May an unlicensed assistant take a listing from a seller then assign the listing to their broker in exchange for a referral fee?
No! An unlicensed assistant may not enter into a listing with a seller or buyer without being licensed by the California Bureau of Real Estate (CalBRE). Even if the listing is later assigned to a licensed broker, the negotiation or arrangement of an employment for the rendering of real estate services is an activity which requires a CalBRE license.
An unlicensed person may solicit prospective buyers, sellers, borrowers, tenants or landlords for referral to licensed brokers or agents as an unlicensed finder employed by the broker working in exchange for the promise of a fee. [See RPI Form 115 and 507 §2.11]
A finder providing referral services in California for a fee may:
- find and introduce parties;
- solicit buyers and sellers for referral to licensed brokers or agents [Tyrone Kelley (1973) 9 C3d 1]; and
- be employed by either principals or brokers. [See RPI Form 115]
Alternatively, an unlicensed assistant may conduct administrative tasks, such as:
- handling documents;
- performing tenant-related negotiations;
- canvassing for prospective clients to enter into a listing agreement with a licensed broker or agent;
- opening a property to third-party service providers; and
- communicating with parties to a transaction. [See RPI Form 507]
However, a finder or unlicensed assistant may not:
- enter into listing agreements [See RPI Form 102];
- take part in any negotiations [Business and Professions Code §10131(a)];
- discuss the price or terms;
- discuss the property conditions; or
- discuss the conditions of the transaction. [Spielberg Granz (1960) 185 CA2d 283]
A finder or unlicensed assistant who crosses into any aspect of negotiation which leads to the creation of a real estate transaction or employment needs a real estate license as they are both soliciting on their own behalf and negotiating. Unless licensed, an individual who enters into negotiations or a listing cannot collect a fee for services rendered.
Further, a finder or unlicensed assistant who engages in brokerage activities without a license is subject to:
- a penalty of up to $20,000; and/or
- a six-month jail term. [Bus & P C §§10137, 10139]
In addition, the broker who permits a finder or unlicensed assistant to perform any type of “licensed” work beyond solicitation for a referral to the broker or agent may have their license suspended or revoked. [Bus & P C §§10131, 10137]