Is there another name for Bird Dog contracts and where could get one locally?

UPDATED: Jun 18, 2011

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Is there another name for Bird Dog contracts and where could get one locally?

Asked on June 18, 2011 under Real Estate Law, Arkansas


M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

"Bird dogs" are usually unlicensed individuals who find deals for the principal/investor in a transaction. In turn the principal/investor pays bird dogs a finder's fee. What does the law say about this? A close reading of the applicable sections of AZ law indicates that a broker buys and sells or negotiates real estate transactions for others; a broker is also the person who gets leads. Additionally, a person must have a license to do anything falling under the definition of "Broker"; specifically an individual cannot find leads for a principal/investor and get paid for it unless they are licensed.

That all having been said, there ways that a bird dog can be legally paid. For instance the bird dog can be the initial purchaser of the property; in their purchase contract they could state, "Bird Dog and/or assignee". As long as the seller does not object, the principal/investor would pay then purchase the contract from the bird dog by paying an "assignment fee". However there could be certain tax and legal implications in doing so. Therefore consulting with an accountant and/or real estate attorney about your specific transaction would be advisable.

Another possible way to handle such a situation if for the bird dog to write the contract and be a direct party to the transaction; "Bird Dog and Principal/Investorl" are the purchasers, A separate compensation agreement could then be arranged whereby the Principal/Investor buys out the Bird Dog's interest. Again, an accountant and/or a real estate attorney should be consulted.

A still further way of getting legal compensation to form an entity (partnership or LLC or the like) which is then the purchaser of the property. The partners share in sales; perhaps Bird Dog puts in a $200 as his contribution and for his work in finding the property, his compensation is the return of his capital plus $2000. To repeat both tax and legal counsel should be consulted.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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