California Real Estate Practice Exam

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Is an escrow agent breaking the law by paying a referral fee to brokers who send him business?

  1. Yes

  2. No

  3. Only if the referral fee is over a certain amount

  4. Only if it's not disclosed

The correct answer is: Yes

An escrow agent paying referral fees to brokers who send him business is breaking the law because it violates the Real Estate Settlement Procedures Act (RESPA). RESPA prohibits the payment of any referral fees, kickbacks, or unearned fees in connection with a real estate settlement. Therefore, options B, C, and D are incorrect as they suggest that an escrow agent can legally pay referral fees under certain circumstances, which is not the case according to RESPA.

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