Wednesday, June 24, 2009

Alabama Federal Court Decision on Brokers Charging Transaction Administration Fees By now you may have heard about a recent decision from an Alabama federal court regarding a broker charging transaction fees in a case called Busby v. Realty South. Since that decision, there has been much discussion about whether brokers should continue to charge these fees. Whether you continue to charge these fees and the manner in which you do so may largely depend on geography. Some jurisdictions have taken a similarly narrow view of RESPA as the Busby court did, while other jurisdictions have taken a less restrictive view and hold that these fees can only violate RESPA if they are split with a third party. And then there are jurisdictions that have yet to take a position one way or the other on what constitutes an unearned fee under Section 8b of RESPA. For that reason, we strongly encourage you to consult with your legal counsel to determine whether your current business practices are impacted by the Busby decision or case law specific to the state within which you operate. We cannot provide you with legal advice on whether you should charge these fees. Whether or not you continue to charge these fees is both a business decision you need to make to assess the risk associated with how much revenue you may forego, and a legal decision you need to make after consulting with your legal counsel.

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