• For the past several years, state and federal regulators have policed market-servicing agreements nearly out of existence. Can conscientious real estate businesses continue to join together in advertising, one might ask. In a few limited ways, yes.
  • Co-Advertising. Shared advertising is permissible under the Real Estate Settlement Services Act (RESPA) if the parties to the ad pay their respective shares of the display. For example, an advertisement that is half devoted to a real estate brokerage and half devoted to a mortgage broker should be paid 50% by each company.
  • Buying Leads. Certain companies–builders for example–often have information about customers who need or soon will need settlement services, like mortgage loans, title insurance, etc. According to the U.S Department of Housing & Urban Development, the sale or lease of that sort of information does not violate RESPA as long as the use of the lead data is not contingent on the success of the leads. Also, the sourcing company should not make any sort of recommendation about the lead purchaser, nor should it endorse that company. Moreover, you should be mindful about whether the lead seller obtained its information lawfully and with the consumer’s full and knowing consent.
  • Participating in Promotional Events. Federal regulations specify that “[n]ormal promotional and educational activities that are not conditioned on the referral of business and that do not involve the defraying of expenses that otherwise would be incurred by persons in a position to refer settlement services or business incident thereto” are permissible. But that standard can be tricky. For instance, the presenting of an education seminar could be considered the defraying of a business expense and therefore improper. And if the only people you invite to lunch are the ones who refer work to you, that could be considered a conditional, and therefore unlawful, promotional event.