For many real estate agents, particularly those who live near a state border, the lure of taking on clients in both states can be attractive. Before you do so, you might want to ensure you have the proper licensing to do so.

During a recent webinar, California Real Estate Commissioner, Wayne Bell was asked if it Is a California licensing violation for a California real estate licensee to transact out of state sales in violation of the out of state licensing law.

According to Realty Times, Bell first pointed out that it is likely most California agents would not be pleased if agents licensed in other states were coming to the Golden State to transact real estate business. Second, he noted that he has been on contact with commissioners in neighboring states regarding this issue.

According to the report, there are provisions in the California Business and Professions Code (B&P) that address this issue.

According to B&P 10176, which covers fraud and misrepresentation, several situations are outlined, including using false promises to influence, persuade, or induce; comingling of funds; making substantial misrepresentations. It also includes Section (i) “Any other conduct, whether of the same or a different character than specified in this section, which constitutes fraud or dishonest dealing.”

Moreover, B&P Section 10177 provides that a license may be suspended, revoked, or denied to a person who has knowingly allowed distribution, or circulation of a material false statement or representation concerning his or her designation or certification of special education, credential, trade organization membership, or business.

Securing a real estate license is an investment and real estate license reciprocity, the ability for agents or brokers licensed in one state to more easily get a license in another state, is pretty important for the travelling agent or agents who live in border markets.

It is important to know the reciprocity agreement between the states you are working in.

Many people may think that a reciprocity agreement is all-encompassing, however it does not mean that 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, agents need to understand the state laws for real estate license portability.

Real estate license portability describes state laws which allow for out-of-state real estate agents or brokers to take part in real estate transactions in their state.

There are three classifications of real estate license portability. They include cooperative state, physical location state and a turf state.

There are 26 cooperative states, 21 physical location states, including Florida, Illinois, Massachusetts, and Washington, D.C., and four turf states; Nebraska, New Jersey, Pennsylvania, and Utah.

This article is for informational purposes and is not presented as legal advice. Ultimately, agents would be best served by consulting an attorney or legal counsel before participating in an out-of-state transaction. Failing to adhere to state laws could result in the loss of a commission or even put your license in peril.