Broker of record for business brokers

When a business sale becomes a real estate deal

Three things usually trigger it:

• The lease. In most states “real estate” is defined to include leasehold interests, so negotiating or assigning the lease for a fee is licensed activity. Vermont is the only state that expressly excludes leaseholds.
• The building. When the seller owns the real estate and it transfers with the business, that part of the deal is a real estate sale.
• Five states. California, Florida, Minnesota, South Dakota and Wisconsin require a real estate license to broker the sale of a business itself, with or without real estate. Illinois requires a separate registration.

Every state, with the statute behind it, is in our 50-state reference.

If your firm is based in one of our states

I can serve as your firm's licensed broker in Texas, Florida, Georgia, Tennessee or Utah, wherever you are based or take listings. Here is what each one requires of a business broker:

• Florida. A license is required for business brokerage itself. Fla. Stat. § 475.01(1)(i) defines real property to include “any interest in business enterprises or business opportunities,” so selling a business in Florida is real estate brokerage, lease or no lease. Your firm registers as a Florida brokerage with me in a governing position, and your brokers are licensed under it.
• Texas. No separate business broker license, and Chapter 1101 never mentions business opportunities or goodwill. But Tex. Occ. Code § 1101.002(6) defines real estate as any interest in real property, which reaches the lease and any building. The Texas Association of Business Brokers recommends its members get licensed for that reason.
• Utah. Utah Code § 61-2f-102 treats a business opportunity as a sale that includes an interest in real estate, so the lease or the building is the trigger.
• Georgia. Georgia's broker definitions (O.C.G.A. § 43-40-1) all key on real estate, with no business-opportunity provision. The license comes in with the lease or the building.
• Tennessee. The definition that decides who needs a license (Tenn. Code Ann. § 62-13-102(4)(A)) is real-estate-only, so the lease or the building is the trigger. Reasonable lawyers could read it differently, so we check each Tennessee deal.

Outside these five states, we cover deals through co-brokerage.

Why it has to be in place before the listing is signed

A broker who was not licensed when the work began generally cannot sue to collect the commission. In Texas, § 1101.806 requires anyone suing for a brokerage fee to allege and prove they held a license when the brokerage began. Bringing a licensed broker in after a buyer appears does not fix that. The license has to be on the deal when the work starts.

What we do for a business brokerage firm

• Serve as your firm's licensed broker (designated, qualifying or principal broker, depending on the state) in Texas, Florida, Georgia, Tennessee and Utah, so the firm itself is licensed and can be paid on the real estate part of a deal
• Sponsor your brokers who hold, or get, a real estate license under the firm, with the supervision the state requires
• Triage deals before the listing is signed: which state, whether a lease or building is involved, and whether a licensed broker needs to be on it
• Review the real estate parts of your listing and purchase documents, and the fee language that goes with them
• Cover deals in states where we are not licensed through co-brokerage with a licensed partner broker

How a deal runs

• Before the listing. You send a one-page summary: the state, whether a lease or building is involved, and the deal size. I tell you whether a licensed broker is needed and for which part.
• The listing. Where a license is needed, the licensed firm or the co-broker is on the listing agreement from the start.
• Closing. The real estate portion of the fee is paid through the licensed firm, as state law requires.

Who this fits

• Practice-transition firms selling dental, veterinary, medical, optometry, chiropractic and accounting practices
• Main Street business brokers whose deals include a lease
• M&A advisors whose deals include owned real estate
• Firms taking listings in Florida, one of the five states that license business brokerage itself

What this does not cover

• Stock and membership-interest sales. State securities law can apply regardless of real estate licensing, and the federal M&A broker exemption does not override state law.
• Valuations. We do not value the business.
• Legal and tax advice. I am a licensed broker, not an attorney.

Common questions

Do business brokers need a real estate license?

Usually not for the business alone. Five states require one to broker a business sale even without real estate: California, Florida, Minnesota, South Dakota and Wisconsin. In most other states the license comes into play when the deal includes a lease or real estate, because real estate is defined to include leasehold interests.

Does assigning a lease require a real estate license?

In most states, negotiating a lease assignment for compensation is real estate brokerage, because the state's definition of real estate includes leaseholds. Vermont is the only state that expressly excludes them. Check the specific state before the listing is signed.

Can you cover a deal in a state where you are not licensed?

Yes, through co-brokerage with a licensed partner broker in that state. We confirm coverage for the specific state in writing before you sign, and share the partner's name and license number at scoping.

Do business brokers in Florida need a real estate license?

Yes. Florida defines real property to include any interest in business enterprises or business opportunities (Fla. Stat. § 475.01(1)(i)), so brokering a business sale in Florida is real estate brokerage even with no lease or building. A Florida business brokerage firm registers as a brokerage with a licensed broker in a governing position, which is the role we fill.

Does Texas have a business broker license?

No. Texas has no separate business broker license. A Texas real estate license is still needed when the deal includes negotiating a lease or selling real property for compensation.