Steve Ryan, MAR General Counsel
Margy Grant, MAR Associate Counsel
Q. Recently my office launched a rebate program where we offer all buyers who close through our office a 10% rebate of our commission, payable at closing. We have a transaction where there is a dispute regarding the buyer agency commission, we are the cooperating broker. The listing broker has advised us that we will resolve it at arbitration. If we are not paid our commission are we required to pay the rebate to the buyer?
A. It depends. Offers of gifts, incentive or rebates are generally legal in Massachusetts, however are unique to each office offering them. The terms of your rebate offer will dictate whether or not you are obligated to pay the rebate, if for example, the offer simply said “buy a house through us and we will give you a gift,” you might have a problem as there is no restriction on the collection of the offer. As a general rule you should develop a description of your rebate or gift program for consumers to review and possibly sign when they begin working with you. This description should include a disclaimer that if the office is not paid then they are not obligated to pay the consumer. Further, this description should be reviewed by your tax advisor for determination tax consequences, if any, of this kind of offer. Further, RESPA rules usually require this offer to be disclosed on the HUD-1 Settlement Sheet at closing. Like all consumer services the more disclosures you have on the program the better. It will prevent disputes down the road.
Q. I have an agent who has a large subdivision listed with my firm. She has asked if she can only put her cell phone number on her advertising, including the signs at the site. Is it permissible for me to require that the office phone number be put on the advertising? I don’t object to her cell phone being the only number on her business card, but shouldn’t office signs reference the office number?
A. It is permissible to require your office number on the advertising for the subdivision. The law only requires the broker’s name on advertising, however you have the right to require your agents list the office phone number on advertising as an office policy decision. As the market is slow and agents are feeling the heat, it might be helpful to sit down with the agent and explain your reasons for your decision so she feels included in the decision and understand why it benefits the company in your opinion.