Realtors: Fine-tuning needed for business brokerage rules

A set of regulations that baffles and worries real estate brokers who handle business property might get a fresh look from the Nevada Real Estate Commission this week.

The regulations, which were required by a law approved by the Legislature in 2005, require a special permit for brokers who specialize in the sale of businesses.

But as commercial real estate brokers in northern Nevada began digging into the regulations in the weeks before the rules took effect on Jan. 1, they started sounding alarms.

One big question, said Teresa McKee, the legal counsel to the Nevada Association of Realtors, surrounds the type of transactions that would require the business-broker permit.

Stephen Haley, a Realtor in Reno, told the real estate commission last month that the regulations might require permits for brokers any time an investment property even a small rental property was sold.

Going back to legislative records, Haley said that doesn't appear to have been the intent of lawmakers. Instead, Haley said lawmakers apparently wanted the permits for brokers who handle sales of business opportunities that don't involve real estate.

Said Brad Bankowski, a Carson City broker who's been working on the issue, "The language in these regulations is very ambiguous. There are a lot of gray areas."

Gail Anderson, the administrator of the state's division of real estate, said members of the real estate commission relied on Internal Revenue Service definitions as they prepared their regulations.

She said they understand the worries of commercial real estate brokers, and the regulations are scheduled for discussion this week.

But even if the commission decides to revise the regulations, she noted that the new rules can be only temporary because the Legislature meets this year. Permanent new rules would have to wait until later in the year.

It's unlikely, McKee said, that the Nevada Association of Realtors will go back to lawmakers to get new legislation that would resolve the confusion.

"We're going to clean up what we can in the regulations," she said.

In the meantime, the association urges commercial brokers to tread carefully and get good legal advice as they handle deals that involve businesses.

Early on, a second worry for the brokers was the timing of the regulations.

Because the rules took effect Jan. 1, brokers wondered if deals in the pipeline before then would require a permit. The commission decided, however, that any transactions that were under contract by Dec. 31 don't require a permit for the brokers who were involved.

The business-broker permits require 24 hours of training, three hours of continuing education for annual renewal, and fingerprinting and a background check for applicants.