Unlicensed “property finder” charging tenants one month’s rent?

[Jade Smith]

Is it allowable for an unlicensed “property finder” (unconnected to any brokerage) to charge tenants large commissions to find them luxury homes to rent? 

Here’s the detail:

Last year, we were tenants looking for a very specific luxury property (we needed an owner that would permit us to sublease when we were away travelling). Impossible to find, and no luck through our broker.

We were approached by an unlicensed “property finder” (not connected to any brokerage) who convinced us to let her search for our home.

She found us a home that hit our specs (including a wonderful landlord allowing us to sublease) and charged us a finder’s fee of an entire month’s rent (18k). At the time, it was worth it. But we now know that many of these unlicensed finders are not following the rules.

Is it even allowable for an unlicensed “property finder” to charge tenants like this?

I know the rules for how licensed brokers can pay “unlicensed finders” is clear, but what about when tenants are the ones paying? 

We were under the impression she would just find the property for us and let us take it from there. But she inserted herself heavily in the negotiation, even after we asked her not to. We had no agreement with her that she could negotiate on our behalf. Isn’t this a licensed activity?

We learned later that she was asking for a commission on both sides, asking an additional 18k from the landlord’s broker! She had no interest in getting the rent down for us, and was playing both sides. Of course they didn’t pay her.

She made us sign an MOU where payment was contingent on the lease being signed. Doesn’t that go beyond what a finder can do, which is simply to connect two parties? 

We pay her in chunks over the course of the 3 year lease. If what she was doing was offside, I don’t want to be doing this.

Finally, please don’t judge - we know we were too naive at the time, and we would only ever work through licensed brokers now. She was a master convincer, saying her role and fee was completely permissible, and we trusted it.

[Bill B.]

So you were happy with the service until you found out she might need a license? If you do find out she doesn’t need a license you’ll be happy again? If you weren’t happy you shouldn’t have used her. It is a compliment to say she could do something quickly and easily that your broker said was impossible. Personally I can’t believe she found you a “high end” property that would let you sublease. I wouldn’t let a tenant sublease my lowest end property.