If you’re thinking of helping a friend, neighbor or relative buy, sell or rent a home, apartment or commercial property, you’d better think again. Conducting such activities without the benefit of a real estate license could be illegal and a felony.
In 2008, the New Mexico Real Estate Commission fined two Ruidoso-area property managers $1,000 each for managing 12 rental complexes without a license. At the time, their actions were considered a misdemeanor under New Mexico law. Were those managers found guilty of such behavior today, they’d be facing felony charges.
That’s because a change in the law that took effect July 1, 2011, makes it a fourth-degree felony to “lease, rent, manage, sell, exchange, auction or option property for others without a real estate broker’s license.” The penalty for conducting such activities can carry a fine of up to $5,000 and 18 months in jail on each count, according to former NMREC Chief Investigator Walter Mullen. Keep in mind that selling or leasing one’s own property without a license is perfectly legal.
New Mexico law also states that “the attorney general or the district attorney of the judicial district in which the person resides or the judicial district in which the violation has occurred or will occur may, upon application of the commission, maintain an action in the name of the state to prosecute the violation or to enjoin the proposed act or practice.”
While the practice is particularly pervasive in tourist-driven communities, similar situations have occurred right here in Las Cruces. In one instance, a father advertised his daughter and son-in-law’s home for sale in a local newspaper and negotiated on their behalf when a buyer decided to make an offer.
On another occasion, a local homeowner assisted his next-door neighbor by advertising and showing the neighbor’s property to prospective renters, eventually executing a lease on the owner’s behalf. In neither case were the kind-hearted helpers licensed to conduct such activities. Lucky for them no one complained, so the violations went unnoticed and unpunished (as far as I know).
As is the case with many laws, there is a loophole available to family members and relatives who assist with the sale or lease of another family member’s property. That loophole comes in the form of a power of attorney. A power of attorney is a written authorization to represent or act on another's behalf in private affairs, business or some other legal matter. Keep in mind that the loophole applies only to family members and relatives, to the fourth degree.
What is a family member or relative to the fourth degree? Let’s begin at the beginning. A family member to the first degree is a parent or child. Second-degree relatives include grandparents, brothers, sisters and grandchildren. Great-grandparents, aunts and uncles, nieces and nephews, and great-grandchildren are considered relatives in the third degree. Great-great-grandparents, great uncles and aunts, first cousins, and grand nephews and nieces fall into the fourth-degree category. Friends and neighbors are definitely not on the loophole’s list of exceptions.
While the law pertaining to real estate sales is exceedingly clear, the rules concerning renting and leasing are more complex. It is for that reason that landlords and tenants alike should familiarize themselves with The New Mexico Owner-Resident Relations Act , which is the definitive guide to renting and leasing residential properties in New Mexico.
Real estate is a serious and complicated business that is best handled by individuals who have the background, training and legal authority to oversee the process. Buyers, sellers, landlords and tenants can be easily deprived of the rights and obligations they enjoy under the law when the rules, regulations and laws are not followed to the letter.
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