For Want Of Real Estate License A Contract Is Voided
Yesterday, I discussed the confused characterization of the defendant in Carbon Crest, LLC v. Tencue Productions, LLC, 2022 U.S. Dist. LEXIS 66676. The case is nonetheless a good reminder that those who sell "business opportunities" fall within the definition of a broker under California's Real Estate Law:
A real estate broker within the meaning of this part is a person who, for a compensation or in expectation of a compensation, regardless of the form or time of payment, does or negotiates to do one or more of the following acts for another or others:
(a) Sells or offers to sell, buys or offers to buy, solicits prospective sellers or buyers of, solicits or obtains listings of, or negotiates the purchase, sale, or exchange of real property or a business opportunity.
Cal. Bus. & Prof. Code § 10131. A "business opportunity" is defined as including "the sale or lease of the business and goodwill of an existing business enterprise or opportunity". Cal. Bus. & Prof. Code § 10003.
In Carbon Crest, the plaintiff sued to enforce a Business Advisory Agreement under which it assisted in the sale of the defendant. Because the plaintiff lacked a real estate broker's license, Judge William Alsup found the agreement void and incapable of severance because it had but a single, unlawful object - the sale of the defendant. Old timers will remember that this was the issue in the celebrated case of All Points Traders, Inc. v. Barrington Assocs., 211 Cal. App. 3d 723 (1989).
"still the fine's the crown"
Carbon Crest did not have an entirely unhappy denouement for the plaintiff. Judge Alsup found that it could recover in quasi contract.