Is it legal for a lawyer who is not a licensed real estate agent to earn a real estate commission?

Answer 1

I am not a lawyer, I am a real estate agent so please do not take this as legal advice. Being a commercial real estate agent, I seek out ways to promote my business. One of the major ways I do so is by asking lawyers to refer me business. Basically, asking them to send me their clients in order for me to assist them with selling their real estate. Working for the leading real estate company in NYC only helps. I would say that about 30% of my business comes from referrals so I have the issue of paying referral fees all the time. As you can understand, I love to pay lawyers commission.

To my best understanding, in the State of New York, you have to obtain a license in order to legally be paid a real estate commission. Since the law does not require lawyers to take a course and pass a test, all they need to do is apply and pay about $50 or so. Once they have a brokerage license, there is no problem paying.

The bigger question is, in general, why do you need a license in order to be paid a real estate commission? While I am sure there are many answers, I think the main issue was to protect the public (and not the real estate sales people). When you have many people that can be paid a commission, then you have a situation where anyone can practice real estate sales without being licensed. Since in New York the history of real estate sales is scattered with many moral and ethical issues, the state needed to step in and require a license in order practice the profession. The idea is to ensure the public was protected from unethical and dishonest behavior.

So, if that is true, why would lawyers be required? Are lawyers by definition not ethical people? The answer is to give the state the ability to keep track of the lawyers that are practicing real estate without limiting them.

Now, this is the answer for New York State lawyers, but it is very possible that different states have different laws since the legislators views on real estate differ from state to state.