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Real Estate License Reciprocity and Portability Guide 2019
Real estate license reciprocity represents the ability of an agent to get licensed in a new state based on their existing home state license. Real estate portability lets out-of-state agents conduct transactions within specific states, based on local laws. To help, we compiled license reciprocity and portability rules for all 50 states.
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What Is Real Estate License Reciprocity?
Real estate license reciprocity is an agreement between multiple states allowing real estate agents licensed in one state to be licensed in reciprocal states without taking local real estate pre-licensing courses. Reciprocity is state-specific, with some states requiring full re-examination, some requiring limited examination, and others flatly denying reciprocity to out-of-state licensees.
This means that a reciprocity agreement doesn’t necessarily allow a real estate salesperson or broker can take part in real estate transactions in a reciprocal state without getting a license in that state. For that, you need to understand the state laws for real estate license portability.
For example, if you have a New York State real estate salesperson’s license, you can apply for and get a Connecticut real estate salesperson license without taking the coursework required for licensure in Connecticut. You would, however, still need to take the Connecticut state portion of the exam. Keep in mind, however, that specific requirements vary from state to state.
What Is Real Estate License Portability?
Real estate license portability describes state laws allowing out-of-state real estate agents to engage in real estate transactions in their state. In general, there are three kinds of portability laws: cooperative, physical location, and turf states. Each of these classifications requires different circumstances under which an out-of-state real estate agent may work within the state.
There are three major classifications of real estate license portability:
1. Cooperative State
Cooperative states allow out-of-state real estate agents or brokers to physically enter the state to conduct real estate business. This includes property showings, closings, negotiations, and other stages of real estate transactions. However, in order for out-of-state agents to work in a cooperative state, they must have a co-brokerage agreement with a licensee of that state.
There are 24 cooperative states, including Alabama, Colorado, and Washington. Keep in mind, however, that some cooperative states, like Michigan, place limitations on out-of-state agents. So, you should always familiarize yourself with local requirements before committing to a client looking for property in a cooperative state.
2. Physical Location State
A physical location state allows agents and brokers to conduct business in another state but doesn’t allow them to enter the state for the purpose of conducting real estate business. This means that an agent or broker from another state must conduct all out-of-state business remotely and may not enter the state for showings, closings, or any other reason.
For example, in a physical location state, you can send your clients to view properties, submit offers on their behalf, and negotiate transactions as long as you physically remain in the state in which you are licensed. There are 21 physical location states, including Florida, Illinois, and Massachusetts, plus the District of Columbia.
3. Turf State
A turf state does not allow out-of-state agents or brokers to conduct any business in their state, either in-person or remotely. The only option to work with clients in a turf state is to refer them to a licensee of the turf state. There are six turf states: Kentucky, Missouri, Nebraska, New Jersey, Pennsylvania, and Utah.
If you have a lead who wants to buy or sell property in a turf state, your options are limited. If you work with a brokerage that has offices in multiple states, simply refer your client to someone in the appropriate turf state office.
Things to Keep in Mind When Operating in Other States
Conducting business for clients who are looking for property in another state can be tricky because local agents may try to poach their business. Unless you have a great relationship with your clients, consider requesting an exclusive buyer’s agreement. Just remember that most exclusive buyer’s representation contracts are only valid in the state you’re licensed in — not out-of-state.
In addition, assisting clients with out-of-state properties can be difficult unless you’re extremely experienced, have a great lawyer, or are being supervised by a broker experienced in out-of-state transactions. Transactions are complicated by convoluted reciprocity and portability laws, varying document formats, inconsistent recording requirements, and more. If you’re unsure of yourself, offer the client as a referral to avoid these problems and frustrations.
Out-of-state real estate practices can be complex, but you can look into state-specific license reciprocity and portability laws to determine whether you need to refer a client. Some states offer reciprocity with all states, while others have reciprocity agreements but require state-specific real estate courses. On the other hand, some states have agreements with a limited number of states or none at all.
Important note: You should consult an attorney or legal counsel before becoming involved in a transaction in another state. Failure to observe the law may result in loss of commission, or worse, even jeopardize your license. The following guide is for informational purposes only and is not meant to be taken as legal advice.
Real Estate License Reciprocity and Portability by State
Real estate reciprocity and portability vary by state, so it’s important to understand licensing requirements if you live near a state border or if travel is a substantial part of your business. To jump directly to your state, use the state-by-state table or browse through the 50 states below.
SOURCE: SOURCE: NEF2.COM