Referral Fees for Out-of-State Brokers Attending Showings

QUESTION: My firm deals primarily with the sale of second homes to out-of-state buyers. Frequently, buyers will have a family member or friend who is licensed in their home state assisting them by attending showings, advising on inspections, making offers, and performing other common brokerage services. These licensed agents request that we sign a referral agreement for them to receive a referral fee from us at closing. Is a broker licensed in another state allowed to be paid a referral fee for helping their family or friend?

ANSWER: No, N.C.G.S. §93A-1 makes it unlawful for anyone in North Carolina to perform brokerage services without a license issued by the NC Real Estate Commission. The statute specifically notes, “A license shall be obtained from the Commission even if the person […] is licensed in another state and is affiliated or otherwise associated with a licensed real estate broker in this State.” Brokerage can be generally described as any activity performed, for compensation, related to the advertisement, conveyance, or rental of real property in this State.

Notably, the NCREC does not enforce these rules against individuals who never enter North Carolina. You can read the Commission’s comments on the license law and rules here. Therefore, you could lawfully sign a referral agreement with an out-of-state licensed broker and they could receive compensation related to their assistance with a real estate transaction, so long as they have not physically entered North Carolina. However, you should first ensure that an out-of-state broker or entity is lawfully licensed to receive compensation for brokerage activities under the laws of the jurisdiction where the out-of-state agent is located.

© Copyright 2023. North Carolina Association of REALTORS®, Inc.

This article is intended solely for the benefit of NC REALTORS® members, who may reproduce and distribute it to other NC REALTORS® members and their clients, provided it is reproduced in its entirety without any change to its format or content, including disclaimer and copyright notice, and provided that any such reproduction is not intended for monetary gain. Any unauthorized reproduction, use or distribution is prohibited.

Filed Under: Fees/Commissions,