No. Under the provisions of the Real Estate License Act, she must be licensed to receive valuable consideration for referring prospects for the purchase or sale of real estate. Since she is not licensed, you cannot share fees with her or pay her any kind of referral fee. However, TREC rules do not prohibit you from giving her a gift of merchandise having a value of no more than $50. This type of gift would not subject either of you to violations of the act or the commission's rules.

No, you only need to sign that if your landlord and you have agreed to compensate the cooperating broker. The Agreement Between Brokers for Residential Leases (TXR 2002) is beneficial to prove the agreement for compensation between the two brokers. It also specifies a time frame for payment and covers compensation for lease renewals and sales. Note: Either the Agreement Between Brokers for Residential Leases or the Compensation Agreement Between Brokers (TXR 2402) may be used to secure compensation from a listing broker for a lease transaction.

No. The brokers' agreement in the Compensation Agreement Between Brokers will apply, as it was agreed to by both brokers and signed by both brokers. Page 10 is purely for informational purposes and as stated does not change a previous agreement between brokers as to compensation.

In addition, Standard of Practice 16-16 under Article 16 of the REALTOR® Code of Ethics states that a REALTOR® acting as a buyer's representative may not use the terms of an offer to attempt to modify the listing broker’s offer of compensation or make the submission of an offer contingent on the listing broker agreeing to modify the compensation.

No. A sales agent can only receive compensation, including bonuses, with the written consent of their sponsoring broker, according to The Real Estate License Act (TRELA) §1101.651(b) and (c) and TREC Rule §535.3 and only if such bonus is accounted for in the buyer/tenant representation agreement.

For example, if a builder offers a cash bonus or a car to agents in return for completed transactions, the sponsoring broker must approve the compensation before the agent can accept it. If the sales agent changes brokers, the sponsoring broker of the agent at the time the agent became entitled to the compensation can approve the payment. Similarly, if the buyer/tenant representation does not contemplate the payment of such bonus, the client would have to agree to amend such agreement to reflect the bonus. Keep in mind that NAR has stated that there needs to be a reason for amending the buyer/tenant representation to increase the amount you are paid such as additional work completed for the buyer.

No. Commission negotiations should occur only with a sales agent's broker’s knowledge and consent.

If a commission negotiation comes up between a sales agent and their client, they should tell the client that all negotiations are subject to their broker’s approval.

In addition, the Real Estate License Act says a sales agent may only accept compensation for a real estate transaction from their sponsoring broker or a broker who previously sponsored them at the time they earned the compensation. This would preclude a sales agent from negotiating directly with a client to receive compensation without their broker’s involvement.

No. There is no statute that authorizes you to place a lien upon an owner's home to protect your right to a negotiated fee for termination of a listing. And if you attempt to have the title company refuse to complete the closing of the sale to secure your fee, you could find yourself at risk of disciplinary action by the Texas Real Estate Commission.

A better course of action is to continue to discuss this matter with your former client. You can also ask the seller's current broker to help resolve this issue. If those efforts are unsuccessful, your remedy lies in filing suit to collect your fee.

You could use the Compensation Agreement Between Broker and Owner (TXR 2401), available exclusively to Texas REALTORS®. This form allows you to register your buyer to cover the purchase of the owner's property during an agreed time period. It also contains language to provide that the owner will pay your negotiated fee should your buyer purchase the property. The agreement doesn't allow you to list the property for sale or require the owner to pay you a fee should the owner sell the property to someone else. This form could be used in situations where the broker is representing a buyer interested in farm & ranch or commercial property that is for sale by owner. It is not intended to take the place of a buyer's representation agreement between a broker and his buyer client. In the alternative, the buyer’s broker could secure compensation from seller directly by using Paragraph 12A(1)(b) of the sales contract. If the buyer’s broker includes his compensation in Paragraph 12A(1)(b), the Compensation Agreement Between Broker and Owner is not needed. Similarly, if the Compensation Agreement Between Broker and Owner is used to secure compensation, the buyer’s broker does not need to complete Paragraph 12A(1)(b).

Yes. On the one side is the restraint-of-trade concern with the affinity group or relocation company controlling the stream of buyers and sellers. As much as 25% of today’s real estate market involves an affinity group or relocation company referral, and the percentage will only go up. On the other side, real estate companies competing with each other in a particular marketplace cannot get together to fight the relocation companies by refusing to participate in the referral fee scheme or they risk violating antitrust laws. This whole question remains largely unanswered since there are no definitive court decisions which would give us needed guidance.

No. If you do not have an agreement with the affinity group or relocation company, there is no legal obligation to pay the referral fee. However, this may put your client in a difficult position because in most of these relationships the employee will lose her benefits if she does not follow the rules. If you insist on not paying a referral fee, the client will have to pay more to work with you because of the loss of benefits. Many real estate agents have adopted a policy to ask potential clients up front if they have any agreements with other service providers to avoid surprises later.

Legally, the answer is no. While the current level of fee ranges from 35%-45%, in some markets the fee is at 50%. In Mobility Magazine several months ago, an executive from a relocation company predicted that relocation companies would own real estate companies in the near future. Since his statement, one major relocation company announced it was going to invest $200 million to buy dominant real estate companies in major markets across the U.S. The only limit is market-driven, not legal.

The Department of Housing and Urban Development (HUD), in its regulatory comments on proposed RESPA regulations in 1996, stated that it was not taking a position at that time on referral fees in affinity and relocation relationships. Ironically, the practice would violate RESPA if there was any common ownership between affiliated entities in what most of us still call "controlled business arrangements." As we all know, there are strong political lobby interests, including NAR, on the side of limiting the reach of RESPA. In the association's view, RESPA could easily be interpreted to prohibit the common practice of paying referral fees as part of an affinity group or due to a referral from a relocation company.

The Farm and Ranch Contract has two sections on Page 10 related to fees: a Ratification of Fee and an Agreement for Payment of Brokers’ Fees.

A listing broker who has already agreed to pay a commission to a cooperating broker—in the Compensation Agreement Between Brokers (TXR 2402), for example—should fill out the Ratification of Fee box. This authorizes the escrow agent to pay the cooperating broker from the listing broker’s fee at closing.

The seller and buyer should not sign the Agreement for Payment of Brokers’ Fees if the listing broker has already agreed to pay the cooperating broker’s commission elsewhere, like in the Compensation Agreement Between Brokers. This could bind the seller or buyer to unintentionally pay additional amounts to the listing broker or the cooperating broker.

However, a seller and buyer could sign the Agreement for Payment of Brokers’ Fees if the listing broker hasn’t offered to pay a commission. Note that the agreement states either the seller or the buyer will pay the brokers.

Alternatively, if the seller wants to pay for buyer’s brokerage fees agreed upon in a buyer representation agreement, such as the Residential Buyer/Tenant Representation Agreement (TXR 1501-long form/TXR 1507-short form), the seller may include the amount to be paid in Paragraph 12A(1)(b) of the contract and does not have to sign the Agreement for Payment of Brokers’ Fees, because the seller’s signature on the Farm and Ranch Contract binds the seller to pay such fees.

Note: The Texas Real Estate Commission made changes to several sales contracts in November 2024, including the Farm and Ranch Contract (TXR 1701, TREC 25-16), to address the practice changes required by the NAR settlement.

Yes. Section 535.131 of TREC rules permits a licensed Texas real estate broker to cooperate with and share commissions with brokers licensed in other states; however, all negotiations within Texas must be handled by Texas licensees.

You may give an unlicensed person a non-cash gift worth $50 or less in exchange for a referral and not violate The Real Estate License Act (TRELA) or Texas Real Estate Commission rules. According to TRELA, if a referral is made with the expectation of receiving valuable consideration, the person making the referral must be licensed under the act. Under Section 535.20 of TREC rules, gifts of merchandise having a value of $50 or less do not count as valuable consideration.

A bank gift card that can be converted to cash or credit or any amount of cash or credit toward rent owed are not allowed to be used as gifts to an unlicensed person in exchange for a referral, according to TREC.

A referral to a commercial agent or broker is not fundamentally different than a residential referral. You should perform your due diligence to ensure the commercial agent has the proper experience to serve the client's interests. The Referral Agreement Between Brokers (TXR 2405) may be used in such circumstances.

You should discuss this issue with your client. The relocation company's instruction is inappropriate. Your fiduciary responsibility to your client requires that you inform him of everything you know about the transaction unless it is otherwise privileged information you are not permitted to tell him. No such privilege exists relative to this instruction from the relocation company.

Generally speaking, there will need to be a referral agreement between the brokers. It is best to get this agreement in writing. The Referral Agreement Between Brokers (TXR 2405) can be used for this purpose. An agent may sign the agreement on behalf of their broker only when authorized by their broker to do so.

The answer to this question hinges on who is the procuring cause of the sale, and it will be up to an arbitration panel to make the final determination if there is a procuring cause dispute.

Procuring cause is defined as the uninterrupted series of causal events which results in the successful transaction—a sale that closes. NAR provides an extensive list of specific factors an arbitration panel should consider in such disputes. Here are a few of those factors:

-The nature and status of the transaction -The nature, status, and terms of the listing agreement or offer to compensate -The roles and relationships of the parties -The initial contact with the purchaser: Who first introduced the buyer to the property? -The conduct of the broker or agent -Continuity and breaks in continuity -The conduct of the buyer -The conduct of the seller

In the question above, the listing broker showed the property. However, an arbitration panel will consider numerous factors, like those listed above, to determine procuring cause of the sale.

NAR defines procuring cause as "the uninterrupted series of causal events which results in the successful transaction." Commission conflicts must be evaluated based upon all the relevant facts and circumstances leading up to a sale. Rules of thumb and other predetermined ideas must be disregarded.

Although NAR provides an extensive list of specific factors to be considered in procuring cause disputes, most cases will turn to the following factors:

-Who first introduced the buyer to the property, and how was the introduction made? -Was the series of events starting with the original introduction of the buyer to the property and ending with the sale hindered or interrupted in any way? -If there was an interruption or break in the original series of events, how was it caused and by whom? -Did the action or inaction of the original broker cause the buyer to seek the services of the second broker? -Did the second broker unnecessarily intervene or intrude into an existing relationship between the buyer and the original broker?

The reason for the entry of the second broker into the transaction always should be examined closely. For example, if the original broker did not call the buyer for three weeks after a showing, the hearing panel might decide that he abandoned the buyer and paved the way for the entry of the second broker. If, on the other hand, the buyer looked at a home with the original broker and the next day wrote an offer through his cousin, the second broker, then the second broker may be seen to have intervened unnecessarily in the transaction.

Procuring-cause disputes between REALTORS® are usually settled in arbitration proceedings because of the mandatory-arbitration provision found in Article 17 of the Code of Ethics. Article 17 provides that contractual disputes between REALTORS® associated with different firms must be submitted to arbitration rather than resorting to litigation. To sue another REALTOR® for a commission in such cases and then to refuse to withdraw from or to dismiss the suit upon demand by the other party is a refusal to arbitrate under Standard of Practice 17-1. This would be a violation of the Code of Ethics. However, litigation is not a violation of Article 17 if all parties to a dispute waive their right to arbitrate. Remembered that the broker (REALTOR® principal in arbitration cases) is a necessary party to any arbitration or litigation.

Yes, but the Real Estate License Act states that, as a license holder, you may only receive compensation from more than one party if you have the full knowledge and consent of all parties. It's also a good idea for you to get the necessary consents in writing. The new MLS policy also requires that if you act as a buyer's representative that you can only receive the amount of compensation referenced in the written buyer/tenant representation agreement. If the amount to be paid is above that amount, you will have to request that your buyer amend the buyer/tenant representation agreement to increase the amount you are to be paid to reflect the additional payment from the seller. The buyer does not have to agree to amend. Also, NAR has stated that there needs to be a reason for amending the buyer/tenant representation to increase the amount you are paid such as additional work completed for the buyer.

In addition to the legal requirement, Article 7 of the REALTOR® Code of Ethics states that "in a transaction, REALTORS® shall not accept compensation from more than one party, even if permitted by law, without disclosure to all parties and the informed consent of the REALTOR®'s client or clients." However, the legal requirement puts a greater obligation on you than the REALTOR® Code of Ethics because it requires the consent of all parties and not just the consent of the REALTOR®'s client.