Connecticut Real Estate - Choice of Agent Freedom in
Relocation
"The Connecticut Decision"
Why relocating buyers have the legal right to choose their
Buyer Agents in Connecticut.
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THE STATUTE:
See sections in red
Interfering with Agency Relationships
History: There has been real estate brokerage
industry concern in Connecticut that real estate relocation companies (and
affinity groups) are charging brokers referral fees for business that the broker
already has (either because an agent generated it or another broker referred
it). In this situation, there is no referral of business and no agreement
between the broker and relocation company that the broker will pay a fee.
Therefore, the broker is under no legal obligation too pay the relocation
company a referral fee. However, brokers have stated that
they feel pressured to pay the fee because otherwise (1) benefits will be
withheld from the broker's client, and (2) a broker
may not be sent future referrals.
In order to provide guidance to licensees on the issues of (I) referral fees
and (II) interfering with agency relationships, the Connecticut Real Estate
Commission establishes the following policy.
- Section 20-328-8a(e) of the Connecticut real estate regulations prohibits
a broker from paying a referral fee to an unlicensed person engaging in the
real estate business. In order to meet this license requirement, the person
receiving the referral fee can be licensed in either Connecticut or another
state.
- Section 20-328-8a(a) of the Connecticut real estate
regulations prohibits a licensee from demanding a referral fee, unless
reasonable cause for payment of the referral fee exists. A reasonable cause
for payment (which would allow a licensee to demand a referral fee, but not
necessarily mean that the licensee has a legal right to a referral fee)
means that (1) an actual introduction of business has been made, (2) a
subagency relationship exists, (3) a contractual referral fee relationship
exists, or (4) a contractual cooperative brokerage relationship exists.
- Section 20-328-9a(a) of the Connecticut real estate
regulations prohibits a licensee from interfering with the agency
relationship of another licensee (and further, Section 20-328-9a(c)
prohibits a licensee from attempting to induce a seller or landlord to break
a listing contract with another licensee for the purpose of substituting it
for a new listing contract). For purposes of this section, an agency
relationship is not established until a written agency agreement (either a
listing or buyer representation agreement) is entered into. Interfering with
the agency relationship of another licensee includes (1) demanding a
referral fee from another licensee without reasonable cause, (2) threatening
to take harmful action against a client of another licensee because of the
agency relationship, and (3) counseling a client of another licensee on how
to terminate or amend an existing agency contract. Any activities
that involve the communication of corporate relocation policies or benefits
to a transferring employee, as long as that communication does not involve
advice or encouragement on how to terminate or amend an existing agency
contract, shall not be considered interference.
Concerns that a company or individual may not be complying with any
regulations or statutes contained in this policy statement should be addressed
to: Connecticut Real Estate Commission, 165 Capitol Avenue, Hartford, CT 06106.
Adopted this 5th day of March, 1998
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