Q1. Why does the Referral Fee Agreement ask for identification of the Brokerage Firm Code and the Agent Code?
A1. Disclosure of the Brokerage Firm Code and the Agent Code is requested to facilitate payment of the referral fee by identifying the appropriate branch and agent.
Q2. What should an Originating Agent do if they are concerned that the Receiving Agent will circumvent the Referral Fee Agreement by taking the client’s information and then refusing to sign the Agreement?
A2. If this is a genuine concern of the Originating Agent, they may want to reconsider the Receiving Agent to whom the referral is being given. With that said, an Originating Agent can request that the Agreement be fully executed before the client’s contact information is provided to the Receiving Agent.
Q3. Pursuant to line 24 of the Referral Fee Agreement, the parties can agree that the Receiving Brokerage shall furnish to the Originating Brokerage a copy of the final settlement/closing statement. Can the Receiving Brokerage redact portions of that statement before conveying it to the Originating Brokerage?
A3. Yes. The Originating Brokerage is provided an opportunity to view the final settlement/closing statement in order to confirm that the amount of the referral fee is accurate. However, any confidential or sensitive personal information that appears on the statement can be redacted before it is conveyed to the Originating Brokerage.
Q4. Why does the Referral Fee Agreement leave it to the parties to determine the term of the Agreement?
A4. The workgroup contemplated a default term of six months or one year but ultimately decided to leave it up to the licensees, as they will know best what an appropriate term is for the contemplated transaction. The Agreement does, however, provide that the referral fee will be paid regardless of the closing date as long as the contract or lease is executed during the term.
Q5. Can the Receiving Brokerage withhold payment of the referral fee until such time as the Originating Brokerage has furnished a completed IRS Form W-9 and a copy of the Originating Brokerage’s real estate license?
A5. Yes. Payment of the referral fee is subject to the Originating Brokerage’s compliance with the terms and conditions set forth in the Referral Fee Agreement. However, if the Receiving Brokerage elects to waive these requirements, it is free to do so.
Q6. Why doesn’t the Referral Fee Agreement require disclosure of a taxpayer identification number?
A6. Because the Referral Fee Agreement requires the Originating Brokerage to furnish a completed IRS Form-W-9 to the Receiving Brokerage, there is no need for the disclosure of a taxpayer identification number on the face of the Agreement. Furthermore, not all brokers operate with a taxpayer identification number, meaning that they would be required to disclose their social security number. The workgroup was not in favor of social security numbers appearing on the Referral Fee Agreement.
Q7. Why does the Referral Fee Agreement require the Originating Brokerage to furnish to the Receiving Brokerage a copy of the Originating Brokerage’s real estate license?
A7. The Receiving Brokerage should confirm that the Originating Brokerage holds a real estate license. Since Originating Brokerages may be licensed in states other than Arizona, having the Originating Brokerage produce a copy of their real estate license will enable the Receiving Brokerage to ensure that payment of the referral fee is legal.
Q8. If the Receiving Brokerage is unable or unwilling to represent the client, can they refer the client to another brokerage or salesperson?
A8. No. The Referral Fee Agreement expressly states that: “In the event Receiving Brokerage is unable or unwilling to service Client, Receiving Brokerage shall immediately notify Originating Brokerage and shall not refer Client to any other brokerage or salesperson.”
Q9. Does the execution of a Referral Fee Agreement with an out-of-state broker enable that out-of-state broker to practice real estate in Arizona?
A9. No. Even with a fully executed Referral Fee Agreement, an out-of-state broker cannot sell, lease, rent, exchange or attempt to sell, lease, rent or exchange real property in Arizona.
Q10. Can a licensed broker in Arizona lawfully pay compensation to, and receive compensation from, a broker lawfully operating in another state?
A10. Yes. Payment of this nature is expressly permitted by A.R.S. § 32-2163.
Q11. Is an Arizona real estate licensee permitted to pay a referral fee to a member of the public?
A11. No. A.R.S. § 32-2155(B) prohibits a person, firm or corporation from paying or delivering compensation for licensed activity to anyone who is not licensed at the time the service is rendered.