Expert: Karyn Foley - 1/15/2004

Question
Hi,

I own a home with some acreage in upstate NY. I was recently approached by an architect claiming he has a client that might be interested in buying the house and land to develop into senior housing. He told me that if I'm interested, he's want to sign an agreement with me obligating me to pay a 5% commission should the deal go through. I was not aware that architects are allowed to collect a brokerage commission. Do you know the law with regard to a licensed architect (but not a licensed broker) collecting a commission? Thanks.

Answer
Hello Jon and what an excellent question!  I practice in California where it is against the law to give a commission to an unlicensed person.  I suggest that you check New York law by calling your state Department of Real Estate and asking them their law.  You may also get an answer from your local board of realtors, or even from a real estate agent who works in your area.  If you are interested in selling to that individual, I suggest that either you get representation from an agent, or go through a real estate attorney.  You have too much to gain, and much to much to lose by not having an advocate.  When an individual who is not licensed gives me a referral, I always thank them by a giving them a lovely gift at the close of the transaction.  I am overly generous because my business is generated by a referral.  However, there is also an IRS ruling that states the amount of the gift that I give which is an allowable deduction.  I chose to open myself up to a tax charge if the gift I give exceeds this amount.  %The homes that I mostly sell usually calls for a more lavish gift so I am more than willing to pay the IRS.  So you may also elect to check with your accountant to see what your limit may be.  Perhaps your architect is actually being represented by an agent.  Check this out.  If so, that should have been disclosed so that you can seek your own representation.  Please let me know what happens.  Good luck to you.  Oh, by the way, I strongly suggest that the actual first thing you do is to hire a licensed land appraiser to determine the fair and actual value of your property.   It could be more than the architect is offering!  KARYN FOLEY