I have heard different opinions on this topic, but I am assuming there is some form of criteria that sets precedent on this?
Example: I live in Los Angeles, and am not a broker (i.e. I don't have a license). A friend in Dallas calls me up and says he wants to sell one of his office buildings in Texas on an off-mkt basis, and asks if I know of any buyers. I call a friend locally in Los Angeles, tell him about the property, and draft a NDA and fee agreement stating that if he goes through with the purchase, the buyer is to pay me a % of purchase price as a finder fee.
Under this premise, would I be exposing myself to any issues given that I do not hold a broker license? Could I simply call it a consulting fee or something similar to side step the lack of having a license? Is a broker license more of an issue when you are actively marketing property publicly vs doing one deal a year quietly off-market?
Just curious what the rules are here. Thanks.
I'm not a lawyer. We have payed people consulting fees for deals like this.
I know many people who have "brokered" off market deals without having a license. They were discreet about it. You can call it a consulting fee, advisory fee, whatever. I think if you are actively advertising deals in public, you can get in trouble without an active license, but most of the guys I know doing it are not posting deals online, etc. Besides, they aren't doing much more than saying "here's a deal, if you want the information, sign my NDA and fee agreement".
Nope. Commercial RE is the wild west, not many rules
I'd say technically yes it is required.
I'm going to say that generally speaking you're going to need a license to receive compensation of any type on a deal. Even if labelled a referral feel. A referral fee is generally going to be a fraction of an actual commission. Otherwise, it's a commission...
Who would even regulate something like this?
Board of Registration of Real Estate Brokers and Salespersons. Plus your brokerage has to file taxes. The company can't file taxes correctly after recognizing commissions from a salesperson who isn't a salesperson.
What if you don't work for a brokerage? Plenty of brokers I know in LA who work for themselves so they don't have to split commissions with the house. Granted, most of these people I know do have an active California DRE license, they are just self employed and report their commissions as income and pay their taxes in April each year.
Don't know what a DRE license is. You are a broker if you don't work for a brokerage (if you do work for a brokerage you'd be a salesperson at said brokerage or a THE broker at the brokerage). You can't get a commission if you're not hanging your broker/salesperson license at a registered broker.
That is the difference between being a salespersons and a broker. I can't speak outside of California, but here the licenses are diff, salesperson is easier to obtain, but a "broker" license typically requires more in the way of classes, credentials, and takes longer to get.
In California, if you are a licensed broker (not salesperson), you can absolutely go out on your own without hanging your license at a registered broker. I know quite a few brokers who were the top dogs at shops like Colliers, Marcus & Millichap, etc, and one day they decided they were tired splitting their fees with the house. They had a loyal client list, they started their own company or simply worked from home and collected 100% of the fees. Totally legit.
You should have a license to do this. The whole "draft a fee agreement" would never fly.
That said...if your friend in Dallas doesn't throw you a "fee" as a consultant or out of the goodness of his heart, he is a bad friend and I would never talk to him again.
The other thing would be if your friend in Dallas employs you, you could do it without a license since you would be the "owner"
In Texas, you aren't legally allowed to give/take any fees unless you're licensed by TREC. And interstate transactions are also legally required to be by two parties licensed in Texas.
I'm sure there are ways around this but this is per the TREC guidelines. Do with it what you will.
The Dept. of RE in Ca is now the Bureau of RE (BRE)...a division of consumer affairs. Still the same staff and phone numbers. As previously stated we have two licenses. A salespersons which is your standard license that must be hung under a broker, and a brokers license. The brokers license provides tremendous flexibility.
Barring non-comp agreements, a broker like myself could be a "broker acting as salesperson" while working for, say, a CB. But I can still be broker of record for a mortgage company and also be be broker of record for a property management firm if I choose so. A brokers license in conjunction with an officers license (think Corp, LLC, etc) gives you tremendous flexibility here here in CA.
Ca has very liberal representation standards as well. Regardless of which license you have, you can get both sides of the deal as the RE broker, representing buyer and seller and broker the purchase money loan for the buyer. It's a license to whore and a great place to do business if you can originate, underwrite, maintain and close deals.
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