Compensating Unlicensed Referral Sources in Texas

Texas licensing law maintains a strict regulatory barrier around commissions. Knowing what compensation is legal and what constitutes unlicensed brokerage is a heavily tested topic on the state exam.

Why the Correct Option is Right

Option C is correct because TREC Rules draw a sharp line at licensed status. It is illegal to pay any commission splits or cash referral fees to unlicensed people. The only exception is a small gift of retail merchandise (not cash or cash-equivalents like Visa cards) with a maximum retail value of $50.

Why the Other Options are Traps

• Option A is a trap because even a tiny percentage (like 0.1%) of a home sale is valued in the hundreds of dollars, violating both the licensed rule and the $50 cap.
• Option B is a trap because a client’s written consent cannot override state licensing laws or TREC administrative regulations.
• Option D is a trap because family status does not grant a waiver from licensing requirements.

The Exam Trap

A common trick question is whether an agent can give a rent credit of $100 to an unlicensed tenant for referring a new tenant. This is illegal because a rent credit is considered a cash-equivalent payment of valuable consideration, which violates the $50 limit and the cash prohibition.

Worked Texas Example

Scenario: An unlicensed tenant, Sarah, refers her friend to Broker Ken. Sgreeing to show appreciation, Ken wants to give Sarah a $100 gift card to a popular steakhouse. Outcome: This is a licensing violation. Even though it is retail merchandise, the value is $100, which exceeds the $50 maximum. Ken can only give her a gift card valued at $50 or less to remain fully compliant with TREC Rule §535.147.