Does the Manager of an IRA LLC Need a Real Estate License?

In short, no….not only do you not need it, you shouldn’t have it and can’t use it for an IRA LLC real estate investment.   I will be the first to admit that this is a bit of a teaser blog topic…but there is good reason.  And, believe it or not, I have had both IRA LLC managers and IRA Trust trustees ask the question:  “Does the manager of an IRA LLC need a real estate license in order for the LLC to purchase or sell property?”

Does the Manager of an IRA LLC Need a Real Estate License?

First and foremost, even if the manager wanted to be licensed for this purpose, in most cases the manager (you) of the LLC is a disqualified person to your IRA and, as such, cannot provide services to your IRA.  Being a licensed agent representing the investment and purchase of property in the name of the IRA LLC would not be permitted. While a manager of an IRA LLC or the Trustee of an IRA Trust can provide small administrative responsibilities (very small and limited), being a licensed agent as manager of the LLC and executing transactions on the behalf of the IRA LLC would, undoubtedly, trigger a prohibited transaction.

But, because many of my clients have diversified business interests, an individual may have a separate LLC (a business LLC totally unrelated to the IRA LLC or IRA Trust), there could be an occasion where the employee of an LLC would need to be licensed….and, it was a recent post I read that explained this in more detail.

Employee of an LLC Needs Real Estate License

In a recent post written by Phoenix attorney Chris Combs of Combs Law Group, P.C., Chris clearly states that,

“An owner of real estate, or a principal of an LLC that owns real estate, generally does not have to have a real estate license to sell, lease, or manage that real estate.” 

And, this would apply to the manager of an IRA LLC or Trustee of an IRA Trust.  But, for those of you who may be an LLC formed business (unrelated to an IRA LLC or IRA Trust) that sells or manages real estate, how does this affect you?   In simple terms, what if you own a business that executes real estate sales, collects rents, provides landlord services?  If this “box” fits you, must an employee(s) of an LLC have a real estate license?

Chris states:  “An employee of the LLC, however, that receives compensation for any such activity generally needs a real estate license.”

Again, as an IRA LLC manager of IRA Trust Trustee, you cannot provide such services to your IRA anyway…so, this is a moot point.  However, for those of you who may have separate type of business (LLC that owns or otherwise transacts real estate services), you or any employee of that LLC will most likely need to be real estate licensed.  If you are interested in reading Chris’ short blog on this questions, please click here.

As always, the information provided is intended to be educational in nature.   It is not intended, nor should it be interpreted as, any form of tax, legal, financial or investment advice.  One must always consult with their respective professional in all such matters.