I am a Realtor and I have a minority ownership in a title company. The title company wants to formalize a plan to pay me a 'commission' on any deals that I send to them. I would disclose to my clients that I am a part owner of the title company. Is this legal or is this a RESPA violation? The title company is planning to go to dozens of Realtors and offer them a partial ownership deal whereby they claim they can legally pay commissions to referring Realtors since the Realtors would also be owners of the title company. It sounds logical but not sure if legally legit.
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It might sound logical but it's not allowable under RESPA rules. In addition to RESPA, I suggest checking your state rules. Most states also have prohibitions against referral fees.