BRUCE CAGENELLO
Becoming a limited liability company or becoming incorporated are traditional steps that real estate brokerage professionals take as their businesses grow, but despite a previous warning from the Connecticut Real Estate Commission, many companies have not taken the necessary steps to license their legal entity with the Department of Consumer Protection.
The Real Estate Commission recently voted to establish a period of amnesty that will run to the end of 2005 for companies that have not properly licensed their entities. Until the commission granted the amnesty, at least a couple of companies were being fined for the violation every month, according to commission Chairman Bruce Cagenello.
This is the second period of amnesty the commission has established in the last several years. The first was established after an initial wave of fines against brokers who did not get their entities licensed in the hope that it would publicize the law to other companies and allow them to license their entities without incurring fines.
But Cagenello said he believes the first period of amnesty was not sufficiently publicized, and that is likely why many companies still have not applied for the proper license.
“A lot of the brokers are not licensing their entities,” Cagenello said. “Our main concern is to get everybody under the law.”
The lack of proper licensing is likely due to a misconception about the law that requires the entities to be licensed.
“Due to a popular misconception in the state’s real estate industry, many companies are merely operating pursuant to an individual broker’s license, when in fact the law requires separate licensure of any business entity, such as corporations, limited liability companies or partnerships,” said DCP Deputy Commissioner Jerry Farrell Jr. in a prepared statement. “This is an opportunity for the industry and the regulating body to close this gap in understanding.”
Farrell, who previously worked as a private attorney in the field of real estate and corporate law, has led the amnesty effort.
Easy Process
Small, single-office companies are the most likely to have not applied for the correct license, according to Cagenello. In most cases, real estate brokerage businesses have become incorporated or have filed Articles of Organization to become a limited liability company. That allows recognition of the business entity by the Secretary of State’s Office, but many businesses have not taken the additional required step of licensing their legal entities with the Department of Consumer Protection, according to the DCP.
When companies do not license the entities with the DCP, they are engaging in the business of real estate as an unlicensed legal entity and are subject to fines by the Real Estate Commission.
Getting a legal entity licensed is a fairly easy process, according to Cagenello. The application for a legal entity license is available on the Department of Consumer Protection’s Web site at www.ct.gov/dcp, then by following links to Real Estate Licensing. The necessary form is entitled “Application for a Legal Entity to Become a Broker or Reinstate.”
During the amnesty period, no fines or penalties will be assessed against legal entities that come forward to become properly licensed. To qualify, a completed license application for a legal entity, along with all other documents and fees required, must be received no later than Dec. 31 at the Department of Consumer Protection, Real Estate Licensing Unit, 165 Capitol Ave., Hartford, CT 06106.
The amnesty period, however, does not apply to businesses that were once properly licensed but have failed to renew or reinstated their entity license.
The Real Estate Commission, which helps determine licensing requirements for real estate salespeople and companies, also recently became more involved in a national organization that focuses on real estate licensing. Cagenello attended a district meeting of the Association of Real Estate License Law Officials, or ARELLO, in June. Connecticut will host the next one on June 25 and 26 at the Mystic Hilton.
ARELLO connects various departments, divisions and commissions with others from around the world. The organization’s mission is to “provide them with resources for effectively administering the licensing, regulation and enforcement for the real estate industry,” according to ARELLO. Its long-term goal is to be recognized as the global leader on real estate regulatory matters, according to its Web site.
