Now I'm being told...referral pay illegal! - Posted by Gerlad(NC)

Posted by Gerald(NC) on September 16, 2005 at 23:00:16:

I don’t do post cards anyway. I did have it on the back of my biz cards, but my new ones I’m not just cuz I don’t like it on there. I’ll just keep it on the own low then. I only tell 2 peeps whom I know well, and our out and about more than I.

Now I’m being told…referral pay illegal! - Posted by Gerlad(NC)

Posted by Gerlad(NC) on September 16, 2005 at 12:26:10:

Now my partner has told me that referral money is illegal in NC! That he is totally not accepting or giving any referral money, from mortgage brokers he’s partnered with, me, or anyone else. He’s not going to give any either. Says this is what “the law” states, as he has learned in class.

Everywhere you read about about REI tells us to “give a lil bit” to get them to come back and give us more. Birddogging itself is a form of biz, and yet now we’re not supposed to give them their pay? lol.

Re: Now I’m being told…referral pay illegal! - Posted by Jim FL

Posted by Jim FL on September 17, 2005 at 18:49:20:

Gerald,
Sounds to me like you need to embark out on your own, and use the services of others.
This partner, or associate, whatever, is now brainwashed by the RE commission and their class full of literature and materials, some might call partial propaganda. (however you spell that. )

Also, your friend, might be correct.
In most states where I’ve looked it up, paying the fee is not illegal, but collecting it is.
That appears to be the case in my home state now.
However, some time ago I had a page on my website that advertised that I pay cash for referals.
Some T/B’er who defaulted, and lost their option money, and possession of MY house, thru eviction, filed a complaint with the RE commission.
They sent me her written statement, taken by a local police officer, who noted on the statement that she was taking it off duty, and was the defaulted tenants sister.
Anyway, lots of bad grammar, and sentences that did not finish, and nothing could really be followed.
EXCEPT her last statement that said I told her I was keeping her option money as my ‘commission’…which was false.
So, the RE commission investigator called me up, and asked me to drive over 100 miles to meet him and speak.
I said, "Nope, not unless you send me in advance, a travel fee of $500, and then I charge $200 an hour for my time."
To which he replied, well, your not an agent or broker then?
I said, "Nope, an investor, and consultant on various investment strategies."
He asked if I ever used the word ‘commission’ when talking with the defaulted tenant, and I told him “no”.
I then faxed him a copy of the judgement, where I was the plaintiff, as the landlord, and the defaulted tenant was the defendant, showing they had lost, due to failure to pay rent.
I thought that was the end of it.

Then, about 12 weeks later, I get another letter, with the original complaint attached, and printouts of my web page advertising referal fees.
It was a cease and desist order, from the RE commission, telling me not to pay referal, and quoting the actual law where it said it was okay to pay them, just not to receive them.
I showed it to my attny, and asked him what to do?
His response, was to send them a letter correcting their position, and telling them to leave me a alone or face action from us.
I got a letter of apology from their ‘head council’ a few weeks later, stating they misunderstood the ad.
Never heard a word since, and that page, is still there.

They govern agents, and brokers, and those acting like them without licenses.
NOT investors who are acting on their OWN behalf.
and when speaking with the investigator, I did ask him what things were prohbited by unlicensed people in RE.
He told me acting for others in a sale, and managing things you don’t own.
I asked if we could manage things relatives own, and he said, “NO”, which is wrong also.
So, don’t rely on what some commission member says, teaches, or tells you, ask your lawyer and read the law…then follow it.

I see nothing wrong with referal fees.
And if you still want to give deals to this partner person, sign them up, and assign them, for a LARGER fee…since he set the rules. :slight_smile:

My two cents,
Jim FL

Re: Now I’m being told…referral pay illegal! - Posted by Pat

Posted by Pat on September 16, 2005 at 20:56:06:

Your friend is right. In my state, it is not illegal to receive a “fee” for the “services” you describe. However it is illegal to PAY a non licensed person a “fee”. I suspect most states have similar laws. Unfortunately the “gurus” make it seem like you can take their courses and embark on a career of “bird dogging” for other people. Either they’re not telling you or the students are missing the point…if you don’t have legal control of the property and are acting in Your Own Behalf…you become guilty of brokering without a license. I’ve been 'round and 'round with the RE Commission a couple of times now on this very subject. Because I have been doing it properly and they had to back off, but if my paper work and advertising were wrong and I couldn’t demonstrate control, I was sunk.
I’m sure there are people out there who will work with you illicitly and ignore the laws; but do you really want to put your trust in those types?If they screw you, who are you going to complain to…the RE authorities?
The thing to remember is this…if you’re not a licensed pro, then don’t advertise yourself as someone who is acting in behalf of another; act in yuor own behalf. It means sticking your neck out alittle but it’s legal and can pay off well.

Re: Now I’m being told…referral pay illegal! - Posted by Mike (Seattle WA)

Posted by Mike (Seattle WA) on September 16, 2005 at 15:47:20:

By law, brokers are not allowed to give cash kickbacks to a client. Same for agents. Doesn’t mean they won’t “give you a discount” on the current or following deal though…

Re: Now I’m being told…referral pay illegal! - Posted by Gerald(NC)

Posted by Gerald(NC) on September 16, 2005 at 21:03:47:

I get tired of having to my email in EVERYTIME!

But anyway, sorry.

So I, as a non-licensed REI person, how does this affect me? I mean, are you saying I cannot pay a non-licensed person a referral fee, cuz they are not licensed? And I can’t receive one, (the person paying me is acting wrong) if I give someone a referral?

Re: Now I’m being told…referral pay illegal! - Posted by Gerald(NC)

Posted by Gerald(NC) on September 16, 2005 at 18:16:07:

He’s the one becoming a RE broker and all. What I’m talking about is you know, giving someone $500 cuz they found you a buyer, or seller with whom you closed with. Or I know one of our mortgage peeps was offering him like 1% of his own commisions for each referral he was giving him. It’s these things he is saying is illegal.

Re: Now I’m being told…referral pay illegal! - Posted by SKI

Posted by SKI on September 16, 2005 at 19:07:20:

And who is going to turn you into the REAL ESTATE POLICE??

Re: Now I’m being told…referral pay illegal! - Posted by John B. Corey Jr.

Posted by John B. Corey Jr. on September 16, 2005 at 21:54:49:

The people who do the reporting are the licensed agents who do not like the cowboys operating without a license.

There are normally numerous reports of the state coming after a person for operating without a license.

Check the laws of your state. Brokering RE without a license is a violation. In some states paying referrals to a non-licensed person if you are an agent is allowed up to some limit.

Gerald - printing postcards and other things will provide evidence when the state want to come after you. Just let a card go to a listed house or the home of an agent and you increase the likelihood that someone will raise a stink.

John Corey
Chelsea Private Equity LLC

PS. You can buy leads or otherwise pay someone for a lead. That is not paying for a successful transaction. You are buying a name and address. You may never do a deal.

PPS. Posting to a public forum is another source of evidence if the records get requested by a court. You can judge how likely it might be. Or you can operate legally and not worry about risk management.

Re: Now I’m being told…referral pay illegal! - Posted by Gerald(NC)

Posted by Gerald(NC) on September 16, 2005 at 20:37:49:

lol that’s what I was thinking. He was acting as if he’d be arrested and thrown away for life.