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If I am based in a state that DOES NOT require a business broker or real estate license to sell a business but I work on a deal in a state (WA, OR, CA, CO, FL, etc.) that does require that license, could/would/should that have any legal ramifications in reference to getting paid a fee/finder's fee on that deal?

Does one need to get licensed in that state to be compensated, in any way, as part of the deal?

  • How are you going to conduct this without the license? – Putvi Nov 4 at 20:50
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TL;DNR: As usual, the answer is, "it depends." In this case, it depends on whether you ever worked on this deal while you were in the state that requires a license. US courts have consistently held that a broker or agent who is not physically present in a state is not "doing business" in the state, and thus not subject to its licensing laws.

First, a point of clarification. There is no such thing as a "business brokers" license. Those states that require business brokers to have a license, require them to have a real estate license. So business brokers are subject to the same laws as real estate brokers.

Thus, in Florida, the state the OP is interested in, "real estate" is legally defined to include:

any interest or estate in land and any interest in business enterprises or business opportunities… FLA. STAT. §475.01(1)(i)

Similarly, a "real estate broker" is defined as:

a person who, for another…sells…business enterprises or business opportunities or any real property… FLA. STAT. §475.01(1)(a)

The statute goes on to say that to sell real estate, (which, in Florida, by definition includes "business enterprises") you need to have a Real Estate Broker's license.

As I said above, the basic law for selling real estate in another state is simple: If you work on a deal while you are in a state, you need a license from that state.

This rule has been consistenty applied by courts. For example, in Consul v. Solide, 802 F.2d 1143 (1986), the US Court of Appeals said, "All relevant authority suggests that licensing schemes like California's do not apply to out-of-state activities regarding in-state land." The Court goes on to point out that "courts have found real estate licensing statutes inapplicable to transactions in which brokers performed all of the regulated functions outside the state in which they were not licensed."

Of course, this general rule is subject to a host of of details on matters such as whether you need to put a choice of law provision in any contracts, and so on. You can read more about the specifics of the law covering brokers selling land in another state here.

Caveat: If the business you are selling has issued stock, then you are subject to state and federal securities law.

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    Can you please point to an example of "US courts have consistently held that a broker or agent who is not physically present in a state is not "doing business" in the state, and thus not subject to its licensing laws." this is surprising to me. – George White Dec 1 at 1:31
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    @GeorgeWhite I hoped the quotations from Consul, a 9th Circuit Court of Appeals opinion, would provide exactly the example you want. In Consul, Judge Fletcher says, "All relevant authority suggests that licensing schemes like California's do not apply to out-of-state activities regarding in-state land." A little later, she says, "courts have found real estate licensing statutes inapplicable to transactions in which brokers performed all of the regulated functions outside the state in which they were not licensed." Obviously, you don't agree. What do you think is missing? – Just a guy Dec 1 at 4:49
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    thanks - I was thinking about the inverse situation. The out of state seller feels wronged by the broker and sues. The broker says "I never did business in that state, you have no authority over me". I would be surprised if that would hold. Also, the link was all about real estate and the question included business brokers and doctors. I know that there are issues around interstate tel-medicine that would be very different than the real estate cases. – George White Dec 1 at 6:12
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    @Georgewhite I agree: You must be right about the inverse situation. I am pretty sure I saw some cases covering that. If I can find them easily, I'll let you know. – Just a guy Dec 1 at 13:26
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    There was a question about medicine across state lines a few weeks ago. I posted an answer with some helpful links law.stackexchange.com/questions/45518/… – George White Dec 1 at 20:39
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It depends on the law

In general, if you require a licence to carry on a particular business/profession in a given jurisdiction (real estate agent, business broker, plumber, doctor, lawyer etc.) then if you do that business in that jurisdiction you need that licence irrespective of where your business is based.

What the consequences are of doing the business without a licence depend on the law. You may be liable to a fine (or imprisonment) but still entitled to payment. There may be no state sanction but you might not be able to enforce the contract. Or both.

  • Ok....but I am not sure if "carry on a particular business" would cover setting up the 2 businesses to meet and then they take it from there. Would it? I understand that the agent/advisor that is selling a business for his client would need that registration but a finder's fee is usually just for the introduction. – Sizzle Nov 5 at 0:57
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    @Sizzle that’s the definition of a real estate agent or business broker – Dale M Nov 5 at 0:59
  • Fair enough! I suppose it could be although I think quite a bit more work is involved in addition to an introduction, in a real estate transaction. Also, the group paying the finder's fee is not based in the state where the sale is occurring. I suppose I will have to see if I can find something in writing on this subject. – Sizzle Nov 5 at 1:06
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    @DaleM You are right that if you "do business" in a state you need to comply with the licensing requirements of that state. However, you are wrong about what it means in US law to "do business" in a state. US courts have consistently held that a broker or agent who is not physically present in the state is not "doing business" in the state, and thus not subject to its licensing laws. – Just a guy Nov 30 at 8:08
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If you need a license to sell a business in Florida and you don't have the license you can't make the sale, so you would not get paid.

If you aren't actually doing the selling, yes you can get paid, obviously.

  • I would not be selling the business. I stated that I would be working on the deal...I brought the buyer in to the deal, so I am not the seller of the business. – Sizzle Nov 4 at 21:00
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    I and probably most other people took working on the deal to mean you would be doing the selling when the deal is selling a business. If they want to pay you something for connecting them that is fine. – Putvi Nov 4 at 21:02
  • I edited the question to be more specific. – Sizzle Nov 4 at 21:04
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    It's cool, I didn't mean it to criticize. I just meant the law about selling a business means nothing if you aren't doing the selling. – Putvi Nov 4 at 21:07
  • understood...sometimes it takes an edit or two to get a question where it really needs to be. – Sizzle Nov 4 at 21:08

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