Fee Sharing Agreement — Buyer’s Broker Compensation — RPI Form 105

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This form is used by a buyers agent when receipt of compensation for their services rendered in a transaction depends on sharing the fee due the seller’s broker, to document the right of the buyers agent to be paid a fee.

Your use of RPI Form 105

Brokers receive and split the fees

The only person permitted to receive compensation — fees — in a real estate transaction or for related services is a licensed broker. [Calif. Business & Professions Code §10137]

A broker may not compensate anyone for real estate-related activities requiring a license who is not employed by the broker at the time of payment and is not licensed by the California Department of Real Estate (DRE). [Bus & P C §10137]

The DRE limits fee splitting to:

payments between brokers (who then spit the fee with their employees); or
payments by a broker to their employees, whether licensed or unlicensed. [Bus & P C §10130]

Thus, a licensed agent may only receive a fee or other compensation for acts requiring a DRE license when they are employed by a broker.

Referral fees are allowed between two brokers when the broker receiving the referral fee is not providing another significant service in the home sales transaction such as financing, insurance, escrow, or similar service. [See RPI Form 114]

A buyers broker may arrange a fee-sharing agreement with the sellers broker to document a prospective buyer as their client and record the buyer’s written promise to assure a fee is paid in the transaction. [See RPI Form 105]

Fee protection through written consent

Unlike representing a property owner intending to sell their property, no multiple listing service (MLS) rule or sellers broker is concerned with whether the buyer has formally employed an agent to help them locate a property or prepare and submit an offer.

Thus, when undertaking the duty to counsel a potential buyer — and certainly before giving advice, providing information, or commencing efforts to locate qualifying properties — it is prudent and necessary to ask the buyer to enter into a written commitment. [See RPI e-book Real Estate Practice, Chapter 15]

In so doing, the buyer commits themselves to employ and authorize the agent to work with them to locate property as their exclusive agent.

Here, when the client buys property, no matter how or by whom the property is located, the broker and their agent who worked diligently to meet the buyer’s objectives have earned a fee — and it’s collectible.

Typically, a buyers agent uses an exclusive right-to-buy listing agreement when the broker is employed as their sole agent by a prospective buyer. [See RPI Form 103]

Always, however, a fee-sharing agreement is arranged with a sellers broker either through a publication of the property’s availability offering a fee to a buyers broker or by the buyers broker documenting the identities of their buyers as their client. [See RPI Form 105]

It is unreasonable for a buyers broker to expect to receive a fee, no matter who is expected to pay it, for working with a buyer who acquires property located and presented by the broker, unless:

the buyer has signed a writing containing a fee provision relating to the property; or
the sellers broker has agreed in writing (or orally) to share their fee with the buyers broker regarding the identified buyer.

Analyzing the fee sharing agreement

A buyers agent uses the Fee Sharing Agreement — Buyer’s Broker Compensation published by Realty Publications, Inc. (RPI) when receipt of compensation for their services rendered in a transaction depends on sharing the fee due the sellers broker under a seller’s listing agreement. The form allows the buyers agent to document the right of the buyers agent to be paid a fee. [See RPI Form 105]

The Fee Sharing Agreement — Buyer’s Broker Compensation contains:

Facts: the identity of the seller, sellers broker and real estate or personal property for sale [See RPI Form 105 §1]
Addenda included: a checklist of a dozen different disclosures, reports and appraisals that may have been conducted during the sale of the property [See RPI Form 105 §2];
Agreement: the effective date, fee split percentage, and how the fee is to be paid to the buyers broker [See RPI Form 105 §3];
Client identification: blank spaces for entering the identity of the clients retained by the buyers broker to locate property [See RPI Form 105 §4];
General provisions: statements that both brokers are licensed real estate brokers and authorized by their clients to share brokerage fees, the sellers broker will enforce collection of the brokerage fees earned under the seller’s listing agreement and disputes will be resolved by mediation [See RPI Form 105 §5]; and
Signatures of the buyers broker and sellers broker. [See RPI Form 105]