If you’re considering helping a friend, neighbor, or relative buy, sell, or rent a house, apartment, or commercial property, you better think again. Conducting such activities without the benefit of a real estate license could be illegal and a crime.
In 2008, the New Mexico Real Estate Commission fined two Ruidoso-area property managers $1,000 each for running 12 rental complexes without a license. At the time, their actions were considered a misdemeanor under New Mexico law. If these managers were found guilty of such behavior today, they would face felony charges.
Indeed, a change to the law that took effect July 1, 2011 makes it a fourth-degree felony to “rent, lease, manage, sell, trade, auction, or option property for others without a real estate broker‘s license.” “. The penalty for carrying out such activities can carry a fine of up to $5,000 and 18 months in prison for each count, according to former NMREC chief investigator Walter Mullen. Keep in mind that selling or renting out your own property without a permit is perfectly legal.
New Mexico law also states that “the attorney general or district attorney for the judicial district in which the person resides or the judicial district in which the violation occurred or will occur may, at the request of the commission, maintain action on behalf of the state to prosecute the violation or prohibit the proposed act or practice”.
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Although the practice is particularly prevalent in tourist communities, similar situations have occurred right here in Las Cruces. In one case, a father advertised the sale of his daughter and son-in-law’s home in a local newspaper and negotiated on their behalf when a buyer decided to make an offer.
On another occasion, a local landlord helped his neighbor by advertising and showing the neighbor’s property to potential tenants, eventually signing a lease on the landlord’s behalf. In neither case were benevolent helpers allowed to carry out such activities. Luckily for them, no one complained, so the violations went unnoticed and unpunished (as far as I can tell).
As is the case with many laws, there is a loophole available to family members and relatives who assist in the sale or rental of another family member’s property. This loophole comes in the form of a power of attorney. A power of attorney is a written authorization to represent or act on behalf of another in private matters, business or any other legal matter. Keep in mind that the escape only applies to family members and relatives, up to the fourth degree.
What is a family member or fourth degree relative? Let’s start at the beginning. A first degree family member is a parent or a child. Second-degree relatives include grandparents, brothers, sisters, and grandchildren. Great-grandparents, aunts and uncles, nieces and nephews, and great-grandchildren are considered third-degree relatives. Great-great-grandparents, great-uncles and aunts, first cousins, and great-nephews and nieces fall into the category of the fourth degree. Friends and neighbors are certainly not on the list of loophole exceptions.
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While the law relating to real estate sales is extremely clear, the rules regarding renting and leasing are more complex. It is for this reason that landlords and renters should familiarize themselves with the New Mexico Landlord-Resident Relations Law, which is the definitive guide to renting and renting residential property in New Mexico.
Real estate is a serious and complicated business that is best run by people who have the experience, 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 strictly followed.
Meet at closing time.
Gary Sandler is a full-time realtor and president of Gary Sandler Inc., real estate agents in Las Cruces. He loves answering questions and can be reached at [email protected] or 575-642-2292.