Can a lender buys donuts for real estate brokerages EVERY week?
Local lender buys donuts for several top Realty Brokers and their staff EVERY Wednesday and has been doing so for YEARS. Is this OK?
Hi, Tim – thank you so much for your question! In general, RESPA regulates marketing and business relationships between settlement service providers and agents. As part of that, RESPA prohibits real estate agents from receiving a “thing of value” for referring business to a settlement service provider, like a mortgage banker, mortgage broker, title company, or title agent.
According to the NAR (https://www.nar.realtor/ae/manage-your-association/association-policy/following-respa-rules), the following situations (that may be similar to yours) are prohibited under RESPA:
– A hazard insurance company hosts a “happy hour” and dinner outing for real estate agents.
– A title company hosts a monthly dinner and reception for real estate agents.
– A mortgage lender provides lunch at an open house but does not distribute brochures or display any marketing materials.
However, note that the NAR provides the following as an example of permissible behavior under RESPA:
– A title agent pays for dinner for a real estate agent during which business is discussed, provided that such dinners are not a regular or expected occurrence.
For more information on RESPA violation examples and penalties, check out our ultimate guide here: https://fitsmallbusiness.com/what-are-respa-violations/