Referral Fees & Open House from MAR Legal Hotline

Referral fees to Active / Inactive Salespersons

Q. I am confused about whether I can pay a referral fee to a salesperson with an “active” license who is no longer affiliated with a firm. My Broker says we can’t because salespeople with an active license can only receive compensation if they hang their license with a firm. Is this true? If it is, is there some way that the salesperson can make their license “inactive” so we can pay them?

A. Your broker is correct. A salesperson has an “active” license if they have taken the required CE courses and attested to this fact on their current license renewal. You cannot pay a referral fee to this salesperson because salespersons with an active license can only receive compensation from the broker with whom they are affiliated. If their license was “inactive”, meaning that they stated on their most recent license renewal that they did not complete CE credits and they are not affiliated with a firm then you could have paid them a referral fee. There is no mechanism by which a licensee can change their license from active to inactive except at their next renewal.

Open House Blues

Q. If I hold an open house at a listing and a potential buyer is injured (falls down stairs, is bitten by the owner’s dog etc) can my firm be liable? What about situations where a seller claims that something is stolen from the home during the open house?

A. The answer to both questions is “maybe”. In the law, liability is based upon breaching a duty owed to someone and that breach causing damages or injury. In the two examples you give, it is possible that a firm could find itself involved in a lawsuit if they failed to meet their duties to either the prospective buyers or their seller client.

When you hold an open house, your firm is inviting the public into a private home. So, for example, if a customer walks into an open house and is bitten by the owner’s dog who had almost bitten you the week before when you took the listing, your firm’s decision to hold the open house in light of your knowledge of the dog’s dangerous propensities could create a problem-especially if you did not warn the customer and the seller took no steps to secure the animal in a safe location.

Situations in which items are alleged to have been stolen can be difficult to resolve. If you were negligent in the way you monitored people while they were in the home you could be liable for items that went missing. It is never a bad idea to give the seller a clear set of instructions on what they should do with valuables and medications before an open is held. For more information on keeping yourself safe at an open house click on MAR’s website.