Broker Kevin in Rhode Island operates a real estate brokerage and receives a referral fee from an out-of-state broker for sending a buyer client to that broker. The buyer successfully purchases a property in Massachusetts. Under Rhode Island law, which statement about Kevin receiving this referral fee is correct?
Correct Answer
A) Kevin may receive the referral fee because he holds a Rhode Island broker's license and referral compensation between licensed brokers is permissible
Under Rhode Island law and consistent with standard real estate practice, a licensed Rhode Island broker may legally receive a referral fee from another licensed broker for referring a client, even if the referred transaction occurs in another state. The key requirement is that Kevin holds a valid Rhode Island broker's license and the compensation flows broker-to-broker. No Massachusetts license is required simply to refer a client and receive a referral fee.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Florida brokers are required to maintain transaction records and escrow records for a minimum of five years.
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.
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