Thursday, February 16, 2012

title company wants to pay Realtors commissions for business

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.

Read more on agentsonline forum.

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.

1 comment:

Anonymous said...

To add to this - of the agency is so confident that this is a legal process have them submit to you a letter from the DOBI in that state attesting the process of payment. You will find very quickly the retraction of the offer. To won a percentage of anything will require you to buy in, then share int eh companies P&L not your files alone. This is simply a creative way to sell kickback.

Owner of Title Company