The Basics of License Portability
Transaction State: The state where the real property which is subject to the transaction is located.
Out-of-State Licensee (“OSL”): A licensee who holds a license in a state or jurisdiction other than the transaction state.
Portability Types
Cooperative State: Where a legal basis exists, either implicitly or explicitly, which allows an OSL to physically enter a state's physical borders to broker a transaction - with certain exceptions that may vary depending on the state. However, an OSL and a licensed broker of the Transaction State must enter into a written co-brokerage agreement which addresses responsibilities and the sharing of compensation. Statutes and/or regulatory rules typically list the requirements for the co-brokerage agreement and set forth the permissable and prohibited activities of an OSL in the Transaction State.
Physical Location State: An OSL cannot perform activities requiring a license while physically located in the Transaction State. However, the OSL can work on the transaction and receive part of the commission from a licensed broker of the Transaction State, as long as all licensed services conducted by the OSL are done so while the OSL is physically located in their state of licensure.
Turf State: An OSL may neither enter the Transaction State nor work on the transaction while the OSL is physically located in their state of licensure. A referral to a licensee of the Transaction State is usually permitted and would be mandatory if the OSL shares in any compensation. Referral fees can be negotiated and paid, but no licensed services can be performed by the OSL on that transaction.
Cooperative State: Where a legal basis exists, either implicitly or explicitly, which allows an OSL to physically enter a state's physical borders to broker a transaction - with certain exceptions that may vary depending on the state. However, an OSL and a licensed broker of the Transaction State must enter into a written co-brokerage agreement which addresses responsibilities and the sharing of compensation. Statutes and/or regulatory rules typically list the requirements for the co-brokerage agreement and set forth the permissable and prohibited activities of an OSL in the Transaction State.
Physical Location State: An OSL cannot perform activities requiring a license while physically located in the Transaction State. However, the OSL can work on the transaction and receive part of the commission from a licensed broker of the Transaction State, as long as all licensed services conducted by the OSL are done so while the OSL is physically located in their state of licensure.
Turf State: An OSL may neither enter the Transaction State nor work on the transaction while the OSL is physically located in their state of licensure. A referral to a licensee of the Transaction State is usually permitted and would be mandatory if the OSL shares in any compensation. Referral fees can be negotiated and paid, but no licensed services can be performed by the OSL on that transaction.
Need a Broker of Record?
Submit your questions in the form, we'll get back to you within an hour.