PSI Virginia Real Estate Practice Exam

What must be done for referral fees to be accepted legally?

1. They must be issued through an agency

2. They must be acknowledged in writing by the person who pays for the service

3. They must be declared to the Board of Real Estate

4. They must be listed on a tax form

The correct answer is: They must be acknowledged in writing by the person who pays for the service

For referral fees to be accepted legally, they must be acknowledged in writing by the person who pays for the service. This requirement ensures transparency and accountability in the transaction. By obtaining written acknowledgment, it establishes a clear agreement between parties regarding the referral, protecting both the referring agent and the recipient from potential disputes or misunderstandings. The requirement for written acknowledgment is particularly important because it formalizes the arrangement and serves as evidence of consent to the payment of the referral fee. This is a fundamental principle in real estate transactions to uphold ethical standards and compliance with state regulations, which mandate clear communication and agreement on financial arrangements. Other factors, such as whether fees are issued through an agency or declared to a regulatory board, may involve different legal or procedural requirements, but they do not replace the need for the explicit acknowledgment of the individual who will pay the fee. This written acknowledgment helps ensure that all parties have a mutual understanding of the financial arrangement involved.