Does it seem like we encounter more “third parties” than first and second parties in today’s transactions? Are they all looking for a piece of your commission? Do banks and many of these “third party” companies hide behind Federal laws or exemptions to Nevada Revised Statutes and laws in order to thrive off our very active local real estate market? The rhetorical answer is a resounding “Absolutely”! There are other responses, but I will leave those to your imagination!
We have all adapted our real estate practices to take into account that Banks and Asset Managers generally could care less about what disclosures and forms that we may be required to submit per Nevada Revised Statutes or local Brokerage practices. In fact they have often taken refuge from the Nevada Attorney General by citing and hiding behind Federal laws that allow them to patently ignore much of what we have been taught to do in performing our duties with “reasonable skill and care”.
It has often been said that there is likely more fraud in the local Las Vegas market now than at the peak of the subprime loan years. We’ve seen short sale transactions fraught with straw buyers, double escrows, and a myriad other schemes that run from legal to dangerous to flat out fraudulent. And of course, we now have banks outsourcing their short sale negotiation function to third parties that are exempt from the licensing requirements that were set forth by the Mortgage Lending Division. Often these companies too are asking for a portion of your commission!
First, let’s look at NRS645.280 regarding commission payments:
NRS 645.280 Association with or compensation of unlicensed broker, broker-salesperson or salesperson unlawful; payment of commission other than through broker or owner-developer unlawful.
1. It is unlawful for any licensed real estate broker, or broker-salesperson or salesperson to offer, promise, allow, give or pay, directly or indirectly, any part or share of his or her commission, compensation or finder’s fee arising or accruing from any real estate transaction to any person who is not a licensed real estate broker, broker-salesperson or salesperson, in consideration of services performed or to be performed by the unlicensed person. A licensed real estate broker may pay a commission to a licensed broker of another state.
2. A real estate broker-salesperson or salesperson shall not be associated with or accept compensation from any person other than the broker or owner-developer under whom he or she is licensed at the time of the real estate transaction.
3. It is unlawful for any licensed real estate broker-salesperson or salesperson to pay a commission to any person except through the broker or owner-developer under whom he or she is licensed at the time of the real estate transaction.
[26:150:1947; 1943 NCL § 6396.26]—(NRS A 1959, 394; 1975, 1542; 1979, 1538; 1985, 1263; 2005, 1286)
These third parties may be exempt from Nevada Revised Statutes, but when they are not licensed, they may not receive commission payments from agents or brokers!
Our dilemma – in a nutshell – is that there are quite a number of companies and parties that are able to operate outside of Nevada laws and do so legitimately. And there are others that are skirting laws or outright fraudulent in their business practices, which have led to the creation and maintenance of the following two Nevada websites:
Agents and brokers – on the other hand – remain bound and subject to Nevada Revised Statues and laws, regardless of whether these other parties are or not! As such we must continue to practice real estate with that always at the forefront of our minds each and every day! We must commit ourselves to providing the best service possible – while navigating these difficult waters with our clients – and keep our integrity intact at all times.
As I’ve always said: “There are more sharks in the Las Vegas desert than in all of the Pacific Ocean”!