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AGO 1954 No. 337 - November 01, 1954
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Don Eastvold | 1953-1956 | Attorney General of Washington

REAL ESTATE BROKERS ‑- ADVERTISING FEES ‑- ADVANCED FEES

(1) A non-licensed person may sell advertising, but if the transaction in any way contemplates an act required to be licensed under chapter 18.85 RCW, then a violation of law has been committed.

(2) A broker may receive compensation in advance of sales if the terms of his contract of employment so provide, but he may remain liable for its repayment in the event he fails to earn his commission.

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                                                                November 1, 1954

Honorable Della Urquhart
Director of Licenses
Olympia, Washington                                                                                                              Cite as:  AGO 53-55 No. 337


Dear Mrs. Urquhart:

            By your letter with enclosures of October 13, 1954, you have asked the following questions pertaining to real estate brokers and salesmen:

            (1) Is it unlawful for fees to be taken by nonlicensed individuals in consideration for advertising real estate for sale?

            (2) Is it unlawful for advance fees to be taken by licensed real estate brokers to defray advertising expenses, and which fees are deductible from the commission due the broker in the event of a sale?

            As regards Question 1, a nonlicensed person may sell advertising but if the transaction in any way contemplates an act required to be licensed under chapter 18.85 RCW, then a violation of law has been committed.

            As for Question 2, a broker may receive compensation in advance of sale if  [[Orig. Op. Page 2]] the terms of his contract of employment so provide, but he may remain liable for its repayment in the event he fails to earn his commission.

                                                                     ANALYSIS

            Authorities are unnecessary to establish that one may be an advertising agent without engaging in the real estate business.  Therefore, a person holding neither a real estate broker or salesman license can lawfully sell advertising for compensation, regardless of the medium employed and regardless of the subject matter advertised.  Real estate is, of course, a legitimate subject of advertisement.  However, if such a nonlicensed person, as part of the same transaction, purports to, or does engage in the purchase, sale, exchange, rental or negotiation therefor of real estate, or any interest therein, including business opportunities, or holds himself out to the public as being so engaged as respects the property of another, a serious transgression of the law results.  Such person is then engaging in the real estate business for compensation and without a license.

            In answer to Question 1, it is our conclusion that a nonlicensed person may, of course, sell advertising but if the transaction of sale in any way contemplates an act required to be licensed under chapter 18.85 RCW, then a violation of law has been committed.

            The right of a broker to compensation is dependent upon his contract of employment, 8 Am.Jur. § 139.  An advance to defray advertising expenses is not necessarily compensation to the broker as a fee for real estate brokerage service.  This will depend upon the contract of employment.  But, assuming it to be such compensation, the time and manner of payment is again dependent upon the terms of the contract of employment, 8 Am. Jur. § 145.  If an employer wishes to pay a portion of the broker's fee in advance of sale for any purpose, there is no law which would make this per se illegal.  However, unless the contract of employment clearly provided otherwise, the broker would be obligated to repay the sum advanced in the event he failed to find a buyer for the property and thereby earn his commission.

            In answer to Question 2, it may be said that a broker may receive compensation in advance of sale if the terms of his contract of employment so provide, but he may remain liable for its repayment in the event he fails to earn his commission.

Very truly yours,

DON EASTVOLD
Attorney General


E. ALBERT MORRISON
Assistant Attorney General

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