What’s In a Name and Why Does It Matter?
Many license holders ask: what is the difference between using a DBA (“doing business as”) or assumed name and using the name of business entity — a limited liability company (LLC), a corporation, or a partnership?
A DBA is not a separate legal entity
The principal difference is that a DBA is NOT a legal entity; it is simply any name, including a team or group name, used in business by an individual broker or entity broker other than the name shown on the broker’s license issued by the Commission. The DBA can be used in advertising in place of the broker’s licensed name so long as it is properly registered with the Commission. (See §535.154 of the Commission Rules).
An LLC, a corporation, or a partnership is a separate legal entity
An LLC or a corporation, on the other hand, is an artificial person or a legal entity created under the authority of the laws of a state. The law treats the LLC or corporation itself as a person which can sue and be sued. The law also treats the LLC or corporation as a person and therefore the legal entity must hold its own Texas real estate broker license in order to engage in brokerage activities or to receive a commission or brokerage fees. The LLC or corporation is distinct from the individuals who own it, so even if a licensed sales agent or a broker owns the corporation, the owner and the corporation are two distinct legal “persons” and the legal entity must hold a broker license under Section 1101.351(a-1) of the License Act.
Registering or filing with the Secretary of State is not a filing with TREC
On occasion, a license holder will attempt to use the name of an LLC or corporation as an additional DBA or assumed name of the broker and will submit a “Notice of DBA or Assumed Name” attempting to register that name with the Commission. The Commission, however, will reject such a form because an LLC or corporation cannot be a DBA of a broker. A legal entity must have its own broker’s license and a license holder cannot register the name as a DBA to avoid this requirement. Some license holders who file for incorporation with the Secretary of State incorrectly assume that by filing for an assumed name certificate with the Secretary of State they also comply with the Commission’s requirements. If you have a separate legal entity that is engaging in real estate brokerage activities (like taking commission checks or advertising broker activities) – get a license Brokerage activity by an unlicensed entity violates Section 1101.351(a-1) of the License Act. If you have questions on this subject, contact the Commission or your attorney. You can apply for a business entity broker license on our website. TREC’s DBA or assumed name registration form.