the selling of or purchasing of a firm, there is no one right way to value a firm. However, there are certain guidelines and factors to take into consideration. Before actual appraisal of the firm, these questions need to be addressed: • After the transaction, will the firm operate as is, will there be significant changes to the operation, or will the firm be closed?

• Can you identify the internal factors (factors within firm’s control) that affect the value?

• Can you identify the external factors (factors outside firm’s control) that affect the value?

• What is the motivating factor for purchasing or selling a firm and how much of an effect does it have on the value of the firm?

• Do you know of a consulting company that has expertise in valuing a real estate firm that you can hire and feel comfortable with?

• Do you keep complete financial and operation information through good bookkeeping?

While the value of the firm may not necessarily reflect the price of the firm, an estimated range of value can be used to start the negotiation process. There are many things that influence the value and price of a firm. Some are objective factors that are internal to the firm and affect value, and some are objective factors outside the firm’s control that also affect value. Poor record keeping and timing of the payment of sales can affect the price a buyer will pay or a seller will accept. Regardless of their impact, or the method by which we value the firm, buyers and sellers must be careful to differentiate between price and value. The agreed upon price of the firm may be influenced in a positive or negative manner. However, some of these subjective influences should not change the intrinsic value of the firm.

C. Factors Determining Value of the Firm (1) Internal Factors These are the basic assets of the firm and include the unencumbered tangible assets as well as intangible assets.

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Tangible assets can include office equipment, useful advertising material, buildings, vehicles, etc. Sometimes an unexpired lease on a building or office space can be considered

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an asset depending on the desirability of the location and the term on the lease.The inventory of listings is important especially if the quality of the inventory is high. Quality will depend on how old the listings are, the exclusivity of the listing areas, and the potential income after commissions are paid.

Intangible assets can include the quality of the staff, operating procedures, franchise status, business reputation, community goodwill, etc. In the area of staff, quality is determined by experience, productivity of individuals as well as the firm, professionalism, retention of staff, and the trend of productivity. Another area of concern is the operational procedures of the firm. Are records well kept and in order? Are the firm’s training, advertising, strategic planning and other programs effective and beneficial?

(2) External Factors Generally, the firm’s owner has little to no immediate control of or influence over external forces. Because these factors are outside the control of the purchasing or selling broker, the significance of these factors can be easily overlooked when valuing a firm when in fact they do contribute to the valuing process.

The national economy is the largest factor in terms of affecting the value of a firm. Trends such as recession and inflation can affect the mood of potential home buyers. When times are tough on the home buyer, they’re even tougher on the real estate industry and the converse is also true. Interest rates are another area that affect home sales and therefore earnings for the firm. Demographic trends such as population migration, age distribution, and income distribution all affect the potential earnings of the firm.

Competition can also affect the value of a firm. If an area is over-farmed, fewer listing opportunities are available for your firm. If the same target market is being sought after by more and more competitors, the firm may find that segment or niche marketing techniques can help reduce the amount of competition. The size, location, target market, marketing strategy, experience, reputation, and financial conditions are all aspects of competition that affect the value of a firm.

Local governing and regulatory agencies can have an impact on the value of the firm.

Regulations, zoning ordinances, tax bases, along with local statutes and ordinances need to be thoroughly investigated before purchasing. Inquiring about expected changes or possibilities of change in the regulatory arena of your area can prevent serious misevaluations of a firm’s future income potential.

The professional reputation of a firm can linger long after the original owner has left.

Deciding whether to change the name entirely or to keep the name of the original firm can be either an advantage or disadvantage to the future potential to draw income. In essence, it would be prudent for the buyer to check on the community standing of the seller.

D. Techniques for Valuation of a Firm There are many methods for valuing a firm. The assistance of a certified public accounting firm is invaluable in determining the value of your firm.

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However, three methodologies of valuing a firm are most common:

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1. Asset-based method 2. The replacement cash method 3. Cash flow methods (1) Asset-Based Methods Asset-based methods consider placing a value on unencumbered assets of the firm and then totaling the conglomerate asset values which represent the total value of the firm. Two basic techniques can be used and include the net asset technique and the total asset (summation) technique. Each technique has advantages and disadvantages. (a) Net Asset Technique The net asset technique takes into consideration only unencumbered tangible assets and does not consider intangible assets such as the quality of the staff. Generally, the net asset technique would be used in these situations: • Market sales forecast is poor.

• The business will not be continued as is.

• The business will be altered or even disbanded.

• You desire to create an attractive price for a quick sale.

• Simplicity.

• You are not keeping the real estate listings.

• The business is merged with another.

If there is little or no future income potential from sales, the future value of the firm may not be determined except from the existing tangible assets at present market costs (not replacement). (b) Total Asset (Summation) Technique The total asset (summation) technique takes into consideration both unencumbered tangible and intangible assets in valuing the firm. Each intangible asset is represented by a quantifiable monetary value (present market costs) and then added to the total of all tangible assets. In this way, the actual value of the firm is more theoretically correct. The difficulty comes in appraising the value of each intangible asset. For example, the value of the sales staff might be difficult to surmise. One way would be to appraise the value of the staff by historically calculating the contributing income and appraising the expected growth in income through trend analysis. While more difficult than the net asset based technique, the total asset (summation) technique can be used when: • The business will be continued as is.

• No firm name changes are necessary due to community goodwill and reputation of the firm.

• Market Sales forecasts are very favorable.

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(2) Replacement Cash Method The replacement cash method may be considered a major variation of the asset-based method. It takes into consideration the replacement or duplication of both tangible assets and personnel at today’s market prices. It can be figuratively compared to replacing all tangible assets of a firm if a catastrophic event were to wipe out the entire operation, destroying everything including sales and administrative staff. While this is a drastic com-

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parison, the costs associated with replacing the building, equipment and other tangible assets and the cost of recruitment, training and organizing a staff would all have to be considered. The major disadvantage would be appraising the costs of areas such as recruitment and training. Also, it may not reflect the value of senior sales staff with strong earning power and it might ignore the value of community goodwill. By using the replacement cash method, the value derived can be an excellent tool for either the buyer or seller for these reasons: • Provides a comparative analysis with other methods of valuation.

• Establishes a cost analysis which allows the buyer to start a firm if the seller refuses to sell.

• Indicates to the seller that overpricing may cause direct competition rather than purchasing at the seller’s price.

(3) Cash Flow Methods The cash flow method differs from asset based evaluations in that it takes in consideration the future value of the firm through the future earning power of the firm. Two techniques of the cash flow method are earnings multiplier and discounted cash flow. (a) Earnings or Income Multiplier (Future Value) This technique focuses in on the future earning power of the firm. The value is calculated by the amount of capital needed to generate the future earning power of the firm at some predetermined rate of return. It assumes that the firm will not experience diminished earnings in the future and that the investor would be indifferent to investing back into the firm or any alternative investments as long as the investor receives the predetermined rate of return. The forecasted projections are very subjective at best. However, it does force the buyer into considering comparing the forecasted projection of the firm against alternative investment opportunities. (b) Discounted Value (Present Value) The discounted value or present value method estimates future earnings on an annual basis and discounts them to the present value using a risk-adjusted discount rate. In other words, you are more likely to accept a dollar today rather than wait for that same dollar in the future. The idea is that the dollar is worth more today than it may be five years down the road due to inflation, cost of living increases and other factors that reduce its value. It takes into consideration the impact of all external factors such as economic, regulatory, and financial concerns on an annual basis, thereby providing the most accurate future analysis for the future value of the firm. This method assumes that the buyer is purchasing a stream of future earnings, where the price is the sum of the present values of each future year's earnings.

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(4) Summary There is no one right way to value a firm. The method and results should account for all the key value factors internal and external to the firm. The method should be understandable as well as believable to all parties and should have the capability of being duplicated by the other party lending to the credibility of the results. Overall, the method should arrive at a range of values that can be used as the starting point in negotiation. Regardless of whether you're selling the firm or buying the firm as an expansion branch office, understanding valuation methodologies is the first step in determining the profitability gained by selling or by investment purchasing.

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A. RESPA Policy Associates are required to comply with the provisions of the federal Real Estate Settlement Procedures Act (RESPA) at all times. The area of referral fees is specifically addressed in this policy manual in order to explain the sometimes-confusing requirements of the federal law and to emphasize the importance of compliance. Additional information on RESPA can be obtained from VAR's Legal Staff or on One Realtor Place at Realtor.com.

(1) Prohibition against Kickbacks and Unearned Fees Regulation X details the elements of a RESPA Section 8 violation: • Pursuant to Section 8, paying or receiving a fee or a "thing of value" for the referral of business related to a mortgage loan settlement is illegal under RESPA. • Reg. X also prohibits the splitting of any settlement charge except for paying for actual services rendered. If no or nominal services are performed or if duplicative fees are charged, an unearned fee exists and payment of this fee violates Section 8.

• Reg. X makes clear that any agreement or understanding that a thing of value will be given in exchange for a settlement service referral need not be written or even verbalized.

This agreement can be established by a practice, pattern or course of conduct.

• Reg. X gives a list of the real estate-related services which are defined to be settlement services.

These "settlement services" include, without limitation, any services related to: 1. Origination, processing or funding of a federally-related mortgage loan 2. Mortgage broker services such as counseling, taking applications, obtaining verifications and appraisals, lender-borrower communications, etc.

3. Title company services 4. Attorney's legal services 5. Closing document preparation 6. Credit reports and appraisals 7. Property inspections 8. Conducting the settlement 9. Mortgage insurance 10. Hazard, flood or casualty insurance and home owner warranties 11. Mortgage life, disability or similar insurance 12. Real property taxes and assessments 13. Real estate brokers and agents (a) What is Permitted Regulation X specifically permits: • Payments for services actually rendered by attorneys, title companies, lenders, and real estate brokers and also for real estate agents "pursuant to cooperative brokerage and referral arrangements or agreements."

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(b) Key Referral Fee Reminders • Don't pay referral fees to providers of settlement services other than pursuant to a referral agreement with another real estate broker. RESPA generally forbids paying someone for the mere referral of business.

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IV. RISK MANAGEMENT ISSUES

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• No "gifts" or fees may be given to individuals who refer business to settlement service providers.

• When someone performs a service, that party should be paid a fee that is reasonably related to the benefit received. He or she should not be given an excessive payment that blatantly announces itself as a reward for steering business in the direction of a certain company.

• Don't ask for or receive fees for referring business. There is a statutory exemption for broker-to-broker referrals and agreements between brokers and agents. Therefore a real estate licensee should never ask to receive or accept fees for referring business unless he has an established written broker-to-broker or broker-to-sales agent fee arrangement.

No licensee shall knowingly pay any part of a fee, commission, or other compensation received by such licensee in buying, selling, exchanging, leasing, auctioning, or renting any real estate except to another licensee through the licensee‘s responsible broker.

For more information on RESPA referral fee regulations, refer to Section 8 of RESPA (12 U.S.C. 2607).

Resources http://www.hud.gov/offices/hsg/sfh/res/respa_hm.cfm (Consumer info & procedures, sample complaint letter, industry statute, proposed rules, Congressional report, etc.) http://www.realtor.org/government_affairs/respa/index.html (NAR’s take on RESPA – “RESPA Realities,” HUD updates, how to comply, marketing agreements, etc.) http://www.respareform.com/ http://www.respanewsupdate.com/ (Latest on RESPA news, weekly Web casts for the Real Estate Community)

B. Antitrust (1) Summary of Principal Federal Antitrust Laws The basic statutes making up the body of law known as the antitrust laws are the Sherman Act, the Clayton Act, the Robinson-Patman Act, and the Federal Trade Commission Act. (a) THE SHERMAN ACT - This statute enacted in 1890 was the first modern United States antitrust law and remains the cornerstone of all the federal antitrust statutes. It establishes two broadly stated principles of antitrust policy: 1. Section 1 of the Sherman Act prohibits agreements, combinations or conspiracies between two or more persons, firms, corporations, or associations which unreason ably restrain trade.

2. Section 2 of the Act prohibits the monopolization or any attempted monopolization of any market for a particular product or service.

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These very general precepts of the Sherman Act have achieved specific meaning through a process of court interpretation that has continued for more than 90 years.

The selected cases most applicable to real estate brokers and the real estate industry

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It is not necessary to show a written contract to prove a violation of the Act. "Understandings," formal or informal, written or oral, express or implied, are enough for a court or jury to infer that an agreement has been reached. As the Supreme Court said in a leading antitrust case, "A wink of the eye or a shrug of the shoulder is often more important than a formal handshake." (b) THE CLAYTON ACT - The Clayton Act was enacted by Congress in 1914, and was the next major antitrust statute. Its approach differs from the Sherman Act in two basic ways: 1. While the Sherman Act applies to restraints of trade which have a present anti-competitive effect, the Clayton Act represents an effort to stop anti-competitive practices in the beginning by outlawing future conduct resulting in an unreasonable restraint of trade.

2. While the Sherman Act deals in broad principles, the Clayton Act is concerned with a limited number of specific subjects such as exclusive bidding arrangements (Section 3); acquisitions or mergers (Section 7); interlocking boards of directors (Section 8). (c) THE ROBINSON-PATMAN ACT - The Robinson-Patman Act enacted in 1936, amended the Clayton Act and deals with discrimination in prices charged various customers.

The basic purpose of the Robinson-Patman Act was to protect small businessmen by putting constraints on the ability of a large company to command price discounts by use of greater purchasing power. The Federal Trade Commission is the enforcing agency for this law. (d) THE FEDERAL TRADE COMMISSION ACT - The Federal Trade Commission Act authorizes the FTC to enforce these federal laws. Such authority is shared with the Department of Justice. The FTC also enforces Section 5 of the Federal Trade Commission Act, which prohibits "unfair methods of competition." and "deceptive practices." Under this general provision, the FTC has enjoined potentially anti-competitive conduct before it could ripen into a violation of any of the antitrust laws.

In addition to having the authority to seek injunctions, the FTC is authorized to sue in federal court to recover refunds for consumers who have been injured by violation of an FTC rule or cease and desist order.

C. Antitrust Compliance In antitrust cases, whether criminal prosecutions or civil treble damage suits, proof against the defendant is most likely to come from the defendant's own files and records or from statements made by the defendant or his associates. Thus, an antitrust compliance program must not only avoid actual violations of antitrust laws, but must also avoid creating or permitting the creation of files, records, documents, statements or conversations which might create an appearance of violation.

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It is impossible, of course, to formulate a set of guidelines to cover all situations at all times, but insofar as the principles of antitrust compliance can be stated in specific rules, it would be well advised to remember the following:

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have been compiled by the National Association of REALTORS® as Volume 2 of its publication “Antitrust and Real Estate.”

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1. DO NOT Discuss Your Business With Competitors – Do not discuss your business with competitors at any time, in any place, or under any circumstances, or have any personal or telephone conversations with competitors concerning commissions, fees, charges or any other business practices of your real estate business or those of the firm with which you are associated. This applies at social gatherings, on the golf course, while hunting, in the bar, cocktail parties, board functions and at all times and at all places. At association or board meetings, confine discussions to topics of association or board business directly involved in the purpose of the organization and the meeting. Attached as Addendum 1 is VAR’s basic antitrust policies as it relates to Realtor meetings.

2. Written Communications Must Be Clear and Explicit - When you discuss a real estate transaction or the superiority of your business practices over your business competitors, talk to your broker or associates in the firm with which you are associated. Regardless of how carefully you may phrase your letter or memorandum, things look much different in writing than they should sound when spoken between knowledgeable people. Of course, financial and economic data sometimes must be written but in many instances, any information relevant to business or legal relations can be communicated by talking, and talking only to those who have legitimate justification for receiving the information you are transmitting. More than one antitrust defendant has had his letter, correspondence, memoranda and written notes admitted in evidence against him for purposes for which the writer never intended. It is amazing how differently what you wrote sounds when it is read back to you in the grand jury room or during trial. All correspondence and memoranda must be clear and specific.

3. DO NOT Talk Unless You Know Who You're Talking To And What You're Talking About In any business, complete candor among trusted business associates is necessary. It is not necessary, however, to tell everyone your business. Inform only those who need to know such matters as how and in what manner commission or fee contracts were negotiated, how much business you're doing, what business prospects are, how many and which properties you have sold, and anything else which might be of interest to someone investigating your business for a reason you know nothing about. If you receive a telephone call from anyone who refuses to identify himself or who begins what amounts to a probing cross examination about your business practices, terminate the conversation as quickly and courteously as possible.

In this day of ever-improved recording devices for both telephonic use and miniature recording devices easily concealed in a room or on the person of an investigator, it is well to make it a rule in discussing business matters to speak as if you were being recorded.

4. DO NOT Deceive Yourself Or Let Anyone Else Deceive You Into Believing That Any Transgression Of The Antitrust Laws Has Little Risk Of Discovery -The federal government possesses extensive investigatory powers, such as grand juries and civil investigative demands, as well as ingenious and dedicated investigators. Also, in private litigation, parties have litigation discovery tools to examine corporate or firm records and documents and to compel testimony. Even though an antitrust violator may not keep records, its competitors or the injured parties may.

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In this age of photocopying, it is difficult to restrict distribution. Unexpected records such as telephone bills, expense accounts, a secretary's notes, engagement calendars or a forgotten written record may be uncovered. In a prosecution or suit for antitrust violations, a party may be faced with surprise witnesses such as former associates and employees and

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plea bargainers. Also, an alleged co-conspirator may take advantage of the antitrust division's leniency program and confess, thus perhaps avoiding indictment, a jail sentence and fines and keeping the tax-deductibility of civil damage payments.

5. DO NOT Use Such Terms As "Please Destroy When Read", "For Your Eyes Only", "No Copies", Or Similar Terms and Phrases - Experience has demonstrated that even if no copies are made, the original of such documents eventually end up in somebody's file.

Even when marked "personal and confidential," the document is usually retained by the recipient and eventually filed. When an antitrust investigation is underway or documents are produced on a civil investigative demand or in private antitrust litigation, such terms and phrases are red flags for the investigator or opposing counsel. All written documents must comply with the antitrust laws whether inspected or discovered and should not indicate or infer an attempt to conceal any document.

6. DO NOT-At Any Time-Use Any Of The Words And Phrases Which NAR's Program For Compliance Designated As "Dangerous" – Because these statements are so improper, incorrect and dangerous, they need to be emphasized here along with some other words and phrases.

• "We would like to charge a lower commission, but the board has a rule..."

• "This is the rate that all REALTORS® charge."

• "The MLS will not accept less than a 120 day listing."

• "Before you list with XYZ Realty, you should know that nobody is going to work on their listing."

• "If John Doe is really professional (or ethical) he would have joined the Board."

• "The Board requires that all REALTORS® force their sales people to join."

• "The best way to deal with John Doe is to boycott him" or "we don't worry about John Doe; we just don't show his listings."

• "If you valued your services as a professional, you wouldn't cut your commission."

• "No board member will accept a listing for less than 90 days."

• "Let him stay in his own part of town, this is our territory."

• "If he was really a professional, he wouldn't use part timers."

• "X is the going rate in this area."

• "We have to charge that commission since our rates are set by the Virginia Real Estate Board.”

• "The standard commission in this area is X." • "When I see that guy's signs, I just drive the prospect down another street."

• "We've all agreed that any commission below X is unfair."

• "Something's got to be done about that company, nobody can charge such a low commission and make a living."

• "That price-cutter has no business being a member of the board."

• "You will not get a lower commission from a REALTOR®."

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7. If In Doubt, Consult - No compliance program or manual can spell out all the answers to questions which may arise. Situations are bound to arise which create doubt. If you have doubts about the legality of any business practice, procedure or activity, consult your board executive officer, the broker under whose license you work or legal counsel knowledgeable about antitrust matters.

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8. Without Clearance: Don't Do It - If neither the board executive officer, an executive officer of your firm nor legal counsel will give clearance to a proposed business deal or activity with antitrust implications, don't do it.

D. Document Retention Policy For the purposes of antitrust issues documents should not be kept any longer than reasonably necessary and should be destroyed when their useful life is over.

E. Consequences and Costs of Failure to Comply.

If you are not persuaded by the positive approach to antitrust compliance consider some alternative practical reasons for compliance. Will an antitrust compliance program for VAR, its affiliated local boards of REALTORS® and its membership be cost effective? It is going to take a considerable expenditure of money, staff-time, and membership-time to institute and maintain a continuous, on-going antitrust compliance program. To make that judgment, consideration must be given to the awesome consequences and costs of the failure to carry on a continuous antitrust compliance program. Those who choose to ignore the antitrust laws or fail to educate themselves about such laws and develop sensitivity to antitrust issues risk very serious consequences and costs for themselves, those with whom they are associated, and their fellow REALTORS®.

(1) Criminal Prosecution - The criminal penalties for violating antitrust laws are severe, and the present enforcement trend is to prosecute not only the association, corporation, or firm involved, but also the officers, directors, staff, and employees personally. A violation of the Sherman Act, for example, is a felony for which any corporation may be fined up to one million dollars for each offense and an individual can be fined up to $100,000 and imprisoned for up to three years for each offense. The fines are not tax deductible.

Also if a taxpayer is indicted and subsequently pleads guilty or nolo contendere or is convicted, payments or damages in civil treble-damage actions are only one-third deductible. Jail sentences and probation, which by now are by no means uncommon, can be great personal tragedies. Furthermore, convicted felons incur many civil disadvantages with respect to voting, holding of public office and the like. The emphasis today in the Justice Department is on stronger and more frequent criminal enforcement. Nolo contendere pleas are usually opposed by the government, and larger fines and sentences are being sought.

(2) Private Treble Damage Suits - Antitrust laws also provide for civil penalties. Persons or businesses injured by violations of the antitrust laws may recover three times the amount of their damages, plus attorney's fees and all costs of litigation. The potentially enormous size of these judgments, particularly in a class action suit, can spell disaster for all real estate brokerage firms and boards of REALTORS® involved.

(3) Injunctions - The government and injured persons or businesses may also obtain injunctions against further antitrust violations. The severe requirements of these injunctions will handicap any brokerage business or board of REALTORS®.

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(4) Consent Decrees - To avoid the shocking expense of defending antitrust suits, some defendants elect to settle out of court by agreeing to consent decrees. However, these consent decrees can severely restrict an association's operations or a company's business, and, in some instances, the result is that the officers, directors and staff of a defen-

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dant from day-to-day carry on the operations under peril of contempt of court citations or threats of civil penalties of up to $10,000 per day. Conduct and practices which have not been adjudicated to be unlawful are often prohibited on consent decrees.

(5) Time - Antitrust litigation usually requires years of preparation before trial and many months of appeals. From the filing of suit to settlement of judgment, on the average may take from 4 to 5 years. Not only may the defendant board or real estate firm in an antitrust case face years of uncertainty, but the valuable time of REALTORS® and other personnel almost certainly will be spent in long hours of preparing testimony, giving depositions, producing documents, tabulating statistics and performing other necessary preparations for trial. It is almost impossible for board executives and REALTORS® in antitrust cases to appreciate the time lost and the expense involved until they actually experience serious antitrust litigation.

(6) High Cost of Antitrust Litigation - The cost of defending antitrust suits, civil or criminal, is astonishing. It is not at all unusual in criminal antitrust cases for the cost of litigation to exceed the fines imposed. Even defendants confident of acquittal are faced with the prospect of spending shocking amounts of money and countless days of employee time and effort in establishing their innocence. So called "simple" antitrust cases usually cost hundreds of thousands of dollars to defend. It is therefore imperative that REALTORS® involved in the real estate brokerage business not only comply with the antitrust laws, but also avoid even the suspicion of any violations.

(7) Adverse Publicity - Whether the antitrust case is civil or criminal, once the suit is filed, damages to the reputation and public image of both the local board as well as the individual defendants and especially the image of REALTOR® as an ethical and responsible business person are incalculable. Even if the government's prosecution or private plaintiffs treble damage suit against a REALTOR® is without merit and the cases are eventually won by the defendants, the bad publicity lingers on.

(8) Internal Strife and Tension - No matter how well organized and managed a local board or REALTOR® firm may be, once an antitrust investigation is launched or an antitrust suit is filed, internal strife and tension among the staff and employees is unavoidable. Personnel will be kept busy assisting in matters involving the investigation or in preparing for litigation, and some inevitably will seek to disassociate themselves from others whom they perceive to have contributed to the charge. The loss of work efficiency and production resulting from these conflicts is expensive and can be ruinous to any board or REALTOR® business.

(9) Resources http://www.usdoj.gov/atr/ (Includes press releases, speeches, cases, compliance assistance, victims’ rights, etc.) http://en.wikipedia.org/wiki/Antitrust (Basic definition for consumers as provided by the public.)

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http://www.law.cornell.edu/wex/index.php/Antitrust (Overview of antitrust law with links to key primary and secondary sources. From Cornell Law School's Legal Information Institute.)

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http://www.antitrustinstitute.org/about.cfm (American Antitrust Institute - independent Washington-based non-profit education, research, and advocacy organization. Their mission is to increase the role of competition, assure that competition works in the interests of consumers, and challenge abuses of concentrated economic power in the American and world economy.) http://www.ftc.gov/ftc/antitrust.htm (FTC’s Antitrust arm – Bureau of Competition – contact info, speeches, etc.)

F. Environmental Concerns (1) Background Environmental hazards and conditions are of increasing concern in real estate transactions because of the serious impact some environmental problems can have on the health and well-being of occupants or users of the property, and the fact that the presence of environmental hazards can substantially affect the value, salability and use of real property.

In some cases the cost of correction or removal of environmentally hazardous substances or conditions required by law, safety or prudential considerations may exceed the value of the property. In other cases, the cost of remediation may not be as dramatic, but the risks of failing to discover and resolve an environmental problem may be serious to property occupants or users.

Litigation regarding environmental hazards may involve property owners, tenants, real estate agents and their clients and customers. Agents may be subject to claims for not discovering or disclosing facts pertaining to hazardous sub-stances or conditions that they should have recognized and reported. Lenders, too, are becoming increasingly concerned and cautious about the environmental condition of properties purchased with mortgage loans they may make.

In many ways, the risks of environmental problems associated with real estate are similar to the issues confronting real estate professionals in the context of avoiding misrepresentation of more common features or conditions of property. The primary concern is that a purchaser may not be fully aware of or understand the condition of the property. The purchaser may seek to hold the real estate professional liable for damages based on the claim that the agent had a duty to disclose the problem to the purchaser before he became obligated to complete the transaction.

There are also important differences from the typical misrepresentation case. In the case of environmental concerns, the typical problems may be unfamiliar to real estate buyers and sellers and, in many cases, even to real estate professionals themselves. The problem of discovering the existence, nature or extent of an environmental problem is often more difficult than in the more common case of ordinary property defects, and may require special testing or the retention of specially qualified experts. Also, the remediation of environmental problems may be more difficult, more costly, more time-consuming, or it may be simply difficult to find firms qualified to perform such work.

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To minimize the risk of liability which might arise as a result of the presence of unrecognized environmental defects of real property, and to appropriately fulfill their legal and ethical duties and responsibilities to clients and customers, real estate agents should:

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• Be aware that environmental problems and issues may affect real estate and result in liability for sellers, brokers and agents.

• Learn and know the nature of the most common environmental problems affecting real estate, including the kinds of hazards presented to occupants and users of affected properties and the warning signs or “red flags” that indicate that such problems may be or are present.

Discuss with the seller any indications that an environmental problem may be present, reach an understanding and agreement on a course of action to correct the problem, and disclose the concern to potential buyers in the course of marketing the property.

• Be sure to disclose to potential property purchasers any environmental problems with a property that are known to be present, or any indications that certain problems may or are likely to be present. This includes sharing any environmental assessments that have been performed.

• Be aware of and comply with all duties and obligations imposed on real estate professionals or otherwise related to real estate and real estate transactions under local, state and federal laws, regulations and requirements.

• Be prepared to provide to concerned clients and customers information about environmental issues and hazards such as the brochures, pamphlets and other publications issued by federal, state or local government agencies. Such publications usually describe how to identify or test for environmental problems and how to remediate problems that are found to exist.

(2) Common Environmental Hazards This section provides a basic description of the most common environmental hazards and defects as well as more specific guidance on how brokers and agents can deal with and avoid or minimize their liability arising out of such problems. (a) Asbestos Definition Asbestos is a mineral fiber widely used in the past as thermal insulation because of its excellent fire and sound retardant qualities. The presence of intact asbestos-containing material is not itself a health hazard. A health hazard may occur, however, when asbestos-containing materials are disturbed by physical destruction, direct impact or mere decay and, as a result, asbestos fibers are released into the air. This most often happens to asbestos-containing materials that are “friable”—that is, those that crumble easily to the touch. Minute asbestos fibers that thereby escape into the air may be inhaled and, if inhaled in sufficient quantity, cause various types of cancer as well as the degenerative lung disease known as asbestosis.

10231 Telegraph Road, Glen Allen, VA 23059-4561

Identifying Asbestos Hazards Asbestos may be found in acoustical tiles, cement, floor tiles, roofing materials and insulating materials that are sprayed or wrapped on pipes and boilers. Like most environmentally hazardous substances, specialized and highly technical experience, knowledge and equipment is required to conduct the testing necessary to confirm the presence of asbestos or to determine whether health hazards from asbestos-containing materials are present.The possible existence of asbestos-containing materials may be evident from a visual inspection.

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• A fluffy, cotton-candy like material sprayed on ceilings or walls as a fire retardant.

• A granular, cement-like plaster that was either sprayed or troweled-on walls and ceilings for fireproofing and soundproofing purposes.

• Wallboard used for insulation that has sprayed or troweled on material behind it.

• Pipe or boiler insulation that may be felt-like or cement-like in appearance or may look like fibrous wrapping paper.

Actions Regarding Presence of Asbestos Remind the owner or occupants to use care to insure that the material is not disturbed (scraped, sanded, drilled through, etc.). Suggest further investigation to determine whether the material contains asbestos fibers. Environmental consultants or state and local health or environmental protection officials can perform testing to determine if the material contains asbestos, and can assess whether an asbestos-related hazard exists.

Inform parties to the transaction that you suspect or know asbestos is present. This allows the parties to seek more factual information from qualified sources and get advice on how to address the problem based on the facts that are currently known or later determined. (b) Formaldehyde Gas and UFFI Definition Formaldehyde is a gas emitted by a variety of common household materials including, most particularly, the thermal insulation known as Urea-Formaldehyde Foam Insulation, or UFFI. Formaldehyde is also emitted by materials used in plywood, furniture, carpeting, and draperies. When formaldehyde gas is released into building interiors, it may cause problems ranging from minor complaints of eye, nose and throat irritation to potentially serious health effects. It is important to note, however, that the most serious of these problems are not ordinarily caused by levels of formaldehyde gas commonly present in homes, and that different people react quite differently to exposure to various levels of formaldehyde gas.

The Consumer Product Safety Commission banned the installation of UFFI in 1982. An appeals court overturned the ban, but in doing so specifically noted that such reversal did not exonerate formaldehyde, and UFFI in particular, of health-based concerns.

Formaldehyde gas is generally recognized as a health threat or irritant, but there is dispute over whether such problems arise as a result of the amount of gas emitted by properly installed UFFI.

10231 Telegraph Road, Glen Allen, VA 23059-4561

Identifying Formaldehyde Gas and UFFI Insulation containing formaldehyde was a popular type of insulation in older homes, although it was also used in new construction. It is estimated that formaldehyde-type insulation was installed in a half-million homes in the U.S. Formaldehyde insulation often cannot be identified by sight, but it was generally installed by “blowing” it into walls and other spaces, and insulation installed in that fashion during the relevant time period may be suspected of being UFFI. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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Four common types of materials often contain asbestos:

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Actions Regarding Presence of UFFI Testing of the indoor air for formaldehyde can be done where a client or customer believes that action is necessary or if UFFI or other formaldehyde emitting compound may be present. You should disclose to buyers where formaldehyde is known or believed to be present. In some cases, removal of gas-emitting insulating material may also be necessary. (c) Lead Definition Lead is a heavy metal that is hazardous to health if ingested or inhaled. Lead can be extremely toxic. It impairs the physical and mental development of children and aggravates high blood pressure problems in adults. The EPA, the Department of Housing and Urban Development (HUD), and the Consumer Product Safety Commission (CPSC) have all moved to take action to restrict public exposure to lead and to prevent further discharge of lead into the atmosphere.

Resources http://www.realtor.org/libweb.nsf/pages/fg712 http://www.epa.gov/lead/ (d) Radon Gas Definition Radon is an invisible, odorless, and tasteless radioactive gas which is formed from the decay of the naturally occurring radioactive element, uranium, in the soil and rocks of earth. Uranium, as it decays, forms radium, which decays further to form radon gas.

Radon health risks are significant. Radon is the second leading cause of lung cancer in the United States, second only to cigarette smoking, and is estimated to cause between 5,000 and 20,000 deaths a year. When inhaled, radon particles may be deposited in the lining of the lung where they damage lung tissue and may transform normal cells into cancer cells. This risk increases with the amount of radon gas to which one is exposed and the length of time that exposure continues.

Identifying Radon Gas Radon, in amounts that can be hazardous to human health, can be found in any home.

Well-insulated and energy efficient homes tend to experience higher levels of radon gas than other homes because the radon becomes trapped inside the house and cannot escape to the open atmosphere where it is harmless. Radon enters into homes through minute openings in the foundation above the ground, such as cracks in the basement floor or walls, cracks in the slab or openings commonly built around plumbing. It can also enter through well water. Radon contamination has been found to be a problem in certain homes and schools, but ordinarily is not a problem in the upper floors of commercial, high-rise buildings.

10231 Telegraph Road, Glen Allen, VA 23059-4561 Phone: (804) 264-5033 Fax: (804) 262-0497 Toll Free: (800) 755-8271

The Environmental Protection Agency (EPA) has classified areas of the United States with potential radon problems based upon five factors: indoor air data, geology, aerial radioactivity, soils, and foundation. There are three groups in the classification: Zone One, Zone Two and Zone Three. However, EPA recommends that all homes be tested for radon, regardless of zone designation or geographic location.

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Testing of a home is the only way to determine if it has elevated levels of radon. You may be able to obtain clues as to the likelihood of the presence of radon from local, state, and federal environmental and health officials or from information about nearby homes.

The absence of elevated levels in even adjacent homes, however, does not establish that elevated levels are not present in any particular home.

The most simple radon test involves putting an activated charcoal filter canister in the basement for three to seven days and then returning it to a laboratory for analysis. The "alpha-track” sampler test method involves leaving the device in the home for a longer period, ranging from thirty days to as long as one year, before it is returned to a laboratory for analysis. Other testing methods are also available, including “continuous monitors" that provide results within 24 to 48 hours.

EPA has also published a pamphlet specifically directed at radon in the context of the home sale transaction: The Homebuyers and Sellers Guide to Radon, copies of which can be obtained from EPA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .........................................................

Another EPA radon publication of a more general nature is A Citizen’s Guide to Radon.

Actions Regarding Radon Gas Disclose to potential purchasers levels of radon in the home that exceed the Environmental Protection Agency’s recommended action level of 4 pCI/L. Inform the seller and buyer that remediation techniques for reducing elevated levels of radon are available. These involve “sealing the basement” to prevent further radon entry and/or installing ventilation devices. Remediation costs range from a few hundred to a few thousand dollars.

Obtain the EPA publications on radon from your regional EPA office. Providing prospective purchasers with copies of such publications permits them to make an informed choice about a home in which the presence of elevated levels of radon is known.

Information Regarding Radon in Real Estate Radon is an issue of concern…not panic. Radon is a “fixable” problem. The better a REALTOR® is informed and educated as to the issue of radon, the greater his ability to effectively and professionally address the radon issue with seller and buyer.

If an elevated radon level is confirmed, steps should be taken to reduce the radon level.

Because fixing a home often requires special knowledge, skills and tools, repairs are usually done by a special repair contractor call a radon mitigator. Remedies may include preventing radon from entering the home or removing radon gas from the home by installing ventilation systems. ......................................................... (e) Underground Storage Tanks

10231 Telegraph Road, Glen Allen, VA 23059-4561

Definition Underground storage tanks are, as their name suggests, buried tanks that contain, or previously contained, liquids or other materials which may be hazardous if discharged freely into the ground. Because such tanks or the piping associated with operation of the

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tanks often deteriorate and leak, they represent a potential problem. The EPA estimates that there are between 1.5 and 2 million underground storage tanks currently in use and a significant number of abandoned tanks. Only a small percentage of these are protected against corrosion, and EPA estimates that there are 100,000 leaking tanks with the number quickly rising. The presence of underground storage tanks on a property can represent a serious potential problem and source of liability for the owner, since leaking storage tanks pose severe contamination problems for soil and water supplies. Even a slow leak of one gallon per day can contaminate the water of a 50,000 person community to the point of endangering public health.

Federal law requires certain specific action with respect to particular types and sizes of tanks, whether they are currently being used or abandoned. Many states and some local jurisdictions have also adopted laws and regulations addressing underground tanks and any possible contamination of the surrounding site, so be sure also to check laws and regulations in your state. Where a tank exists, the seller should be sure to comply with all applicable requirements which, in some cases, means the removal of abandoned tanks.

Identifying Underground Storage Tank Hazards A physical examination of the property may provide clues to the possible presence of one or more underground tanks, since such tanks usually have an air vent that sticks out of the ground above the tank. Real estate agents ordinarily do not possess the technical expertise needed to accurately predict or determine the presence or condition of an underground storage tank on a property. Oil sheens in wet areas, piping or vents sticking out from the ground, or traces of concrete, metal or asphalt that may indicate former commercial use of the property may all suggest the presence of an underground tank. Particularly where such indicators are observed, the seller should be questioned concerning any knowledge he/she may have about the presence of such tanks.

Actions Regarding Underground Storage Tank Hazards Consult with the seller to determine whether underground storage tanks are known to be present on the property. Seek whatever information may be available from the seller if you observe any indication that a tank may be present. If you learn that a property does or may contain an underground storage tank, or if you know a gasoline station or fuel oil distribution center was formerly located on the property, you should advise the buyer that he may be prudent to have further investigation performed by a qualified environmental consultant or, where available, a government environmental protection department that will perform such an investigation. (f) Groundwater Contamination

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Definition Groundwater is the supply of fresh water under the earth’s surface. Groundwater sources are the principal water supply for approximately 50% of all residences either through on-site wells or the wells of a municipal or private water company. Groundwater contamination may occur when groundwater used as drinking water supply is also subject to discharge of pollutants from irrigation, industrial activities, permitted or un-permitted waste disposal or other potential contaminants. Clean up of contaminated groundwater

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Identifying Groundwater Contamination Typical sources of groundwater contamination include: • Leaking underground storage tanks and pipelines • Faulty septic systems • Hazardous and non-hazardous landfills • Excessive road de-icing • Run-off of agricultural pesticides and fertilizers • Mining activity Real estate agents do not ordinarily possess the technical knowledge or expertise needed to make a judgment about the quality of the drinking water or the likelihood that it has been or will be contaminated. Visual inspection of the property, may, however, reveal “red flags” pointing to or suggesting typical potential sources of contamination, for example, vent pipes for underground storage tanks. In addition to visual inspection, you should familiarize yourself with the area surrounding a property and maintain an awareness of reports of groundwater contamination from common sources such as commercial establishments, industrial parks, gasoline stations or any widespread use of pesticides or fertilizers near the property. (g) Electromagnetic Fields (EMFs) Definition Electromagnetic fields are sources of electric and magnetic energy that are created whenever electric current is flowing, such as in the use of electrical appliances or the transmission of electricity. Common sources of EMFs in the home are various electrical appliances (electric lights, toasters, clocks, electric blankets, hairdryers) and electric transmission and residential distribution lines.

Research to determine the effects of human exposure to EMFs has been ongoing for years, and continues today. To date, the results of that research are inconclusive, and do not establish either that EMFs are or are not harmful to human health.

Identifying EMFs Because of the equivocal nature of the research results, it is uncertain whether real estate professionals have any legal or professional duty or obligation to “look for” or disclose anything which might suggest the possibility of exposure to EMFs. While close proximity to overhead power transmission lines tends to indicate the possibility of EMF exposure on a particular site, the specific facts and circumstances are decisive in determining whether EMFs are in fact present and, if so, the strength of such fields present on the property. Moreover, common household appliances can and may create an equally or more significant EMF exposure problem.

10231 Telegraph Road, Glen Allen, VA 23059-4561 Phone: (804) 264-5033 Fax: (804) 262-0497 Toll Free: (800) 755-8271

Actions Regarding EMF Hazards There are presently no federal laws and believed to be no state or local laws specifically requiring real estate professionals or property owners to disclose the presence or possi-

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is very difficult and is almost always beyond the economic reach of individual property owners.

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bility of EMFs on a property. Until the research advances further and establishes conclusively the risks, if any, of EMF exposure, real estate professionals are probably best advised to equip themselves with information and publications to provide to parties expressing concern about EMFs. Such publications may be available from federal, state or local government agencies, or from private sources such as power companies. These publications provide useful information about potential hazards that EMFs may pose, and strategies that can be employed to reduce any such risks. (h) Waste Disposal Sites Definition Waste disposal sites may be authorized landfills used for disposing of community waste, landfills approved to receive industrial and agricultural hazardous wastes, unauthorized and illegal dump sites used by “midnight dumpers", or simply sites previously subject to industrial uses where wastes or other hazardous materials were intentionally or accidentally discharged on the site. State and federal law comprehensively regulate the generation, flow and disposal of hazardous and other solid wastes. But there are thousands of known and unknown hazardous waste sites that may be presenting a public health hazard by contaminating water and soil.

The potential presence of hazardous wastes or other contaminants on property poses certain economic and practical risks also. The Comprehensive Environmental Recovery, Conservation and Liability Act (“CERCLA” also known as the “Superfund” law) imposes on current and most prior owners of certain severely contaminated properties the obligation to clean up such properties or to bear the financial responsibility for cost incurred by the government in cleaning up the contamination. Although the Act contains an “innocent purchaser defense" to such liability, the nature and requirements of that defense are imprecisely stated in the Act, making it difficult for one to take advantage of the protection from liability provided by that defense. Where such liability exists, the costs of property clean up can be staggering, making lenders often unwilling to make loans on properties which are or may be so contaminated.

Identifying Waste Disposal Site Hazards Visual inspection of the property may identify red flags of problematic dump sites that war-rant further inquiry or investigation. Be vigilant for: • Depressions, mounds or soft spots that could indicate the possible presence of landfill.

• Tanks, vessels, piles of drums, etc. located above or below ground.

• Traces of concrete, metal or asphalt that could indicate prior commercial use.

• Ravines or earth embankments that could indicate former dumping on the site.

• Discoloring of soil or stressed vegetation that may be caused by contamination.

10231 Telegraph Road, Glen Allen, VA 23059-4561

Actions Regarding Waste Disposal Hazards Review any available information regarding former uses of the property. Aerial photographs from various geographic surveys can provide snapshots of property use over time. Consult the EPA or your state environmental agency for information about known waste disposal sites in the area that may affect the property, such as EPA-designed (or state-designated) Superfund sites. If either through physical inspection or research you

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uncover a red flag, advise potential purchasers of the information you have obtained and recommend that they seek expert assistance and appropriate investigation and testing to determine whether a site has been contaminated.

You should also recommend that the parties to a transaction involving a suspected hazardous waste site consult with state and federal environmental protection officials or local health and planning officials for information about any problems affecting the property. If property is suspected of being a waste disposal site leave detailed inspection to an environmental professional.

Mold : http://www.epa.gov/mold/ 3.Environmental Contacts Federal Government Offices U.S. Environmental Protection Agency (EPA) Public Information Center 401 M. Street S.W. Washington, D.C. 20460 202-260-7751 U.S. Department of Housing and Urban Development (HUD) 415 7th Street S.W. Washington, D.C. 20410 202-708-1422 Office on Energy and the Environment U.S. Department of Housing and Urban Development Washington, D.C. 20410 RCRA/Superfund Hotline 800-424-9346 (Outside Washington, D.C.) Toxic Substances Control Act (TSCA) Information Services (Also provides information on the EPA asbestos programs) 202-554-1404 Consumer Product Safety Commission CPSC Central Regional Center 230 South Dearborn Street Room 2944 Chicago, IL 60604-1601 312-353-8260

10231 Telegraph Road, Glen Allen, VA 23059-4561 Phone: (804) 264-5033 Fax: (804) 262-0497 Toll Free: (800) 755-8271

EPA Regional Office Region 4 61 Forsyth Street Atlanta, GA 30303-3104 404-562-9900 1-800-241-1754

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It will be imperative for all associates to comply fully with the requirements of the federal lead paint disclosure laws in all transactions where the law requires compliance. Penalties available under the law include triple damages plus attorney fees. Not completing the form completely and accurately can result in significant fines imposed on the broker by representatives of the EPA. http://www.epa.gov/lead/ (1) Disclosure Requirements The federal disclosure rules specifically require that sellers and landlords of most residential housing built before 1978 must: (a) Disclose the presence of known lead based paint (LBP) and LBP hazards (b) Provide buyers and tenants with any available records or reports about any LBP present in the housing (c) Provide buyers and tenants with a federally-approved lead hazard information pamphlet Offers to Purchase and leases must contain certain disclosures and acknowledgments.

Sellers must also provide buyers with an opportunity to inspect for LBR. Finally, real estate agents must ensure compliance with these requirements.

The new rules do not require that any testing be conducted for LBP, nor do they require the removal of such paint or hazards.

(2) Properties and Transactions Subject to LBP Rules The new EPA/HUD requirements for the disclosure of LBP apply to all transactions to sell or rent target housing, subject to certain exceptions. The following discussion specifies what types of residential properties are covered under the new LBP rules and those which are not subject to the rules' requirements.

(3) Target Housing "Target housing" means any housing constructed prior to 1978, except for housing for the elderly or persons with disabilities (unless any child who is less than 6 years of age lives in or expects to live in such housing), and except for any "0-bedroom" dwellings.

(4) Excluded Properties

10231 Telegraph Road, Glen Allen, VA 23059-4561 Phone: (804) 264-5033 Fax: (804) 262-0497 Toll Free: (800) 755-8271

(a) Housing for the Elderly (No Resident Children Under 6). Housing for the elderly means retirement communities or similar types of housing designed specifically for households where at least one person is 62 years of age or older at the time of initial occupancy. (b) Housing for Persons with Disabilities (No Resident Children Under 6). With both housing for the elderly and housing for persons with disabilities, the exclusion from the LBP disclosure rules is lost if children under the age of 6 live there or are expected to live there. The parties to any sales or lease transaction involving housing for the elderly or persons with disabilities where children under 6 live or are expected to live would need to comply with the federal LBP disclosure rules

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G. Lead Based Paint (LBP) Disclosure Requirements

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(c) “0-Bedroom" Dwellings. A “0-bedroom” dwelling means residential dwelling units where the living area is not separated from the sleeping area. This includes efficiencies, studio apartments, lofts, dormitory housing, military barracks and rentals of individual rooms in residential dwellings.

(5) Transactions Subject to LBP Rules Both sales and leases (includes subleases and oral leases) are included. Subleases are included so that the subtenant or sublessee (i.e., the new tenant) receives the LBP disclosures and information. Informal rental agreements not involving a written lease, for example, oral leases are included despite the difficulties in complying with the rules requirements during a process handled verbally without written documentation.

(6) Exempted Transactions (a) Foreclosure sales. (b) Leases of Housing Found to be Lead Free. Leasing transactions involving target housing that has been found to be LBP free by a certified inspector are excluded from the LBP disclosure rules. "Lead-based paint free housing" means target housing that has been found to be free of paint or other surface coatings that contain lead equal to or in excess of 1.0 milligram per square centimeter or 0.5 percent by weight. (c) Short-Term Leases of 100 Days or Less (No Renewals or Extensions). (d) Lease Renewals if Disclosures Done and No New Information. LBP disclosures need not be repeated for the renewal or extension of existing leases where the landlord previously disclosed all information required by the rules and no new information concerning LBP on the premises has come to the attention of the landlord. In situations with no formal renewal process involved, e.g., a month-to-month holdover after the expiration of a one-year lease term, "renewal" shall be interpreted to occur at the point where the parties agree to a significant written change in the terms of the lease such as a rent rate adjustment. Then disclosure would be required as to any new LBP information not previously disclosed to the tenant. (e) Purchase, Sale or Servicing of Mortgages.

(7) Agents Covered "Agent" means agents of sellers, landlords, tenants and buyers except for buyer's agents who receive all of their compensation from the buyer.

(8) Buyer Opportunity to Inspect for LBP The LBP disclosure rules require that sellers provide buyers with a 10-day opportunity to conduct an LBP risk assessment or inspection of the target housing before becoming obligated under the purchase agreement. The length of time may be shortened or lengthened by mutual agreement of the parties. This requirement does not mean that the buyer must be permitted to conduct an LBP inspection before signing a purchase agreement.

10231 Telegraph Road, Glen Allen, VA 23059-4561 Phone: (804) 264-5033 Fax: (804) 262-0497 Toll Free: (800) 755-8271

This requirement may be met by having an LBP inspection contingency in the offer, similar to the home inspection contingencies typically used in residential offers. There is no mandatory language or provision for this purpose, so the contingency may be negotiated by the parties. Thus, the terms and conditions for the conduct and completion of the LBP inspection or evaluation will be reached by mutual agreement and not by federal mandate.

A lead-based paint inspection contingency which is included in the LBP disclosure and

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acknowledgment addendum to the offer is discussed later. Buyers may choose to waive their opportunity to inspect for LBP. The rules do not contain any requirement for providing tenants with the opportunity to conduct an LBP inspection. Sellers may not reject an offer to purchase simply on the basis that it contains a lead inspection/contingency provision. They may, however, attempt to negotiate the terms and conditions of the provision.

(9) Timing of LBP Disclosures The rules only identify the latest point at which full disclosure must occur, that is, before the buyer or the tenant becomes obligated under a purchase agreement or lease.

(10) Agent Responsibilities Each agent involved in a sale or lease transaction shall be responsible for ensuring compliance with all the requirements imposed by the rules.

To ensure compliance, the agent must: • Inform the seller or landlord of his or her duties to disclose known LBP on the target housing.

• Furnish LBP records and reports and the EPA-approved lead hazard information pamphlet to buyers and tenants.

• Advise the seller that he or she must permit the buyer to have a 10-day opportunity or inspection contingency to conduct an inspection or evaluation of the premises with respect to LBP. • The seller and landlord must also be told about his or her duty to certify compliance with these obligations and retain a copy of a signed LBP disclosure and acknowledgment addendum.

• Certain specifically-prescribed LBP "Warning Language" must be included in sales contracts and leases.

• Ensure compliance with all of these requirements.

Ensuring compliance can be done by making sure that the seller or the landlord has performed all of these required activities, or by personally performing these activities on behalf of that party. If the agent has informed the client about all of his obligations under the federal LBP disclosure rule, the agent shall not be liable for the failure to disclose LBP to a buyer or tenant if the LBP is known by the seller or landlord but not disclosed to the agent. The new LBP disclosure rules require that sellers and landlords disclose to agents the presence of any known LBP as well as any additional information about the basis for the determination that LBP exists on the property, the location of any LBP on the premises, and the condition of painted surfaces. Sellers and landlords must also disclose to agents the existence of any available records or reports pertaining to LBP on the premises. The federal LBP rules provide that each agent shall ensure compliance with all the requirements of the rules. "Agent" is defined as any party who enters into a contract with a seller or landlord for the purpose of selling or leasing target housing. For real estate agents in sales transactions, this means all listing, selling, cooperative, and buyer's agents (except those paid only by the buyer). In rental transactions, this means property managers, and leasing and rental listing agents.

10231 Telegraph Road, Glen Allen, VA 23059-4561 Phone: (804) 264-5033 Fax: (804) 262-0497 Toll Free: (800) 755-8271

(11) Listing the Residential Property The listing agent will complete the property condition disclosure, and complete a listing contract that contains a termination of contract date. The following guidelines

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(a) Determine if the property is target housing. (b) Look for painted surfaces in bad condition while inspecting the property. (c) Advise the seller of his or her obligations under the LBP rules. (d) Ask the seller if he or she has any knowledge of LBP or LBP hazards on the property. (e) Obtain copies of any available LBP records pertaining to the property.

By the time the offer is accepted, the seller should have made any LBP disclosures, have them signed by the seller, buyer, listing agent and cooperating agent, and incorporated into the offer. In addition, the buyer should have received the LBP information pamphlet.

V. ADDITIONAL RESOURCES A. Internet Policy B. Fair Housing http://www.hud.gov/offices/hsg/sfh/res/respa_hm.cfm (– Consumer info & procedures, sample complaint letter, industry statute, proposed rules, Congressional report, etc.) http://www.realtor.org/government_affairs/respa/index.html (– NAR’s take on RESPA – “RESPA Realities,” HUD updates, how to comply, marketing agreements, etc.) http://www.respareform.com/ http://www.respanewsupdate.com/ (– Latest on RESPA news, weekly Web casts for the Real Estate Community)

C. Do Not Call https://www.donotcall.gov/default.aspx http://www.realtor.org/libweb.nsf/pages/fg707 http://www.ftc.gov/donotcall/ (– Rules, regulations, info on how to sign up, etc.) http://www.the-dma.org/government/donotcalllists.shtml (– Where Marketers can get lists of Do Not Call lists – by state. Note: Does not include VA, but has other states listed.)

D. Non Discriminatory/Harassment/Safety http://www.realtor.org/libweb.nsf/pages/fg201

E. Professional Courtesies 10231 Telegraph Road, Glen Allen, VA 23059-4561

F. Internet Marketing http://www.realtor.org/libweb.nsf/pages/fg203?OpenDocument

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detail the steps that must be taken by the listing agent to comply with the federal LBP rules.

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H. Property Management Procedures and Policies (not yet availabale) I. Opening a Real Estate Brokers http://www.realtor.org/libweb.nsf/pages/fg100?OpenDocument

J. Links to NAR site – small business administration http://www.realtor.org/rmomag.NSF/pages/Website200307213?OpenDocument

K. Do Not Call NAR Field Guide http://www.realtor.org/libweb.nsf/pages/fg707

L. Agent Safety http://www.realtor.org/libweb.nsf/pages/fg201

M. Internet Marketing http://www.realtor.org/libweb.nsf/pages/fg203?OpenDocument

N. Opening a Real Estate Brokerage http://www.realtor.org/libweb.nsf/pages/fg100?OpenDocument

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G. Relocation Procedures and Policies (not yet availabale)

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Virginia Association of REALTORS® Antitrust Policy – April, 2006 A goal of the Virginia Association of REALTORS® is to improve the level of products and services offered by its members to the public and to assist customers in comparison shopping for products and services. It is the policy of the VAR to comply strictly with the antitrust laws, and in furtherance of this goal, VAR has adopted the following policy: (1) Company Policies. Members shall not discuss with any competitor individual company policies relating to prices or related types of sensitive information, including (a) commission levels, fees, business expenses or other business information or policies which would allow or encourage price fixing or maintenance; (b) bids on contracts for particular properties or any information which would allow or encourage bid rigging; (c) a firm’s competitive business decisions; (d) duration or types of listing agreements the firm will enter into or the form of compensation the firm will accept or negotiate; (e) the compensation offered or paid to a firm’s agents or employees; (f) plans concerning any proposed or existing customers, clients or territories; (g) any other actions that might be construed as concerted attempts to restrain competition, including joint attempts to control or affect prices, market conditions, marketing practices, customer choice, or the like.

(2) REALTOR® Association Membership. Membership in VAR and local REALTOR® associations is open to any individual or entity meeting the membership qualifications set forth in the bylaws of the association, without regard to the type of business models employed by its company. No member shall urge on the leadership or membership of VAR or of any local association or on any competitor that membership in any Realtor association be limited to companies practicing particular business models, or that membership be denied to companies or members practicing business models with which the member is in competition or with which the member is unfamiliar or uncomfortable.

Members shall take no action to influence the business conduct of customers or other members towards such competitors.

(3) Availability of Information. Statistical reporting by VAR will be voluntary and will relate to general market trends and comparisons of past transactions of general interest. Data collection will not be limited to the membership but will generally deal with the market as a whole, and the results will be available to non-members for a reasonable fee. The development of guidelines and standards relating to the accumulation, dissemination and use of such information will be open to wide participation by affected parties, and adherence to the guidelines or standards will be strictly voluntary. In conducting any collective research, VAR will take care to avoid anticompetitive effects. General historical statistical data collected by VAR is for use and analysis by individual members and companies and should not be discussed among competitors at organized functions or otherwise.

10231 Telegraph Road, Glen Allen, VA 23059-4561

(4) Conduct of Meetings. Topics that may give an appearance of an agreement that would violate the antitrust laws may not be discussed at VAR meetings. VAR counsel and staff are well versed in antitrust matters, but the presences of counsel or staff at a meeting should not invite discussion of matters that violate the letter or spirit of this policy or the antitrust laws. It is the responsibility of each member in the first instance to avoid raising improper

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subjects for discussion. However, if discussion of any inappropriate topics occurs at any meeting, all members present should openly disassociate themselves from such discussions, and if the discussions do not end immediately, the meeting should be brought to a prompt adjournment by the person in charge of the conduct of the meeting. Committee chairs and others conducting meetings will find that adherence to prepared agendas for all VAR meetings will reduce the likelihood of inappropriate discussions.

Members should also be aware that informal or social settings are inappropriate for discussion of the topics described in this policy, and that casual comments – even those made in jest – might have serious antitrust implications.

This policy statement has been prepared to assure that VAR members, and especially participants in VAR and other Realtor association meetings, are aware of their obligations under antitrust law. Consequently, members conducting or participating in meetings of any Realtor association shall see to the strict enforcement of this policy. Members with questions about antitrust issues should contact VAR counsel or seek other competent advice in all cases involving specific situations as they arise, or when in need of guidance.

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Employee Manual You’re Part of the “Home Team”

As a member of the real estate firm’s Home Team, you will be expected to contribute your talents and energies to improve the environment and quality of the Company, as well as the Company’s services. This includes performing at a satisfactory level and maintaining a good team attitude.

We are dedicated to two standards: 1.To provide our customers and clients with the best quality of service.

2.To provide you with wages and benefits comparable to others doing similar work within the industry and within the region.

Your Various Benefits With The Real Estate Firm You may not have thought about it, but the value of your benefits amounts to a considerable sum each year in addition to the wages or salary you earn.

Some of the benefits we provide for eligible employees each year include: Dental Insurance – optional Disability Leave of Absence Funeral (Bereavement) Leave Group Term Life Insurance Health Care/Hospitalization Insurance Paid Holidays Paid Vacations Personal Leave of Absence Retirement Plan Sick Leave The Purpose of this Manual This Manual has been prepared to inform you about the real estate firm’s history, philosophy, employment practices and policies, as well as the benefits provided to you as a valued employee and the conduct expected from you.

10231 Telegraph Road, Glen Allen, VA 23059-4561

No Employee Manual can answer every question. It is in our person-to-person conversations that we can better know each other, express our views, and work together in a harmonious relationship. Accordingly, we encourage personal communication.

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We hope this Manual will help you feel more comfortable and help you understand the real estate firm’s culture. We depend on you – your success is our success.

Please do not hesitate to ask questions. Your Manager will gladly answer your questions. We believe you will enjoy your work and your fellow Employees, Agents and Managers here. We also believe you will find the real estate firm a good place to work.

We ask that you read this Manual carefully, and refer to it whenever questions arise.

Our policies, rules and benefits, as explained in this Manual, may be changed from time to time as business, employment legislation, and economic conditions dictate.

If and when provisions are changed, you should be given replacement pages for those that have become outdated.

Notice The statements contained in this employee Manual are intended to serve as general information and guidelines regarding the real estate firm and its existing policies, procedures, practices of employment and employee benefits. This Manual is not a contract of employment, express or implied, and is not a guarantee of employment for a definite term. Employees are employed at-will and either the employee or the real estate firm may terminate an employee’s employment at any time, with or without cause, and with or without notice. The real estate firm may, from time to time, clarify, amend, supplement or eliminate the information contained in this Manual, with or without notice.

No one other than the real estate firm Management may alter or modify any of the policies, procedures, practices or benefits contained in this Manual.

TABLE OF CONTENTS What you can expect from the real estate firm . . . . . . . . . . . . . . . . . . . . . . . . . . .1-1 What the real estate firm expects from you . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1-2 I. Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Section 2

10231 Telegraph Road, Glen Allen, VA 23059-4561

Personnel Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-1 Your Personnel File . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-1 Employment Classifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-2 & 2-3 Full-time Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-2 Part-time Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-2 Temporary Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-2 “Non-Exempt” and “Exempt” Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-3 Employment Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-4 thru 2-13

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Anniversary Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-4 At-Will Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-4 Business Hours . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-4 Confidential Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-4 Driver’s License and Driving Record . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-5 Former Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-5 Anti-Harassment Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-5 Prohibition and deterrence of workplace violence . . . . . . . . . . . . . . . . . . . . . . . .2-9 How You Were Selected . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-11 Introductory Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-11 Job Descriptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-12 Knowledge of the Real Estate Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-12 Outside Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-12 Proof of U.S. Citizenship and/or Right to Work . . . . . . . . . . . . . . . . . . . . . . . . . .2-12 We Need Your Ideas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-13 Standards of Conduct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-14 thru 2-17 Disciplinary Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-14 Complaints/Grievances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-17 Dismissal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-17 II. Compensation & Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Section 3 Wage & Salary Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3-1 thru 3-4 Basis for Determining Pay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3-1 Deductions from Paycheck (Mandatory) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3-1 Deductions (Other) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3-2 Direct Deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3-2 Error in Pay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3-2 Overtime Pay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3-2 Work Performed on Company Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3-3 Pay Cycle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3-3 Reporting Time Pay – Inclement Weather & “Acts of God” . . . . . . . . . . . . . . . . .3-3 Time Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3-3 Mileage Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3-4 Performance & Compensation Reviews . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3-5 Performance Reviews . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3-5 Compensation Reviews . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3-5 Work Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3-6 thru 3-7 Absence or Lateness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3-6 Attendance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3-6 Excessive Absenteeism or Lateness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3-6 Record of Absence or Lateness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3-7

10231 Telegraph Road, Glen Allen, VA 23059-4561

III. Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Section 4

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The Benefits Package . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4-1 Eligibility for Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4-1 Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4-2 Recognized Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4-2 Holiday Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4-2 Vacations and Other Paid Leaves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4-3 thru 4-5 Accumulation Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4-3 Funeral (Bereavement) Leave . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4-3 Jury Duty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4-4 Personal Leave . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4-4 Sick Leave . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4-5 Unpaid Leaves of Absence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4-6 thru 4-7 Disability and other Leaves of Absence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4-6 Military Leave . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4-6 Personal Leave of Absence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4-6 IV. Insurance Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Section 5 Group Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5-1 Termination of Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5-1 V. Other Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Section 6 Parking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6-1 Personal Phone Calls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6-1 Smoking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6-1 Substance Abuse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6-1 Traffic Violations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6-2 VI. Retirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Section 7 Retirement Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7-1 VII. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Section 8 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8-1 VIII. Acknowledgment of receipt of the Real Estate Firm’s Employee Manual . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Section 9 Document for signing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9-1

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What You Can Expect From The Real Estate Firm The real estate firm’s established employee relations policy is to: 1.Select people on the basis of skill, training, ability, attitude, and character without discrimination with regard to age, sex, color, race, creed, national origin, religious persuasion, marital status, political belief, or disability that does not prohibit performance of essential job functions.

2.Pay all employees according to their effort and contribution to the success of our business.

3.Review wages, employee benefits and working conditions constantly with the objective of providing maximum benefits in these areas, consistent with sound business practices.

4.Provide paid vacations and holidays to all eligible employees.

5.Provide eligible employees with medical, disability, retirement and other benefits.

6.Dedicate ourselves to constantly improving service to our clients and customers.

7.Develop competent people who understand and meet our objectives, and who accept with open minds the ideas, suggestions and constructive criticisms of fellow employees.

8.Assure employees, after talking with their managers, an opportunity to discuss any problem with the owners of the real estate firm.

9.Make prompt and fair adjustment of any complaints which may arise in the everyday conduct of our business, to the extent that is practicable.

10. Respect individual rights, and treat all employees with courtesy and consideration.

11. Maintain mutual respect in our working relationship.

12. Promote employees on the basis of their ability and merit.

10231 Telegraph Road, Glen Allen, VA 23059-4561 Phone: (804) 264-5033 Fax: (804) 262-0497 Toll Free: (800) 755-8271

13. Keep all employees informed of the progress of the real estate firm, as well as the company’s overall aims and objectives.

14. Do all these things in a spirit of friendliness and cooperation so that the real estate firm will continue to be known as “a great place to work”!

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What The Real Estate Firm Expects From You ®

Your first responsibility is to know your own duties and how to do them promptly, correctly and pleasantly. Secondly, you are expected to cooperate with Management and your fellow employees and maintain a good team attitude. How you interact with fellow employees and those whom the real estate firm serves, and how you accept direction can affect the success of the company. In turn, the performance of one department can impact the entire service offered by the real estate firm.

Consequently, whatever your position, you have an important assignment: perform every task to the best of your ability. The result will be better performance for the Company overall, and personal satisfaction for you.

Employees are expected to display good judgment, diplomacy, and courtesy when dealing with Company Associates and the public; and to maintain the highest standards of personal and professional conduct and ethics.

Employees have a responsibility to fulfill particular job responsibilities and duties promptly, efficiently and to the best of their ability.

Although each employee is primarily responsible for the fulfillment of the responsibilities of his or her job, all employees must work together to achieve the objectives of the Company. Cooperation is extremely important. It will, therefore, be necessary for all employees to assist from time to time on specific assignments unrelated to their particular job description. It is also expected that when any employee has spare time during the course of a given day, that employee will check with other employees to see if assistance is needed.

Visitors should be welcomed and identified immediately upon entering the office.

Personal visitors may be necessary during working hours, but they should be limited in time and frequency and when possible, made during lunch.

Telephones are to be answered in an upbeat, pleasant and enthusiastic manner and always within the first three rings. Above all, courtesy is foremost, and rudeness, even if someone is being rude to you, is never tolerated.

The telephone is for Company business and is not to be used for personal conversation. Only personal calls of an urgent nature may be made.

Complaints received from the public or Company Associates should be directed to Management. Staff should not try to answer questions or complaints in which they are not trained and/or of which they are not knowledgeable.

10231 Telegraph Road, Glen Allen, VA 23059-4561 Phone: (804) 264-5033 Fax: (804) 262-0497 Toll Free: (800) 755-8271

An “open door” policy is maintained by Management with the staff to address problems and complaints. Should a staff member have a complaint or grievance, the staff member should try to resolve same with Management.

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If the matter is not resolved at this level, Management will arrange a meeting with the president, the staff member and Management. The president will review the complaint and render a final decision. A record of complaints and/or grievances as well as decisions rendered will be maintained in the employee’s personnel file.

It is important that all employees orient themselves to office policies and procedures and use this manual as a source of interpretation.

You are encouraged to grasp opportunities for personal development that are offered to you. This Manual offers insight on how you can positively perform to the best of your ability to meet and exceed our expectations.

We strongly believe you should have the right to make your own choices in matters that concern and control your life. We believe in direct access to Management. We are dedicated to making the real estate firm an organization where you can approach your manager, or any member of Management, to discuss any problem or question.

We expect you to voice your opinions and contribute your suggestions to improve the quality of our Company. We are all human, so please communicate with each other and with Management.

Remember, you help create the healthful, pleasant and safe working conditions that the real estate firm intends for you. Your dignity and that of fellow employees, as well as that of our customers and clients, is important. The realty firm needs your help in making each working day enjoyable and rewarding.

The real estate firm is an equal opportunity employer. It does not discriminate on the basis of any protected category, including but not limited to, race, age, sex, national origin, creed, color, disability or religion. We do not tolerate discrimination or retaliation in the workplace and engaging in any inappropriate conduct could lead to disciplinary action, up to and including termination.

1-3 Personnel Administration The task of handling personnel records and related personnel administration functions at the real estate firm is assigned to your respective manager. Questions regarding insurance, wages, and interpretation of policies may be directed to him/her.

Your Personnel File 10231 Telegraph Road, Glen Allen, VA 23059-4561 Phone: (804) 264-5033 Fax: (804) 262-0497 Toll Free: (800) 755-8271

Keeping your personnel file up-to-date can be important to you with regard to pay, deductions, benefits and other matters. Coverage or benefits that you and your fami-

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ly may receive under the real estate firm’s benefits package could be negatively affected if the information in your personnel file is incorrect. Please notify your Manager of any pertinent changes.

You may see information which is kept in your own personnel file if you wish; please ask your Manager.

2.1 Employment Classifications Full-time Employees At the time you are hired, you are classified as full-time, part-time or temporary and are also told whether you qualify for overtime pay. Unless otherwise specified, the benefits described in this Manual apply only to full-time employees. All other policies described in this Manual, and communicated by the real estate firm apply to all employees, with the exception of certain wage, salary and time off limitations applying only to “non-exempt” (see the definition that follows) employees. If you are unsure of into which job classification your position fits, please ask your Manager.

An employee who has successfully completed the Introductory Period (see the Employment Policies section for definition) of employment and who works at least 35 hours per week (1750 hours per year) is considered a full-time employee.

If you were a full-time employee and were laid off, you will be considered a full-time employee upon return to work, provided that you were not on layoff for longer than one year.

If you were a full-time employee and have been on an approved leave of absence, upon return you will be considered a full-time employee, provided you return to work as agreed in the provisions of your leave.

Part-time Employees An employee who works less than 1750 hours per year (approximately 35 hours per week) is considered a part-time employee. Part-time employees are not eligible for benefits described in this Manual, except as granted on occasion, by the real estate firm’s Management or to the extent required by state and federal laws.

Temporary Employees From time to time, the real estate firm may hire employees for specific periods of time or for the completion of a specific project. An employee hired under these conditions will be considered a temporary employee. The job assignment, work schedule and duration of the position will be determined on an individual basis.

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Normally, a temporary position will not exceed six months in duration, unless specifically extended by a written agreement. Seasonal employees are considered temporary employees.

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If you are a temporary employee, please understand that you are not eligible for any benefits described in this Manual, except as granted on occasion, or to the extent required by state and federal laws. Those temporary employees classified as “nonexempt” (see the definition that follows), and who work more than forty (40) hours during any work week will receive overtime pay.

2-2 “Non-Exempt” and “Exempt” Employees All employees are classified as either “exempt” or “non-exempt.” This is necessary because employees in certain types of jobs receive overtime pay for hours worked in excess of forty hours per work week. These employees are referred to as “nonexempt” in this Manual. This means that they are not exempt from (and therefore should receive) overtime pay.

NOTE: See “Wage & Salary Policies” in the “Compensation and Performance” section of this Manual for a full description of overtime payment policies.

Exempt employees are Managers, Officers, Owners and others whose duties and responsibilities allow them to be “exempt” from overtime pay. If you are an exempt employee, you should be advised that you are in this classification at the time you are hired, transferred or promoted.

2-3 Employment Policies Whether you are a new hire or a former employee returning to the real estate firm, you may feel a little strange in your new surroundings. This is a normal feeling and is expected. Your fellow employees, Managers and Agents, want to help you get off to a good start. Feel free to ask them for help concerning anything you do not understand.

One of the first things you should do is carefully read this Manual. It is designed to answer many of your questions about the practices and policies of the real estate firm, what you can expect from us and what we expect from you.

Anniversary Date The first day you report to work is your “official” anniversary date. Your anniversary date is used to compute various conditions and benefits described in this Manual.

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At-Will Employment All employment with the real estate firm is “at will” which means that your employment can be terminated with or without cause, and with or without notice, any time, at the option of either the real estate firm or yourself.

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Business Hours Our regular operating hours for employees are 8:45 a.m. to 5:00 p.m. Monday through Friday. Your particular hours of work and the scheduling of your lunch period will be determined and assigned by your Manager. Although the normal work week is 8:45 a.m. to 5:00 p.m., there may be occasions when we will require you to work more than the normal work day or work week in order to complete a project or event, or for other unusual circumstances.

Confidential Information Our customers and clients entrust the real estate firm with important information relating to themselves and their real estate transaction. The nature of this relationship requires maintenance of confidentiality. In safeguarding the information received, the real estate firm earns the respect and further trust of our clients and customers. Your employment with the real estate firm assumes an obligation to maintain confidentiality, even after you leave our employ. Any violation of confidentiality seriously injures our reputation and could be grounds for legal action by our clients and/or customers. Therefore, please do not discuss the real estate’s business with anyone who does not work for us, and never discuss business transactions with anyone who does not have a direct association with the transaction. Even casual remarks can be misinterpreted and repeated, so develop the personal discipline necessary to maintain confidentiality. If you hear, see or become aware of anyone else breaking this trust, you should report it to your Manager.

2-4 If you are questioned by someone outside of the real estate firm and you are concerned about the appropriateness of giving them certain information, remember that you are not required to answer, and that we do not wish you to do so. Instead, as politely as possible, refer the request to your Manager.

REMEMBER, ONLY LICENSED AGENTS ARE ALLOWED TO GIVE OUT INFORMATION ON LISTINGS AND/OR SALES. No one is permitted to remove or make copies of any the real estate firm’s records, reports, or documents without prior Management approval. Because of its seriousness, disclosure of confidential information could lead to disciplinary action, up to and including dismissal.

10231 Telegraph Road, Glen Allen, VA 23059-4561

Driver’s License and Driving Record Employees whose work requires operation of a motor vehicle must present and maintain a valid driver’s license and a driving record acceptable to our Insurance Provider. You may be asked to submit a copy of your driving record to us from time to time. Any changes in your driving record must be reported to your Manager immediately. Failure to do so may result in disciplinary action, up to and including dismissal.

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Former Employees Depending on the circumstances, the real estate firm may consider a former employee for re-employment. Such applicants are subject to our usual pre-employment procedures. To be considered, an applicant must have been in good standing at the time of his/her previous termination of employment with us and must have provided at least two week’s advance notice of their intention to terminate his/her employment with us.

ANTI-HARASSMENT POLICY I. Description The real estate firm is committed to providing a work environment free from all forms of harassment and disrespect, including sexual harassment. This policy applies to all employees. Management is responsible to ensuring that non-employees (vendors, contractors, customers, trades people, etc.) comply with this policy while on Company property. The real estate firm will not tolerate workplace harassment in any form. All forms of harassment violate an individual’s fundamental rights and personal dignity. The Company considers harassment, including sexual harassment, to be a serious offense. The purpose of this policy is to define harassment and to provide employees with procedures for the handling of claims to ensure that potential violations are fully remedied.

2-5 II. Definitions (A) Harassment can be based on race, sex, religion, national origin, color, disability, age or any other protected characteristic. Harassment generally includes, but is not limited to, verbal or physical conduct which interferes with an individual’s work performance or which creates an intimidating, hostile, or offensive work environment.

Such behavior or conduct can include the use of or threat of violence, taunting, use of obscene or profane language, kidding, racial or sexual jokes, racial, ethnic, or sexual slurs, the use of negative stereotypes, or other offensive and intimidating verbal or physical conduct relating to an individual’s race, national origin, or other protected characteristics.

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(B) Sexual harassment is a form of illegal sex discrimination that occurs when an employee is subjected to unwelcome conduct which is offensive to the individual and affects the terms or conditions of the individual’s employment. Sexual harassment can encompass a wide range of conduct, including, but not limited to, repeated offensive sexual flirtations, advances, or propositions, requests for dates, touching, pinching, patting, brushing up against, hugging, cornering, kissing, fondling, putting one’s arm around another or any similar physical contact considered unwelcome or intimidating. Sexual harassment may also include verbal conduct of a sexual nature;

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explicit or degrading verbal comments about another individual or his or her appearance; the display of sexually suggestive pictures, objects, cartoons, letter, notes or posters; repeated foul language or sexually-oriented jokes, remarks or gestures.

This type of behavior is strictly prohibited whether or not accompanied by an implied or stated promise of preferential treatment at work or of any negative impact on an employee’s employment status.

(C) A non-employee refers to any vendor, customer, contractor, or trades person who is present on Company property or interacting with employees in the performance of their duties.

III. Policy (A) The real estate firm is committed to providing a work environment free from all forms of harassment and disrespect. No employee, female or male, should be subjected to unsolicited and unwelcome sexual behavior or conduct. In addition, the Company will not tolerate any form of harassment on the basis of race, religion, national origin, color, disability, age, or any other protected characteristic. Any employee found to have engaged in any form of harassment, including sexual harassment, will be subject to disciplinary action, up to and including termination.

(B) The Company also specifically prohibits any form of retaliation against an employee for filing a complaint, reporting inappropriate behavior or cooperating in an investigation of harassment, including sexual harassment. Complaints of retaliation will be investigated immediately. Any employee or Manager found to have engaged in retaliation will be subject to disciplinary action, up to and including termination.

2-6 IV. Complaint Procedure

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(A) Employees believing they have experienced, witnessed or are aware of any form of harassment, including sexual harassment, must immediately report the matter to __________________________________ or your immediate Manager.

(B) In the event the complaint involves an employee’s immediate Manager or the employee is not comfortable approaching his/her immediate Manager, the employee should contact either _____________________ or _________________________.

(C) All complaints and any reported violations will be investigated immediately and appropriate action will be taken.

(D) Employees who bring a complaint, report an alleged violation or who are involved in the investigation of a complaint of harassment under this policy, including sexual harassment, will not be subject to any form of retaliation by the alleged harasser or any other employee, Manager or Owner.

(E) Employees found to have engaged in harassing conduct, including sexual harassment, are subject to immediate disciplinary action, including termination of employment.

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(F) Failure to report situations of harassment, including sexual harassment, if observed or have knowledge of, will be grounds for disciplinary action, up to and including termination.

(G) Being dishonest or failing to cooperate with an investigation will result in disciplinary action, up to and including termination.

2-7 ACKNOWLEDGMENT AND RECEIPT OF ANTI-HARASSMENT POLICY I acknowledge that I have received and read a copy of the real estate firm’s AntiHarassment Policy. I have had an opportunity to have any and all of my questions answered regarding this Policy, and I agree to abide by its terms during my employment or other association with the real estate firm. ___________________________________________ Name ___________________________________________ Date

2-8 PROHIBITION AND DETERRENCE OF WORKPLACE VIOLENCE The Company has adopted this policy prohibiting workplace violence and encouraging its deterrence because it recognizes that workplace violence is a growing nationwide problem which needs to be addressed by all employees. Consistent with this policy, acts or threats of physical violence, including intimidation, harassment, and/or coercion, which involve or affect the Company or which occur on Company property will not be tolerated.

Acts or threats of violence include conduct which is sufficiently severe, offensive, or intimidating to alter the employment conditions at the Company or to create a hostile, abusive, or intimidating work environment for one or several Company employees. Examples of workplace violence include, but are not limited to the following:

10231 Telegraph Road, Glen Allen, VA 23059-4561 Phone: (804) 264-5033 Fax: (804) 262-0497 Toll Free: (800) 755-8271

• All threats or acts of violence occurring on Company premises, regardless of the relationship between the Company and the parties involved in the threat.

• All threats or acts of violence occurring off the Company premises involving someone who is acting in the capacity of a representative of the Company.

• All threats or acts of violence occurring off the Company premises involving a Company employee if the threats or acts affect the legitimate interests of the Company.

• Any acts or threats resulting in the conviction of an employee or Agent of the Company, or of an individual performing services for the Company on a contract or

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Specific examples of conduct which may be considered threats or acts of violence include, but are not limited to, the following: • Hitting or shoving an individual.

• Threatening an individual or his/her family, friends, associates, or property with harm.

• The intentional destruction or threat of destruction of Company property.

• Harassing or threatening phone calls.

• Harassing surveillance or stalking.

• The suggestion or intimation that violence is appropriate.

• Unauthorized possession or inappropriate use of firearms or weapons.

To support this policy, and to further prevent against firearms or weapons being carried onto Company property, the Company reserves the right to conduct searches, as deemed appropriate by Management, of any employee’s locker, desk or other storage areas under the control of the employee, as well as the employee’s personal effects or automobile on Company property. The Company may also require that an employee empty his/her pockets for inspection. Areas subject to inspection include, but are not limited to, the inspection of parcels, packages, purses, lunch boxes, briefcases, lockers, work stations and desks. (Understand that discovery of other prohibited materials, such as drugs, alcohol, or drug paraphernalia, may subject an employee to discipline, up to and including dismissal.)

2-9 The Company’s prohibition against threats and acts of violence applies to all persons involved in the Company’s operation, including but not limited to Company personnel, contract, and temporary workers and anyone else on Company property.

Violations of this policy by any individual on Company property, by any individual acting as a representative of the Company while off Company property, or by any individual acting off of Company property when his/her actions affect the Company’s business interests will lead to disciplinary action (up to and including termination) and/or legal action as appropriate. No provision of this policy shall alter the at-will nature of the employment relationship at the Company.

Remember that the Company is not a police department and cannot be a guarantor of employee safety. Each employee shares responsibility for doing his/her part to prevent acts of violence. If an employee believes that he/she is a possible target of violence, because of events occurring either on or off Company premises, he/she must report this fact immediately.

10231 Telegraph Road, Glen Allen, VA 23059-4561 Phone: (804) 264-5033 Fax: (804) 262-0497 Toll Free: (800) 755-8271

Every employee and every person on Company property is encouraged to report incidents of threats or acts of physical violence of which he/she is aware. The report should be made to Human Resources Department, the reporting individual’s immedi-

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temporary basis, under any criminal code provision relating to violence or threats of violence which adversely affect legitimate Company interests and goals.

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ate supervisor, or another supervisory employee if the immediate supervisor is not available. However, in the event of an emergency, or any other circumstances which require police intervention or emergency medical attention, employees should call 911 prior to taking any other action to notify appropriate authorities. Nothing in this policy alters any other reporting obligation established in Company policies or in state, federal, or other applicable law.

2-10 How You Were Selected We carefully select our employees through written application, personal interview and possibly reference checks. After all available information was carefully considered and evaluated, you were selected to become a member of our team.

This careful selection process helps us find and employ people who are concerned with their own personal success and the success of the real estate firm; people who want to do a job well and who can carry on their work with skill and ability; and people who are comfortable with us and who can work well with our team.

Introductory Period Your first 90-days of employment at the real estate firm are considered an Introductory Period, and during that period you will not accrue benefits described in this Manual unless otherwise required by law. This Introductory Period will be a time for getting to know your fellow employees, your management team and the tasks involved in your job position, as well as becoming familiar with our procedures and operations. Your manager will work closely with you to help you understand the needs and processes of your job.

This Introductory Period is a try-out time for both you, as an employee, and the real estate firm, as an employer. During this Introductory Period, we will evaluate your suitability for employment, and you can evaluate us as well. At any time during this first 90 days, you may resign without any detriment to your record. If, during this period, your work habits, attitude, attendance or performance do not measure up to our standards, we may release you If you take approved time off in excess of five workdays during the Introductory Period, the Introductory Period may be extended by that length of time.

At the end of the Introductory Period, your Manager will discuss your job performance with you. This review will be much the same as the normal job performance review that is held for regular full-time or part-time employees on an annual basis.

During the course of the discussion, you are encouraged to give your comments and ideas as well.

10231 Telegraph Road, Glen Allen, VA 23059-4561 Phone: (804) 264-5033 Fax: (804) 262-0497 Toll Free: (800) 755-8271

Please understand that completion of the Introductory Period does not guarantee continued employment for any specified period of time, nor does it require that an employee be discharged only for “cause.” Employment remains at-will at all times, both before, during, and after the Introductory Period.

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A former employee who has been rehired after a separation from the real estate firm of more than one year is considered an Introductory employee during their first “90” days following rehire.

2-11 Job Descriptions We maintain a job description for each position in the real estate firm. When your duties and responsibilities are changed, your job description will be updated. Job descriptions are not intended to be exhaustive descriptions of job tasks, but rather guides of what is expected of a position. All employees of the real estate firm are expected to be “team” players and will often be instructed to perform tasks that do not appear on the job description, but are necessary to get the job done and ensure smooth performance of the Company.

Knowledge of Company After having learned to competently perform your own duties, your next step is to familiarize yourself with all aspects and services of our business. This can prove valuable to you, our agents, our clients and customers and the Company as well. We may provide additional “cross-training”.

Knowledge of the programs and services will help you avoid the “I do not know” syndrome. Our agents, staff and management’s confidence in you increases as you are able to answer their basic questions. However, please do not pretend you know the answer or try to guess the answer when you are uncertain. If you are unsure of the correct information, refer the inquiry to your Manager, or to a person more qualified to respond.

Outside Employment What you do on your free time is your own business. However, if you are employed by the real estate firm in a full-time position, we will expect that your position here is your primary employment. Any outside activity must not interfere with your ability to properly perform your job duties.

If you are thinking of taking on a second job, it would be wise to notify your Manager immediately. He or she will thoroughly discuss this opportunity with you to make sure that it will not interfere with your job at the real estate firm nor pose a conflict of interest.

10231 Telegraph Road, Glen Allen, VA 23059-4561

Proof of U.S. Citizenship and/or Right to Work Federal regulations require that before becoming employed, all applicants must complete and sign Federal Form I-9, Employment Eligibility Verification Form; and all applicants who are hired need to present documents of identity and eligibility to work in the United States.

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We Need Your Ideas Ask any of our employees who have worked with us for a long time and they will probably tell you of the many changes and improvements that have come about here at the real estate firm since they first joined us. We believe the person doing a job is in the best position to think of ways of doing it more easily, more efficiently, and more effectively. If you think of a better way of doing your job or the job of a fellow employee, discuss it with your Manager, who will welcome your suggestions and ideas.

2-13 Standards of Conduct The real estate firm has built its successes on a foundation of integrity and trust. We are committed to maintaining the highest standard of quality. By accepting employment with us, you have a responsibility to the real estate firm and to your fellow employees to adhere to certain rules of behavior and conduct. The purpose of these rules is not to restrict your rights, but rather to be certain that you understand what conduct is expected and necessary. When each person is aware that he or she can fully depend upon fellow workers to follow the rules of conduct, then our Company will be a better place to work.

Disciplinary Actions Unacceptable Activities Generally speaking, we expect each person to act in a mature and responsible way at all times. However, to avoid any possible confusion, some of the more obvious unacceptable activities are noted below. If you have any questions concerning any work or safety rule, or any of the unacceptable activities listed below, please see your Manager for an explanation. Questions may arise from time to time and you should feel free to ask your Manager about any questions you have. The real estate firm, in its sole discretion, shall determine the level of discipline necessary or warranted in each situation that occurs.

Occurrences of any of the following violations, because of their seriousness, may result in immediate dismissal without warning:

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1.Willful violation of any rule; any deliberate action that is extreme in nature and is obviously detrimental to the real estate firm’s efforts to operate successfully.

2.Negligence which endangers the life or safety of another person.

3.Being intoxicated or under the influence of a controlled substance while at work; use or possession or sale of a controlled substance in any quantity while on Company premises except medications prescribed by a physician which do not impair work performance.

4.Unauthorized possession of dangerous or illegal firearms, weapons or explosives

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on Company property or while on the job.

5.Engaging in criminal conduct or acts of violence, or making threats of violence toward anyone on company premises or when representing the real estate firm; fighting, or horseplay or provoking a fight on Company property, or negligent damage of property.

6.Insubordination or refusing to obey instructions properly issued by Management pertaining to your work; refusal to help out on a special assignment.

7.Theft of Company property or the property of fellow employees, unauthorized possession or removal of any company property, including documents, from the premises without prior permission from Management; unauthorized use of Company equipment or property for personal reasons; using Company equipment for profit.

2-14 8.Dishonesty; willful falsification or misrepresentation on your application for employment or other work records; lying about sick or personal leave; falsifying reason for a leave of absence; alteration of Company records or other Company documents.

9.Immoral conduct or indecency on Company property.

10. Conducting a lottery or gambling on Company premises.

11. Unsatisfactory or careless work; failure to meet production of quality standards as explained to you by Management; mistakes due to carelessness or failure to get necessary instructions.

12. Any act of harassment, sexual, racial or other; telling sexist or racial-type jokes; making racial or ethnic slurs.

13. Sleeping on the job; loitering or loafing during working hours.

14. Obscene or abusive language toward any Manager, employee, customer/client or Agent; indifference or rudeness towards a customer/client, Agent or fellow employee; any disorderly/antagonistic conduct on Company premises.

15. Failure to immediately report damage to, or an accident involving Company equipment.

16. Soliciting during working hours and/or in working areas; selling merchandise or collecting funds of any kind for charities or others without authorization by the real estate firm’s Management team during business hours, or at a time or place that interferes with the work of another employee on Company premises.

Unacceptable behavior which does not lead to immediate dismissal may, in the sole discretion of the real estate firm Management, be dealt with in the following manner: Discipline The Discipline Policy applies to all regular employees who have completed the introductory period.

10231 Telegraph Road, Glen Allen, VA 23059-4561 Phone: (804) 264-5033 Fax: (804) 262-0497 Toll Free: (800) 755-8271

This Guideline pertains to matters of conduct as well as the employee’s competence.

However, an employee who does not display satisfactory performance and accomplishment on the job may be dismissed, in certain cases, without resorting to the steps set forth in this policy.

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Managers generally should follow the three-step procedure outlined below. There may be particular situations, however, in which the seriousness of the offense justifies the omission of one or more of the steps. Likewise, there may be times when the real estate firm may decide to repeat a disciplinary step.

When a problem in these areas does arise, your Manager will coach and counsel you in mutually developing an affective solution. If, however, you fail to respond to coaching or counseling, or an incident requiring formal discipline, the following procedures will occur.

2-15 Step One: Oral Reminder Your Manager will meet with you to discuss the problem, making sure that you understand the nature of the violation and the expected remedy. The purpose of this conversation is to remind you of exactly what the rule or performance expectations is and also remind you that it is your responsibility to meet that expectation.

You will be informed that the Oral Reminder is the first step of the discipline procedure. Your Manager will fully document the Oral Reminder. Documentation of the incident will be placed in your file.

Step Two: Written Reminder If your performance does not improve or if you are again in violation of the real estate firm’s practices, rules or standards of conduct, your Manager, after reviewing the situation with the Management team, should discuss the problem with you, emphasizing the seriousness of the problem and the need for you to immediately remedy the problem.

Following the conversation, your Manager will write a memo to you summarizing the discussion. The original memo will go to you and a copy should be placed in your personnel file.

In the Written Reminder, your Manager should indicate the time frame in which your performance should improve.

Step Three: Decision Making Leave If your performance does not improve within the time frame as indicated in the Written Reminder, or if you are again in violation of the real estate firm’s practice, rules or standards of conduct, you will be placed on “Decision Making Leave.” The “Decision Making Leave” is the final step of our disciplinary Guideline.

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“Decision Making Leave” is a paid, one-day disciplinary suspension. Employees on “Decision Making Leave” will spend the following day away from work deciding whether to correct the immediate problem and conform to all of our practices, rules and standards of conduct, or to quit and terminate their employment with the real estate firm.

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If your decision following the “Decision Making Leave” is to return to work and abide by our practices, rules and standards of conduct, your Manager will write a letter to you explaining your commitment and the consequences of failing to meet this commitment. You will be required to sign the letter to acknowledge receipt. A copy of the letter should be placed in your personnel file.

You will be allowed to return to work with the understanding that if a positive change in behavior does not occur, or if another disciplinary problem occurs within the next 12 months, you will be terminated.

If you are unwilling to make such a commitment, you may be terminated.

2-16 Discipline Deactivation Step 1 (Oral Reminder) will be in effect for three months.

Step 2 (Written Reminder) will normally be in effect for three months.

Step 3 (Decision Making Leave) will normally be in effect for 12 months.

If no further performance problems occur during the active period, the current disciplinary action will be formally deactivated at the end of the appropriate time period. Your Manager should initiate a memo advising you of the inactive status of discipline and, when appropriate, commend you for performance improvement.

Complaints/Grievances If you have a complaint or grievance, you should first discuss it with your Manager to see if it may be satisfactorily resolved. If not, the real estate firm’s Management team or owners maintain an “Open-Door” policy regarding the concerns of employees, and you should feel free to discuss the matter with any of these individuals.

Grievances and complaints will be treated as personal and confidential to the extent possible.

Dismissal Employment and compensation with the real estate firm is “at will” in that you can be terminated with or without cause, and with or without notice, at any time at the option of either the Company or yourself, except as otherwise provided by law.

If your performance is unsatisfactory due to lack of ability, failure to abide by our rules or failure to fulfill the requirements of your job, you will be notified of the problem. If satisfactory change does not occur, you may be dismissed. Some incidents may result in immediate dismissal.

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Wage & Salary Policies It is the real estate firm’s desire to pay wages and salaries that are competitive with other employers in the marketplace in a way that will be motivational, fair and equitable, variable with individual and Company performance and in compliance with all applicable statutory requirements.

Application The real estate firm applies the same principles of fairness to all on the basis of skill, training, ability, attitude, and character without regard to age, sex, color, race, creed, national origin, religion or disability or any other protected characteristic.

Basis for Determining Pay Your pay generally is influenced by three factors: 1.The nature and scope of the job 2.What other employers pay their employees for comparable jobs 3.Individual performance Individual Pay An individual’s pay will depend on his or her sustained performance over time. Each year every employee will have a performance review with his/her Manager. During that review, significant performance events that occurred throughout the year will be discussed.

Deductions from Paycheck (Mandatory) The real estate firm is required by law to make certain deductions from your paycheck each time one is prepared. Among these are your federal, state and local income taxes and your contribution to Social Security as required by law. These deductions will be itemized on your check stub. The amount of the deductions may depend on your earnings and on the information you furnish on your W-4 form regarding the number of dependents/exemptions you claim. Any change in name, address, telephone number, marital status or number of exemptions must be reported to your Manager and Bookkeeping immediately, to ensure proper credit for tax purposes. The W-2 form you receive for each year indicates precisely how much of your earnings were deducted for these purposes.

Any other mandatory deductions to be made from your paycheck, such as courtordered attachments will be explained whenever the real estate firm is ordered to make such deductions.

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Deductions (Other) You may authorize the real estate firm to make additional deductions from your paycheck. Contact Bookkeeping for details and the necessary authorization forms.

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Direct Deposit Direct Deposit is mandatory for all of the real estate firm employees. The authorization agreement for automatic deposits is attached and must be completed by all new employees. The authorization Agreement along with a voided check from the account to which you wish to have your paycheck deposited must be attached to the Agreement, and both forms should be sent to the Bookkeeping Department (see attached SAMPLE).

Error in Pay Every effort is made to avoid errors in your paycheck. If you believe an error has been made, tell Bookkeeping immediately. They will take the necessary steps to research the problem and to assure that any necessary correction is made properly and promptly. The Company expects you to report any discrepancy in your pay, whether it is positive or negative.

Overtime Pay From time to time, it may be necessary for you to perform overtime work in order to complete a job on time. All overtime must be approved in advance by your Manager.

When it is necessary to work overtime, you are expected to cooperate as a condition of your employment. There are two types of overtime work: 1.Scheduled Overtime: Scheduled overtime work is announced in advance. If you need to be excused from this type of overtime please speak with your Manager.

2.Incidental Overtime: Incidental overtime is not scheduled; it becomes necessary in response to extenuating circumstances. It is extra time needed to complete work normally completed during regular hours. It may require you to return to the workplace for emergency work. The opportunity to perform incidental overtime will be given first to the employee who normally performs the task. If that employee cannot perform the overtime, the Manager will offer the overtime to a suitably qualified person who is available to perform the overtime work.

If you are a “non-exempt” employee and you perform overtime work, you will be paid one and one-half times your regular hourly wage for any time over forty hours per week that you work.

3-2 Work Performed on Company Holidays Full-time “non-exempt” employees who work on a Company holiday will be deemed to have worked overtime on that day and will be paid their overtime rate for hours worked regardless of the number of hours they work that work week.

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Pay Cycle Payday is normally the 15th and 30th or 31st day of each month for services performed for the period ending that day.

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Reporting Time Pay – Inclement Weather & “Acts of God” In the event that inclement weather, power/utility failure, fire, flood or some other “Act of God” keeps us from operating, you will receive your regular pay for that day, provided that we officially declare that it is closed for that time. Every effort will be made to provide you with advance notice in the event we will be closed. In the event the office does not close, a liberal vacation policy will generally be in effect. If severe weather conditions exist and our Management decides to close the real estate firm for the remainder of the day, you will be notified as soon as possible by your Manager. You will be paid for the remainder of the day.

Time Sheet We are obligated to keep accurate records of the time worked by all employees.

This is done by your Time Sheet. Your Time Sheet is the only way we know how many hours you worked and how much to pay you. Your Time Sheet is the permanent record of the time you arrived and departed as well as the record of sick time and vacation time used, etc. You are expected to complete your Time Sheet daily.

Falsification of your time sheet can be grounds for termination. Time Sheets should be signed by your Manager before turning them into Bookkeeping.

If you know in advance that you will be absent on the day when Time Sheets are due, you are expected to complete it and turn it in to your Manager in advance. In the event that you are unexpectedly absent on the day when Time Sheets are due, turn it in to Bookkeeping as soon as possible upon your return.

No one may record hours worked on another’s Time Sheet. Tampering with another’s Time Sheet is cause for disciplinary action, including possible dismissal, of both employees. Do not alter another person’s time sheet, or influence anyone else to alter your time sheet for you. In the event of an error in recording your time, please report the matter to your Manager immediately.

3-3 Mileage Compensation Staff will be reimbursed at the rate of .______ cents per mile traveling expense for the use of their vehicle on Company business approved by Management.

3-4 Performance & Compensation Reviews

10231 Telegraph Road, Glen Allen, VA 23059-4561 Phone: (804) 264-5033 Fax: (804) 262-0497 Toll Free: (800) 755-8271

Performance Reviews Your Manager is continuously evaluating your job performance. Day-to-day interaction between you and your Manager should give you a sense of how your Manager perceives your performance.

However, to avoid haphazard or incomplete evaluations, the real estate firm conducts a formal review once a year for each employee. Performance reviews will be con-

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During formal performance reviews, your Manager will consider the following things among others: 1. Attendance, initiative and effort 2.Knowledge of your work 3.Attitude and willingness 4.The quality and quantity of your work 5.The conditions under which you work The primary reason for performance reviews is to identify your strengths and weaknesses in order to reinforce your good habits and develop ways to improve in your weaker areas. This review also serves to make you aware of and to document how your job performance compares to the goals and description of your job. This is a good time to discuss your interest and future goals. Your Manager is interested in helping you to progress and grow in order to achieve personal, as well as workrelated goals, and perhaps he or she can recommend further training or additional opportunities for you.

In addition to individual job performance reviews, we periodically conduct a review of job descriptions to insure that we are fully aware of sufficient changes in the duties and responsibilities of each position and that such changes are recognized and adequately compensated.

Compensation Reviews Wage and salary increases are based on merit alone, not length-of-service or the cost-of-living. Having your compensation reviewed does not necessarily mean that you will be given an increase.

We conduct compensation reviews annually, following their annual performance review. Any wage or salary increases will appear in the pay period ending after the dates they are granted. Wage and salary increases may be retroactive in the case of late reviews, at the discretion of your Manager and our Ownership.

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10231 Telegraph Road, Glen Allen, VA 23059-4561

Work Schedule The normal work week consists of five days, from 8:45 a.m. to 5:00 p.m., Monday through Friday with up to one (1) hour allowed for lunch. Your schedule of daily work hours will be given to you by your Manager. You will be notified promptly whenever a change is necessary. Should you have any questions concerning your work schedule, please ask Management.

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ducted annually. New employees may be reviewed more frequently. A review may also be conducted in the event of a promotion or change in duties and responsibilities.

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Absence or Lateness From time to time, it may be necessary for you to be absent from work. The real estate firm is aware that emergencies, illnesses, or pressing personal business that cannot be scheduled outside your work hours may arise. Sick days and personal days have been provided for this purpose.

If you are unable to report to work, or if you will arrive late, please contact your Manager immediately. Give him/her as much time as possible to arrange for someone else to cover your position until you arrive. If you know in advance that you will need to be absent, you are required to request this time off directly from your Manager. He/she will determine when will be the most suitable time for you to be absent from your work.

When you call to inform us of an unexpected absence or late arrival, ask for your Manager directly. Please try to reach your Manager as early as possible, preferably before the office day begins. For late arrivals, please indicate when you expect to arrive for work. If you are unable to call yourself because of an illness, emergency or for some other reason, be sure to have someone call on your behalf. If your Manager is not available when you call, you may leave the information with another Manager or on voice mail.

Absence from work for three consecutive days without notifying your Manager or Management will be considered a voluntary resignation.

Attendance You are expected to be at your work station and ready to work at the beginning of your assigned daily work hours. When your work takes you away from your work station, please let your Manager know where you are going and how long you expect to be gone.

Be aware that excessive late arrivals could lead to disciplinary action.

Note: See “Excessive Absenteeism or Lateness” later on in this section for further information.

Excessive Absenteeism or Lateness In general, five absences in a 90-day period, or a consistent pattern of absence, will be considered excessive, and the reasons for the absences may come under question. Tardiness or leaving early is as detrimental to the real estate firm as an absence. Three such incidents in a 90-day period will be considered a “tardiness pattern” and will carry the same weight as an absence. Other factors, like the degree of lateness, may be considered.

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Please be aware that excessive absenteeism, lateness or leaving early may lead to disciplinary action, including possible dismissal.

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Record of Absence or Lateness If you are absent because of illness for three or more successive days, your Manager may request that you submit written documentation from your doctor. If you are absent five or more days because of illness, you may be required to provide written documentation from a doctor that you are able to resume normal work duties before you will be allowed to return to work. You will be responsible for any charges made by your doctor for this documentation.

Your Manager will make a note of any absence or lateness, and the reason, in your personnel file. Your attendance record will be considered when evaluating requests for promotions, transfers, leaves of absence, and approved time off, as well as scheduling layoffs, etc.

3-7 The Benefits Package In addition to receiving an equitable salary and having an equal opportunity for professional development and advancement, you may be eligible to enjoy other benefits which will enhance your job satisfaction. We are certain that you will agree that the benefits program described in this Manual represents a very large investment by the real estate firm, and we trust that you will avoid abusing any of the program’s benefits.

A good benefits program is a solid investment in the real estate firm and its employees. It not only insures the loyalty of long-time capable employees, it also helps to attract talented newcomers who can help us grow. We will periodically review the benefits program and will make modifications as appropriate to the organization’s condition.

Eligibility for Benefits If you are a full-time employee, you will enjoy all of the benefits described in this Manual as soon as you meet the eligibility requirements for each particular benefit.

If you are a part-time employee, you will enjoy only those benefits which are required by law to be afforded to you, provided that you meet the minimum requirements set forth by law and in the benefit plan(s).

During your introductory period, you will be provided these benefits as noted, where applicable.

NOTE: See “Introductory Period” in the “Employment” section of this Manual for further information.

10231 Telegraph Road, Glen Allen, VA 23059-4561

Temporary employees are not eligible for benefits.

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Bonus: The Company may, but is not in any way obligated to, offer a bonus at the end of the year. The amount of such bonus, if any, will be subject to the financial

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Holidays Only full-time employees are eligible for holiday pay. You are not eligible to receive holiday pay if you are a part-time employee or a temporary employee.

Recognized Holidays The following holidays are recognized by the real estate firm as paid holidays: New Year’s Day Labor Day Memorial Day Thanksgiving Day Independence Day Christmas Day

4-1 Designated holidays falling on a Saturday or Sunday will be observed on the preceding Friday or the following Monday at the discretion of Management.

From time-to-time, the real estate firm may grant additional paid holidays. Granting an additional specific paid holiday one year does not guarantee that the paid holiday will be granted in succeeding years and does not entitle staff members to additional paid holidays.

Holiday Policies You may take time off to observe your religious holidays. If available, a full day of unused (personal) leave or a vacation day may be used for this purpose, otherwise the time off is without pay. You must notify your Manager at least five business days in advance.

If a paid holiday occurs during your scheduled vacation, it will not count against your vacation time taken.

You are not eligible to receive holiday pay when you are on a leave of absence.

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10231 Telegraph Road, Glen Allen, VA 23059-4561 Phone: (804) 264-5033 Fax: (804) 262-0497 Toll Free: (800) 755-8271

Vacations Vacation is a time for you to rest, relax, and pursue special interests. The real estate firm has provided paid vacation as one of the many ways in which we show our appreciation for your loyalty and continued service.

Only full-time employees are eligible to receive vacation days. Eligible employees shall accrue vacation according to the following schedule.

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profits of the Company and the performance of the employee. The employee must be employed with the real estate firm at the time bonus is paid in order to receive it.

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For the first year of employment, the vacation year for each employee shall coincide with the anniversary date of employment. Employees employed form three months up to one year shall receive five days of vacation.

Employees employed from one year up to five years shall receive ten days of vacation beginning on January 1st of the year following your anniversary date of employment.

Employees can only use five days of vacation during the first six months of the calendar year and must use the remaining five days of vacation during the last six months of the calendar year. Deviations from the schedule must be approved in writing by Management.

Employees employed for more than five years shall receive ten days of vacation beginning on January 1st of each calendar year. In addition, these employees shall receive an additional day of vacation for every full year employed up to a maximum of five additional days. Employees can only use one-half of his/her total days of vacation during the first six months of the calendar year and must use his/her remaining one-half days of vacation during the last six months of the calendar year. Deviations from this schedule must be approved in writing by Management.

Every effort will be made to grant you your vacation at the time you desire. However, vacations cannot interfere with office operations and therefore must be approved by your Manager at least two weeks in advance. If any conflicts arise regarding requests for vacation time, preference will be given to the employee with most seniority.

Accumulation Rights Vacation time, sick leave etc. must be taken during the calendar year and may not be carried forward, nor will the Company reimburse the employee for time allotted but not used.

Funeral (Bereavement) Leave You are entitled to take up to three workdays with pay to attend the funeral and take care of personal matters related to the death of a member of your immediate family.

(A parent, step-parent, spouse, spouse’s parent, child, step-child, brother, step-brother, sister or step-sister.) Three days of paid funeral leave will be granted in the case of the death of a grandparent, your spouse’s grandparent or sibling, or any member of your extended family living in your home. Only regular full-time employees are eligible for paid funeral leave.

4-3 With your Manager’s approval, you may take up to one full day without pay to attend funerals of other relatives and friends. If you prefer, unused personal leave or a day of earned vacation may be used for this purpose.

10231 Telegraph Road, Glen Allen, VA 23059-4561 Phone: (804) 264-5033 Fax: (804) 262-0497 Toll Free: (800) 755-8271

Pay for a funeral leave will be made for actual time lost from work. If the death occurs at a time when work is not scheduled, payment will not be made. If a holiday

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Jury Duty It is your civic duty as a citizen to report for jury duty whenever called. If you are called for jury duty, we will permit you to take the necessary time off and we wish to help you avoid any financial loss because of such service. If you have completed your Introductory Period, the real estate firm will reimburse you for the difference between your jury pay and your regular pay, not to exceed 7.5 hours per day, for a maximum of ten business days.

You must notify your manager within 48 hours of receipt of the jury summons.

On any day or half-day you are not required to serve, you will be expected to return to work. In order to receive jury duty pay, you must present a statement of jury service and pay to your manager. This document is issued by the court.

Personal Leave As a full-time employee, and after your Introductory Period is completed, you are eligible to take two days of paid personal leave during each calendar year along with one day for your birthday. Personal leave time is intended to be used to accomplish personal business that cannot be accomplished during time other than your normal working hours. You are required to request personal leave time from your Manager in advance and obtain his or her approval.

If you are required to take a disability leave of absence, any accrued but unused personal leave will be paid at the time the leave commences.

If you are on an approved leave of absence for less than thirty (30) days, your personal leave eligibility will not be affected; should the leave extend beyond thirty calendar days, personal leave time will not continue to accrue.

In the event of an illness or injury which is covered by workers’ compensation insurance, this personal leave policy will not apply.

Personal leave may not be carried over and accumulated from year to year. Personal leave not used during a calendar year will be canceled out and not paid for.

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10231 Telegraph Road, Glen Allen, VA 23059-4561 Phone: (804) 264-5033 Fax: (804) 262-0497 Toll Free: (800) 755-8271

Sick Leave Sick leave begins to accrue with your first paycheck after the Introductory period to a maximum of five (5) days per year, 3.33 hours per month. Sick leave is for use only when an employee or another member of the immediate household is physically incapacitated for work due to illness. Each employee should consider such compensation as an earned privilege and not an obligation of the Company.

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or part of your vacation occurs on any of the days of absence, you may not receive holiday or vacation pay in addition to paid funeral leave.

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Employees are requested to notify Management by 9:00 a.m. of the day when absent due to illness. If an employee is absent for three or more consecutive days, a statement from a physician may be required.

Medical or dental appointments should be made at the beginning or end of the workday. Adequate notice (three days is suggested) must be given to Management.

If possible, routine medical or dental appointments should be scheduled after consultation with Management, in consideration of the Company’s workload. Medical or dental appointments requiring absence of one-half days or more must be charged to your sick leave. Absences due to serious illness or medial appointments of a member of your immediate family must be approved by Management.

Sick leave used will be recorded on the employee time sheet. Sick leave will be rounded off to one-hour increments. You will not receive payment for unused sick leave when employment is terminated. Sick days are non-cumulative.

4-5 Unpaid Leaves of Absence Occasionally, for medical, personal, or other reasons, you may need to be temporarily released from the duties of your job with the real estate firm, but may not wish to submit your resignation. Under certain circumstances, and at the sole discretion of the real estate firm, you may be eligible for an unpaid leave of absence.

Disability and other Leaves of Absence The real estate firm may grant an unpaid leave of absence for illness, disability, pregnancy or other reason. To request a disability leave of absence from your Manager, you should submit, or have someone submit for you, a statement of ill health, disability, or pregnancy from your doctor. An approved leave may be granted for up to 12 weeks. If necessary, you may request extensions in thirty (30) day increments for a maximum of one (1) year. Whenever possible, you are required to give as much notice as possible of your pending need for a leave of absence.

At the time the disability leave begins, any accrued personal leave or sick leave will be applied toward your time out of the office. Vacation time previously earned (but not used) at the time will also be paid if the employee so desires. These benefits do no continue to accrue during a leave of more than thirty (30) calendar days. This policy applies to all employees. Your group insurance booklet should be reviewed to determine your insurance coverage during a leave of absence.

Employees who must remain away from work for more than the period of time allowed or permitted by applicable law may be subject to termination. They are welcome to re-apply subject to the real estate firm’s usual hiring policies.

10231 Telegraph Road, Glen Allen, VA 23059-4561 Phone: (804) 264-5033 Fax: (804) 262-0497 Toll Free: (800) 755-8271

Military Leave Military leave provides job-protected time off from work for employees who need it

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for Military Service. Upon return from Military leave, the employee’s re-employment shall be handled in accordance with applicable law. Each employee should ask he/her Manager about how the Employee’s Benefits could be affected.

You are expected to notify your supervisor as soon as you are aware of the need to take Military leave.

Personal Leave of Absence In very special circumstances, the real estate firm may grant a leave of absence for a personal reason, but never for taking employment elsewhere or going into business for yourself. You should request an unpaid personal leave of absence from your Manager. A personal leave of absence must not interfere with the operations of your department or the real estate firm. Your Manager will submit your request to the appropriate member of Management for final approval.

4-6 A personal leave of absence may be granted for up to thirty (30) days. If your leave is extended for more than thirty (30) days, vacation and other benefits will no longer continue to accrue. Consult your group insurance booklet to determine your insurance coverage during a leave of absence. Failure to return from a leave at the time agreed will result in termination of employment.

Note: See “Returning From a Leave of Absence” later on in this section for further information.

While you are on any type of unpaid leave of absence from the real estate firm, you will be responsible for paying the total premiums for your coverage and that of your dependents while on leave. Failure to do so may result in loss of coverage and possible refusal by the insurance carrier to allow your coverage to be reinstated.

4-7 Insurance Coverage Group Insurance The real estate firm is interested in the health and well-being of both you and your family. The Company will review the plan options available.

5-1 Other Policies

10231 Telegraph Road, Glen Allen, VA 23059-4561

Parking You are encouraged to use the parking areas designated for our employees.

Remember to lock your car every day and park within the specified areas.

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Courtesy and common sense in parking will avoid accidents, personal injuries, damage to your vehicle and to the vehicles of other employees. If you should damage another car while parking or leaving, immediately report the incident, along with the license numbers of both vehicles and any other pertinent information you may have, to your Manager.

The real estate firm does not assume liability for any loss or damages you may sustain.

Personal Phone Calls We understand that from time-to-time it may be necessary to make or take personal telephone calls while working. Please keep your personal calls to a minimum and ensure that they do not substantially interfere with your work. You are permitted to make limited local area calls for essential personal business. Please make these calls during lunch if possible. Your Manager will determine whether your personal calls are interfering with your work.

Do not make long distance personal calls on any the real estate firm telephone. If you find it necessary to make long distance calls while working either call collect, use a personal telephone credit card, or pre-paid calling card. If you use your long distance code number please advise bookkeeping of the charges and pay accordingly. Violation may be grounds for termination.

Smoking The real estate firm discourages its employees from smoking. Smoking is regarded as a poor health habit which can detract from performance and is often offensive to co-workers and/or customers. While we cannot regulate employee conduct off the job or outside of work hours, we feel it is our responsibility to provide a workplace free of exposure to hazardous substances, and we have therefore established our facility and business as a smoke-free workplace. All employees are expected to abide by this policy while at work.

Substance Abuse The real estate firm is committed to providing its employees with a safe workplace and an atmosphere that is conducive to the safe and efficient conduct of business.

You are expected to be in suitable mental and physical condition while at work, allowing you to perform your job effectively and safely.

10231 Telegraph Road, Glen Allen, VA 23059-4561 Phone: (804) 264-5033 Fax: (804) 262-0497 Toll Free: (800) 755-8271

Whenever use or abuse of any mood altering substance (such as alcohol or other drugs) interferes with a safe workplace, appropriate action must be taken. We have no desire to intrude into our employees’ personal lives. However, both on-the-job and off-the-job, involvement with any mood altering substances can have an impact on our workplace and on the real estate firm’s ability to achieve its objectives of safety and security. Therefore, you are expected to report to the workplace with no mood altering substances in your body. While you may make your own lifestyle choices, we cannot accept the risk in the workplace which substance use or abuse

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may create. The possession, sale or use of illicit or mood altering substances at the workplace, or coming to work under the influence of such substances shall be a violation of safe work practices and will be subject to disciplinary action, including immediate dismissal.

The real estate firm recognizes that alcoholism/drug abuse may be treatable.

Therefore, employees who voluntarily seek assistance through a rehabilitation program may not be subjected to disciplinary consequences. However, voluntary participation in a rehabilitation program does not protect any employee from disciplinary consequences if the substance abuse policy is subsequently violated.

Nothing in this policy is construed to prohibit the real estate firm from its responsibility to maintain a safe and secure work environment for its employees or from invoking such disciplinary actions as may be deemed appropriate for misconduct arising out of the use or abuse of alcohol or drugs or both.

Traffic Violations If you are authorized to operate a Company vehicle in the course of your assigned work, or if you operate your own vehicle in performing your job, you will be considered completely responsible for any accidents, fines, or traffic violations incurred.

All traffic incidents or accidents which occur using Company vehicles must be reported to your Manager immediately.

6-1 Retirement Retirement Plan 1.Each company will determine plans available and communicate that information.

7-1 Termination While employees are free to terminate employment at any time and for any reason, non-exempt employees are asked to give a minimum of two weeks written notice.

Employees who voluntarily terminate employment will be asked to participate in an exit interview with Management.

Upon termination, it is the Company’s policy not to give a detailed employment reference to a prospective employer. The dates of employment and position(s) held will be the only information released. All other employment information will be considered confidential and released only after a written request is received from the terminated employee.

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THE REAL ESTATE FIRM ®

ACKNOWLEDGMENT AND ACCEPTANCE OF THE COMPANY EMPLOYEE HANDBOOK I acknowledge that I have read the real estate firm’s Employee Handbook. I have had an opportunity to have any and all of my questions answered regarding this handbook, and I agree to abide by its terms during my association with the real estate firm.

I further understand this policy is the property of the real estate firm and not to be copied or shared with anyone outside of the Company without the express permission from Management of the real estate firm.

I agree to return any copies of the policy manual upon my departure.

_________________________________________________________ Agent’s Name

_________________________________________________________ Agent’s Signature

_________________________________________________________ Date

9-1 AUTHORIZATION AGREEMENT FOR AUTOMATIC DEPOSITS (CREDITS) Company Name ______________________________________________ Company ID No. _____________________________________________ I (we) hereby authorize ___________________________________ hereinafter called COMPANY, to initiate credit entries or such adjusting entries, either debit or credit which are necessary for corrections, to my (our) Checking { } Savings { } account indicated below and the depository named below, hereinafter called DEPOSITORY, to credit (or debit) the same to such account.

10231 Telegraph Road, Glen Allen, VA 23059-4561

Depository Name_____________________________________________

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City __________________________________________ State_______ Bank Transit/ABA No. __________________________________________ Account No. ________________________ ________________________ This authority is to remain in full force and effect until COMPANY has received written notification from me (or either of us) of its termination in such time and in such manner as to afford COMPANY a reasonable opportunity to act on it.

Name(s) ___________________________________________________ Identification No. _____________________________________________ Date _________________ Signed ______________________________ Signed ____________________________________________________

Attached SAMPLE FORM

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Branch __________________________________________________

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