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The 5th District Appellate Court recently held that a business broker could not collect a finder's fee in the sale of a landfill since he did not have a real estate license. In Thomas v. Daubs, 226 Ill.Dec. 15, 684 N.E.2d 1011, two business brokers claimed to have an oral contract with the sellers for a 6 percent finder's fee for the sale of a 180-acre landfill business. The brokers, William B. and Robert S. Thomas, located a buyer, who bought the stock of John Daubs' landfill company with all of its assets, including the ongoing business, real estate, operating permits, and equipment for $ 3.3 million plus 10 percent of landfill revenues. The brokers sought payment of its finder's fee of $ 198,000 plus 6 percent of the 10 percent income stream.
The sellers refused to pay, and the brokers sued for breach of oral contract, promissory estoppel, quantum meruit and unjust enrichment. The sellers moved for involuntary dismissal, claiming that the brokers failed to allege in their complaint that either one of them held the requisite license necessary to assert a claim for a commission as required by the Real Estate License Act of 2003, 225 ILCS 455/1 et seq. The brokers claimed, however, that the Real Estate License Act was inapplicable because the sale was one of stock, not real estate. The trial court ruled in favor of the sellers, finding that the brokers were not licensed to act as brokers or salespeople by the Department of Professional Regulation and that their claims therefore were prohibited by the Real Estate License Act.
On appeal, the brokers argued that the Real Estate License Act does not apply to the sale of a business and that the sale of the landfill was strictly the sale of a business. The sellers countered that the Real Estate License Act requires that a person be licensed to claim a commission and that the land was not merely incidental to the sale of the landfill business. Section 3 of the Real Estate License Act provides, It is unlawful for any person, corporation, limited liability company or partnership to act as a real estate broker or real estate salesperson, or to advertise or assume to act as such broker or salesperson without a properly issued sponsor card or a license issued sponsor card or a license issued by the Department of Professional Regulation under the act."
Section 7 of the act prohibits unlicensed persons from recovering payment: No action or suit shall be instituted, nor recovery therein be had, in any court of this state by an person, partnership, limited liability company or corporation for compensation for any act done or service performed, the doing or performing of which is prohibited by this act to other than licensed brokers or salesperson unless such person, partnership, limited liability company or corporation was duly licensed hereunder as a broker or salesperson under Article 1 of this act at the time that any such act was done or service performed which would give rise to a cause of action for compensation."
The appeals court looked to how other jurisdictions with similar licensing statutes handle the issue of whether the Real Estate License Act requires persons engaged in selling business entities hold a real estate license if real property is included among the business assets.
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