Selling property for a relative or friend requires a real estate license  Law Offices of Fred M. Duman & Associates 2807 Castro Valley Boulevard     Castro Valley, California 94546 Tel: (510) 537-3388 Fax: (510) 889-1114

Dear Mr. Duman:

My brother's girlfriend was recently transferred and relocated by her employer to a new job in Phoenix.  She wants to sell her house, without a broker, so my brother is trying to sell her home for her.  She has agreed to pay him for his time from the sale proceeds, when the home is sold.

I have told my brother that it looks to me that he is acting like a real estate broker and that he would need a license to do so.

Am I right?  Can he get into trouble?

      R.W., Livermore

Dear R.W.:

You are correct.  Your brother is illegally acting in the capacity of a real estate licensee, without a license, and he can get into trouble.

California  Business and Professions Code, Section 10130, et seq., provides that, in order to legally represent another party in most real property transactions, an individual must be licensed within the State of California as either a real estate "broker" or real estate "salesperson".  The regulation and certification of real estate brokers and/or salespersons are overseen by California Department of Real Estate.

Activities, which require a valid brokers or salespersons license, are those acts undertaken on another's behalf for compensation, such as soliciting and/or assisting others in the purchase, sale or exchange of real property or business opportunities; arranging or soliciting secured loans for borrowers or lenders; collecting payments in connection with such loans, and/or negotiating to buy, sell, or exchange promissory notes secured by real property or real property sales contracts.

A license is, also, required to professionally manage rental real estate, including leasing such property, soliciting tenants, negotiating rental agreements, and other activities; however, a resident manager of an  apartment complex may be allowed to conduct some limited activities, without the necessity of a real estate license.

The licensing difference between a real estate "broker" and a "salesperson" is that a duly licensed real estate "broker" may legally engage in any approved real estate related activities, without supervision, whereas a real estate salesperson licensee may only engage in those same activities to the extent that such conduct is specifically authorized and supervised by a licensed real estate broker, with whom the salesperson is legitimately associated.

With some limited exceptions, real estate licensees are not legally authorized to conduct certain types of financial transactions, such as those involving securities and certain escrow services. Such services require separate and distinct certification, and are therefore beyond the permitted authority vested in a real estate broker/salesperson licensees.

Under some circumstances, an unlicensed person may conduct real estate transactions.  For example, individuals may freely conduct transactions involving their own property (unless the acting unlicenced principal is "in the business" of buying, selling, collection, or exchange of real property notes/sales contracts).   Examples of other exceptions would be legal services rendered by a lawyer to a client and some limited "clerical" activities performed by an assistant, as directed by a real property licensee, such as typing/preparation of certain documents.  Also, activities engaged in without compensation (or expectation of compensation) do not require a state license.

Anyone who wilfully violates the license law is guilty of a misdemeanor.  Your brother would be advised to consult with his lawyer, prior to continuing his activities.

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