If you are not a licensed real estate agent or broker you are not allowed to collect a fee from anyone regarding the sale or even the referral of real estate. As a birddog, what are the legal issues regarding accepting a fee from an investor if you are not licensed.
Glad to meet you.
Every one in a while this comes up so here we go again.
The local Real Estate Boards impose regulation relevant to the distribution or aid in distribution of a homestead with the intent to protect the consumer (and in some rare cases monopolize the marketplace).
Whether or not this legislation is put into place in a criminal or a civil context, it does appear fairly evident that the enforcement of this legislation would be limited to that of:
a) When a consumer is being blind-sided (ie: you are acting on his or her behalf without proper licensing and steering him/her wrong)
b) You are continuously taking a “fee” for selling real estate.
If you are working with an investor, and you are paid by the investor, who has experience in real estate transactions, and you are not party to that transaction (ie: a consultant) you should, (this is not to be construed as legal advice) be ok, for the following reasons:
You are taking a fee for selling information, not real estate (nobody can prevent you from charging $5.00 to tell him or her were the nearest gas station is, or where the nearest “deal” is.
Even if legislation was in place to protect the consumer, you have conducted no harm to the consumer…so in a semi-perfect world, you can indeed pay for a lead on a house!
I think it is important to know, most investors are opposed to the local Real Estate Boards attempting to corner the market on Buying/Selling properties, I am certainly of the opinion that the local Boards would like to see no investors/creative RE at all so that they can continue to take a small chunk out of every property sold and have the properties sold according to their “rules & regulations”.
There is also such a thing as a simple Partnership Agreement, thereby making you and the investor principals in the transaction. The Bird Dog is bought out of the Partnership by the investor, thereby violating no State Statute.
John $Cash$ Locke
If both you and the investor do not hold real estate licenses then there is no governing body to penalize you.
If you do not hold a real estate license but the investor does then he or she can be penalized by the state’s licensing body for violation of that body’s rules and/or regulations.
If both you and the investor do hold real estate licenses then that investor has to pay the broker and the broker pays the agent.
I hope that helps.
Here’s the situation in PA. Under the law in Pennsylvania, anyone who “for another and for a fee, commission or other valuable consideration” aids someone in locating or obtaining real estate, or negotiates the sale or purchase of real estate, or represents himself as a real estate agent, consultant, agent or finder must be RE licensed. This law has nothing to do with Boards of Realtors. It was enacted by the state legislature. Someone who does any of the above in PA without a valid RE license is subject to both criminal and civil penalties, including jail time.
Just thought I would check to see how many Bird Dogs went before the Real Estate commission in PA quarter by quarter for the past few years, well I did not find any Bird Dogs but in the first quarter of this year it seems the realtors and agents have been busy.
The State Board of Real Estate Commission imposed the following sanctions:
Christopher T. Tracy, license no. RS-144912-A, of New Milford, Susquehanna County, was ordered to pay a civil penalty of five hundred dollars ($500) because he failed to retain a copy of sellers’ acknowledgment of their receipt of the Consumer Notice either signed by the sellers or bearing a notation of their refusal to sign. (01-13-04)
John J. Lavelle, Jr., license nos. RB-024150-L, RB-019077-A, and AB-024150-A of Clarks Summit, Lackawanna County, was assessed a civil penalty of five hundred ($500.00) dollars, because Lavelle failed to preserve for three (3) years following its consummation records relating to any real estate transaction. (01-14-04)
Howard Novick, license no. RS220897L, of Irwin, Westmoreland County, had his license indefinitely suspended, with the suspension immediately stayed in favor of probationary terms, due to his having been convicted of a felony. (2-10-04)
Steven M. Glass, license nos. RM-061409-A and RS-141842-A, and Steven Glass Property Mgmt. Corp, license no. RB-061447-C of Philadelphia, Philadelphia County, voluntarily and permanently surrendered his licenses, because Glass made substantial misrepresentations, pursued a continued and flagrant course of misrepresentation, failed to retain all deposits or other moneys pending consummation or termination of the transactions involved and account for the full amounts at the time of the consummation or termination, charged undisclosed expenses for principals, and engaged in conduct during real estate transactions that demonstrated bad faith, dishonesty, untrustworthiness, or incompetency. (02-11-04)
This one is impressive he voluntarily and permanently surrendered his licenses, and to think someone would be concerned about a Bird Dog.
Carlton Advisory Services, Inc., of New York, NY was ordered to pay a Civil Penalty of One-Thousand Dollars ($1,000.00), because Carlton Advisory Services, Inc. attempted to sell property in the Commonwealth of Pennsylvania without having the proper license. (03-09-04)
Linda C. Rutter, license no. AB-049415-L of Greensburg, Westmoreland County, was ordered to pay a Civil Penalty of Two Thousand Dollars ($2,000.00) and ordered to pay an Assessment for the Costs of Investigation in the amount of Two Hundred Fifty Dollars ($250.00), because Ms. Rutter’s conduct in a real estate transaction demonstrated bad faith, dishonesty, untrustworthiness or incompetency. (03-09-04)
Tammy D. Clark, license no. RS-219140-L, of Camp Hill, Cumberland County, was ordered to pay a civil penalty of one thousand dollars ($1,000) and costs of investigation in the amount of five hundred dollars ($500) because she failed to ensure that all services were provided to the consumer in a reasonable and professional manner. (03-09&10-04)
Lynn L. Shambach, license no. AB-050933-L, of New Berlin, Union County, was ordered to pay a civil penalty of two thousand dollars ($2,000) and costs of investigation in the amount of five hundred dollars ($500) because he engaged in conduct in a real estate transaction demonstrating incompetency, failed to exercise reasonable professional skill and care meeting the practice standards required by the Act, failed to advise the consumer regarding compliance with laws pertaining to real estate transactions and failed to comply with those obligations imposed upon a licensee by the “Real Estate Seller Disclosure Act.” (03-09&10-04)
Lawrence P. Lawson, Broker, license nos., RM-040302-A, RM-040302-B, AB-040302-A, RS-089279-A, and RB-040302-A, of Lewisburg, Union County, was ordered to pay a civil penalty of two thousand dollars ($2,000) and costs of investigation in the amount of five hundred dollars ($500) because he failed to exercise adequate supervision over the activities of his licensed associate broker within the scope of the Act. (03-09&10-04)
Looks to me like the Real Estate Commission is busy with the licensed folks.
John $Cash$ Locke
Actually, any person who is not RE licensed who is charged with the criminal offense of practicing without a license doesn’t come before the RE Commission at all.
Criminal offenses are handled by district attorneys for the individual counties in PA. The DA’s handle matters like this–as they would handle the case of a person who practices medicine without a license.
There are over 40,000 individuals RE licensed in PA.
I just bet Bird Dogs are on top of the DA’s list right before murder, drug offenses, sex offenders, burglars, spousal abuse, etc.
36,000 on unemployment, welfare or food stamps or on the Real Estate Commissions hit list. Figuring that 10% get the job done, I’ve always said there are a few good ones around.
As a matter of fact I am growing fond of the growing numbers of the 1 1/2% flat commission realtors.
John $Cash$ Locke
I think the key phrase here is, “Practicing Real Estate.”
Giving a real estate licensee the name and telephone number of a prospective buyer or seller is by no stretch of the imagination practicing real estate. No matter what state you are in.
The key phrase in PA is getting paid for supplying the information or lead. Person “A” (RE licensed or not) can give info or leads to Person “B” (licensed or not). But the problem arises if A gets paid for it. And if B is RE licensed, then B also has a problem.
Unfortunately, all kinds of crimes don’t get investigated and prosecuted. I wouldn’t recommend that somebody break the law – whatever law – because maybe they won’t be caught and prosecuted.
I have sold property in several different states and each state had its unique differences on what was and was not allowed.
My recommendation is to check your state’s rules and/or laws on the topic. You never know what rules/and or laws are on the books.
Glad to meet you.
I saw this post and know this young man so here is an exerpt from his post.
I started birddogging while healing from kidney transplant surgery (I was the donor, the recipient is fine). I was scared that I wouldn’t measure up and would say or do something stupid. And I did. Repeatedly. But I wouldnt give up and I kept trying. Now I am finally finding decent deals with loyal investors. I am working like an expert because I love what I am doing. God has truly blessed me.
Now I think one of the posters in this thread might want to run on down to the hospital and bring the DA with her and turn him in for Bird Dogging. Do you think he might just get probation since he saved anothers life by giving one of his kidneys? However the speed limit at the hospital is 15 MPH, so if this person say goes 16 MPH then they would have to turn themselves in for breaking the law.
I realize no one speeds and breaks the law, but just a caution.
I recommend to my students to have their paperwork reviewed by an attorney or professional, because there are so many ways to Bird Dog without breaking any state laws. If a fellow student in there state has already done this then they share paperwork with one another.
Any way thanks for your posts.
John $Cash$ Locke
Great advice. I agree.
In Texas, birddogging is ILLEGAL! You may not get prosecuted but it is still against the law in any form. Assigning contracts on the other hand is 100% legal.
Anyone that tells you otherwise or tells you to do it anyways is not paying your legal bills or fines. Just becasue you can break the law and get away with it does not make your action right. For some people that may not matter. I on ther other hand need to look at myself to shave every morning.
Real Estate Commissions do not sanction non-licensed people. The Attorney General does. One complaint and it could be up to 30 years in prison.