Federal Law Prohibits Referral Fees to Unlicensed Persons

by Bob Hunt, Realty Times

These days there is a dearth of buyers in most markets around the country. In such conditions, real estate agents must use a variety of resources and strategies in order to get connected with buyers. One such strategy is to offer the payment of a referral fee to anyone who might refer a bona fide buyer to the agent.

More than a few real estate agents are confused about the laws governing referral fees. Some don't even know that there are any laws governing referral fees. Some know, but don't care.

Particularly problematic is the issue of paying referral fees to people who do not have a real estate license. An agent's unlicensed brother in-law might ask for a sum of money in return for referring to him a person who intends to buy a house; and the agent very well might agree. Indeed, agents will sometimes solicit referrals from unlicensed persons. They may even advertise that will pay a certain fee for the referral of buyers or sellers.

Real estate transactions and the activities of real estate agents are subject to a variety of both state and federal laws. The fact that there are these two different authorities provides some explanation for the common confusion about referral fees.

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