Question

Salesperson Jerri helped her sister Summer get a job with Calhoun Title Company. As a way of saying thanks, Summer sends Jerri a $200 referral fee from the Title Company for every transaction that Jerri closes through Calhoun Title. Knowing Florida real estate law, Jerri had a lawyer friend add a phrase in her sale and purchase documentation stating that the buyer "agrees to use Calhoun Title Co." Which of the following statements is accurate regarding this situation?

a) The arrangement is legal and complies with ethical standards.
b) Jerri should return the referral fees to maintain professional integrity.
c) The buyer's agreement to use Calhoun Title Co. is irrelevant.
d) Jerri's lawyer friend is liable for unethical conduct.

Answer 1

The scenario likely violates the Real Estate Settlement Procedures Act (RESPA), as it entails potential illegal kickbacks and pressures clients to use a specific title company. The most accurate choice is that Jerri should return the referral fees to maintain professional integrity.

Step-by-step explanation:

The question revolves around the legality and ethicality of a business arrangement in the context of Florida real estate law. Salesperson Jerri helps her sister get a job and in return, receives a referral fee for every transaction closed with Calhoun Title Company.

Jerri also includes a clause that obligates buyers to use Calhoun Title Co. for their transactions. The accurate statement regarding this situation is b) Jerri should return the referral fees to maintain professional integrity.

This scenario likely violates real estate law because it may be considered an illegal kickback under the Real Estate Settlement Procedures Act (RESPA), which prohibits the giving or accepting of anything of value for business referrals in the mortgage lending and title insurance industry. Furthermore, pressuring clients to use a specific title company potentially violates the duty to act in the best interest of the client.