Can Texas Attorneys Collect Referral Fees?

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.

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