Legal help to start your real estate brokerage the right way!
When you just get your real estate license, you are excited and want to get going. Before you jump the gun, there are a few things you need to think about such as:
- Forming your corporation (the BRE does not recognize the LLC entity)
- Getting and DBA’s or fictitious business names you may want to use approved through County Recorder’s office and approved by BRE
- Getting your independent contractor agreements in place
- Making sure your website is “BRE compliant”
- Is you are in property management, having a property management agreement prepared for your clients
- Opening up a broker bank account, including any trust accounts
- Making sure you have the proper signors on the trust accounts
- If you are in residential or commercial real estate, having a compliance checklist so your files are complete
- Creating a company “policies and procedures manual” part of the broker duty of supervision
- Making sure if you have any “branch offices” (any office where licensed real estate activity is taking place) making sure the BRE is notified of each branch office (if you are contracting with branch office brokers, you should consider having a branch office agreement with other associate brokers)
These are just some of the main things. This blog talks about the corporation, bylaws, DBA’s and minutes of meetings.
California real estate corporations MUST be an Corporation and not an LLC to get approved.
The first and most important thing to understand is that you can run your business as a “sole proprietor” (which means if your real estate business is sued, for example for breach of fiduciary duty, any amounts over and above any insurance coverage you might have, will put your personal assets at risk). This is the reason most real estate brokers want to incorporate, and that is to gain protection against personal liability caused by a legal judgement. Some brokers rush to get a “LLC” (limited liability corporation), as these are very popular, especially as vehicles to hold real estate. However, the California Bureau of Real Estate (“BRE”) does not recognize LLC’s.
Thus, we usually recommend that our real estate broker clients do the following:
1. Incorporate (S-Corp or C-Corp)
2. Fill out the BRE [RE 201 form] to get their corporation licensed.
3. Apply for any DBA”s you might need (any company names you plan to use in any real estate advertisements)
This can be done by the broker themselves, or we offer the full service for steps #1 and #2 above for $995 (which includes the drafting articles of incorporation and paying the filing fees to the state).
If you want to add DBA’s or Fictitious business names, we charge $250 per DBA (which will include the form required to be sent to the BRE (RE 204).
An S-corporation means that the broker will note all their income on their individual tax returns. The C-corporation files its own taxes.
For more information, discuss this with your tax accountant, or CPA.
4. We can also serve as your agent for service of process in California for $99 per year.
So if you want to get started setting your real estate corporation up the right way, contact us to discuss. You are going to need real estate counsel at some point, and the best way to establish a relationship with a real estate law firm is at the start. We have helped countless companies get started with corporations in California.
Other services we offer our real estate broker clients in California and Arizona
Our history of protecting, defending and counseling real estate clients goes back over ten years now. If you are facing a real estate issue get real estate counsel involved. We are cognizant that legal fees need to be affordable, and that services need to be responsive to your needs. We also offer these other valuable services on an “as needed” basis:
1. Helping you keep minutes of your corporation (helps preserve the “corporate veil”).
ATTORNEY STEVE TIP: You always want to make sure you observe the “corporate formalities” including taking minutes of your meetings, and filing your statement of information, paying corporate taxes, and being adequately capitalized. These things will help you in the event your business is ever sued and another company or individual is seeking to “pierce the corporate veil.“
2. Real estate licensing issues (ex. applying for a license with a criminal background)
3. BRE audits & accusations, investigations and response letters (including property management audits)
4. NMLS safe act licensing issues
5. Seeking approval of California broker advance fee agreements
6. Representing Plaintiffs and Defendants in real estate arbitration and litigation
7. Broker code of ethics violations
8. MLS legal issues
10. Real estate zoning and land use for commercial and residential broker clients (ex. seeking a variance or use permit or rezoning)
11. Eminent domain
13. Broker self-audits (trust fund handling consulting)
14. Handling disputes with associate brokers, agents, salespersons, or other real estate brokerages
15. Contracts, privacy policies, website compliance and other legal issues
Contact us if you have any questions or want to get started incorporating your business with the BRE (formerly the Department of Real Estate). We think you will find our fees fair and reasonable and services extremely responsive to your needs. We offer flexible legal fees on all of our services, including arbitration and real estate litigation.
Contact a Real Estate Broker Business Lawyer (CA | AZ cases)
We handles cases in California and Arizona. From San Diego, to Orange County, Los Angeles County, San Francisco, and Maricopa County. Attorney Steve Vondran is a licensed real estate broker in both California and Arizona and has run his own real estate company. He also has prior experience in residential mortgage lending and commercial real estate sales. We can be reached at (877) 276-5084 or by filling out the contact form below. We look forward to putting our experience to work for you.
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