We all love the thrill of a closing, but here’s the truth: compliance is what keeps your business running safely and sustainably.

Understanding and following the Real Estate Settlement Procedures Act (RESPA) isn’t just about staying on the right side of the law; it’s about protecting your clients, your reputation, and your career. Here’s what every real estate agent should keep in mind.

What Is RESPA?

RESPA is a federal law enforced by the Consumer Financial Protection Bureau (CFPB). It was created to protect consumers by ensuring transparency in real estate settlements, particularly in transactions involving federally related mortgage loans.

At its core, RESPA prohibits giving or receiving any “thing of value” in exchange for a referral to settlement service providers like title companies, lenders, and escrow officers. This isn’t limited to cash; it can include gift cards, trips, tickets, discounts, or even small tokens.

If a referral benefit influences your client’s choice of provider, it’s likely a violation.

The Big Don’ts

Violations of RESPA can cost you hefty fines, your license, and your professional reputation. Examples of prohibited actions include:

• Accepting gift cards or cash for referring clients to lenders.
  
• A title or escrow company pays agents for referrals.
  
• Failing to disclose when you refer clients to an affiliated business you own or profit from.
  

Even informal, undocumented arrangements can raise red flags. A “pattern of conduct” is enough to establish a violation.

Key Exemptions You Should Know

Not all payments are off-limits. RESPA allows certain legitimate arrangements, including:

• Bona fide payments: Compensation for actual services performed (not just referrals).
  
• Cooperative brokerage referrals: Commissions split between licensed real estate professionals acting within their capacity.
  
• Affiliated Business Arrangements (ABAs) are permitted if clearly disclosed to the client and only when the consumer retains the option to choose from multiple providers.
  

The rule of thumb? You can get paid for work performed, not for steering business.

Staying Compliant in Everyday Practice

To protect yourself and your business, follow these best practices:

• Disclose everything: Be transparent with clients in writing, especially if you have ownership in or financial ties to a service provider.
  
• Avoid “gifts for referrals”: If it looks like a reward for steering business, it’s likely illegal.
  
• Check state laws: Many states have even stricter referral rules than RESPA.
  
• Document thoroughly: Keep records of communications, disclosures, and compensation to demonstrate compliance if ever questioned.
  
• Ask when in doubt: Consult your broker or legal counsel before entering into any referral-related agreement.
  

Why It Matters

Kickback rules may feel like red tape, but they exist for a reason: to protect consumers from inflated costs and preserve trust in the industry. Agents who prioritize compliance not only safeguard their licenses but also strengthen their client relationships and long-term success.

At the end of the day, closing deals is important, but closing them the right way is what truly defines a successful real estate career.

Pro tip: When in doubt, assume a referral fee is illegal until confirmed otherwise. Protect your business by keeping RESPA top of mind, as successful closings depend on compliance with federal and state regulations.

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