Here’s a step-by-step explanation of how to fill out a Referral Agreement (using the California Association of Realtors® Form RFA 

🔹 1. Identify the Parties

  • Referring Broker/Agent: Write the name, brokerage, license number, and contact information of the agent who is referring the client.
  • Receiving Broker/Agent: Write the name, brokerage, license number, and contact information of the agent who will work with the client.

👉 Both must be licensed agents or brokers in order for the agreement to be enforceable.

🔹 2. Client Information

  • Enter the client’s name(s) and basic info.
  • Optional: include the type of client (buyer, seller, tenant, landlord).
  • This section ensures there is no ambiguity about which client is being referred.

🔹 3. Type of Transaction

  • Check the appropriate box for:
    • Purchase/Sale
    • Lease/Rental
    • Other (explain if it’s a commercial, 1031 exchange, or other transaction type).

🔹 4. Referral Fee

  • Flat fee or percentage of commission must be stated clearly. Examples:
    • “25% of the gross commission paid to Receiving Broker.”
    • “$1,000 flat fee at closing.”
  • Clarify whether the percentage is based on gross commission (before splits) or net commission (after splits).

👉 This avoids disputes later.

🔹 5. Payment Terms

  • State when the referral fee is due — typically at closing through escrow.
  • Indicate if the referring broker is to be paid directly by escrow or by the receiving broker after commission is received.

🔹 6. Duration of Agreement

  • Insert a time frame for the referral. Example:
    • “This agreement applies to any transaction entered into by the Client within 6 months of the referral date.”
  • This prevents disputes if the client takes months to decide.

🔹 7. Signatures

  • Both brokers (or authorized agents) must sign and date the agreement.
  • Make sure broker signatures are included — not just the agents — since commissions are paid to the brokerage.

🔹 8. Escrow/Title Notification

  • Send the signed agreement to escrow so the referral fee is reflected on the closing statement (ALTA/settlement statement).

✅ Best Practices

  • Always get the agreement signed before giving client info to another agent.
  • Keep a copy in your transaction file for compliance.
  • Use clear language: “referral fee based on gross commission” is the most common.

 

Disclaimer:
The questions and answers provided are for general guidance only and may not cover all details or apply to every situation. If anything is unclear or you need further clarification, please visit car.org for official resources and the most up-to-date information from the California Association of REALTORS®.