US brokerages: referring to an in-house title firm, and listing duties

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A brokerage in the United States may own a share of a title agency or a mortgage company, or sit in the same group as one. The arrangement is lawful, but only inside a frame that federal rules draw quite precisely. The frame comes from Section 8 of the Real Estate Settlement Procedures Act, known as RESPA, and from Regulation X, the rule that implements it and that the Consumer Financial Protection Bureau administers. A second set of rules, of a different nature, shapes how the same brokerages handle their listings: the Clear Cooperation Policy of the National Association of Realtors, which says when a listing must reach the multiple listing service, or MLS.

The two subjects are different in kind. One is federal law, the other is the policy of a trade association, applied through local MLS rules. They meet in the daily work of a brokerage. This guide sets out what the regulation and the policy say, as their own texts say it, and marks the points those texts leave open. It describes general rules. How they apply to a given firm depends on its structure, its state and its local MLS.

Regulation X, sections 1024.14 and 1024.15, current text read in October 2026; National Association of Realtors, Clear Cooperation Policy.

What Section 8 of RESPA prohibits

Section 8 contains two prohibitions, and Regulation X restates each of them in section 1024.14. The first, in Section 8(a), concerns referrals. According to the Consumer Financial Protection Bureau's compliance guidance on RESPA, nobody may give or accept a fee, a kickback or any other thing of value under an agreement or understanding that settlement service business will be referred, where that business is part of a federally related mortgage loan. Settlement services are the services that surround a closing: the loan itself, title work, title insurance and the like. The regulation puts the principle in one short line: a referral of a settlement service is not something that can be paid for, apart from the exceptions it lists. It adds that a company may not pay another company, or that company's employees, for sending settlement business its way.

The second prohibition, in Section 8(b), concerns the splitting of charges. Under section 1024.14 of Regulation X, nobody may give or accept a portion or a split of a charge made for a settlement service unless it is for services actually performed. A charge for which no service, or only a nominal service, was performed is what the regulation calls an unearned fee, and so is a duplicative fee. The regulation also closes two obvious side doors. Who pays the charge does not decide whether a service can be compensated, and the rule cannot be avoided by arranging for the buyer of the service to split the fee.

Two features of these prohibitions matter to a brokerage. Both sides are covered: the rule speaks of giving and of accepting, so the firm that pays and the firm that receives stand in the same position. And the regulation states that any violation of section 1024.14 is a violation of Section 8 of the statute itself.

Thing of value, agreement, referral: three wide definitions

The reach of Section 8 depends on three terms, and Regulation X defines each of them broadly.

A thing of value is far more than cash. Section 1024.14 lists money, discounts, salaries, commissions, fees, stock, dividends, franchise royalties, trips and the payment of another person's expenses among its examples. It adds that a payment does not require money to change hands: giving or receiving any thing of value is a payment in the sense of the rule.

An agreement or understanding does not need to be written down, or even spoken. The regulation says it can be established by a practice, a pattern or a course of conduct. It goes further: when a thing of value is received repeatedly and is connected in any way with the volume or the value of the business referred, that receipt is evidence that an agreement exists.

A referral, finally, is any oral or written action directed to a person that has the effect of affirmatively influencing the selection of a settlement service provider, where that person will pay for the service. Recommending a title agency to a buyer is a referral. So is handing over a preferred lender's card. The regulation adds a second form: requiring someone to use a particular provider is itself a referral.

The payments Regulation X allows

Section 8 does not make every payment between settlement businesses suspect. Section 1024.14(g)(1) of Regulation X lists payments that Section 8 permits, and several of them describe ordinary brokerage life.

The cooperative brokerage line is the one that keeps the trade's own referral fees outside Section 8. A broker in one city who sends a relocating client to a broker in another, and receives a share of the commission, is inside the exception. Its limit is in its wording: it covers fee divisions within real estate brokerage, where everyone involved is acting as a real estate broker. It does not stretch to a payment from a title agency or a lender to a real estate agent.

The salary line and the services line both turn on the word "actually". Regulation X then supplies the test, in section 1024.14(g)(2). Where a payment bears no reasonable relationship to the market value of the goods or services provided, the excess is not treated as payment for them, and it may be used as evidence of a violation. The value of the referrals themselves may not be counted when measuring what the goods or services are worth. The same paragraph is careful in the other direction: it says the Bureau may look into high prices, but that high prices standing alone are not proof of a violation.

There is also a rule for people who wear two hats. Under section 1024.14(g)(3), a person in a position to refer settlement business, who is paid for providing additional settlement services in the same transaction, must provide services that are actual, necessary and distinct from the primary services that person provides. The regulation illustrates it with an attorney who also acts as title agent: to be paid for the second role, the attorney must carry out the core work of a title agent, such as evaluating the title search, clearing underwriting objections and issuing the policy.

The affiliated business arrangement

The exception that answers the question in the title has its own section of Regulation X, section 1024.15. An affiliated business arrangement is defined in section 3(7) of RESPA, and the regulation says that such an arrangement is not a violation of Section 8 if the conditions it sets are met. There are three of them, and they are cumulative.

The regulation is addressed to "a person who is in a position to refer settlement service business", and it defines that group widely: real estate brokers and agents, lenders, mortgage brokers, builders, developers, attorneys, title companies and title agents, along with any other person who derives a significant portion of gross income from providing settlement services.

Whether two businesses are affiliated depends largely on control, and here the regulation gives its only numerical thresholds. A person controls another when, among other tests, the person directly or indirectly owns, votes or holds proxies for more than 20 per cent of the other's voting interests, or has contributed more than 20 per cent of its capital. Being a general partner, an officer, a director or the employer of the other person also counts, as does affirmatively influencing the election of a majority of its directors.

A worked example shows how the threshold reads. Assume a brokerage holds 25 per cent of the voting interests in a title agency and has no other tie to it. Since 25 per cent is more than 20 per cent, the brokerage controls the agency in the sense of section 1024.15, and its referrals to that agency fall under the affiliated business conditions. Now assume the holding is exactly 20 per cent. That figure is not "more than 20 per cent", so the voting test is not met on its own. The other tests still apply: if a principal of the brokerage is a director of the agency, control exists by that route. The figures are illustrative.

The disclosure: what it says and when it is given

The first condition is a document. According to section 1024.15(b)(1), the person making the referral gives each person referred a written disclosure, in the format of the Affiliated Business Arrangement Disclosure Statement set out in Appendix D to Regulation X. It must do two things. It explains the nature of the relationship, meaning the ownership and financial interest between the firm making the referral and the provider. And it gives an estimate of the charge, or the range of charges, that the provider generally makes. The regulation asks that the estimate use the terminology of section L of the HUD-1 settlement statement as far as practical.

The form matters as much as the content. The disclosure is to be on a separate piece of paper.

Timing is fixed too. The general rule is that the disclosure is given no later than the time of each referral. The word "each" is deliberate: a buyer referred to the affiliated lender on Monday and to the affiliated title agency a week later has been referred twice. Where a lender requires the use of a particular provider, the disclosure is due no later than the time of the loan application, and the regulation lets a lender referring its own borrower meet the requirement when it provides the good faith estimate. For an attorney or law firm that requires a client to use a particular title insurance agent, the moment is the one at which the client engages the attorney or firm.

The regulation allows for honest mistakes, within limits. A failure to give the disclosure may be overcome if the person making the referral proves, by a preponderance of the evidence, that it maintained procedures reasonably adopted to comply, and that the failure was unintentional and the result of a bona fide error. The burden sits with the firm, and the regulation states plainly that an error of legal judgment about a person's obligations under RESPA is not a bona fide error.

No required use, and only a return on ownership

The second condition protects the client's freedom to choose. Under section 1024.15(b)(2), the person making the referral may not require the person referred to use any particular settlement service provider. A brokerage may say that it owns part of a title agency, explain what the agency charges and suggest it. It may not make the use of that agency a condition.

The regulation carves out two situations. A lender may require a buyer, borrower or seller to pay for the services of an attorney, a credit reporting agency or a real estate appraiser that the lender has chosen to represent its own interest in the transaction. And an attorney or law firm may arrange for a title insurance policy for a client, directly or through a separate title agency, as part of representing that client. Neither exception is written for a real estate brokerage.

The third condition deals with money. Apart from the payments already permitted by section 1024.14(g), the only thing of value the referring party may receive from the arrangement is a return on an ownership interest or a franchise relationship. The regulation gives bona fide dividends and capital or equity distributions as examples, and says that genuine business loans, advances and capital contributions between affiliates are not prohibited so long as they serve ordinary business purposes and are not referral fees in disguise.

It then says what a return on ownership is not. It does not include payments that vary according to the relative amount of referrals by the different recipients, payments whose only apparent basis is to distinguish recipients by the amount of their referrals, or ownership-based payments adjusted on the basis of earlier referrals. Labels do not settle the matter: the regulation says that what a payment is called, or how an organisational document or franchise agreement computes it, does not decide whether it is a return on ownership. Each case is judged on its facts.

A worked example makes the line visible. Assume a title agency owned by two brokerages, one holding 60 per cent and the other 40 per cent, with US$200,000 to distribute for the year. A distribution that follows ownership pays US$120,000 to the first and US$80,000 to the second. Assume instead that the owners agree to pay US$100,000 each, because the smaller owner sent more closings to the agency. The smaller owner then receives US$20,000 more than its ownership share gives it, and that US$20,000 varies with referrals. On the regulation's wording, it is not a return on an ownership interest. The amounts are illustrative; they are not market figures.

Marketing agreements, gifts and discounts

Not every relationship between a brokerage and a settlement provider involves ownership. Two other arrangements are marketing agreements and gifts, and the Consumer Financial Protection Bureau addresses both in its RESPA questions and answers, last updated in October 2020.

The first is the marketing services agreement, under which one settlement business pays another to market its services. The Bureau's position is that such an agreement is lawful only where the payments are reasonably related to the value of marketing services actually performed. An agreement that in substance pays for referrals violates Section 8(a), whatever it is called. The test is the same market value test found in section 1024.14(g)(2). As a worked example with illustrative figures, assume a lender pays a brokerage US$3,000 a month under a marketing agreement, and that the advertising the brokerage actually carries out has a market value of US$1,000 a month. The difference, US$2,000 a month, bears no relationship to services performed, and the value of the referrals cannot be used to justify it.

The second is the gift. A closing basket for an agent, tickets to a game, a prize draw for the office that sends the most files: the amounts may be small, and the Bureau's answer is short.

The Bureau separates this from a provider's dealings with its own customers. A settlement service provider may generally give a consumer a gift or a discount for using its own services. What it may not do is give something in exchange for the referral of other business. A title agency lowering its own fee for its own customer is one thing; a title agency rewarding the agent who sent that customer is another.

Where RESPA stops, and what stays on file

Section 8 is tied to a particular kind of transaction. Its referral prohibition applies to settlement service business that is part of a federally related mortgage loan. The Bureau's guidance adds that RESPA does not apply to credit extended primarily for business, commercial or agricultural purposes. A brokerage active in both residential and commercial work therefore operates under different regimes in each, though state law may impose rules of its own on either.

Both sections of Regulation X discussed here carry a record-keeping rule. Documents provided under section 1024.14 and under section 1024.15 are to be retained for five years from the date of execution. For an affiliated arrangement, that naturally includes the disclosure statements given to clients.

Some subjects lie outside what the sources read for this guide establish. The penalties for a Section 8 violation are set by the statute rather than by the two sections of Regulation X covered here, and they are not described in this guide. Nor does it survey individual enforcement cases.

Clear Cooperation: one business day

The second half of the subject belongs to the listing side of the business. The Clear Cooperation Policy is a policy of the National Association of Realtors, set out in its MLS policy as Section 1.01 and marked as adopted in November 2019. It is not a federal or state law. It reaches a brokerage through the rules of the local MLS in which the broker participates.

Its core is a single sentence. Within one business day of marketing a property to the public, the listing broker must submit the listing to the MLS for cooperation with other MLS participants. The duty is triggered by public marketing, not by the signing of the listing agreement, and the association's policy page gives a list of what public marketing includes: flyers displayed in windows, yard signs, digital marketing on public-facing websites, displays on brokerage websites, including IDX and VOW displays, email blasts, multi-brokerage listing sharing networks and applications available to the general public. IDX and VOW are displays of MLS listings on brokers' own sites.

Once a yard sign goes up, then, the one-business-day period runs. The exact cut-off depends on how "business day" is defined, a question the association answers in guidance that was not available in the policy text read for this guide; local MLS rules are where a broker finds the operative definition, along with the consequences an MLS attaches to a late filing.

The association states that the later policy described below neither changes local mandatory submission deadlines nor removes the one-business-day rule: Clear Cooperation remains in effect.

Office exclusives and delayed marketing

A seller may have reasons to limit exposure, and the association's policies provide two routes for it. Both are exempt listings, both are still filed with the MLS, and both rest on the seller's documented choice.

The older route is the office exclusive. Under Section 1.3 of the MLS policy, where a seller refuses to permit the listing to be disseminated by the service, the broker may take the listing as an office exclusive. It is filed with the MLS but not distributed to other participants, and the filing is accompanied by a certification signed by the seller. The exemption lasts only as long as the property stays out of public view: once an exempt listing is publicly marketed, it must be distributed through the MLS within one business day.

The second route is newer. The National Association of Realtors announced its Multiple Listing Options for Sellers policy on 25 March 2025, effective the same day, and gave local MLSs until 30 September 2025 to implement it. The policy created the delayed marketing exempt listing. Here the seller instructs the listing broker to delay public marketing of the listing through IDX and syndication for a period of time. The listing is filed with the MLS and remains available to other MLS participants through the MLS platform, so that they can tell their clients about it. What is held back, for the delay period, is the feed to the wider internet.

The length of the delay is not set nationally. The association leaves it to each local MLS, which chooses the period it judges suitable for its market.

Before filing either kind of exempt listing, the listing broker must obtain a signed disclosure from the seller. According to the association, it documents the seller's informed decision: it discloses the professional relationship between the broker and the seller, acknowledges that the seller understands the MLS benefits being waived or delayed, such as broad and immediate exposure, and confirms the seller's choice that the listing not be publicly marketed, or not be marketed at once through IDX and syndication.

The 2025 policy also addresses when a conversation between brokers becomes public marketing.

State law may add requirements of its own on either subject. Those are outside the scope of this guide, which covers the federal regulation and the national policy only.

Kooky, from Shaka

Kooky edits Agents Estate and builds Shaka, the payment router he made for real estate professionals. One payment comes in, and every agent, agency and party in the deal receives their signed share on closing date.

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