7-31-17   •   Vol. 2017 Issue 27    •   Brian Copeland, 2017 President   •  Phil Newman, Editor

TAKEAWAYS:
✔  Let the FCC know about the importance of net neutrality
✔  Hotline: Should real estate licensees form an LLC?
✔  Get the scoop on the future of Homesnap ————->
✔  Register for
Fall Convention, Sept. 13-16 in Memphis!

Make Your Voice Heard on Net Neutrality
A big change could affect how fast customers view your website and your listings, video home tours, photos, and more. The Federal Communications Commission (FCC) is proposing a rollback of net-neutrality rules that govern the internet. The current rules prevent internet service providers (ISPs) like Comcast and Verizon from giving premium deals to websites so that consumers access their sites faster. The National Association of REALTORS® is part of a coalition supporting net neutrality so that brokerages and other industry sites can compete on an even playing field. **The FCC is taking public comments on the proposed rollback. Search “Restoring Internet Freedom” on fcc.gov to read and comment.

Talking Politics with Clients?
In THIS REALTOR® magazine article, Graham Wood tackles political questions including: “Even if you know better than to raise contentious topics, do you have a ready approach for dealing with others who tend toward the incendiary? How much discomfort will you tolerate from quarrelsome peers before deciding to leave a brokerage or stop working with a client whose views you find virulent? Or are you the one who needs to develop better filters for your own speech?” Read the whole story HERE.

Register for our Fall Convention!
We want you to save your place for a great event, Sept. 13-16 at The Peabody in Memphis! Scroll down for details, OR watch the preview video (left) starring 2017 President-Elect Leon Dickson Sr., OR head straight to the Registration page HERE.

Committee Nominations: Open until Aug. 31
Are you ready to serve in statewide leadership? Submit an application for a 2018 Tennessee REALTORS®committee, RPAC Trustee and/or TREEF Trustee position. To be considered, you MUST apply by Aug. 31, 2017. Committee and RPAC trustee positions, go HERE. TREEF trustee positions, go HERE(member login required)

The Future of Homesnap — Free Webinar 8/2
Hear from Homesnap’s Gayle Weiswasser as she talks with RETI’s Juanita McDowell about this powerful app for consumers and real estate professionals, in a free webinar from the Real Estate Technology Institute (RETI), a Tennessee REALTORS® partner, 3 p.m. EDT/2 p.m. CDT this Wed. 8/2. RegisteHERE.

Note: Our hotel block at The Peabody is full, but don’t let that stop you from registering for what will be a great Fall Convention! There are several hotels very close by; for a list of options, go HERE. To register for the convention, click anywhere below.

Get details and Register HEREView/print the Schedule HERE.
See our all-star CE Speakers HERE. Help us thank our generous Sponsors HERE.

Source: Tennessee REALTORS® Legal & Ethics Hotline Counsel

The ABCs of LLCs

Real estate licensees are often interested in forming a Limited Liability Company (LLC) to receive commission. This week’s Q&As explain why that is not allowed by the Tennessee Real Estate Commission (TREC), disclosure required if a licensee has ownership interest in an LLC separate from their real estate practice, and why a team should not form an LLC.

Disclose Agent/Buyer’s Interest in LLC?

Q: I have an agent who is buying a property using another agent to represent him in the transaction. The “buyer” is an LLC that my agent has ownership in. Is he required to disclose that he is a licensed real estate agent?

A: Disclosure is recommended. Under Tennessee law, if the property owners own the property in their individual capacity, then an owner/agent disclosure must be made. However, if the property is owned by an LLC, corporation or certain types of partnerships, then this is not necessary since the law views these businesses as separate legal entities.

However, under the Code of Ethics, a REALTOR® is obligated to disclose ownership or “any interest” in the property being sold. That would include any legal ownership or possible future ownership, such as through inheritance or ownership interest in an LLC.

Agent Paid as an LLC?

Q: My CPA wants me, as an agent, to become an LLC. Is that legal?

A:An agent can only be paid by his or her broker. Therefore, an individual licensee who has “incorporated” or “LLC’ed” himself cannot be paid a commission through the company. The individual holds the license, not the company. The only time that a company can hold a license is if it is a firm license. A company cannot be issued an individual license. As set forth in Tenn. Code Ann. § 62-13-302(a):

“It is unlawful for any licensed broker to employ or compensate any person who is not a licensed broker or a licensed affiliate broker for any of the acts regulated by this chapter. A licensed nonresident broker may pay a commission to a licensed broker or another state if such nonresident broker does not conduct in this state any of the negotiations for which a commission is paid.”

In addition, Tenn. Code Ann. § 62-13-312(b)(11) states that an agent can be disciplined for “Accepting a commission or any valuable consideration by an affiliate broker for the performance of any acts specified in this chapter, from any person, except the licensed real estate broker with whom the licensee is affiliated.”

An agent can only be paid in the name of their license—whether it is a firm license or their individual license.

Team Form as an LLC?

Q: We were looking at forming a team as a group of three or four agents; is there an entity type that would be better liability-wise, such as an LLC?

A: A team should not be an LLC or a corporation due to the same payment reasons listed in the answer just above. Even if you “LLC” or incorporate your team, it is likely that this will not protect you individually.

TREC rule 1260-02.12(f) would also discourage making your team an LLC or corporation:

No licensee shall advertise in a false, misleading, or deceptive manner. False, misleading, and/or deceptive advertising includes, but is not limited to, the following: 1. Any licensee advertising that includes only the franchise name without including the firm name; 2. Licensees who hold themselves out as a team, group, or similar entity within a firm who advertise themselves utilizing terms such as “Real Estate,” “Real Estate Brokerage,” “Realty,” “Company,” “Corporation,” “LLC,” “Corp.,” “Inc.,” “Associates,” or other similar terms that would lead the public to believe that those licensees are offering real estate brokerage services independent of the firm and principal broker;

LINKS:

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