Legal Library

Realtor® Legal Tip – Referral fees vs. gifts/rebates to clients.

January 9, 2018

Author: Curtis Bullock

I’ve received some questions on what the rules are on giving referral fees or gifts/rebates to clients. Here are rules:

Utah Admin Rule 162-2f-401b – a licensee may give a gift valued at $150 or less to an individual in appreciation for an unsolicited referral of a prospect that results in a real estate transaction.

Utah Admin Rule 162-2f-401l – An inducement gift is permissible and is not an illegal sharing of commission if the principal broker or affiliated licensee offering the inducement gift to a buyer or a seller complies with the underwriting guidelines that apply to any loan in the transaction for which the inducement has been offered.

(2) A closing gift is permissible and is not an illegal sharing of commissions.

To summarize this, (1) if an unlicensed person refers a client to you, and that referral was unsolicited, you may give the referring individual something valued at $150 or less.

(2) If you want to give a “gift” (or whatever you call it) to your client, what you give them (i.e., gift card, cash rebate, etc) must comply with the underwriting guidelines that apply to the loan for that particular transaction. In most cases, lenders will not allow the buyer to pocket any cash, but will allow the rebate to be used for loan or closing costs. Other lender restrictions might apply so the buyer will need to discuss that with the lender.

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