Among real estate agents and brokers, some types of referral fees, commissions, and fee sharing are permitted. Other types of fee sharing are prohibited by Minnesota real estate statutes and regulations. Whether fee-splitting is a “legal commission” or an “illegal kickback” depends on the context.

Minnesota’s primary authority on sharing real estate agent and broker fees is contained in Minnesota Statutes section 82.70.

An Agent Should Only be Paid by the Broker.

First, a real estate agent should be paid only by his or her broker. Minnesota Statutes section 82.70, subdivision 1, provides:

Unless authorized in writing by the real estate broker to whom the licensee is licensed or to whom the licensee was licensed at the time of the transaction, a licensee shall not pay and a licensee shall not accept a commission, compensation, referral fee, BPO fee, or other valuable consideration for the performance of any acts requiring a real estate license from any person except the real estate broker to whom the licensee is licensed or to whom the licensee was licensed at the time of the transaction.

See Minn. Stat. § 82.70, subd. 1.

Commission-Splitting, Rebates, and Referral Fees Are Prohibited Unless an Exception Applies.

Second, neither the broker nor the agent can give or accept anything of value unless one of the following five exceptions applies. The exceptions are for transactions

(1) between a licensed real estate broker or salesperson and the parties to the transaction;

(2) among persons licensed as provided in this chapter;

(3) between a licensed real estate broker or salesperson and persons from other jurisdictions similarly licensed in that jurisdiction;

(4) involving timeshare or other recreational lands where the amount offered or paid does not exceed $150, and payment is not conditioned upon any sale but is made merely for providing the referral and the person paying the fee is bound by any representations made by the person receiving the fee; and

(5) involving a person who receives a referral fee from a person or an agent of a person licensed under this section, provided that in any 12-month period, no recipient may earn more than the value of one month’s rent, that the recipient is a resident of the property or has lived there within 60 days of the payment of the fee, and that the person paying the fee is bound by any representations made by the recipient of the fee.

See Minn. Stat. § 82.70, subd. 2.

Two of these exceptions carry precise limits you should keep in mind. Exception (4) is not a timeshare-only carve-out: its $150 cap reaches transactions involving timeshare “or other recreational lands,” and it applies only where the payment is not conditioned on any sale but is made merely for providing the referral. Exception (5) caps a residential referral fee at no more than the value of one month’s rent in any 12-month period, requires the recipient to be a resident of the property or to have lived there within 60 days of the fee’s payment, and binds the person paying the fee to any representations the recipient makes. See Minn. Stat. § 82.70, subd. 2(b)(4)-(5).

Undisclosed Compensation is Prohibited.

You cannot accept, give, or charge any undisclosed compensation, or realize any direct or indirect remuneration that inures to your benefit, on an expenditure made for a principal. See Minn. Stat. § 82.70, subd. 3.

Splitting the Listing Commission with the Buyer’s Agent is Allowed.

A seller can authorize sharing a commission with the buyer’s agent. See Minn. Stat. § 82.70, subd. 4. The precise mechanism matters: the seller does not pay the buyer’s agent directly. Instead, in the listing agreement the seller authorizes the seller’s own broker to disburse part of the broker’s compensation to other brokers, including a buyer’s broker solely representing the buyer. That authorization is the specific statutory mechanism by which cooperative buyer-broker compensation flows through the seller’s own broker (broker-to-broker payments among licensees are separately permitted under subdivision 2). For example, a seller could agree to a commission with her broker and, in the listing agreement, authorize the broker to disburse a portion of it to the buyer’s broker.

Using a Corporation or LLC is Allowed.

You can direct that your fees be paid into a business entity you own. A licensed broker or salesperson may assign or direct that commissions or other compensation be paid to a corporation, limited liability company, or sole proprietorship of which the licensee is the sole owner. See Minn. Stat. § 82.70, subd. 5. One practical detail: the statute defines “sole owner” to include the licensed broker’s or salesperson’s spouse, so adding your spouse as a co-owner of the entity does not forfeit the statute’s protection.

Any Closing Agent Fee Must Be Disclosed Ahead of Time in Writing.

A real estate closing agent may not charge a fee for closing services to a borrower, and the borrower may not be required to pay it at settlement, unless the fee was disclosed in writing at least one business day before the settlement. See Minn. Stat. § 82.70, subd. 6. This disclosure requirement is satisfied if a disclosure is made or an estimate given under Minnesota Statutes section 507.45, so a compliant estimate discharges the requirement rather than needing a separate document.