Anyone who wants to sell real estate as a salesperson, real estate agent, or real estate broker must first obtain a license to do so from the state in which they live. State real estate license requirements differ slightly from state to state, but all usually require that an applicant complete a minimal amount of real estate education, submit an application to the state real estate governing organization, and pass a written examination. Only after you have received a state license can you act as a real estate salesperson or agent. If you don't have a license and attempt to buy or sell real estate as an agent, you have committed the crime of practicing real estate without a license.
While state laws differ slightly, the definition of what it means to practice real estate hinges on whether you act on behalf of someone else in a real estate transaction. Any time you act on someone else's behalf when buying or selling real estate in order to receive a fee, commission, or other type of compensation, you have engaged in the practice of real estate. To do this legally you must be properly licensed. If you are not licensed, you have committed a crime. Also, you cannot engage in real estate negotiations on someone else's behalf or even attempt to conduct a real estate transaction for another person or organization unless you are properly licensed.
In order to obtain a real estate license, you must submit an application detailing your qualifications, criminal history, and other personal information. If you knowingly submit a false application or purposefully falsify your answers, this too can result in a practicing real estate without a license crime. For example, if you apply for a real estate license and conceal the fact that you have previously been convicted of a crime, you can be convicted of the unlawful practice of real estate even if the state denies your application, as any attempt to attain a license under false pretenses is a crime.
In cases where people hold themselves out to be properly licensed real estate agents or brokers, the crime of practicing real estate without a license occurs in each separate transaction. For example, if you have a real estate license in one state, move to another and fail to apply for real estate license in the new state, you cannot act as a real estate agent. If you choose to do so, each transaction you engage in as someone else's broker or agent is considered a separate offense.
While all states require anyone acting as a real estate agent or broker to first obtain a proper license, those laws do not prevent property owners from acting on their own behalf. This means, for example, that you can sell your own property, or buy real estate, without having a real estate license.
In some states, the crime of practicing real estate without a license either a misdemeanor or felony offense. In others, the law provides for enhanced penalties for repeat offenders. For example, the state of Kentucky penalizes engaging in real estate brokering without a license for the first time as a misdemeanor offense, while any subsequent acts are charged as felonies. (Kentucky Revised Statutes section 324.990.)
The states provide for various penalties when it comes to the crime of engaging in real estate without a license. A person convicted of this crime will face several potential punishments, though the severity of these will differ depending on the severity of the case.
Prison or jail. The primary difference between a misdemeanor and a felony crime is the potential length of any jail or prison sentence. Any crime where the potential maximum sentence is up to one year in jail is categorized as a misdemeanor, while one where the potential for a year or more in prison is possible is considered a felony. Depending on the state, a conviction for the unauthorized practice of real estate can lead to maximum penalties ranging from up to a year in jail or four years or more in a state prison.
Fines. In addition to or apart from any jail or prison sentence, courts can also impose a fine if you are convicted of the unauthorized practice of real estate. Fines differ widely, but misdemeanor fines are typically up to about $1,000, while felony fines can reach $5,000 or more.
Probation. Courts may also order probation as part of a criminal sentence. When a court orders probation, it allows the convicted person to serve a sentence, typically 12 months or longer, outside of jail or prison. During that time the person on probation has his or her liberties restricted, and must comply with various court orders or conditions of probation. These conditions typically require the probationer to pay all required fines, court costs, and restitution; as well as find or maintain employment, refrain from the further practice of real estate, not engage in any other crimes, and regularly report to a probation officer. A person on probation who fails to meet all the required conditions will face additional penalties, such as higher fines, extended probation periods, or may even have his or her probation revoked and end up serving an incarceration sentence.
Restitution. If, during the course of acting as a real estate agent, you charge others for your services, a court will likely make restitution a part of the sentence. When you are ordered to pay restitution you have to compensate those who were the victims of your crime for any damages you caused. You must pay restitution in addition to any applicable court costs and criminal fines, and must also do so as a condition of your probation.
It's important to receive qualified legal advice if you are ever facing any type of criminal charge or investigation. Real estate licensing requirements and laws that prohibit engaging in the practice of real estate without such a license differ significantly from state to state. Only an attorney in your area can provide you with legal advice relevant to your situation that takes into account not only the appropriate laws, but also the attorney's experience with area prosecutors, police, and courts. You should never speak to investigators or make a decision about your case until you have consulted with an experienced criminal lawyer near you.