What is required for a licensee to share commission with other parties?

To share a commission with other parties, a written agreement is required. This written documentation not only clarifies the terms and conditions of the commission-sharing arrangement but also ensures that all parties involved have a clear understanding of their obligations and rights. A written agreement adds a layer of protection and accountability, which is important in real estate transactions.

Having a clear written agreement is essential because it establishes the legal framework for the commission distribution and may be necessary for compliance with state laws and regulations. These laws often govern how commissions can be shared between licensed agents and other entities, ensuring transparency and fairness in the transaction. Without a written agreement, it may be difficult to enforce the terms of the commission sharing if disagreements arise later.

Using an oral agreement can lead to misunderstandings and disputes, whereas the absence of a requirement or solely relying on the approval of the broker-in-charge (BIC) does not provide the necessary legal assurance needed in such arrangements. Thus, the requirement for a written agreement underscores the importance of formalizing business arrangements in the real estate industry to protect all parties involved.