Can a Texas real estate broker pay a finder's fee or referral gift to an unlicensed person?
A broker may give a referral gift of merchandise worth up to $50, but cannot pay cash or cash equivalents to an unlicensed person.
Under TREC rules, a licensee may give an unlicensed person a gift (such as a gift card or merchandise) valued at $50 or less as a thank-you, but cannot split commissions, pay cash, or provide gift cards convertible to cash.
TREC Rule §535.20— Referral Fees to Unlicensed Persons
Select Your Answer Choice
Exam Explanation
Can a Broker Pay a Finder’s Fee in Texas?
Who a broker can pay is a very common topic on the Texas real estate exam. Under TREC rules, commission splits are reserved only for active real estate license holders.
Why the Correct Option is Right
Option B is correct because TREC Rule §535.20 provides a narrow exception for non-cash referral gifts. A licensee may pay a referral gift of merchandise (including gift cards that cannot be converted to cash) up to $50 in value. This is not considered a payment of real estate commission.
Why the Other Options are Traps
- Option A is a trap because there is a small $50 exception for non-cash items.
- Option C is a trap because cash is NEVER allowed, and the threshold is $50, not $100.
- Option D is a trap because finder’s fees for unlicensed persons are highly illegal and can lead to license revocation under TRELA.
The Exam Trap
Watch out for the type of gift. A Visa or Mastercard pre-paid debit card is considered a cash equivalent because it can be used anywhere to purchase goods, or even withdraw cash. These are illegal referral gifts. A gift card to a specific store (e.g., Starbucks or Home Depot) is permissible, as long as the value does not exceed $50.
Worked Texas Example
Scenario: Jim, an unlicensed neighbor, refers a home seller to Agent Bob. To say thank you, Bob gives Jim a $50 gift card to a local Italian restaurant. Outcome: Bob’s gift is legal. It is under the $50 statutory threshold, and it is a specific merchant gift card that cannot be converted to cash, so it complies with TREC Rule §535.20.