| Q: I have a client who is interested in buying property that is outside of my geographical comfort zone and I want to refer him to another Sales Associate in my brokerage. Before I make the referral, I want to know if the other Sales Associate can pay me a referral fee directly or does the referral fee need to be paid to me through our Broker? Are there any other requirements? Is a form available?
A: A real estate salesperson cannot pay a referral fee directly to another real estate salesperson. California Business Professions Code §10137 requires that any and all compensation for a salesperson’s licensed activities must be paid to the salesperson by that licensee’s broker. A referral fee can be paid in this scenario involving an intra-brokerage referral as long as it is paid by the Broker for both Sales Associates. The payment of the referral fee would be handled in a comparable manner to what is done when an inter-brokerage referral fee is paid to the referring Sales Associate. Currently, C.A.R. does not have a referral fee agreement for use by Sales Associates in the same brokerage and the regular referral fee agreement forms do not easily lend themselves to this type of referral. (Note: C.A.R. does have a Referral Fee Agreement (form RFA on zipForms) for use with referrals between brokerages. Be sure to follow company policies regarding such referrals.) Therefore, Broker Risk Management has created an Intra-Company Referral Fee Agreement which is attached to this Weekly Practice Tip. The attached form makes it clear that the payment is made through the Broker and provides options to enable the Sales Associates to specify the amount of the referral fee, how long the referral agreement remains in force and how subsequent transactions are to be handled. PRACTICE TIPS: 1. Before making a referral to anyone (whether in your own brokerage or to an outside broker), check with your Broker/Office Manager to determine if your brokerage has any special forms and/or rules that must be followed. 2. If your brokerage does not have its own internal set of referral forms, use the attached form to document the terms and conditions of the referral to a Sales Associate in your brokerage. 3. Make certain that all necessary signatures are obtained and that a copy of the fully-signed agreement is maintained in your files. 4. It is best to notify the client whom you are referring that you will be receiving a referral fee; this notification can be done in an e-mail – no special form is needed.
WEEKLY PRACTICE TIP: DO NOT FORWARD TO CLIENTS. This Weekly Practice Tip is for the exclusive use of clients of Broker Risk Management and their agents. It may not be reproduced or distributed without the express written consent of Broker Risk Management. The advice and recommendations contained herein are not necessarily indicative of standards of care in the industry, but rather are intended to suggest good risk management practices.
© Copyright Broker Risk Management 2018 06/22/18
(Insert Broker Name)
INTRA-COMPANY REFERRAL FEE AGREEMENT
REFERRING AGENT: ____________________________ RECIPIENT AGENT: ____________________________ BRANCH OFFICE: ______________________________ BRANCH OFFICE: ______________________________ E-Mail Address: _______________________________ E-Mail Address: _______________________________ Phone: ______________________________________ Phone: ______________________________________
PRINCIPAL: ________________________________________________________________________________ (Client) ADDRESS: ___________________________________________________________________________________ E-Mail Address: ___________________________________________ Phone: _________________________________
1. AGREEMENT: In consideration for receipt of the referral of Principal from Referring Agent, Recipient Agent agrees to pay Referring Agent through Broker as follows: _______ % of the total gross compensation due to Recipient Agent from Broker (based upon the Recipient Agent’s commission split for Principal’s side of the transaction), OR $____________, and which is paid to and received by Broker upon recordation of deed or other evidence of transfer as long as within 12 or □________ months from the date of this Agreement, Principal:
□ Buys □ Sells □ Leases /Rents □ Other _________________________________
2. SUBSEQUENT TRANSACTIONS: On any subsequent Transaction wherein Principal is represented by Recipient Agent, no additional referral fee shall be owed by Recipient Agent to Referral agent unless (if checked) □ within ___ months from the date of this Agreement, Principal is represented by Recipient Agent in a subsequent Transaction or Transactions, in which case Recipient Agent agrees to pay Referring agent ____% of the gross compensation (based upon the Recipient Agent’s commission split for Principal’s side of the transaction), due to Recipient Agent by Broker on each such Transaction, OR $_____________.
3. DEFINITIONS: The term “Principal” includes the principal and any family member, or any entity in which Principal has a controlling interest. The term “Transaction” shall include any purchase, sale, exchange, lease, rental or lease-option by Principal when represented by Recipient Agent
4. ADDITIONAL DOCUMENTATION: Recipient Agent agrees to sign any authorization required by Broker to effectuate the payment to Referral Agent pursuant to this Agreement.
5. OTHER TERMS: __________________________________________________________________________________ __________________________________________________________________________________________________
REFERRING AGENT: RECIPIENT AGENT:
Signed: _______________________________________ Signed: _______________________________________
Print Name: ___________________________________ Print Name: ___________________________________
Date: _______________________________________ Date: ________________________________________
RECEIVED BY BROKER:
By: _________________________________________ By: __________________________________________ Referring Office Manager Recipient Office Manager |
