Referral Agreement (Broker-to-Broker) — Michigan 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 Michigan Edition: the template and its drafting notes are adapted for Michigan practice under Article 25 of the Michigan Occupational Code (MCL 339.2501 et seq.), which governs broker, associate broker, and salesperson licensing and requires that all compensation flow through the employing broker, and under Michigan's agency disclosure statute, MCL 339.2517, which requires the written Disclosure Regarding Real Estate Agency Relationships before a client shares confidential information. Michigan permits dual agency only with the informed written consent of both parties and also recognizes designated agency, so this edition's agency document is a Dual Agency Disclosure & Informed Consent that offers designated agency as the alternative. Seller disclosure follows the Michigan Seller Disclosure Act (MCL 565.951–565.966), with the Seller's Disclosure Statement delivered before a binding purchase agreement and statutory purchaser rescission rights for late delivery. Electronic signatures rely on the Michigan Uniform Electronic Transactions Act (MCL 450.831 et seq.); commission agreements are drafted to satisfy Michigan's statute of frauds (MCL 566.132), and broker lien references are limited to the Commercial Real Estate Broker's Lien Act (MCL 570.581 et seq.). Michigan-specific drafting notes accompany the template for review before use.