Legal Question in Real Estate Law in California

Are real estate referral fees legal?

We want to send thank you cards to homeowners who have purchased a home from our company. In the card, we would like to offer a gift (i.e. a TV, microwave or money such as $100.00) to any of our past buyers who refers a person to us who subsequently closes escrow on a home purchased through our company.


Asked on 3/31/04, 3:27 pm

1 Answer from Attorneys
Ken Koenen Koenen & Tokunaga, P.C.

Re: Are real estate referral fees legal?

You may not pay a referral fee to an unlicensed person based on earnings from a real estate sale. You should definitely not advertise as such.

You can send a "thank you" gift to someone who provides you with a referral.

My suggestion is that when someone provides you with a referral, whether it turns into a sale or not, you send them something ... flowers, $10 gift certificate to the movies or a restaurant, etc. When you do that with no strings attached, you are not violating RESPA, and you are encouraging people to send you referals. If they send you 10, and no one buys, quit sending the "thank yous." If 5 buy, start sending them better "thank yous".

Always on the basis of the referral, not the sale.

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Answered on 3/31/04, 4:03 pm


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