Area 228 Real Estate and More : How Does Your State Define Rebate?

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How Does Your State Define Rebate?

By: Suzi Gravenstuk
Saturday, November 10, 2007 9:53 AM

Mississippi Does not have a rebate issue Crying . I suspect that the other non rebate states do either. (Alaska, Iowa, Kansas, Louisiana, Mississippi, Missouri, New Jersey, Oklahoma, Oregon, Tennessee, Montana, North Dakota, Alabama.)

In the recent Mississippi Real Estate Leader issue(Fall 2007), The Legal Ease section by Ron Farris, Robinson,Biggs, Ingram, Solop & Farris, PLLC reminded Mississippi real estate agents we could lose our licenses by offering "Inducements". According to the article, Mississippi Real Estate Commission is given the authority to revoke or suspend a license where the licensee is guilty of "Paying any rebate, profit or commission to any person other than a real estate broker or sales person licensed under (License Law)." It gets rather technical and requires close reading by Mississippi agents... What some of us may be thinking of as a great closing gift could in fact end up with us losing our licenses.

If you are licensed in a non-rebate state I encourage you to make sure you are interpreting the law as closely as your real estate commission interprets it. For example: Mississippi Licensees cannot offer to list a property and provide a free home warranty, free inspection, or free moving services--unless the service is provided by them or another licensee. Why? It would be considered paying a non-licensee.

According to the article, the test is "Whether any part of the licensee's fee goes to a non-licensee. Any instance where it does, no matter how the transfer is structured. is a prohibited practice. Further, (this is very important), any listing that offers a "free inspection or home warranty", must disclose that these items are "Seller Paid"."

However, Mississippi escapes the "Restraint of Trade" issue by telling us that a reduced fee is an acceptable practice, but in advertisements the possible range of fees a customer or client might pay in every instance is required.

What do you think? In your comment please include whether or not you are a Rebate Allowed, or a Non-Rebate state.

Home Inspectors and Home Warranty specialists, do you think this interpretation of inducements has an effect on your business?

I wonder if in "rebate allowed" states, regarding agents who say they refuse to rebate--if they offer "inducements" such as Home Warranty, Home Inspection, etc.

Comments

Member Since '04	Vance Remele said: Hi Suzi I have been following this and the other DOJ antitrust lawsuits against the National Association of Realtors® and certain MLS services for sometime now and have spent hours reading them. Many state real estate commissions throughout the country rushed to change there laws to open up competition in real estate including rebates etc there scurry was not shall I say something they wanted to do.. The real reason why many states changed there, l will call it anti rebate laws is in the link below and they new they were next on the list.. http://www.usdoj.gov/atr/cases/f212100/212197.htm Now Tennessee was warned by the DOJ not to prohibit rebates and other anti competitive laws but the Governor went ahead anyway and sign into law banning any rebates just recently etc.. So lets see what happens to the state of Tennessee now that they ignored the DOJ warning. (''However, Mississippi escapes the "Restraint of Trade") "not for long" In my opinion the 12 other states will fall into place soon regardless of the circumventing language written into there respective laws in there states. We now have 38 real estate commissions that allow some sort of rebates and other competitive ways to the general public. By searching the DOJ website for up to date info is the best way to stay informed in my opinion.. We can also see what effect on our personal reputation as Realtors ® all this has on us in the eyes of the public court of opinion! its not good...in the link below,.....count how many times you see the word Realtor® is mention. Don't forget to pay your Realtor® dues? Realtor® reputation link below. http://tinyurl.com/2nbrbf November 10, 2007 11:01 AM
Member Since '06	Suzi Gravenstuk said: Vance, thank you for stopping by. I plan to call the Legal Hotline soon and run some concepts by them. Personally, I think restraint of trade, and anti-rebate is wrong. All Real Estate Agents are adults, let us slug it out among ourselves. I understand the main concern here though is that we are not to pay an unlicensed person any part of our commissions. How do rebate states handle this issue, or is it okay in rebate states to pay an unlicensed person part of your commission? November 11, 2007 1:17 AM
Member Since '04	Vance Remele said: Suzie Said: How do rebate states handle this issue, or is it okay in rebate states to pay an unlicensed person part of your commission? ------------------- --------------------- ----------------- Good morning Suzie :) The unlicensed persons do not get any rebates at all ,nothing has changed as far as that and if any license real estate agent/Realtor gives a unlicensed person any consideration is in jeopardy of loosing their lively hood...it is against the law. Only the principals, the home sellers and home buyers.. can receive any inducements/rebates to the best of my knowledge. Vance. November 11, 2007 5:29 AM
Member Since '06	Suzi Gravenstuk said: Good morning to you, too. My interpretation is tha Mississippi takes the broad view and considers anyone in a transaction other than licensees to be non-licensed--including buyers and sellers. Its very broad, but it makes sense if you chew on it awhile... November 11, 2007 8:05 AM
Member Since '06	Vance Remele said: Mississippi ? Hi Suzi :) Including buyers and sellers .. Yes as we know for part most buyers and sellers are not license, unless they stated they are license The rebate is given to either party license or un-license that is a party and named in the sales contract... Am I missing something here? :) Do you have the Mississippi link? November 11, 2007 9:38 AM
Member Since '06	Suzi Gravenstuk said: http://www.msrealtors.org/PDF/RELeader/Fall07.pdf page 5 and 6 Vincent, I did word that rather clumsy, didn't I? The broadview actually applies to the concept of rebate/inducements. Licensed and non-licensed is pretty clear in all states. Dang, I wish you could read the article--I tried to provide a link, but I am still clumsy using the resources here, or maybe the article is not linkable... (you may have to be a MAR member:-) The title is Effective Marketing: Avoiding Inducements . I believe when we think of "rebate" we are thinking of direct payment. So, we think, "I would never do THAT because its against the law." Making "rebate" and "Inducement" interchangeable, it could be "Houston, we have a problem" if inducement is thought of as an indirect rebate. So, if an agent were to offer a free home warranty and paid for it personally we could lose our license . If a Mississippi Real Estate advertisement says, hypothetically...(yes I have a certain firm in mind), Free Home Warranty, Free inspection--well, it has to be paid by the seller or be services that firm is able to provide with contracting it and paying for it... unless you offered that to every person whether or not you go to the closing table with them..., even as a closing gift--you would be paying a non licensed person. How far does this concept actually reach? We know that home warranty companies offer commissions to brokers. We know we have to disclose to clients if we make a commission on a home warranty. If I offer a home warranty at cost and don't take a commission, is that "Paying a non-licensed person?" I am calling the legal hotline Monday for clarification. (PS: I think I am finding the Active Rain blog more user friendly. Never thought I would say that.) November 11, 2007 2:03 PM
Member Since '06	Vance Remele said: Hello again Suzi You may have already seen this, but if not here is the PDF from the Mississippi Real Estate Commission Up to this point this is all I found, page 31 .5 have a look,, your thoughts? http://www.mrec.ms.gov/docs/mrec_lic_law_form_rec.pdf The DOJ option will take care of it when there turn comes up, there are only 12 states left to go.. Vance November 11, 2007 4:24 PM
Member Since '06	Suzi Gravenstuk said: Wow, we got deep, Amigo. The article I referenced is from the legal team for the Mississippi Association of REALTORS(R). Because of the wording of the article, and in reference to 31, 5--the reason for NON REBATES/Inducements is because 31, 5 would be violated. I believe that is the rationale. Hey, I'm just gonna obey license law. Who am I to question? Well, I will ask some questions tomorrow, but to clarify because I tend to have a giving nature . I may need to duct tape my mouth! November 11, 2007 4:53 PM

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Suzi Gravenstuk

MGC Realty, LLC

Member Since '06

How Does Your State Define Rebate?

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