Chief Deputy Legal Counsel
| By Blackwell M. Brogden, Jr. Chief Deputy Legal Counsel |
|
7he following article appeared in the May 1989 issue of the Tar Heel REALTORŪ under the "Commission Comments from the North Carolina Real Estate Commission " column.
The Commission's legal staff is frequently asked whether, and under what circumstances, a North Carolina broker may pay a referral fee or other compensation to a person, partnership or corporation licensed as a real estate broker in another state. The involvement of the Commission in this issue is, of course, limited to determining whether the payment of such fee violates the Real Estate License Law, since disputes between agents over the division or payment of commissions are civil matters within the jurisdiction of the courts.
The North Carolina appellate courts and other courts have, over the years, made it abundantly clear that a person, partnership or corporation that acts as a real estate broker in North Carolina must be licensed by the North Carolina Real Estate Commission as a broker in order to be lawfully compensated for performing real estate brokerage services and activities.
In Gower v. Strout Realty, 56 N. C. App. 603 (1982), the Court of Appeals also made it clear that North Carolina law absolutely prohibits any form of compensation to unlicensed persons in either sales or rental transactions, including the payment of "finder's fees," "consulting fees," "bird dog fees," or referral fees.
This being the case, you may wonder how the various interstate referral and co-brokerage networks can exist. The answer is that North Carolina laws apply only to acts performed within the boundaries of North Carolina. If a person, partnership or corporation is not licensed as a broker in North Carolina, but is licensed as a real estate broker in another state or states, then the North Carolina broker may lawfully compensate the out-of-state broker for his services, prov I that such services have been formed within the state(s) in which he is licensed.
However, the out-of-state broker absolutely cannot enter North Carolina, either personally or through any employees or agents, to participate in the transaction.
The following are other commonly asked questions regarding this subject:
Q: Can I pay a brokerage fee to a North Carolina broker who is now living in another state?
A: You may compensate the broker only if he is licensed in his resident state or he returns to North Carolina to perform all acts connected with the transaction.
Q: Can I pay a salesman licensed in another state?
A. Generally, the laws of the various states require real estate brokerage transactions to be conducted and compensation paid (including referral fees) in the name of the salesman's employing broker.