Some real estate agents are creative at trying to get people to refer them business. However, often times these referral schemes violate state law. Some common referral schemes offer a chance to enter a drawing or raffle in order to win a vacation package, cruise or even a golf cart. All the agent asks in return is the person refer them a good lead to a buyer or seller client.
Is this legal? Absolutely not.
Raffle or drawing entries in exchange for referrals violate state law. South Carolina Code §40-57-710(12) (which incidentally is entitled “Grounds for Disciplinary Action Against Licensee“), states that an agent may be disciplined if the agent “pays a commission or compensation to an unlicensed individual for activities requiring a license under this chapter. Notwithstanding this section, a licensee may not pay or offer to pay a referral fee or finder’s fee to an unlicensed individual who is not a party in the real estate sales or rental transaction.” The statute clearly prohibits an agent from paying a unlicensed person a finder’s fee. A chance to win or to enter a drawing is considered a thing of value and is thus considered payment for the referral. Without question this scheme violates the state statute and the agent can be disciplined.
Simply put, you cannot reward an unlicensed person for referring you business.
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