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Legally speaking: Can a retired licensee still receive referral fees?

By Lorie Garland, OAR Assistant Vice President of Legal Services

The OAR Legal Assistance Hotline receives an array of real estate-related legal questions — including license law issues, disclosure, contract law, ethics and commission problems, among others. In an effort to help you work within the law, our “Legally Speaking” series spotlights some of the timely questions that are being asked by REALTORS. The following looks at whether referral fees can be paid to an agent once they retire… 

Q: My agent plans to retire at the end of the year but would like to be able to receive referral fees. If her license is returned to the Ohio Division of Real Estate and Professional Licensing and placed on an inactive status can she be paid referral fees?

A: No. A licensee must keep her license active to be able to be paid referral fees for referring prospects to another licensee. If your agent wants to continue to receive referral fees she has two options. The first is to keep her license as it is currently, active with your brokerage. This gives her the ability to receive referral fees and to receive compensation for any other activity that requires a real estate license.

The other option is to transfer her license to what is commonly referred to as a “holding company.” A “holding company” is a brokerage where the licensees are not members of the REALTOR association and do not list and sell properties, but keep their licenses active in order to receive referral fees for referrals to licensees with brokerages that do list and sell properties.

Bottom line, an agent’s license must be active (held by a brokerage) in order to receive referral fees.

Tags: legal, Legally Speaking