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I have a question pertaining to a MA real estate broker

Hello I have a question pertaining...
Hello
I have a question pertaining to a MA real estate broker becoming the broker of record for a new corporation. If the broker currently operates his main brokerage business as a sole proprietorship, can he also serve as the broker of record for the new corporation of which he may or may not be an officer in parallel without it impacting his ability to keep operating his main business as a sole proprietorship?
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Answered in 1 minute by:
10/9/2017
Ely
Ely, Counselor at Law
Category: Real Estate Law
Satisfied Customers: 102,694
Experience: Qualified attorney in private practice including business, family, criminal, and real estate issues.
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Hello and welcome to JustAnswer. Please note: This is general information for educational purposes only and is not legal advice. No specific course of action is proposed herein, and no attorney-client relationship or privilege is formed by speaking to an expert on this site. You may also be offered a phone call, but those don’t come from me and are offered by the website and you are under no obligation to accept.

The answer is yes. There is no rule in MA which states that a broker cannot be an officer of a corporation which is also a client to his brokerage.

However, you of course know that if this is the case, the broker will continuously owe the corporation fiduciary duties, which includes not taking on any clients (for the brokerage business) which compete against the corporation.

"I STRIVE FOR FIVE!" My goal is to answer your question to your satisfaction. Please rate with five stars (★★★★★) and click SEND. It does not cost anything extra to rate. You may need to scroll left/right/up/down to see these stars. Rating my answer the bottom two stars or failing to submit the rating reflects poorly on me, even if my answer is correct. If you are not satisfied for whatever reason, or, have follow up questions, please simply reply with SEND before or after rating and let's continue to chat until you are satisfied. This is what I am here for.

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Customer reply replied 1 month ago
Just to make sure I describe the situation clearly: the broker in question currently has the following interests: 1) he is the owner of a real estate business operating as a 'sole proprietorship' 2) he is also the owner/officer of a MA corporation providing property management services. The goal would be for him to become the broker of record for a technology company in the field of residential real estate. His concern is this may affect his ability to keep his aforementioned roles in 1) and 2). To your point, I do understand how a potential conflict of interest may arise between his roles serving a client under 1) and 2) and a client of the new corporation.

Thank you for your clarification. My answer does stand "as is."

The broker can be an officer in the company - that is not an issue. The broker can have the company as his client for the brokerage, too. This is not an issue. The only issue here (foreseeable) is that by being an officer in the company, the broker automatically owes the company fiduciary duties.

One of these duties is not becoming involved in, or helping, competing businesses in his position as broker (or otherwise).

Provided that is not an issue, it should be fine.

Kind Reminder: Please, use SEND button to keep chatting, or please rate positively and click SEND to submit your rating once satisfied. You may always ask follow ups at no charge before or after rating. "I STRIVE FOR FIVE!"

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Customer reply replied 1 month ago
Can he be the 'broker of record' without being an officer? This would be my preference and probably his as well

Absolutely. Nowhere does it say that a broker of record must be an officer, director, or shareholder of the company.

Kind Reminder: Please, use SEND button to keep chatting, or please rate positively and click SEND to submit your rating once satisfied. You may always ask follow ups at no charge before or after rating. "I STRIVE FOR FIVE!"

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Customer reply replied 1 month ago
Alright. So would him not being an officer mitigate or cancel the fiduciary duty towards the corporation's clients or does that still stand?

It would cancel that duty. So he can then represent competitors.

Kind Reminder: Please, use SEND button to keep chatting, or please rate positively and click SEND to submit your rating once satisfied. You may always ask follow ups at no charge before or after rating. "I STRIVE FOR FIVE!"

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Customer reply replied 1 month ago
what are the rules covering a broker acting as a broker of record for a corporation you are basing your opinion on for my record?

Fair question. See HERE for a good outline of the fiduciary duties for officers, and the references on which I base my answer.

Kind Reminder: Please, use SEND button to keep chatting, or please rate positively and click SEND to submit your rating once satisfied. You may always ask follow ups at no charge before or after rating. "I STRIVE FOR FIVE!"

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Customer reply replied 1 month ago
thanks. is there any specific clause you can point me to? I am afraid I may fall asleep on my laptop otherwise :)

True. Definitely not the most exciting reading. I'd start at 8.2.2 and 8.2.3.

Kind Reminder: Please, use SEND button to keep chatting, or please rate positively and click SEND to submit your rating once satisfied. You may always ask follow ups at no charge before or after rating. "I STRIVE FOR FIVE!"

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Customer reply replied 1 month ago
Thanks! My concern stems from a conversation I have had with someone according to whom under the Massachusetts Consumer Affairs and Business Regulation pertaining to the licensure of brokers, no licensee may engage in the business of real estate brokering in an entity (corporation, LLC, partnership, or LLP) unless the entity is licensed. That person interpretation is that in conjunction therewith, no broker's license shall issue to such an entity unless an officer of the entity is a licensed broker in Massachusetts and designated as the broker of record for the entity. This goes against what you told me which I much prefer obviously but wanted to run this by you anyways

I do not think that this is quite correct (that person's opinion). That would make no sense - it would not be practical to mandate that a broker be an officer of every client's corporate entity.

Kind Reminder: Please, use SEND button to keep chatting, or please rate positively and click SEND to submit your rating once satisfied. You may always ask follow ups at no charge before or after rating. "I STRIVE FOR FIVE!"

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Customer reply replied 1 month ago
Thanks a lot. You have been very helpful!I wish you a great day.Best,Jonathan

You are very welcome. Good luck, and please don't forget to RATE my answer with five stars and then click SEND to submit that rating – it is the only way I get credit for my time with you – or, please use the SEND button to keep on chatting. "I strive for FIVE!"

Ely
Ely, Counselor at Law
Category: Real Estate Law
Satisfied Customers: 102,694
Experience: Qualified attorney in private practice including business, family, criminal, and real estate issues.
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Ely and 87 other Real Estate Law Specialists are ready to help you
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Customer reply replied 1 month ago
Done

Thank you.

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Customer reply replied 1 month ago
Hello

Yes, hello.

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Ely
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Ely, Counselor at Law
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