Q. Can commissions be paid to an LLC?
A. Whether commissions can be paid to an LLC depends on how the LLC is established and by whom. First and foremost, Massachusetts real estate licensing laws prohibit the sharing
of fees, commissions, or other valuable consideration with an unlicensed individual. This restriction extends to corporate entities, such as LLCs, which must be validly licensed. For a corporation to become licensed, Massachusetts General Laws Chapter 112, Section 87UU mandates that a partner or officer of the corporation hold an individual broker’s license. This means that the corporate entity must have its own corporate broker’s license in addition to the officer’s individual broker’s license. If the principal no longer holds an active broker’s license, the corporation also loses its valid license. As a result of this requirement, salespersons may never receive real estate commissions through an LLC or other corporate entity. For individuals with a broker’s license, setting up an LLC to receive commissions is possible, provided the entity is properly licensed, which includes obtaining a separate broker bond.
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Written by: Justin Davidson, General Counsel; Catherine Taylor, Associate Counsel; Kate Berard, Associate Counsel; and Jonathan Schreiber, Legislative & Regulatory Counsel. Services provided through the Massachusetts Association of REALTORS® is intended for informational purposes and does not constitute legal advice, nor does it establish an attorney-client relationship. The Massachusetts Association of REALTORS®, by providing this service, assumes no actual or implied responsibility for any improper use of responses to questions through this service. The Massachusetts Association of REALTORS® will not be legally responsible for any potential misrepresentations or errors made by providing this service. For more information regarding these topics authorized callers should contact the MAR legal hotline at 800-370-5342 or e-mail at legalhotline@marealtor.com