Commissions and Referrals

business men shaking hands in exchange for money

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

woman with questions

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

hiding money behind back

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

Gavel and law books

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

Two business men shaking hands

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

legal agreement between two people

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

RESPA Considerations

In a real estate transaction where a buyer’s loan is “federally insured” the Real Estate Settlement Procedures Act (RESPA) changes severely referrals and real estate commission splits under California law. RESPA is a consumer protection law created  to make sure that buyers of residential properties on one to four family units are informed  in writingRead 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

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