Referral Agreement (Broker-to-Broker) — Tennessee 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 Tennessee Edition: the template and its drafting notes are adapted for Tennessee practice under the Tennessee Real Estate Broker License Act of 1973, T.C.A. § 62-13-101 et seq., and its broker-relationship provisions at T.C.A. § 62-13-401 et seq., administered by the Tennessee Real Estate Commission (TREC). Tennessee's default relationship is facilitator (transaction broker) status unless a written agency agreement is signed, so this edition's agency documents are drafted as the written agreements the statute requires; Tennessee permits disclosed dual agency with the informed written consent of both parties and authorizes designated agency under T.C.A. § 62-13-405, so the agency-disclosure document remains a Dual Agency Disclosure & Informed Consent that also presents the designated-agency and facilitator alternatives and references the required written Confirmation of Agency Status. Seller disclosure follows the Tennessee Residential Property Disclosure Act, T.C.A. § 66-5-201 et seq., electronic signatures rely on Tennessee's Uniform Electronic Transactions Act, T.C.A. § 47-10-101 et seq., and the statute of frauds at T.C.A. § 29-2-101 is referenced for land-sale writings. Tennessee-specific drafting notes accompany the template for review before use.