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Correction! Weekly Membership Newsletter
March 13, 2018 • Stay Connected!
Please note the revision to the Legal Hotline Q & A.
Our apologies but the last two paragraphs of Annie's answer were missing in the Get the Facts that went out earlier today. Please see the revision below.

QUESTION:  My question is regarding lender referrals. Is it legal for a real estate agent to only have one lender to whom they refer their clients? Also, is it legal for a real estate team leader to require the agents on the team to recommend and refer that lender to their clients? Can you talk about the legal ramifications of this?

ANSWER:  It is not a question of whether this referral is "legal". Rather, the question should be, "is it a good practice to refer only a single lender?" The answer to that question is unconditionally "NO". It is not a good practice to refer a single provider of any service and particularly not lending when there are numerous qualified and competent lenders available in the market place.
There is a tort claim that is alive and well in Washington State known as "negligent referral". Speaking generally, a person has a claim for negligent referral when a person they had reason to trust referred them to a source that was an incompetent provider. Because broker has no control over the actual level of competency displayed by any referral source once the referral is made, the best and most proactive method of disarming any claim for "negligent referral" is for broker to refer multiple providers, in no particular order, and with instruction that the consumer should contact all the providers and determine, personally, which provider will do the best work for consumer. Broker should be certain that any providers referred by broker are licensing compliant in their industry. When insurance is required and/or available, the provider should be insured.
With respect to industries where there are so many competent providers, such as lending and home inspections, broker should always refer at least three providers and allow the consumer to select the provider of the consumer's choice.  


The Legal Hotline Lawyer does not represent Washington REALTORS or its members. To browse through our database of past Q & A's, visit Attorney Annie Fitzsimmons writes the Legal Hotline Question and Answer of the Week. Please submit questions to . Please tell us your NRDS number when you e-mail the Hotline with your question.

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(updated every Thursday)  Source:  Freddie Mac
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