The nation's largest organization dedicated to assisting transferring employees is urging its members to adhere to the spirit of an accord reached last month with state real estate regulators to stop the practice of seeking "after the fact" referral fees.

In fact, warns the Employee Relocation Council, in some cases failure to get with the spirit could be a criminal mistake.

In two different meetings at this year's ERC convention, being held in Las Vegas, so-called "ATF" fees were the center of attention. Corporate members, third party representatives and attending real estate brokers were warned that if they continued to seek the payments -- even if legal -- they would be inviting regulators and legislatures to step in with their own rules.

"That means 50 different state laws you'll have to deal with," said ERC General Counsel Richard Mansfield. "We have to be self-policing on this issue or they will do it for us" If they do it, you may have to change your company policy in some states. In other states, you may have to change your whole business model."

After the fact referral fees have been a source of irritation for real estate brokers for the past several years and often are a source of complaints to state real estate commissions.

The practice involves corporations or their third-party companies claiming a portion of a real estate agent's commission after the agent already has helped a transferee buy or sell a home. Often, both the agent and the employee are unaware the employee is risking his corporate benefits package by not working with a pre-selected real estate company -- a company that already has agreed to pay a referral fee back to the corporation.

At last month's Association of Real Estate License Law Officials meetings, the ERC and ARELLO agreed that corporations needed to do more to educate their employees about their benefits and any rules on hiring real estate agents. That accord also specifically urges corporations and third party companies not to seek after the fact referrals unless they have a solid legal, contractual basis for making the demand.

Also as part of the agreement, real estate agents are urged to closely question clients about the reasons behind their move in an effort to determine if a relocation package could be in jeopardy.

Mansfield said Iowa, Nebraska and Oklahoma already have legislative actions taking place to stop ATFs.

In Iowa, the legislation goes so far as to prohibit -- under threat of sanction -- a licensee from requiring a customer to use a specific group of agents or brokers and prohibits a licensee from paying a referral fee to anybody who imposes the requirement that a customer use a specific broker.

In Nebraska, Mansfield said, a bill before the legislature makes it a misdemeanor criminal offense to coerce or threaten to withhold benefits from an employee based on his real estate relationship.

Oklahoma already requires third party relocation companies to get real estate licenses in the state. Oklahoma wants the third party companies licensed so they can control the way they do business -- such as demanding ATFs.

Published: May 6, 1999

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