Whether commissions can be paid to an LLC depends on how the LLC is established and by whom. First and foremost, Massachusetts real estate licensing laws prohibit the sharing of fees, commissions, or other valuable consideration with an unlicensed individual. This restriction extends to corporate entities, such as LLCs, which must be validly licensed. For a corporation to become licensed, Massachusetts General Laws Chapter 112, Section 87UU mandates that a partner or officer of the corporation hold an individual broker’s license. This means that the corporate entity must have its own corporate broker’s license in addition to the officer’s individual broker’s license. If the principal no longer holds an active broker's license, the corporation also loses its valid license.
As a result of this requirement, salespersons may never receive real estate commissions through an LLC or other corporate entity. For individuals with a broker's license, setting up an LLC to receive commissions is possible, provided the entity is properly licensed, which includes obtaining a separate broker bond.
Courtesy of the Massachusetts Association of REALTORS® Legal Team.