RESPA
Real Estate Settlement Procedures Act
https://www.nar.realtor/real-estate-settlement-procedures-act-respa
RESPA is a federal law governing residential real estate settlement services and mortgage services.
Implemented primarily by Regulation X, 12 CFR Part 1024
For REALTORS®, the biggest practical issue is Section 8 of RESPA, which prohibits kickbacks, referral fees (except Broker to Broker), and unearned fees primarily connected with settlement service providers involved in federally related mortgage loans.
For REALTORS®, service providers generally can include, lenders, mortgage brokers, inspectors, closing attorneys, appraisers, and other settlement service providers.
Beware casual business arrangements with closing service providers, especially if anything of value is arguably exchanged for referrals.
Bright line rule: no paying for referrals.
Thing of value is broadly applied (e.g., money, gifts, free or discounted services, marketing benefits, special access, event sponsorships, leads, perks).
No unearned fees. Money for actually performed services is required. Be careful to be able to document admin fees, processing fees, marketing fees, and the like. RESPA prohibits "junk fees" in transactions.
Preferred vendor lists: base on performance criteria, not exchange of things of value. Yes to service, competence, availability, and consumer choice.
Marketing Service Agreements (MSA) and Affiliated Business Arrangements ensure your brokerage attorney approves with a RESPA analysis. Your brokerage attorney drafts the agreements, fair market value for services.
Co-marketing and desk/space rental must be fair market and not disguised quid pro quo payment for referrals.
Don’t for REALTORS®, do not accept cash, gift cards, trips, free advertising, tickets, leads, or perks in exchange for referring business. Do not pay lenders, title companies,m attorneys or vendors for being preferred. Do not disguise referral fees as marketing, rent, sponsorship, or admin payments unless the arrangement is legitimate and fair market value.
Analysis, is any thing of value passing hands? Is there any informal or formal understanding, that referal is related? Are payments for actual services and fair market value? Would it still make sense without referrals?
Federal CFPB enforces with potential jail time (1 year) and up to $10,000 fine per occurrence.
Posted by: Byron King on 4/6/26 (This information is only accurate as of 4/6/26. You must contact SCR for updates and changes to this information after 4/6/26, as laws and regulations may change over time. SCR 803-772-5206 or email info at screaltors.org or email byron at screaltors.org)
This information is not legal advice. This information is intended only to provide general information and may not be relied upon as specific legal guidance. Legal counsel should always be consulted before acting in reliance on this information.