SHARING FEES WITH AN UNLICENSED PERSON

California law prohibits a licensed broker from sharing his or her fee with an unlicensed person for performing services for which a license is required. California Business & Professions Code Section 10136. This does not include payment by a broker to a licensed salesperson who works for him or her; such payments are valid.

There are two primary exceptions to this rule. First, broker’s can, of course, hire clerical assistants to perform non-professional work and payment to them is valid. Second, an unlicensed person can be paid a “finder’s fee.”

If there is a dispute over these issues, the question is always: what did the unlicensed person actually do? If he or she did nothing but clerical work, or nothing but introduce buyer and seller, then the payment is valid. If he or she negotiated any part of the deal, assisted with the documents, or otherwise did professional brokerage work – to that degree — the payment is not valid.

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