Referral bonus illegal?

Question

Hi All. Quick question for the more experienced among us :)

I was about to have some biz cards printed and on the back we're stating something that prompts the following question: is offering a $500 bonus for referring a homeowner whose house we buy (or wholesale) illegal? I read somewhere that it may constitute acting as an unlicensed agent.

Thoughts?

Ray Slack · Answer

Okay. I'm going to chime in. I can't speak for Maryland (Even though I live here now)  but in Florida it would not be illegal to pay the bonus/referral fee to a non licensed person (as long are you are also not licensed as a real estate agent)  but it would be illegal for them to receive it. (Acting as a real estate agent without a license ).

Bob Collett · Answer

@Matt Powell ... because it is real estate, not a lamp. This is specially illegal in Ohio. Even a licensed agent is not allowed to pay any referral fee to an unlicensed person in Ohio. I agree, it is not reasonable... but it is the law.

Matt Powell · Answer

You're soliciting a private service (buying a house) outside of any agent involvement, and closing the sale outside of any agent involvement. Provided all transactions are private transactions, I don't see how this would be any different (in principle) than buying a lamp from someone...

Fabio Secaira · Answer

Great idea @Edgar U.!

Fabio Secaira · Answer

Thanks @David Cowan, I think I might remove that from the cards, just to be safe.

That was kind of my thinking also @Matt Powell I think where the gray area lies is that this person (the recipient of the bonus) is being the liaison between the seller and the buyer (me), and that may be construed as acting as an agent. I'm thinking it may not be illegal for me to pay that bonus, but it may be illegal for the recipient to receive it, so I'm better off playing it safe and not stating that in my cards.

Thanks for chiming in guys.

Edgar U. · Answer

@Fabio Secaira we currently offer the following "Your Referrals Help the Children Visit www.[insertcatchylinkforreferrals].com" Then it takes them to the link that allows them to refer anyone and we donate a percentage of our profits to our charity on their behalf. No one is going to say no to that!

Click here for sample link.

Referral bonus illegal?

Most Popular Reply