26 April May a licensee accept compensation from a Home Warranty Company without violating RESPA? April 26, 2017 By Cindy Sellers Transactions Involving Condos 0 On June 25, 2010, HUD's Office of General Counsel published an Interpretive Rule clarifying circumstances under which home warranty companies (HWCs) may compensate real estate licensees in compliance with Section 8 of RESPA. In brief, services provided by real estate licensees on behalf of HWCs are compensable as additional settlement services if the services are actual, necessary, and distinct from the primary services provided by the licensee. The amount of compensation from the HWC permitted under Section 8 for such additional services must be reasonably related to the value of those services and cannot include compensation for referrals of business. Also, a payment by an HWC for marketing services performed by licensees on behalf of the HWC that are directed to particular homebuyers or sellers is an illegal kickback for a referral under Section 8. To evaluate whether a payment from an HWC is an unlawful kickback for a referral, the CFPB may look in the first instance to whether, among other things: the compensation for the HWC services provided by the real estate licensee is contingent on an arrangement that prohibits the licensee from performing services for other HWC companies; and payments to licensees by the HWC are based on, or adjusted in future agreements according to, the number of transactions referred. NAR has published a helpful article called “Selling a Home Warranty? Know the Rules.” You may view that article here: http://realtormag.realtor.org/law-and-ethics/feature/article/2013/05/selling-home-warranty-know-rules Related Posts Is it illegal and/or unethical for an agent to refuse to show another company’s listing to a buyer client based on the compensation being offered to the agent by the listing company? Is it illegal and/or unethical for an agent to refuse to show another company’s listing to a buyer client based on the compensation being offered to the agent by the listing company? My broker has informed me that under no circumstances may I contact the owners of property following my departure from the company and that any listing I have will remain with my current broker. My broker has informed me that under no circumstances may I contact the owners of property following my departure from the company and that any listing I have will remain with my current broker. Is my broker right? Is it legal for an REO seller to require the buyer to use a specific title company? Is it legal for an REO seller to require the buyer to use a specific title company? The Buyer doesn't want to lose the house; however, they don't want to use the seller/REO's title company. I am the broker for a small company and I still take listings. I am the broker for a small company and I still take listings. If another agent in my office has a buyer client interested in my listing, how can we make dual agency work? Q: I am the broker for a small company and I still take listings. If another agent in my office has a buyer client interested in my listing, how can we make dual agency work? Agency How is the “Date of Contract Acceptance” in the MAR Residential Contract established? How is the “Date of Contract Acceptance” in the MAR Residential Contract established? Is it the date on which the contract is actually formed and enforceable? Comments are closed.