The Expired License, the Coach, and the Cash Offer
Denise holds a Louisiana salesperson license sponsored by Riverside Realty, LLC (broker Bruce). On March 3 she shows a $315,000 Baton Rouge house to Marcus, who has signed nothing. Marcus's friend Tanya, an unlicensed 'investment coach,' drafted Marcus's offer and now asks Denise to pay her $2,500 out of the commission at closing. Marcus separately offers Denise $1,000 'for her time' paid directly to her at the act of sale. Denise's two-year license expired February 28; she mailed her renewal and CE certificates March 1, and Bruce told her, 'keep working, it's just paperwork.' On March 10 Marcus asks Denise to write the offer and to 'be my agent, not the seller's.'
1. May Denise pay Tanya the $2,500, and may she accept Marcus's $1,000 directly? Explain the license-law reasoning.
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No on both counts.
Tanya. Louisiana license law makes it unlawful for an unlicensed person to perform brokerage acts for compensation, and unlawful for a licensee to aid that conduct or to share compensation with an unlicensed person for it. Drafting a purchase offer for another person in exchange for a fee is brokerage activity. Paying Tanya out of Denise's commission (a) compensates unlicensed brokerage, (b) creates a paper trail LREC can pursue through the firm's commission records, and (c) exposes the broker's supervision. Advice freely given by a friend is one thing; a $2,500 fee converts it into unlicensed practice.
Marcus's $1,000. A salesperson may be paid only by and through the sponsoring broker. Accepting money directly from a consumer for brokerage services bypasses the brokerage's compensation records, any written engagement, and the broker's supervision, and LREC treats it as a violation. If the firm wants a fee from Marcus, it must be a written agreement between Marcus and Riverside Realty, payable to the brokerage, disclosed as a buyer-side fee.
2. What is Denise's licensing status after February 28, and what should Bruce have done?
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Status: a license exists only while LREC has it in active status. Mailing a renewal application and CE certificates does not extend licensure; until LREC renews or restores the license, Denise is unlicensed and may not show property, quote terms, negotiate, draft contracts, or be paid for brokerage activity.
Bruce: 'Keep working, it's just paperwork' is itself a violation. A qualifying broker must supervise affiliated licensees and may not aid unlicensed activity. Correct steps: pull Denise from active practice immediately; reassign Marcus to a licensed agent; do not pay Denise a commission on any transaction handled while unlicensed; verify renewal status with LREC in writing; document the timeline; consult counsel about whether any self-reporting is warranted.
Practical fallout to flag: errors-and-omissions coverage and collectability of a commission earned by an unlicensed person can both be contested, and a consumer who relied on her can complain to LREC.
3. Marcus wants Denise to be 'his agent.' What must happen before she acts as his agent, and who is the legal agent?
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Denise is a salesperson; she cannot be an agent in her own name. The legal agent is the brokerage, Riverside Realty, acting through Bruce as qualifying broker; Denise acts on the broker's behalf.
Before treating Marcus as a client:
- Deliver the required written agency disclosure explaining who the firm represents and how in-house (dual) situations are handled.
- Have Marcus sign a written buyer/engagement agreement with Riverside Realty.
- Check the firm's posture: if Riverside also has the listing, this is in-house representation of both sides and requires the written informed consent of both parties before facilitating the deal.
Until the written relationship exists, Marcus is a customer, not a client. Denise must not treat him as entitled to full loyalty and confidentiality, must not hand him the seller's confidential information, and should not negotiate as his advocate.