March 19th, 2018 at 12:55 pm
Answer: Generally no, depending on the type of transaction. You are generally prohibited from paying a referral fee to an unlicensed person, including an attorney, for a transaction that fall under the Real Estate Settlement Procedures Act (RESPA). RESPA generally pertains to the sale of one-to-four residential units if the buyer obtains a federally-related mortgage loan. Unfortunately, most conventional financing is considered “federally-related.” You can nevertheless pay a referral fee under certain circumstances, including, but not limited to, an all-cash transaction, seller financing up to $1 million, 5+ unit apartment building, commercial property, vacant land, lease, or non-owner occupied property for an investor buyer. More information is available from C.A.R.’s legal article on Referral Fees (password-protected for C.A.R. members only).
-Thank you to Terry Canfield Schmidt (Beverly Hills Office) for suggesting this week’s legal tip.
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