Does RESPA prohibit referral fees between licensees?

The correct answer is that RESPA does not prohibit referral fees between licensees. The Real Estate Settlement Procedures Act (RESPA) primarily focuses on disclosing the costs associated with the settlement process, promoting transparency, and preventing abusive practices in the real estate transaction process. While RESPA does prohibit certain types of kickbacks and referral fees that are not disclosed or that do not meet specific criteria, it does allow for certain referral arrangements among licensees as long as these fees comply with the regulations laid out in the Act.

Licensees can share fees for legitimate referrals as long as these fees are disclosed and the services provided warrant the payment. Therefore, fees resulting from referrals are permissible within the guidelines established by RESPA, fostering cooperation and enabling professionals in the real estate industry to work together effectively without infringing on the law.

This clarity helps licensees understand their limitations and the legal framework governing their transactions, ensuring they operate within the law while still being able to receive or share referral fees appropriately.