Steve Ryan, MAR General Counsel
Margy Grant, MAR Associate General Counsel
Mike McDonagh, MAR Associate Counsel
Q: I received a referral from an agent in another part of the state to work with a seller in my market area. After successfully marketing the property and finally closing I was prepared to send the agent a referral fee but I found out she is an inactive salesperson. I thought I could only pay a referral fee to active brokers and salespersons. Also, because she is a salesperson and not a broker, I thought license law prohibited me from paying her directly instead of making the payment to her broker.
A. You may pay the referral fee directly to the agent. Massachusetts General Law Chapter 112, Section 87XX ½ created a new “inactive” license status for those who did not complete their continuing education requirements while also permitting inactive salespersons to receive referral fees. It states that an inactive salesperson may “assist with or direct the procuring of prospects and may receive referral fees for such procurement activities.” Aside from collecting a referral fee, the statute prohibits inactive licensees from engaging in the business of or acting as real estate brokers or licensees.
To answer your second question, inactive licensees are precluded from affiliating with a broker due to their inactive status, and therefore this is the only instance where a salesperson can receive a referral fee directly. On the other hand, salespersons with an active license can only receive compensation from the broker with whom they are affiliated.
Q. When trying to get information on a listing, I recently visited the website of an agent and I noticed that there is no indication of the broker’s name with whom the agent is affiliated. All that’s listed is the agent’s name and email address. I thought that all advertisements needed to be made in the broker’s name and that all advertisements and websites contain the broker’s name and telephone number?
A. With regard to the broker’s name, you are correct. Whether the property is being promoted in the newspaper or on the internet, State Regulation requires that the name of the brokerage firm must appear in the advertisement, however, there is no specific requirement that the broker’s telephone number also appear. The regulation also prohibits salespersons from advertising under their own name. State regulation 254 CMR 3.00(9)(a) states as follows:
(9) Advertising. A broker shall not advertise in any way that is false or misleading.
(a) Broker Identification. No broker may advertise real property to purchase, sell, rent, mortgage or exchange through classified advertisement or otherwise unless he/she affirmatively discloses that he/she is a real estate broker. No broker shall insert advertisements in any advertising publication or other means where only a post office box number, telephone, facsimile, electronic mail number or street address appears. All advertisements shall include the name of the real estate broker.
(b) Salespersons Prohibited From Advertising. Salespeople are prohibited from advertising the purchase, sale, rental or exchange of any real property under their own name.