Frequently Asked Questions

Legal Hotline FAQ

a blog of the most frequently asked questions to the MAR legal hotline.


Cindy Sellers
Cindy Sellers
Cindy Sellers's Blog

May a broker charge an Administrative or Flat Fee or does that violate RESPA?

In 2012, the U.S. Supreme Court provided clarity about administrative fees charged by real estate brokerages when it ruled in favor of Quicken Loans in a lawsuit alleging a violation of the Real Estate Settlement Procedures Act. (“RESPA”). In the case decided by the Supreme Court, the defendant was a lender, however, many real estate brokers charge an administrative fee in addition to the sales commission, and in some previous cases, federal courts had ruled that such fees violate RESPA. The Supreme Court has made it clear that the fees don’t constitute a RESPA violation, so long as the fees are not split with a third party who provides no services in exchange for the fee.
 
RESPA does not regulate how a real estate broker determines the charges for its services, which could be in the form of a flat fee, a percentage, or a combination of both. MAR’s Exclusive Right to Sell Residential Brokerage Agreement provides as follows:
12. BROKER’S COMPENSATION:  The amount of Broker compensation is not prescribed by law or established by any membership organization with which the Broker is affiliated.
In the event of a sale, exchange, or transfer, the Compensation to be paid by Seller to Broker shall be __________________________________________________________________.
So, consistent with RESPA and with the Supreme Court’s decision, Brokers are free to decide what they will charge for their services, and whether those charges will be in the form of a flat fee, a commission or both.  You should speak with your Broker if you have any questions regarding your office’s policies on this matter.
 


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