An out-of-state broker licensed in California wants to refer a client relocating to Hawaii to a Hawaii-licensed broker and receive a referral fee for the referral. The California broker has no Hawaii real estate license. Under HRS Chapter 467, which of the following is correct?
Correct Answer
B) The California broker may receive a referral fee from the Hawaii broker, provided the California broker does not perform any licensed real estate activities within Hawaii
Under HRS Chapter 467, an out-of-state broker may receive a referral fee from a Hawaii-licensed broker for referring a client, provided that the out-of-state broker does not perform any activities within Hawaii that require a Hawaii real estate license. A pure referral — where the out-of-state broker simply introduces the client to the Hawaii broker and then steps back — does not constitute the performance of licensed activities in Hawaii. The compensation flows from the Hawaii broker to the out-of-state broker for the referral only, not for Hawaii-based licensed services. This is a critical and commonly tested distinction.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A tie-in arrangement is an illegal antitrust practice in which a seller conditions the purchase of one product or service on the buyer's agreement to purchase a separate product or service.
A trust account, also called an escrow account, is a separate bank account maintained by a broker to hold funds belonging to others, such as earnest money deposits, security deposits, or other client funds.
Advertising regulations govern how real estate licensees may market properties and services, requiring truthful, non-deceptive advertising that includes proper identification of the brokerage.
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