Can a Florida licensee pay a referral fee to an unlicensed person?

No. Under Section 475.25(1)(h), a licensee may not share a commission with, or pay a fee or other compensation to, a person who is not properly licensed as a broker, broker associate, or sales associate, for referring real estate business or performing real estate services. Doing so is a disciplinable offense. The prohibition covers any form of payment — split commission, referral fee, or other compensation — when the recipient is unlicensed and the payment is for steering brokerage business.

Can a licensee give the buyer or seller a rebate?

Yes, with disclosure. A licensee may rebate a portion of the licensee's own compensation to a party to the transaction — the buyer or seller — as long as the rebate is disclosed to all interested parties. Because the buyer or seller is a principal in the deal rather than an unlicensed person being paid to bring in business, a disclosed rebate to them is permitted. The disclosure to all interested parties is the essential condition that keeps the rebate lawful.

Can a Florida broker pay a referral fee to an out-of-state broker?

Yes. Section 475.25(1)(h) prohibits paying compensation to a person who is not properly licensed. A broker licensed in another state is properly licensed where they operate, so a Florida licensee may pay that broker a referral fee. The prohibition targets payments to genuinely unlicensed people, not cooperative payments to licensees in other jurisdictions. The recipient's proper licensure is what distinguishes a permitted referral payment from a prohibited one.

Is a small apartment finder's fee allowed?

Yes, within a narrow statutory limit. Florida law permits a property management firm or apartment complex owner to pay a finder's fee — capped at $50 per transaction under Section 475.011(13) — to an existing tenant who refers a new renter, without that tenant needing a real estate license. This is a specific carve-out. Paying more than the statutory limit, or paying a non-tenant, falls outside the exception and becomes a violation of Section 475.25(1)(h).

Does the label on the payment matter?

No. Whether a payment is called a referral fee, finder's fee, marketing fee, gift, or thank-you, what matters is whether it is compensation to an unlicensed person for referring real estate business or performing real estate services. The form and name of the payment do not change the analysis. If the recipient is unlicensed and the payment is for steering brokerage business, it violates Section 475.25(1)(h) regardless of how it is labeled.

How is this different from unlicensed practice?

Unlicensed practice under Section 475.42 is the unlicensed person's crime of performing brokerage services without a license. Section 475.25(1)(h) is the licensee's disciplinary violation of paying or sharing compensation with that unlicensed person. The two often appear together in the same fact pattern — an unlicensed person is paid for referrals — but they target different actors: the statute here disciplines the licensee who made the improper payment, while Section 475.42 reaches the unlicensed recipient.

Florida Commission Sharing Rules: F.S. 475.25(1)(h)

TL;DR

Florida prohibits a real estate licensee from splitting a commission or paying compensation to someone who is not licensed, and that rule lives in Section 475.25(1)(h) of the Florida Statutes. Under this provision, a broker or sales associate is subject to discipline for sharing a commission with, or paying a fee or other compensation to, a person who is not properly licensed as a broker, broker associate, or sales associate — when that payment is for the referral of real estate business, clients, prospects, or customers, or for performing real estate services. The rule exists to stop unlicensed people from being paid to do or funnel brokerage work indirectly, which would undermine the licensing system. There is one important exception: a licensee may rebate a portion of the licensee's own compensation to a party to the transaction — the buyer or seller — as long as the rebate is disclosed to all interested parties. Paying an unlicensed third party for referrals is prohibited; giving the buyer or seller a disclosed rebate is allowed. A narrow statutory carve-out also permits an apartment complex to pay an existing tenant a finder's fee for referring a new renter, as long as the fee does not exceed $50 per transaction. Outside these limited exceptions, compensation for real estate services flows only to and among licensees.

Why the compensation rule exists

Licensing controls who may perform real estate services for compensation, and the commission-sharing rule protects that control from being evaded through the back door. If a licensee could simply pay an unlicensed person for referrals or for handling part of a transaction, unlicensed practice would flourish behind a licensed front, and the education, examination, and discipline requirements of licensing would mean little. Section 475.25(1)(h) closes that gap by making it a disciplinable offense for a licensee to share compensation with an unlicensed person for brokerage-related services or referrals.

The rule is about who receives the payment, not merely about the size or label of the payment. Calling a payment a referral fee, a finder's fee, a marketing fee, or a gift does not change the analysis if it is compensation to an unlicensed person for steering real estate business. This prohibition is one of the disciplinary grounds enforced under the broader license law, covered in our guide to license law and ethics conduct rules. Section 475.25(1)(h) is the specific subsection that governs improper compensation-sharing.

What Section 475.25(1)(h) prohibits

The subsection makes a licensee subject to discipline who has shared a commission with, or paid a fee or other compensation to, a person not properly licensed as a broker, broker associate, or sales associate, for the referral of real estate business, clients, prospects, or customers, or for any of the real estate services the license law defines. The prohibited payment can take any form — a split commission, a flat referral fee, or other compensation — and the recipient's lack of a proper license is what makes it a violation. A Florida licensee may, however, pay a referral fee to a licensed broker in another state, because that person is properly licensed where they operate; the prohibition targets payments to genuinely unlicensed people.

The practical exam point is distinguishing a prohibited payment from a permitted one. Paying an unlicensed neighbor a thank-you fee for sending a client is prohibited. Splitting a commission with an unlicensed "bird dog" who finds leads is prohibited. These are the classic fact patterns the exam uses, and each turns on the recipient being unlicensed and the payment being for referral or brokerage services. Handling client funds properly is a related compliance area, covered in our guide to escrow and trust account rules.

The rebate exception and narrow carve-outs

The most tested exception is the rebate to a party to the transaction. A licensee is permitted to rebate or share a portion of the licensee's own earned compensation with the buyer or seller in the transaction, provided the licensee discloses the rebate to all interested parties. The reasoning is that the buyer or seller is a principal in the deal, not an unlicensed person being paid to bring in business, so a disclosed rebate to them does not undermine licensing. The key conditions are that the recipient is a party to the transaction and that the arrangement is disclosed to everyone with an interest in it.

Florida law also contains a narrow carve-out allowing a property management firm or apartment complex owner to pay a finder's fee or referral fee to an existing tenant of the apartment complex who refers a new renter, as long as the fee does not exceed $50 per transaction, without that tenant needing a license. Outside these specific exceptions, the rule holds: compensation for referrals or real estate services may not go to an unlicensed person. This compensation-sharing rule sits alongside the disclosure obligations that govern how licensees represent the parties, covered in our guide to brokerage relationship disclosure under Section 475.278.

Frequently Asked Questions

Can a Florida licensee pay a referral fee to an unlicensed person?: No. Under Section 475.25(1)(h), a licensee may not share a commission with, or pay a fee or other compensation to, a person who is not properly licensed as a broker, broker associate, or sales associate, for referring real estate business or performing real estate services. Doing so is a disciplinable offense. The prohibition covers any form of payment — split commission, referral fee, or other compensation — when the recipient is unlicensed and the payment is for steering brokerage business.
Can a licensee give the buyer or seller a rebate?: Yes, with disclosure. A licensee may rebate a portion of the licensee's own compensation to a party to the transaction — the buyer or seller — as long as the rebate is disclosed to all interested parties. Because the buyer or seller is a principal in the deal rather than an unlicensed person being paid to bring in business, a disclosed rebate to them is permitted. The disclosure to all interested parties is the essential condition that keeps the rebate lawful.
Can a Florida broker pay a referral fee to an out-of-state broker?: Yes. Section 475.25(1)(h) prohibits paying compensation to a person who is not properly licensed. A broker licensed in another state is properly licensed where they operate, so a Florida licensee may pay that broker a referral fee. The prohibition targets payments to genuinely unlicensed people, not cooperative payments to licensees in other jurisdictions. The recipient's proper licensure is what distinguishes a permitted referral payment from a prohibited one.
Is a small apartment finder's fee allowed?: Yes, within a narrow statutory limit. Florida law permits a property management firm or apartment complex owner to pay a finder's fee — capped at $50 per transaction under Section 475.011(13) — to an existing tenant who refers a new renter, without that tenant needing a real estate license. This is a specific carve-out. Paying more than the statutory limit, or paying a non-tenant, falls outside the exception and becomes a violation of Section 475.25(1)(h).
Does the label on the payment matter?: No. Whether a payment is called a referral fee, finder's fee, marketing fee, gift, or thank-you, what matters is whether it is compensation to an unlicensed person for referring real estate business or performing real estate services. The form and name of the payment do not change the analysis. If the recipient is unlicensed and the payment is for steering brokerage business, it violates Section 475.25(1)(h) regardless of how it is labeled.
How is this different from unlicensed practice?: Unlicensed practice under Section 475.42 is the unlicensed person's crime of performing brokerage services without a license. Section 475.25(1)(h) is the licensee's disciplinary violation of paying or sharing compensation with that unlicensed person. The two often appear together in the same fact pattern — an unlicensed person is paid for referrals — but they target different actors: the statute here disciplines the licensee who made the improper payment, while Section 475.42 reaches the unlicensed recipient.

Bottom Line

Section 475.25(1)(h) of the Florida Statutes makes it a disciplinable offense for a licensee to share a commission with, or pay a fee or other compensation to, a person who is not properly licensed as a broker, broker associate, or sales associate, for the referral of real estate business or for performing real estate services. The rule prevents unlicensed practice from being funded indirectly, and the form or label of the payment does not matter — what matters is that the recipient is unlicensed. The central exception is a rebate of the licensee's own compensation to a party to the transaction, the buyer or seller, when disclosed to all interested parties. A narrow carve-out lets an apartment complex pay a tenant a finder's fee of up to $50 per transaction. A referral fee to a properly licensed out-of-state broker is also permitted. For related topics, see our guides to license law and ethics, escrow and trust accounts, and brokerage relationship disclosure.

Source: Florida Statutes § 475.25(1)(h) (sharing compensation with an unlicensed person); § 475.011(13) (apartment tenant referral-fee exemption); FREC Rule 61J2-10.028. F.S. § 475.25 (Florida Senate) · F.S. § 475.25 (FindLaw) · FREC Rule 61J2-10.028 (Cornell)