My partner and I are based in Europe and we want to help some of our clients invest in land in the USA, in multiple states. All of our clients are also outside the USA. The question we have is would we need to have real estate licenses to do this? We would not charge the seller any commission whatsoever, we only charge our clients a relatively small consultancy fee to set the deals up. We only act in an advisory capacity and only for the buyer in much the same way as a lawyer does.
We would not wish to break the law in the US so any help or pointers would be hugely appreciated. Thanks very much for reading.
Hey there! So, you and your partner want to help your clients invest in land across multiple states in the U.S., but you’re not sure if you need a real estate license since you’re all based outside the country. The short answer is: it depends.
Every state has its own rules about who needs a license, and it also matters exactly what you’re doing. If you’re actually representing buyers or sellers and getting paid for it, then yeah, you might need a license in each state where the properties are located.
There are some exceptions and gray areas. Like, if you’re just giving advice and not directly involved in the deals, you might be okay without a license. It’s kind of like how lawyers or accountants can give real estate advice without a license. And in some states, you can get referral fees for connecting people without needing a license, but that’s not always the case.
Since you’re looking at multiple states, keep in mind that each one has its own licensing rules. So you might need separate licenses for each state you’re working in.
To make sure you’re doing everything by the book, here’s what I’d suggest:
Talk to a U.S. real estate lawyer who knows the ins and outs of the states you’re interested in.
Reach out to the real estate commission or department in each state you’re planning to do business in. They can tell you what licenses you might need and if there are any exceptions that apply to you.
If you do need licenses, make sure you get them before diving into any real estate stuff in those states.
Hey Charlotte,
Really appreciate you taking the time to reply.Yep that was what we thought but wanted to float the idea here first to get some pointers.It would not be feasible to get RE licenses as we will be dealing with multiple states. I think we will need to speak to lawyers as you suggested. Thanks again,I see you help lots of people on here with great advice which is I am sure we all are very grateful for. Best regards,Katherine.
Thanks Charlotte,I have now spoken to several lawyers and they all seem to agree with you that we would need a license to operate. You mentioned some states that allow referrals without licenses,do you or anyone else reading this happen to know which ones and or is there a resource you can point to?
If you’re charging them a consulting fee that shows up completely outside of the HUD settlement statement, I’m not sure why you’d have any problems with this. It sounds like consulting for anything else, where they’re essentially paying you for your advice and expertise, unless I’m misunderstanding something.
Thanks Sean,
Sorry I Just saw this message after I replied to your other one. Can I just ask for purposes of clarity what you mean by HUD ‘Statement? I know HUD refers to houses and urban development but not sure what the ‘statement’ bit means exactly ? I am guessing this might be a federal law or declaration of some kind?
When I say ‘HUD’ I’m referring to the closing statement. This document, usually 1-3 pages, is prepared by the title company and it shows how much money the buyer is bringing to the table, how much of that money is coming from a lender (if any), what expenses are being covered as part of the closing (appraisal, survey, closing costs, recording costs, transfer taxes, etc) and how much money the seller is walking away with after all the closing costs are paid for.
People call this the ‘HUD’ or ‘HUD Statement’ because the US Department of Housing and Development has a standard form that is often used for this closing statement. You can see their template here: https://www.hud.gov/sites/documents/1.PDF
Thanks for the clarification Sean and thanks for your time. So in response to your original message stating that as long as nothing shows up on the statement you could not see a problem, then yes I fully agree, that is exactly what I thought. I cannot see how a state or federal agency could impose any limitations on any transactions whatsoever that take place outside of their jurisdiction. The fact that the consideration in this case is real estate is not relevant as the same principle would apply to any goods or service. I am not sure the lawyers I spoke with fully understood my questions so I am not giving up yet! It might be worth me speaking to some title companies. If anyone else reading this has any thoughts I would love to hear what you think. Thanks again.
I agree with Sean Jean. How would anyone over here in the States ever know what you were doing or charging if it never showed up on the settlement statement? To me it seems like only the laws in your country would apply to you in this situation. If your country does not have a problem with you charging a fee for this service, then I would not see it being a problem here.
I think you are right in that the lawyers you spoke with did not fully understand your question. If you did find a law over here or in your country preventing you from doing what you are wanting to do, you could always find a way to work around it like assigning a contract to your client with your fee added into it.
Sounds like you found a need and way to fulfill it. I hope it works out for you.
Thank you so much for your very helpful comments. I have had some emails back from some licensing authorities and some of the laws state that if you are involved in a sale and receive any payments period, then you must be licensed. Our fees might not show up on the legal paperwork but if they find out we were paid it sounds like we could land in hot water. Some of the laws I have looked at are very badly drafted and ambiguous so they are very difficult to make sense of. Thanks again for reaching out, have a great day)
I was curious if you were getting this information from the real estate commission (governmental agency) or the National Association of Realtors (private organization)? Either way there are ways to legally get around the licensing problem and still get paid. Most states allow wholesalers or property finders (bird dogs) to operate. I just wanted to encourage you to not give up and keep searching for ways without getting bogged down to much by all laws and regulations.
Thanks you so much for your very kind comments and help. Sorry for the delayed reply I have been super busy. So to answer your questions, I contacted a number of licensing authorities and every one of them sent me a lengthy PDF containing all the laws. I read through many of them which was extremely time consuming and the upshot is most of them are fairly clear that any payment received indirectly or otherwise requires a license. I hear what you are saying about assigning contracts etc to get around all that but that then opens up another can of bureaucratic worms for foreigners from what I understand… The good news is however that there are lots of countries in the world where the laws are more relaxed so we are looking at various options. Thanks again for kind your support,this really is a great community!