Ethics: Advisory Opinion No. 1996-5

Advisory Opinion No. 1996-5
Advisory Opinion No. 1996-5

Application Of The Ban On Contingent Fee Lobbying
To A Real Estate Transaction

Under 1-97(b) of the Code of Ethics for Lobbyists, Chapter 10, Part II, Connecticut General Statutes, no person may be employed as a lobbyist for compensation which is contingent upon the outcome of any administrative or legislative action.  See State Ethics Commission Advisory Opinion No. 94-3, 55 Conn. L.J. No. 37, p. 6D (March 15, 1994).  “Administrative action” is defined to include, effectively, any action or nonaction of an executive branch or quasi-public agency on any matter within the agency’s jurisdiction or cognizance.  See Conn. Gen. Stat. 1-91(a).  The petitioner has asked how the Code’s prohibition against contingent fees for lobbying services would apply to the sale of real estate to the State of Connecticut, a type of transaction which typically generates contingent fees in the form of sales commission.

Contact with an executive branch or quasi-public agency for the purpose of promoting or negotiating the sale of real property to the State of Connecticut constitutes communication for the purpose of influencing an administrative action of the agency.  See State Ethics Commission Advisory Opinion No. 95-12, 57 Conn. L.J. No. 9, p. 4C (August 29, 1995).  Nevertheless, Conn. Gen. Stat. 1-91(k)(2) provides that communications by a “salesperson” do not constitute lobbying, so long as such person does not otherwise engage in lobbying regarding any administrative action.  The Commission finds that a real estate salesperson or broker, licensed pursuant to Connecticut General Statutes Title 20, Chapter 392, or exempt from licensing pursuant to such statutes, is a “salesperson” within the meaning of Conn. Gen. Stat. 1-91(k)(2), when promoting or negotiating the sale of real property to the State of Connecticut.  See State Ethics Commission Advisory Opinion No. 95-11, 57 Conn. L.J. No. 9, p. 3C (August 29, 1995).  So long as such an individual does not otherwise engage in lobbying regarding any administrative action, he or she may accept a contingent fee for effecting the sale of real property to the State.

Distinguishable from the negotiation or promotion of the sale of real property is any action which may be a necessary precedent or precondition to the sale, such as obtaining regulatory authorization, effecting hazardous waste clean-up or securing necessary state permits.  Such activities would not be considered the exempt business activities of a “salesperson” within the meaning of Conn. Gen. Stat. 1-91(k)(2) and Regulations of Connecticut State Agencies 1-92-42b and 1-92-42c(b).  A real estate salesperson or broker communicating with an executive branch or quasi-public agency regarding such matters would risk losing the exemption of 1-91(k)(2) which, as noted, extends only to persons who limit their activities to sales.  However, any such action may otherwise be exempt from the definition of lobbying, for example, as the practice of law within the meaning of Conn. Gen. Stat. 1-91(k)(3), if undertaken by an attorney, or as a business activity exempted pursuant to Conn. Gen. Stat. 1-91(k)(4) and Regulations of Connecticut State Agencies 1-92-42a(e).  See State Ethics Commission Advisory Opinion No. 95-12, supra and State Ethics Commission Advisory Opinion No. 95-6, 57 Conn. L.J. No. 4, p. 1E (July 25, 1995).

Finally, the Commission has been asked to address the question of how the above limitations and exemptions apply to a real estate broker or salesperson whose business associates engage in non-exempt lobbying activities.  For the “salesperson” exemption of 1-91(k)(2) to apply under such circumstances, the real estate broker or salesperson must refrain from participating in any non-exempt activities and may not accept any share of the compensation generated by his associates’ non-exempt activities.  The salesperson’s lobbyist-associates, of course, are prohibited from accepting any share of the real estate commission generated by the sale of the property.

By order of the Commission,

David T. Nassef
Chairperson



Content Last Modified on 9/7/2005 8:01:37 AM