Disclosure Requirements When Brokers Recommend Affiliated Vendors

QUESTION: I frequently refer clients to vendors such as a construction company, solar installer, staging company, or handyman service. In some cases, my firm or I have an ownership interest in the company I am recommending, or we receive a fee or other financial benefit if the client hires that company. Do I need to disclose these relationships? If so, when is the disclosure required?

ANSWER: For these sorts of non-settlement services, you do need to disclose, and you should do so no later than the time you recommend the service, if not earlier.

When a broker refers a client to any outside business in which the broker or the broker’s firm has a financial interest, North Carolina law requires full and timely disclosure of that relationship. Rule .0109(b) of the License Law applies broadly and is not limited to settlement services. If you receive, or anticipate the possibility of receiving, anything of more than nominal value because of a recommendation made in connection with a real estate transaction, you must disclose that fact to your client. This includes ownership interests, profit-sharing arrangements, referral fees, discounts, or other economic benefits tied to the client’s use of the recommended provider.

Full disclosure means the client is told what the relationship is and how you or your firm benefits from it, even if the compensation is indirect (such as profit distributions rather than a per-job referral fee).

Timely disclosure means the information must be provided early enough for the client to meaningfully consider whether the recommendation is influenced by your financial interest. Waiting until after the work is performed or, after the client has already engaged the provider, is too late. The best practice is to make the disclosure in writing in your agency agreement. If the referral comes up after the agency agreement is signed, then disclose it in writing prior to your making the referral and keep a copy in your file.

In addition to the License Law, REALTORS® must comply with Article 6 of the Code of Ethics, which requires disclosure of any financial benefit a REALTOR® or their firm may receive from recommending real estate-related products or services. Construction, solar, renovation, staging, and similar services fall within this category. The North Carolina Real Estate Commission has explained that the purpose of the disclosure rule is to ensure a party understands that an agent making a referral is not necessarily providing disinterested advice when making a particular recommendation. The existence of a referral fee or other financial interest could reasonably affect a client’s decision about whether to engage the recommended provider.

Even though your question does not present a RESPA issue, you can see our discussion on that here.

Release Date: 12/11/2025

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