Referral Agreement (Broker-to-Broker) — New Jersey 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 New Jersey Edition: the template and its drafting notes are adapted for New Jersey practice under the Real Estate Commission's rules — licensees must deliver the Consumer Information Statement (CIS) on real estate relationships before substantive discussions (N.J.A.C. 11:5-6.9), every listing, buyer-agency, and sales contract must include a declaration of business relationship identifying the firm's role, and disclosed dual agency requires the informed written consent of both parties. New Jersey also overlays the Law Against Discrimination (one of the broadest fair-housing statutes in the country), the New Jersey Real Estate Sales Full Disclosure Act for new/subdivision sales, and attorney-review practice for residential contracts. New Jersey-specific drafting notes accompany the template — they supplement, never replace, the mandatory CIS.