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Can Texas Attorneys Collect Referral Fees?

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Real Estate Agent with RE/MAX Dallas Suburbs TX Broker 0513551

Referral Fees To Texas Attorney

This is always a hot topic and so many people are not aware of the laws and rules which govern it.

Texas attorneys can represent both sellers and buyers. Given that few attorneys are also brokers or salespersons, they don't usually represent sellers who need to have a property marketed. The most common situation is an attorney representing a buyer. While the attorney can represent them, it is illegal for a Texas broker to share a commission with an unlicensed person or entity (other than a party to the transaction). Texas attorneys can collect a fee from the client they represent or even the seller if the parties agree (TRELA §1101.651(a) and §1101.652(b)(11) respectively). Listing brokers can reduce their commission so that the seller can pay the attorney directly without violating the Act.

The same rules apply to the referral fees. Brokers cannot pay referral fee (valuable consideration) to unlicensed persons or entities. There is an exception found in TREC Rule 535.20(a) which allows brokers and salespersons to provide gifts of merchandise with a retail value of $50 or less. Such gifts are not considered valuable consideration.

Tom Branch

Photo licensed from iStockPhoto

Originally posted at http://www.referralagentsoftexas.com/2012/02/25/can-texas-attorneys-collect-referral-fees/

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Tom Branch and Gina Branch, The Branch Team with RE/MAX Dallas Suburbs, service the greater North Dallas suburbs including Dallas, Plano, Allen, McKinney, Frisco, Lewisville, and Carrollton.  While Gina concentrates on traditional listings and buyer/tenant representation, Tom specializes in assisting distressed homeowners to avoid foreclosure.  Tom and Gina have published two books (Achieving Rock Star Status and The Field Guide to Short Sales) and are available for speaking engagements in the greater Dallas - Fort Worth Metroplex. Subscribe to The Branch Team Blog.

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Comments (4)

Bryan Robertson
Los Altos, CA

It's a bit complicated down in Texas.  In CA the rules are simple, only licensed salespeople (brokers or agents) can collect commissions.

Feb 25, 2012 01:42 AM
Tom Branch
RE/MAX Dallas Suburbs - Plano, TX
Broker, CDPE, SFR, ACRE, Plano TX Ambassador

Bryan,

It's about that simple here as well. The gifts under $50 rule is about the only exception.

Tom

Feb 25, 2012 01:53 AM
Kay Van Kampen
RE/MAX Broker, RE/MAX - Springfield, MO
RealtorĀ®, Springfield Mo Real Estate

In Missouri, an Auctioneer can receive a commission.  I've got to go look at the MAR reguations to see if an attorney can receive compensation.  Good post.

Feb 25, 2012 09:53 AM
Larry Story ALC
Total Care Realty - Greensboro, NC
Beneath it all is the Land, Covering all of NC

Tom,

Ditto for North Carolina. Only licensed brokers can be paid a commission or referral fee from a commission.

Feb 25, 2012 10:20 AM