The information contained herein is not legal advice but is provided only for information and educational purposes. As usual, my findings are based on the current Ontario law. Take care not to rely on the information contained in this document and to follow the current and applicable Ontario laws faithfully.
I have never wondered about the legality and ethics of the introduction fee between Ontario real estate agents (Note: I will use the term "real estate agent" through this blog to mean real estate salesperson) And a lawyer? For example, your estate agent will recommend a lawyer to close your transaction. Is it legal and ethical that a lawyer pay a referral fee to a real estate agent if you decide to go to that attorney?
Conclusion:
In short, referral fees are prohibited between real estate agents and lawyers. The Ontario State Real Estate Council strongly insists that such fees are forbidden, although it is unclear whether real estate agents can pay referral fees. However, a real estate agent can receive a referral fee from a third party if it is disclosed to a client and client's contract first (preferably in writing) from a third party from a third party. In such a case, a third party will pay an introduction fee to the employer (ie broker) of the real estate agent and pay the real estate agent. However, like real estate agents, lawyers can not pay referral fees to non-attorneys, but you can receive fees under the same conditions as real estate agents. Therefore, although either real estate agent or lawyer can receive introduction fee, referral fee is forbidden among them because they can not pay introduction fee to each other. Violations of this rule are illegal and unethical.
The following analysis shows how I got into these conclusions.
Realtors and so-called "bird dogs" or referral fees
ss combined effect. Real estate business and broker law 2002 30 (b) and (c) stipulate that brokers "do not pay fees or other fees" to "trade real estate by hiring or hiring unregistered people" doing.
Here, we need to clarify some terms further.
Section 1 describes the broker as "for others or for others, alone, or for one or more staff or salespersons, real estate transactions, or for themselves, for reward, benefit or compensation or hope or promise Both myself and myself are so. "
Furthermore, s. 1 defines a sales representative as "a person hired, appointed or authorized by a broker to trade real estate". Here, "to hire" means "to hire, appoint, approve, or act on behalf of another person, including independent contractors".
Finally, s. 1 is a direct or indirect action to promote disposition or acquisition or trading of real estate, such as trading, trading, sales contract, exchange, option, lease, rental, etc., and promotion of such acquisition, transaction, , Advertisement, act, or negotiation and is considered a transaction in the sense of a verb.
Clearly, brokers can not pay compensation for unregistered people to promote real estate transactions, but it is unknown whether sales representatives (that is real estate agents) are banned or not (see page 30 on salesperson Because it is not described). Registrar Allan Johnson of the Realty Council of Ontario states to the bulletin board of the expired registrar as follows. "The right to pay for the recent transactions with the salesperson and the right to pay a thankfulness for the lead that was offered Interestingly, RECO's new registrar Bird-Dog coverage says," As the securities company recognizes, This place is interpreted as a violation as a way to pay some kind of compensation to avoid appropriate sanctions of laws by securities firms where employees / sales representatives are used. If the salesperson acts solely without knowledge of the securities company, can the latter escape the responsibility? In expired Registrar & # 39; s Bulletin, Mr. Johnson said sales representatives will provide referral fee We suggested two cautions that prohibit doing.
1. In light of the fact that sales representatives are registered and employed by a particular broker and indeed are acting with the expressed authority of the broker employer, the salesperson, after paying taxes, It may be equal to the broker's violation section [30 (b)] And / or
2. Paying this kind of compensation to unregistered persons may be defined as promoting the transaction, so the salesperson receives a committed counseling offense & # 39; payment to the salesperson Those who judge to be in violation of the law by doing real estate transaction without the benefit of registration. "
Mr. Johnson also wrote that the format of the referral fee (wine bottle, cash payment etc.) is not important. "For the type of reward, # 39 of the kingdom's coin"
The warnings proposed by Mr. Johnson are discussed at the bulletin board of the expired registrar (these opinions are not explicitly reflected) but these attention points are ignorable considering the purpose of the real estate business Seem. Broker law (2002) (ie, to prevent unregistered people from trading real estate), doctrine of vicarious responsibility and so on.
Therefore, real estate agents who pay referral fee may be fined up to $ 25,000 and / or sent to disguise for up to one year. The broker is asked for a proxy responsibility and the possibility of receiving the same penalty if the broker does not take reasonable measures to prevent the broker from breaching the real estate business and the broker law in 2002 through the behavior of the salesperson Yes. Real Estate Business and Broker Law In Article 40 (4) of 2002, we eliminate the action taken by directors on sales representatives or brokers two years after the date the company was originally known to the director.
Can real estate agents receive introduction fee from a third party? Yes
In the Real Estate Council on the real estate business and broker laws in 2002, relevant regulations, or referral fee of the Ontario State Real Estate Council, it seems that the lawyers or other third parties do not provide referral fees A sales representative probably will be allowed to introduce fees from the former to the latter unless the ethical obligation is infringed by a lawyer or salesperson.
Jim Marhsall (broker) 's Parry Sound Real Estate blog said that as noted at a certain point, "Introduction fee can only be accepted if you paid brokerage fee to registered company This statement Was confirmed by phone with Charles (Compliance Officer, Real Estate Council Compliance Officer - Phone Number: 416-207-4850) on April 20, 2007. If a sales representative previously contacts a customer from a lawyer with that customer Pay the referral fee by recommending the attorney to the attorney, the customer agrees (recommends to submit the written document) and then holds the lawyer, the lawyer pays the securities company and the salesperson. It is in agreement with the obligation of broker / sales person under below.Whether to offer trading at realistic opportunity as soon as possible, before commitment is accepted, commission and other Potential buyers / to disclose to the seller of the presence and details related to the output are.
Can lawyers provide referral fees to real estate agents? No
Although there are exceptions, lawyers can not offer referral fees to non-lawyers such as real estate agents. Rule 2.08 (8) of the Canadian Senior Prosecution Rules, lawyers shall not:
(A) To divide, divide or divide their fees directly or indirectly with non-attorneys.
(B) Provide financial or other reward for those who are not attorneys for the introduction of client or customer issues.
In addition, attorneys can pay a referral fee only if such a fee is given to a lawyer by pursuing Canada's Law of Society of Practice Management Guidelines.
Can a lawyer receive an introduction fee from a third party? Yes
Legalists can receive referral fees if certain conditions are met. Lawyers may "take fees, compensation, expenses, fees, interest, rebates, agents or forwarding only." Permission, other employment related fees from someone other than the client, but client consent Only by fully disclosing it, the consent of the client, another person or agency can be written or written only here.In addition, the lawyer will introduce only if various conditions are met It is common to accept fees.
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