The Transactional Administrative Fee

Administrative services such as “record keeping” or “regulatory compliance” are not menus services for which a fee should be charged! These are services you are required to provide and your overall fee covers these services. If you are charging an extra fee, the service for that fee should indeed be an extra service that the consumer is free to select or not. The Hotline Attorneys are fielding many questions about the “transactional fee” or “administrative fee” – what can and what cannot be charged. The Real Estate Licensing and Registration Act (“RELRA”) obligates licensees to disclose the nature of the service and the fee to be charged to a consumer in writing. Is the “transactional fee” or “administrative fee” truly an additional service that is being performed for the consumer? And if the consumer refuses to pay this “transactional fee” or “administrative fee”, is there a specific service that will be withheld due to the consumer’s choice not to pay the fee?

As you may be aware, there have been some suggestions – and at least one court opinion – that these additional fees are either duplicative fees to what is being charged through the commission, or that they may be fees for services not rendered to the consumer. Under those circumstances, RESPA can be implicated.

PAR has gone to great lengths to enable brokers to negotiate their fees with consumers in such a way as to allow for a blended fee while complying with RELRA and likely avoiding coming in conflict with RESPA. The PAR Listing Contract defines the broker’s fee to be x% of the sales price and y dollars (you are not obligated to charge a fee that is a combination of percentage and flat rate; each office must determine fees independently). This is a blended fee that does not violate any prohibitions under RELRA. Similarly, the PAR Business Relationship Agreement provides that in addition to any fee paid by a cooperating broker, the buyer will pay an additional fee of z dollars, as part of Broker’s fee.

If you are charging a consumer for tasks that fall within your obligations and duties as licensees, then those charges should be included as part of the broker’s fee. If you are offering additional, optional services at an additional charge, then those services can be separate line items… both in your written agreement with your consumer and on the settlement sheet.

Copyright © Brett M. Woodburn, Esquire, CALDWELL & KEARNS, P.C., 2009
All Rights Reserved

Brett Woodburn is an attorney with Caldwell & Kearns and serves as general counsel to PAR. A substantial portion of his practice is dedicated to providing advice and counsel to real estate licensees. He and his firm represent and defend real estate salespersons and brokers in civil lawsuits and licensing claims across the Commonwealth. Jim also defends REALTORS® in disciplinary hearings conducted by the Real Estate Commission. He routinely counsels employers on employee relations issues and is one of the voices of the PAR Legal Hotline. He may be reached at www.realcompliance.com.