[WSBARP] Attorney Acting as Broker

[Erik Marks]

This is my first post, so I hope I am doing it right.  I know many of you on this list, and so hello everyone!  

I am a broker and an attorney, so I can share some insights here.  The statutory authorization for an attorney to perform brokerage services is when those services are performed “in the practice of law.”  While I don’t recall the specifics, many years ago I looked into this and determined that receiving a commission that was established as a percentage of the sales price of a property, and was contingent on closing, would not qualify as acting “in the practice of law.”  Therefore I got my broker’s license.

The more practical issue is that brokers are prohibited from sharing commissions with people who are not licensed brokers.   If you represent a Buyer, you are typically receiving your commission as a share of the commission that the Seller pays to the Seller’s Broker.  The Seller’s Broker will be uncomfortable sharing with a person not licensed as a broker.

Yet another hurdle is the need to switch hats cleanly – and this issue comes up whether you are a lawyer or a lawyer/broker.  As a lawyer, you must use a heightened level of care working with unrepresented parties.  In most residential transactions, and some commercial transactions, the other party may not be represented by counsel early in the process, or even at all.   Disclosures are needed.  Therefore you want to establish a very clean break where your broker hat comes off, and your lawyer hat is put on.    In commercial transactions, this is easily established at the point where the LOI is signed, and definitive-document drafting begins.  Because of this issue, and the difficulty of working with residential brokers who are generally less sophisticated and often have never worked with a lawyer, I do not serve as broker in residential transactions.  

So there are some issues.  How about solutions?  Make friends with a local broker.  If you spoonfeed a deal to a broker, they will often do the legwork for a few thousand dollars, and rebate the remainder of the commission to the Buyer (your client).  Brokers can rebate commissions to clients – see Redfin’s business model.   Your client gets what they want.  You move forward with the deal.  Broker makes a few dollars, and may send business your way in the future.

Erik


-- 
Erik G. Marks 
Attorney at Law 
2255 Harbor Ave SW
Suite 203
Seattle, WA 98126

office: 206-264-4598 
cell: 206-612-8653

erik at egmrealestate.com