Phil Querin Q&A: Home Reseller Paying Fees to Employees of Another Company

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August 12, 2013

Question: Is it legal for a manufactured home reseller to pay referral fees to employees of another company who are not working under the reseller’s specific dealers license?

Answer: I cannot find any law precisely on point, so will have to “reason by analogy.” For purposes of answering the question, I will assume that the payor and the payee both have an Oregon manufactured structures dealer’s (“MSD”) license. However, that license only permits one to conduct business from a single location. If a person wanted to conduct business elsewhere, they would need to have a supplemental license (Form 440-2963). See, statutes here. My concern with the payment of referral fees between separate dealers, is that it blurs the distinction between the “single location” requirement. In other words, the payee would be receiving compensation from his own business location and another (unrelated) business location as well. I would not be too concerned if the two locations where owned by the same person or entity, but if not, there could be regulatory problems with the responsible agency, Finance & Corporate Securities Division (“DFCS”). Legally, there could be additional ramifications. Say the recipient of the fee made a misrepresentation to the customer, or there was a material defect in the home that resulted in injuries. If litigation ensued, the plaintiff would have two potential targets rather than one. Under the Oregon real estate licensing laws, one broker may pay a referral fee to another broker associated with an unrelated company. However, this is expressly permitted by statute. I see nothing in the statutes allowing MSDs to engage in referral fee activity, so would not recommend it without first checking with the DFCS.

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