Yes, agents can collect referral fees in Toronto. A referral fee is a payment made by one professional to another for referring a client or business to them. In the real estate industry, for example, agents may earn referral fees for referring clients to agents in other parts of the country or even internationally.
In Ontario, the Real Estate and Business Brokers Act, 2002 (REBBA) regulates the activities of real estate and business brokers. Under REBBA, it is permitted for agents to collect referral fees as long as they disclose the referral fee arrangement to their client and obtain their consent.
Here is an example of how referral fees may work in the real estate industry in Ontario:
Imagine that an agent in Toronto, Ontario has a client who is looking to sell their home and move to Victoria, British Columbia. The Toronto agent may not have the expertise or resources to assist their client in finding a new home in Victoria. In this case, the agent may refer their client to a Victoria-based agent who has experience in the local market. The Victoria-based agent may agree to pay the Toronto agent a referral fee for the introduction. The referral fee may be a percentage of the commission earned by the Victoria-based agent or a flat fee agreed upon by both parties.
It is important to note that referral fees must be disclosed to the client and the client must give their consent before the referral fee arrangement can be made. This ensures that the client is aware of any potential conflicts of interest and can make an informed decision about whether to proceed with the referral.
Referral fees are not limited to the real estate industry. Other professions, such as lawyers and financial advisors, may also earn referral fees for introducing clients to other professionals. For example, a financial advisor in Toronto may refer a client to a tax lawyer in Ottawa and receive a referral fee for the introduction. It is worth noting that referral fees are not always permitted in all professions. In some cases, such as in the medical industry, referral fees may be considered unethical and are strictly prohibited.
