Broker/real estate license needed to be a co-host/manager?

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Hello! Here’s my issue in a nutshell…any info, guidance, etc would be greatly appreciated!

I am an active real estate agent in New York (not city), and work under a local brokerage. I also have an LLC with a business partner who is not an agent, and together we act as co-hosts for Airbnb owners. We communicate with guests, arrange for service providers when issues arise, etc. We are listed as co-hosts on the listings; the owners are the actual hosts on Airbnb.

When we formed the LLC, I was advised by our attorney that because I am not acting as a fiduciary for the owner, and because Airbnbs fall under hotel/motel as a opposed to “housing” and these are “guests” not “tenants”, that these co-host activities did NOT fall under the category of state licensed property management. Therefore, I did not need to worry about doing these activities through a broker; it was a separate thing from my real estate activities, no different than if I was a desk clerk at a hotel or a handyperson.

We are two years into business, and just now an attorney who acts as an advisor/educator for our our board has said that this DOES fall under legal property management because we are being paid to “maintain a property”, and that my broker can be liable if anything were to go south with a client and we (my LLC) got sued. He said she could lose her license and of course that freaked her out. And now I’m freaked out…

Has anyone dealt with this? Any experiences, thoughts, etc would be greatly appreciated. Not expecting to take anything here as actual legal advice, I’m jut curious if anyone has dealt with something like this.

Thank you!

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I would call your state association of realtors legal hotline and ask the lawyers. In California its a free service to members.

Even if it is legal for an agent to do this outside of your brokerage, your broker may not want the exposure. When someone sues and finds out you work for a brokerage they could drag the broker into it since it is real estate related.

RR

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Thank you! So, we had called the legal hotline and they told us it would not be an issue because these activities do not fall under state-licensed property management. But then this other attorney advisor was adamant that it does and, as you said, exposes my broker to risk.

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You’re in a tough situation as you’ve been conflicting legal advice.

My impression though is not, per your title, that a broker/real estate is needed to be a co-host.manager but that if you are sued as a co-host/manager that you will be held to a higher standard of care as a real estate professional rather than a co-Host who is not a real estate professional.

That sounds realistic to me.

It might well be that your lawyer cannot readily point to cases where a real estate professional was held to a higher standard of care because the cases have settled but just think about it. Imagine a guest is seriously injured on the property, a lawsuit is filed, is the co-Host going to be sued? Absolutely.

Is the lawyer going to make the argument that whatever was not addressed and arguably contributed to the injury was the duty of the co-Host? Of course. Will the opposing counsel be able to prevent the co-Host from testifying as to its credentials as a real estate professional? I would not think so.

I don’t know why you are ‘freaked out.’ You had to know you had potential liability in this arrangement. Isn’t it the situation that the co-Host could lose her real estate license only for a truly egregious act or omission? You might want to read count III of this lawsuit that is being waged against the property manager (Airbnb and the property owner too) for a sense of what will be thrown at you in the event of a serious injury.

Here, even Airbnb is sued though by conventional thinking it is not legally responsible. The point is that if the stakes are high enough the lawyers will sue everyone under every theory they can imagine. Then they’ll find out what sticks with that court with those facts and the law as it is just then.

For now I would accept the opinion of your lawyer. Do you still want to be in the real estate management/co-Host business? IS there a contract between the property owner and the co-Host that spells out each’s responsibilities and limits to liability? There should be. Is there anything in the contract that spells out that the owner is not hiring the co-Host in their capacity as a real estate professional? It sounds like you’d want that but I don’t know if that’d ‘stick’ when a third party (the injured guest) claims that.

If the Host is not maintaining the property to code or otherwise is not willing to maintain the property appropriately then you should resign. Otherwise, you are on the hook and in my opinion should be. The fact is that the co-Host is a real estate professional not a clerk and I don’t know that you’ll be able to ‘contract’ that out as to the third party claim. Your contract with the owner could limit damages, say to the annual contract amount, and include a provision that the owner indemnifies the co-Host. But those protections won’t help much in a third party suit by an injured guest that goes after your broker and LLC.

You might want to look here on a checklist for maintaining a safe property.

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I don’t know how you found “this other attorney,” but I’m thinking your broker doesn’t want you to have a side gig in this field. Because if you called the state association and the state bar and they said “it’s OK,” then your “other attorney” needs a lesson in the law and/or you need a second opinion.

Either way, call another attorney for a second opinion based on the law and call the state association and the state bar association again.

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I told two agents who work for me that they would have to either stop managing STR’s or stop working for me. I miss them but it was the right thing for my business. I have a low tolerance for taking on risk that I am getting no benefit from.

Like I told them, say you don’t turn off the water in the winter and it freezes then causes damages. Or worse, someone is injured. If the lawyers see you are licensed they will name me because I am insured. It may not be right, it may not be fair but anyone can sue for anything and it is not worth the risk for me.

RR

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I understand…I have the utmost respect for my broker and would never want to jeopardize her business.

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THIS! My first thought was that they need a second/ third opinion. Let’s not forget that attorneys are paid to argue! (No offense intended for you attorney types out there):joy:

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Even of you find an attorney with a different opinion, will they be willing to write it and send to you?

See what the disclaimers are if they do because I think it highly unlikely that a lawyer will write that in the event of a serious injury where an act or omission of the real estate professional is alleged to be a factor in causation that the real estate professional will not be sued in his LLC capacity.

Remember, if there is a lawsuit costs will be incurred to defend it, even if the defendant ultimately prevails. In this situation, the broker will face the choice facing @RiverRock, what risk to incur (cost) in exchange for receiving no direct benefit (associate co-Hosting for Airbnbs).

Duh.

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