On Friday, May 14, Tennessee became the first state in the country to have legislation prohibiting relocation companies from demanding referral fees in transactions without having introduced business House Bill 1616. Throughout the year we have been providing regular updates on the after-the-fact referral fee legislation drafted by the Memphis Area Association of REALTORS® and sponsored by the Tennessee Association of REALTORS®. During the past few months, this legislation has been making its way through the Tennessee General Assembly. It unanimously passed both the Senate and House on April 30 and May 3, respectively, and went into effect on May 14 after being signed by the governor.

This legislation makes it unlawful for any person or entity to solicit or request a referral fee from a licensee without reasonable cause, defined as an actual introduction of business and either the existence of a sub-agency relationship, a contractual referral fee relationship, or a contractual cooperative brokerage relationship. This law makes it unlawful to threaten to reduce or withhold employee relocation benefits or take other action adverse to the interest of a client of a real estate licensee because of an agency relationship. It also makes it unlawful for a real estate licensee, relocation firm, or a firm with a corporate relocation policy or benefits, or anyone on behalf of such licensee or firm to counsel a client of another real estate licensee on how to terminate or amend an existing agency contract.

For further information on this law or other legislative issues, please contact Aubrie Kobernus at 818-2423 or akoberus@maar.org.