Is this broker lying or is lease options illegal w/o a license in NY and NJ

I am a new investor that is staring to building my company, I have been working with a mentor on lease purchase options(sandwitch lease and coopertive assignments) Is it legal to do this without a real estate license in NY and NJ?? My research tells me yes but I just had a brooker responding to one of my emails say that Im operating ILLGEALLY! Which I don’t want to be doing, is he right or does he just not want more competition? Please help!

I got this information below from a real esate attorney on

I"n New York, do you have to be a licensed agent to conduct lease options on residential properties?
No, you wouldn’t need a real estate license to work out lease options with prospective sellers or buyers. However, if you were representing somebody else in your dealings, and not negotiating on your own behalf, you would need a license."

I’m not an attorney, but I don’t have to be to know the answer to your question is, no, you do not need to be a licensed agent in NY, or any state for that matter, to do these deals. So long as you are a principal in the deal you are good to go. Sounds to me like the Broker is feeling threatened by your presence in what he thinks is his territory.

Ditto. :cool


Pay no attention to real estate agents or brokers when it comes to anything but a conventional listing and sale. They aren’t taught about lease/options, or much else. They don’t appreciate anything creative.

Anything that represents a delayed sale, or where commissions are put at risk, is not the least bit interesting. Furthermore, they’re generally incurious about anything other than what they ‘had’ to learn to get their licenses in the first place. And what did they learn to get a license? They learned how to be “ethical.” Isn’t that great. And of course anything that doesn’t look familiar to them is, of course, “unethical.”

If they were curious, and learned how to be creative (and ethical), and put together profitable deals that were outside their little formulas, they wouldn’t be settling for making $22k a year …and working their butts off doing it.


The two prior replies are correct.

At the same time, it could be the way you explained things. If you present yourself in a way that you will be helping sellers sell their house and you will be earning a fee or commission then it does sound illegal if you do not have a license. Language can matter when talking to people. Use the wrong terms and you sound like you are operating outside the law.

At the same time the person listening might not be able to hear the subtle differences if you expressed things correctly. As was noted, agents are not normally well versed in the full RE laws of the state. They know what they need to know to pass the exam and they mostly deal with vanilla transactions.

In my experience you can generally ignore what agents are saying when they claim something is illegal. To be polite about it, ask them for a reference to the specific part of the law they are offering advice on. Normally they will not know and will start to say they were told this by some other agent or their broker. They will also start saying they are not offering legal advice or are not qualified to give legal advice.

Hit it right on the head. Many states have Real Estate laws that state you can not earn a commission without being licensed. Perhaps that is what the broker understood you saying. You were getting a commission?
In reality a unlicensed person has more freedom to be an investor than a licensed person does simply because they have to comply with certain laws while licensed that a unlicensed person doesn’t
Example: If you are licensed in FL and go to on a listing appointment with a client. Instead of listing the house you think its a good deal and decide to L/O it yourself, FL Law requires you (the broker) to pay the closing costs for the seller. Wholesaling is a real fine line also with a license. The way the law reads, its illegal (if you assign the contract and not close first) but I know agents doing it all the time.
So go forth and do a deal.

In NJ, you can’t even pump your own gas without a ‘license’…

LOL Keith. That brings back a memory for me. A few years ago I was in New Jersey and was taking my rental car back to the airport and decided to stop and top off the tank. When I started pumping my gas. This guy (looked like a bum) came over and said he had to pump my gas. As anybody that knows me knows that I am kind of a jerk by nature especially when I don’t understand something so I basically reverted to my natural Tony Soprano stance with him and he backed off. I later found out that it was illegal for me to pump my own gas.

The pumps work like normal I even paid at the pump. There was no reason I couldn’t just pump my own gas. This is what happens when government gets too large.

Yep, although NOT illegal, but still not very smart. IMO, Lease Purchase/Options are probably the single most dangerous way to be involved in Real Estate, including as a Seller, Buyer, Investor and especially as a Licensed Agent. There are waaaaaaaaaaay to many risks and liabilities associated with many forms of seller assisted financing or carry transactions (CFD, AITD, LC, WRAPs, etc), but especially Lease Options.

OK, really? The most dangerous? Pffft.

For 10 years all I’ve done are LO’s, and it comes down to 2 main things…

  1. your verbiage
  2. your contracts

If you go off telling people you can “sell their house in 30 days” blah blah blah… you are in violation of most state’s Occupational Code
If your contracts do not have you as a legal principal, then you are in violation of most state’s Occupational Code