Referral Agreement (Broker-to-Broker) — Alabama Edition Template

Referral fees are a core revenue stream in real estate — but they are legal only when paid between licensed brokers. Every state's license law prohibits paying referral fees to unlicensed persons, and in transactions involving a federally related mortgage loan, RESPA Section 8 (12 U.S.C. § 2607) prohibits kickbacks and unearned fee-splitting for settlement-service referrals — with an exemption at 12 U.S.C. § 2607(c) that permits cooperative brokerage and referral arrangements between licensed real estate agents and brokers. The practical rule: broker-to-broker referral fees are fine; anything else needs scrutiny. And because a referral fee is a commission-sharing promise, the statute of frauds in most states means an unwritten referral deal is an unenforceable handshake.

This 4-page Referral Agreement locks the arrangement down in writing: identification of referring broker and receiving broker (with license numbers and states), the referred client's identity and the scope of the referral (buy-side, sell-side, or both; geographic area; property types), the referral fee as a percentage of the receiving side's gross commission (or a flat amount), when the fee is earned and payable (at closing, out of escrowed commission), treatment of multiple transactions by the same referred client during a defined capture period, a no-brokerage-services acknowledgment by the referring broker in the destination transaction, status updates, and governing law.

The included notes cover interstate referrals (fee must generally be paid broker-to-broker through the licensee's own broker), states with specific referral disclosure requirements to clients, and the RESPA boundaries for anything touching settlement services beyond brokerage. Template for drafting purposes — not legal advice.

About this Alabama Edition: Every template was redrafted around the Alabama Real Estate License Law (Ala. Code § 34-27-1 et seq.) and the Real Estate Consumers Agency and Disclosure Act (RECAD, Ala. Code § 34-27-80 et seq.), under which a licensee is a transaction broker unless a written agreement creates an agency relationship, the Commission's Real Estate Brokerage Services Disclosure must be presented at first substantive contact (§ 34-27-82), and limited consensual dual agency is permitted only with written informed consent — so the dual-agency document is drafted as a Limited Consensual Dual Agency Agreement with a transaction-brokerage alternative. The seller disclosure is drafted as a voluntary disclosure for Alabama's caveat emptor market, explaining the judicially recognized exceptions (health/safety defects, direct questions, fiduciary relationships) and Alabama-specific items such as wood-infestation reports and termite bonds. The forms also apply the Alabama statute of frauds (Ala. Code § 8-9-2) and the Alabama Uniform Electronic Transactions Act (Ala. Code § 8-1A-1 et seq.), and note that Alabama has no broker lien statute.