I’m Paying a Referral Fee – But to Whom?
Based on Florida Realtors Legal Hotline calls, many members understand referral fee restrictions but the details confuse them, especially when they face a specific situation.
ORLANDO, Fla. – Paying referral fees can be confusing, and Florida Realtors’ Legal Hotline fields many calls about who can and cannot receive one.
Below is a brief refresher as to who can receive a referral fee for the referral of real estate, who can’t, and how that payment must flow.
The general rule: It’s a violation of Florida law for a real estate licensee to pay a referral fee for real estate services to anyone who is not a Florida-licensed real estate broker or associate.
However, Florida law provides an exception to the general rule. A broker may pay a referral fee to a foreign broker, as long as that person is properly licensed in her or his country or state and does not violate any Florida laws. The term “foreign” refers to someone located outside the state of Florida, whether that is a country, like Brazil, or a state, like Kentucky. (see §475.25(1)(h), Florida Statutes).
While that exception seems straightforward, many real estate professionals think that there’s an exception for attorneys as well. Although attorneys may be paid for their legal work in real estate transactions, only those also licensed as real estate brokers may be paid referral fees for real estate services.
It’s also a violation of Florida law for a sales associate to receive payment for real estate services from anyone except her or his broker (see §475.42(1)(d), Florida Statutes) – and making a referral of real estate and collecting compensation for it IS a type of real estate service. (see §475.01(1)(a), Florida Statutes).
As with other payments for real estate services, only real estate brokers may receive referral fees, which they may then distribute to their sales/broker associates.
Meredith Caruso is Associate General Counsel for Florida Realtors
Note: Information deemed accurate on date of publication
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