Commissions and Referrals
What to Know to Avoid RESPA and Real Estate Referral Lawsuits
Could a list of preferred providers put you at risk of legal woes? Possibly. The Real Estate Settlement Procedures Act (RESPA) doesn’t specifically mention preferred provider lists. Still, some experts fear that using a preferred provider list is a red flag for regulators under RESPA. Why Referrals Could Lead to Real Estate Legal Trouble RESPARead More
Is Zillow’s Joint Marketing Program a Violation of RESPA?
Increasing Scrutiny of RESPA Violations Joint marketing activities between real estate agents and lenders have been the subject of inquiry by governmental authorities as a potential violation of the Real Estate Settlement Procedures Act (“RESPA”). This oversight has taken on a more aggressive tone ever since the Dodd-Frank legislation created the Consumer Financial Protection BureauRead More
Legal Review: What Is a RESPA Violation?
The purpose of the Real Estate Settlement Procedures Act (RESPA) is to prevent abusive settlement charges that plagued this country’s real estate industry in the past — and led to the “Great Recession” in 2008. The key provision under RESPA is that, “No person shall give and no person shall accept any fee, kickback, orRead More
The “Procuring Cause” Claim
Over the years of handling risk management matters, I invariably see disputes where the real estate agent who was not the listing or selling agent on a closed transaction makes a claim for real estate commissions claiming that he or she was the “procuring cause” for the transaction closing. The typical “procuring cause” claim arisesRead More
Get to Know RESPA Before RESPA Gets to Know You
In 1974, Congress passed the Real Estate Settlement Procedures Act (RESPA) to regulate and monitor the real estate industry. Since that time, RESPA has mystified more than one real estate professional. Now that RESPA is being enforced by the Consumer Financial Protection Bureau (CFPB) instead of HUD, activities that may have been allowed in theRead More
Are Agent Commission Agreements Enforceable?
Agreements between agents to share commissions may be enforceable even where the agents are affiliated with different brokers. In a new case, Sanowicz v. Bacal, (2015) 234 Cal.App.4th 1027, two agents who were both affiliated with the same broker entered into several agreements to share commissions equally on any transactions that either of them closed. Read More
MD Regulation Discourages Referrals by Real Estate Agents
By Harvey S. Jacobs If you live in Maryland and your real estate agent refuses to refer you to a mortgage lender, he isn’t being rude. Real estate agents making referrals to service providers in Maryland can now be fined up to $5,000 if they violate a new state Real Estate Commission regulation. That regulationRead More
Allowable Referrals and Commission Splits in California Real Estate Transactions
In California, the Bureau of Real Estate and California law permit a licensed real estate brokerage to pay a referral fee for a real estate transaction to a person not licensed by the Bureau of Real Estate, only if the person who is to get such a fee was not soliciting on behalf of theRead More
Legal Alert: Commissions
RealPro, Inc. v. Smith Residual Co.; Fourth Dist. February 28, 2012 Smith Residual Co. (the Sellers) owned 46.8 acres of vacant land in Riverside County, CA. They retained MGR Services, Inc, a real estate broker, as their exclusive agent for the sale of the property. On September 21, 2005, the sellers entered into a standardRead More