Finder's Fee Legal in California?

Hi, I sure HOPE so because I live in California myself and am
wanting to start out this way as a beginning to afford myself
a rent-to-own type deal for myself and family in Sonoma County
areas over there once I can get moved back, till then I'm stuck
in Fairfield, ca. where I know nothing about the areas to check
them out for other investors who would buy them. Bird dogging I
know the Sonoma County areas well having lived there since the
early 50's and 60's era and would be willing to do the foot work
it takes to get it done once I research it on the net that lists
it in Sonoma County for the interested buyer, then collect my fee.

finder's fees are legal as long as you only introduce the parties, but do not negotiate or act like an agent in the transaction. Check out this post. It's good stuff.

http://activerain.com/blogsview/1636696/commission-splits-kickbacks-and-...

That link to Activerain or this link to the original writer of the article says it all, and it is close to the way it is for every state

http://www.brewerfirm.com/articles/article-splits-kickbacks-fees.html

The most important point shows that you can get a referral fee which is legal in the state for just an introduction but you must not provide "broker type" services

And the second point is the fact that while it may be legal under state law to receive a referral, it may still violate Federal law.

Why is this stuff important? Because during economic growth times, brokers and state boards don't usually have the time to run after low level infractions. But during the lean times, they step up enforce ment to "protect their own".

So be careful out there because "they" are looking out there.

I saw you're online. Just want to ask if you got my message regarding buyers in Atlanta? How did it go so far? Blessings to all. LA

but to find a realtor willing to give you a finder's fee seems to be a challenge in of itself. Early on, I scared realtors asking them if they pay finders (or referral) fees if I give them a buyer and that buyer ends up purchasing from them. Most of them are willing to give a $50 gift certificate, but be careful how you approach any realtors you want to give a buyer to. They seem to be afraid of it for some reason, much like they are afraid of assignments and believe they are illegal.

Bird dogging for another investor is the best way to go.

Hi, trustpoint

I copied the links you provided in your post but what about the ways
dean talks about this subject of putting two people together and we
collect a finders fee once we match their desired preferences in the
type property they want to purchase?
Now I'm begining to wonder if I'd be breaking California law being a
bird dog for someone; this is getting me confused a little bit please
explain further how I can precisely go about doing this in my state
without landing in jail or getting fined for it when I read so much
about some others doing this and ran into no problems with it as long
as it was expert advice out of one of deans books.

As I always say, when someone says something is illegal, I ask them to cite what law, or code it violates. Nine times out of ten, they can't tell you why it's illegal....it mostly hearsay. That being said, here is a link to the court cases that uphold the legality of finder's fees in CA.

"The difference between a finder and a broker turns on whether the intermediary/finder has been invested with authority to participate in the negotiations. Despite the broad sweep of the statutory language defining brokers, the courts have consistently held that a person who does no more than introduce the two parties, without further participation in the negotiations,does not need a broker’s license to recover a commission. The California Supreme Court has specifically held that the legislature did not intend to require the licensing of finders, because a person who does no more than introduce parties does not need the knowledge and experience required by the licensing statutes......And remember, the statute of frauds is applicable to a finder’s agreement, so, a finder is entitled to compensation only if the agreement is in writing."

http://www.realestatelawblogca.com/2010/01/27/finders-keepers/

Good blog

Hi there,

Yeah I received your message. I am going over the list and such still. I will let you know what happens from there. Thank you so much for it too! I appreciate it.

Most Realtors are afraid of it because their broker's will not allow it. To stay ethical in a transaction, "good and ethical" Realtors will pay you out of their commissions through escrow, not outside of escrow. My suggestion is to talk direct with brokers not agents. Once you have the broker's blessing then agents will feel more comfortable paying you a referral fee. Also, don't refer to it as a finder's fee, but instead refer to it as a referral fee. I don't know why, but Realtors feel more comfortable calling it a referral than finder's fee. Keller Williams is very investor friendly. You might want to contact them first and tell them that you come across properties all the time that are not listed and do not fit your buying criteria. Then ask the broker if you can have permission to refer these people to their agents for a referral fee. 10% to 15% of the agents commission is reasonable. Or you could do a flat rate. Let the broker decide which agents you refer to.

Kimmy2010 raises a valid point. Get the blessings of the broker first as they are the gatekeeper. You have to remember that the real pain to this type of transaction is on the broker/agent as they are the ones who could lose their license if things are not legal.