Commissions on hundreds of commercial real estate deals in Boston and throughout Massachusetts may be in peril because the brokers involved in the transactions have let their licenses lapse. 

An investigation by Banker & Tradesman has uncovered almost a score of top brokers – and in some instances, entire brokerages – that are not legally empowered to be doing deals. In many cases, the license failures go back years.

Indeed, because the “brokers of record” – or supervisory broker – at notable firms such as Cresa Partners and Lincoln Property Co., are no longer licensed, that means that every deal done by every agent at those companies while working underneath those brokers of record is now compromised.

Responding to inquiries from Banker & Tradesman, the Massachusetts Office of Consumer Affairs and Business Regulation (OCA) acknowledged that it has now identified more than 200 commercial and residential brokers without legal licenses. The OCA said it was likely to make the results of its internal probe public as early as this week.

Colleen DeGirolamo, supervisor of the Massachusetts Board of Registration of Real Estate Brokers and Salesmen, confirmed the status of all the unlicensed brokers identified by B&T.

Massachusetts law says unlicensed brokers cannot recover any claims for unpaid, partially paid or overdue commissions in the courts of the commonwealth. If an unlicensed broker and client disagree on the amount of or timing of the payment of commissions, the broker can do nothing. The client “wins” without a contest.

Similarly, and perhaps more importantly, landlords and tenants can also sue in civil court for recovery of commissions if evidence is presented that a broker was unlicensed at the time of a deal, according to an OCA spokesman, which could lead to the forfeiture of huge sums of money.

Top Down Failure

Commercial real estate deals often earn realty firms, brokers and agents hundreds of thousands of dollars. But the right to earn those high fees only comes with a valid real estate license – and with valid supervision on the part of a “broker of record.”

In Massachusetts, individuals can be licensed as either a commercial salesperson, or as a commercial broker (which involves substantially more experience and education). Salespeople may not operate independently – they must work for, and under the supervision of – a licensed broker. But even brokers who work as part of a larger firm must technically report to one top person, identified under state statutes as the “broker of record” for the firm.

According to Chuck Borstad, a spokesman for the state’s licensing board, any firm is considered to be operating without a license when the designated broker of record is inactive or unlicensed. A broker’s license is considered “inactive” when the broker has not completed the 12-hour continuing education requirements of the state licensing board.

Without an active license, the broker cannot engage in brokerage. And if that person is also the “broker of record,” neither can anyone else at the firm.

Lincoln Property Co. lists James H. Greene as its broker of record. But according to the OCA, Greene’s license expired in October, 2005.

John D. Miller, the president of Lincoln’s Boston office, last operated with a license in December, 2008. And Kevin Malloy, the firm’s senior vice president, has an inactive license.

When reached by Banker & Tradesman, Miller said his company had just spent “a bunch of money” with a real estate school to ensure its brokers, ostensibly including its designated broker of record, were up to date.

“Maybe we should check the authenticity of the school,” Miller said.

He also said he thought Don Bouchard was the broker of record at Lincoln. The state licensing board, though, confirmed to B&T that Greene is the broker of record. In any case, Bouchard doesn’t have a broker’s license, either, though he is a licensed appraiser.

At Cresa Partners, William Goade, the chief executive officer and broker of record at the firm, also has an inactive license.

“I don’t think I’m inactive,” Goade told Banker & Tradesman. “I know I’m up to date on my dues.”

Unfortunately for Goade, inactive status has nothing to do with paying dues to a Realtor board, only whether state laws have been followed.

Widespread Problem

Beyond Lincoln Property and Cresa Partners, Banker & Tradesman found three other top city brokerages who also list multiple license violators among their ranks: Richards Barry Joyce & Partners (RBJ), CB Richard Ellis (CBRE) and NAI Hunneman. In the case of RBJ, one of the company’s co-founders, Michael J. Joyce, is operating without a license.

When contacted, RBJ President and Broker of Record John Barry offered no comment.

CBRE has five brokers operating without licenses. Tim Halloran, the broker of record there, stressed that his company was doing all it could to remedy license expirations.

A spokeswoman for E. Michael DiGiano, NAI Hunneman’s executive vice president, could provide no explanation for the lapses.

Despite the poor record of their peers, several firms examined did have clean records, including Colliers Meredith & Grew; Cushman & Wakefield; Jones Lang LaSalle; Fallon Hines & O’Connor; Thompson Doyle Hennessey and Everest; and UGL Equis.

According to Borstad, the investigative division of the OCA regularly conducts unannounced, on-site inspections of brokerages, with authority to request evidence of the firm’s license and the license of every broker and salesperson, including the firm’s broker of record. The division can file a complaint directly with the board. Any individual can also file a complaint with the board if the complainant has evidence of a broker operating without a license.

“Ultimately, a broker can have his license revoked for life,” Borstad said, though a more common outcome is a consent agreement with fines.

Borstad said the OCA has been busy of late. Responding to Banker & Tradesman’s investigation, he told the paper that the board planned to release the results of its own probe of commercial and residential brokerage firms statewide that could implicate more than 200 individuals.

“And we will name names,” Borstad promised Banker & Tradesman.