NEW COURT OPINION -- REAL ESTATE COMMISSIONS CAN BE RECOVERED FROM UNLICENSED "BROKERS" BUT ONLY BY THOSE WHO PAID THEM

San Antonio Texas Real Estate Attorney Trey Wilson wrote:

In Texas, persons engaging on certain real estate activities for a commission or other consideration are generally required to hold a license or certificate of registration issued by the Texas Real Estate Commission (TREC). TEX. OCC. CODE ANN. § 1101.351(a). In particular, broker functions, including negotiating or attempting to negotiate the listing, sale, exchange, purchase or lease of real estate, usually require a TREC license. TEX. OCC. CODE ANN. § 1101.002(1)(A)(iii). NOTE: There are notable exceptions to the rule including attorneys (See TRELA §1101.005(1), and persons selling their own property (regulated real estate brokerage activities must be "for another" person or entity. This means that persons who are buying, selling or leasing their own property do not need a license; they are acting for themselves and not for another person).

In fact, Section 1101.758 of the Real Estate License Act (RELA) establishes that it is a crime for an unlicensed person to engage in activity for which a real estate license is required.  

Further there exists a statute expressly creating a PRIVATE CAUSE OF ACTION, and right to file suit, against persons who receive a commission or other consideration as a result of acting as a broker or salesperson without holding a license or certificate of registration issued by TREC. TEX. OCC. CODE ANN. § 1101.754.  Under that statute, an unlicensed person is  liable to an "aggrieved person" for a penalty of not less than the amount of money received or more than three times the amount of money received. Id. The statute, however, does not define the term "aggrieved person."

In an opinion issued earlier this week (May 14, 2013) the Houston Court of Appeals (1st District) interpreted TEX. OCC. CODE ANN. § 1101.754 to mean "that the aggrieved person must have paid that commission to have standing to pursue a private cause of action under RELA." See Shanklin vs. Bassoe Offshore USA, Inc. Tex. App. 1st Dist [Houston] 2013.  Thus, the Court reasoned, a person does not have standing under the statute unless the payed  a commission "because a claimant is aggrieved by the specific conduct of the person receiving a commission without having a license." See Id.

If you have paid a real estate commission to an unlicensed person (including a TREC licensee whose license is suspended), you should contact an experienced real estate litigation attorney to evaluate whether you might recover that commission under Section 1101.754 or another provision of law.  NOTE: Conducting real estate brokerage activity with an inactive license is considered a violation subject to sanctions. [TRELA §1101.351(c)]