Can a Finder's Fee Be Paid to a Person Who is Not A Real Estate Agent?

Full Question:

A person has asked me to keep an eye out for a (high end) residential property on Nantucket. In early stages (my viewing of a property) he wishes to remain anonymous. Can I collect a finder's fee from the listing RE agent in the event of a sale? (form to be filled out before my viewing)
03/11/2010   |   Category: Contracts ยป Finder's Fee   |   State: Massachusetts   |   #21352

Answer:

Generally, a person needs to be licensed as a real estate agent to collect a fee on the sale of real estate. Please see the following MA statute to determine exceptions:

G.L.c. 112, § 87QQ. Real estate brokers and salesmen; applicability of
sections; exemption

Section 87QQ. The provisions of sections eighty-seven RR to
eighty-seven DDD, inclusive, shall not apply to the following: — any
person who, acting for himself as owner, lessor, lessee, tenant or
mortgagee, shall perform any of the aforesaid acts of a broker or
salesman with reference to real estate owned or leased or rented by or to
him, or mortgaged to him; the regular employees of any person aforesaid,
with respect to such real estate, if such acts are performed in the
regular course of, or as an incident to, the management of such real
estate and the investment therein; any person, while acting for himself,
who seeks to acquire, lease or rent real estate for his own use or
investment or his regular employees acting in behalf of such person in
the regular course of their employment; a person acting for himself in
negotiating a loan secured or to be secured by a mortgage or other
encumbrance upon real estate, or his regular employees acting therein in
behalf of such person in the regular course of their employment; a
managing agent while acting under a contract with the owner of the real
estate or the regular employees of such agent acting in his behalf in the
regular course of their employment; a person acting as a licensed
auctioneer; a person buying, selling or otherwise dealing in any stock,
bond or other security, or certificate of beneficial interest in any
trust; a public officer or employee while performing his official
duties; a person acting as attorney in fact under a duly executed power
of attorney from an owner of real estate authorizing the final
consummation by performance of any contract for the sale, leasing or
exchange of real estate; the services rendered to a client by an attorney
at law in the performance of his duties as such; a receiver, trustee in
bankruptcy, executor, administrator, guardian or conservator, while
acting as such; a person selling real estate under order of any court; a
trustee acting under a written instrument of trust, or deed or
declaration of trust, or will, or his regular employees, acting in the
course of their employment; a bank as defined in section one of chapter
one hundred and sixty-seven or organized under the laws of the United
States or an insurance company lawfully engaged in business in the
commonwealth, or the regular employees of such bank or insurance company
acting in the course of their employment, when such bank or insurance
company is acting in any aforementioned capacity of a fiduciary or is
acting for itself in negotiating a loan secured or to be secured by a
mortgage or other encumbrance upon real estate or is acting for itself
with reference to real estate owned, mortgaged, leased or rented, by or
to it or which it seeks to acquire, lease or rent for its own use; a
credit union organized under chapter one hundred and seventy-one or the
regular employees thereof acting in the course of their employment.


Please see the following MA statutes:

G.L.c. 112, § 87RR. License; completion of transactions; fee or
commission; action for compensation **Update Notice: This section has
been amended by Chapter 304 of 2008

Section 87RR. Except as otherwise provided, no person shall engage in
the business of or act as a broker or salesman directly or indirectly,
either temporarily or as an incident to any other transaction, or
otherwise, unless he is licensed.

No salesman may conduct or operate his own real estate business, nor
act except as the representative of a real estate broker who shall be
responsible for the salesman and who must approve the negotiation and
completion by the salesman of any transaction or agreement which results
or is intended to result in the sale, exchange, purchase, renting or
leasing of any real estate or in a loan secured or to be secured by
mortgage or other encumbrance upon real estate. No salesman shall be
affiliated with more than one broker at the same time nor shall any
salesman be entitled to any fee, commission or other valuable
consideration or solicit or accept the same from any person except his
licensed broker in connection with any such agreement or transaction. A
salesman may be affiliated with a broker either as an employee or as an
independent contractor but shall be under such supervision of said broker
as to ensure compliance with this section and said broker shall be
responsible with the salesman for any violation of section eighty-seven
AAA committed by said salesman.

Except as otherwise provided no person shall recover in any suit or
action in the courts of the commonwealth for compensation for services as
a broker performed within the commonwealth unless he was a duly licensed
broker at the time such services were performed; provided, however, that
nothing contained herein shall be construed as affecting the right of a
licensed salesman to recover in a suit or action against a broker on any
contract or agreement with said broker.

G.L.c. 112, § 87PP. Definitions

Section 87PP. For the purposes of sections eighty-seven PP to
eighty-seven DDD, inclusive, the following words and phrases, unless the
context otherwise requires, shall have the following meanings: —

"Board", the board of registration of real estate brokers and
salesmen.

"Non-resident" shall include and be deemed to apply to an individual
whose principal place of abode is without the commonwealth and to a
corporation, society, association or partnership, organized, formed or
existing under the laws of another state and which does not maintain a
usual place of business within the commonwealth.

"Real estate", any and every estate or interest in land and the
improvements thereon, whether corporeal or incorporeal, whether freehold
or non-freehold, and whether or not said land is situated within the
commonwealth.

"Real estate broker", hereinafter referred to as broker, any person who
for another person and for a fee, commission or other valuable
consideration, or with the intention or in the expectation or upon the
promise of receiving or collecting a fee, commission or other valuable
consideration, does any of the following:- sells, exchanges, purchases,
rents or leases, or negotiates, or offers, attempts or agrees o negotiate
the sale, exchange, purchase, rental or leasing of any real estate, or
lists or offers, attempts or agrees to list any real estate, or buys or
offers to buy, sells or offers to sell or otherwise deals in options on
real estate, or advertises or holds himself out as engaged in the
business of selling, exchanging, purchasing, renting or leasing real
estate, or assists or directs in the procuring of prospects or the
negotiation or completion of any agreement or transaction which results
or is intended to result in the sale, exchange, purchase, leasing or
renting of any real estate.

"Real estate salesman", hereinafter referred to as salesman, an
individual who performs any act or engages in any transaction included in
the foregoing definition of a broker, except the completing of the
negotiation of any agreement or transaction which results or is intended
to result in the sale, exchange, purchase, renting or leasing of any real
estate.

The following are MA standards of conduct for realtors:

(8) Sharing of Fees. No fee, commission or other valuable consideration shall be paid to or shared by an owner's managing agent or its employees as the result of the sale of real estate for the owner unless such agent and its employees are licensed brokers or salespersons, except as provided for in M.G.L.c. 112, § 87QQ.

(d) Sub-agency representation. No broker or salesperson shall enter into an agreement with any other broker or salesperson to represent a seller or purchaser as a secondary or sub-agent without informing such seller or purchaser in writing that the secondary or sub-agent's actions may subject the seller or purchaser to vicarious liability. The broker or salesperson shall provide written notice containing the information of potential vicarious liability and obtain the seller's or purchasers consent on such notice to secondary or sub-agency. The written notice must state that the broker may cooperate with another broker who is then a sub-agent of the seller or buyer. The written notice must further state that vicarious liability is the potential for a seller or buyer to be held liable for a misrepresentation or an act or omission of the sub-agent And that the seller or buyer authorizes the broker or salesperson to offer sub-agency in signing the notice. The broker or salesperson shall provide such notice at the execution of an agreement to sell the real property of the seller or when the agent and purchaser agree that the agent will represent such purchaser. This Section applies to real estate brokers or salespeople engaged in the purchase or sale of land with a building intended for use as a one to four unit residential dwelling or to the purchase or sale of land on which a building is intended to be constructed for use as a one or two unit residential dwelling.
(e) Non-agent facilitator. Nothing herein shall prohibit a broker or salesperson from working with a seller or purchaser in such capacity where the broker or salesperson does not represent them as a sole, designated or dual agent provided written notice of such representation is provided. The notice must state that no agency relationship exists between the facilitator and the seller or purchaser. The notice must be provided at the first personal meeting to discuss a specific property. A facilitator has a duty to present all real property honestly and accurately, disclosing known material defects and accounting for funds. The facilitator does not have a duty of confidentiality with regard to any information received from the seller or purchaser. A facilitator may also be called a transaction broker or salesperson and a facilitator relationship may be changed to an agency relationship provided for in this regulation with the written agreement of the person so represented

See also:

http://www.mass.gov/?pageID=ocaterminal&L=6&L0=Home&L1=Licensee&L2=Division+of+Professional+Licensure+Boards&L3=Board+of+Registration+of+Real+Estate+Brokers+%26+Salespersons&L4=Statutes+and+Regulations&L5=Rules+and+Regulations+Governing+Real+Estate+Brokers+%26+Salespersons&sid=Eoca&b=terminalcontent&f=dpl_boards_re_cmr_254cmr300&csid=Eoca’ http://activerain.com/blogsview/346696/when-is-it-legal-to-pay-a-finder-s-fee-to-a-birddog-