The North Carolina Court of Appeals has recently ruled on the often-asked question of whether so-called "finder's fee" contracts are permitted under the provisions of the North Carolina Real Estate License Law. A "finder's fee" contract was defined as ". . . an arrangement by which an (unlicensed) intermediary finds, introduces, and brings together parties to a real estate transaction, leaving the ultimate transaction and consummation of the transaction to the (licensed) broker."

In a unanimous decision, the Court found such arrangements between licensed brokers and unlicensed persons to be in violation of the License Law, stating that ". . . though the finder or originator does not assist in the ultimate negotiations of sale, the real estate licensing statutes would become meaningless if unlicensed parties were able to carry on traditional brokerage activities under a finder's fee contract."

Adopting this unanimous decision handed down by the Court of Appeals, the Real Estate Licensing Board advises brokers that the payment of finder's fees, referral fees, "bird dog" fees, or similar compensation to unlicensed persons is prohibited. Any previous advice from the Board to the contrary is rescinded. Any licensee who pays a finder's or referral fee to an unlicensed person is subject to disciplinary action.