Every REALTOR® knows that a referral fee from a mortgage broker or home inspector must be disclosed. What about splitting fees with other REALTORS® in your office? Is disclosure required when a share of a commission is paid to a colleague who mentored you through a difficult file, or split with the licensee down the hall who sent you the buyer side of a deal?

The issue is muddied by the interplay between different sections of the Real Estate Services Rules (the Rules), which in parallel set up two different remuneration disclosure pathways: one for the direct provision of real estate services and one for receiving referral fees from third-party professionals. Both are further complicated by the general disclosure obligations to clients in other sections of the Rules.

Confused yet? You are not alone, so let us walk through this.

The bottom line, which the rest of this article explains, is that any referral fee to a person outside the brokerage must be disclosed. Inside the brokerage, the analysis is more nuanced and fact-based. Generally, for an inside referral, no disclosure is required beyond the Section 57 Disclosure to Sellers of Expected Remuneration, unless an internal referral or fee-split arrangement is material to the client or could create a perceived conflict of interest. 

Remuneration Disclosure 

There are two separate remuneration disclosure pathways contemplated by the Rules: 

1. remuneration received directly from the provision of real estate services (Sections 56(1)(a) and 57), and 

2. remuneration received from recommending or referring another professional (Sections 56(1)(b) and (c)). 

Each pathway is then further modified by the general application of the disclosure obligations in the duties to clients (Sections 30(f), 30(i), 30(j) and 32(4)). 

The first pathway is the remuneration you receive for providing real estate services. Section 56(1)(a) captures it, but only where it comes from a source other than your client, so the commission your seller pays your own brokerage on a listing is not caught by Section 56 at all.¹ What is caught is the commission a buyer’s agent receives out of the listing brokerage’s fee, or a bonus offered by the listing side to whoever brings the buyer. 

Section 57 sets the mechanics on the seller’s side. When a licensee acting for a seller presents an offer to that seller, Section 57 requires a disclosure in the form approved by the superintendent, setting out the remuneration the seller will pay the listing brokerage, the remuneration the listing brokerage will pay the cooperating brokerage, the remuneration the listing brokerage will retain, and any remuneration a licensee expects to receive of the kind described in Section 56(1)(a). If it is money, it must be given as a dollar amount.² Compliance is captured by the Disclosure to Sellers of Expected Remuneration form. 

The second pathway is the remuneration you receive for recommending or referring your client to another professional. Sections 56(1)(b) and (c) capture recommendations and referrals to a home inspector, mortgage broker, notary public, lawyer,³ savings institution, or any other person providing products or services related to real estate.⁴  

This pathway applies additionally and separately to commission disclosure. The Disclosure to Sellers of Expected Remuneration form does not cover it, because Section 57(2)(d) reaches only remuneration for "providing real estate services to or on behalf of the client" as described in Section 56(1)(a).⁵ Section 52 draws the same line, permitting the Section 56(2) disclosure to be made in a service agreement only in respect of remuneration under Section 56(1)(a).⁶  

Any referral fee, therefore, needs its own written disclosure. Note that, unlike the disclosures required by Sections 53, 54, 55, and 57, Section 56 does not require a form approved by the superintendent and may include a BCREA Disclosure of Referral Payment Form. What it requires is a document, other than the Contract of Purchase and Sale, containing the information set out below. 

The general disclosure duties to clients found in Section 30 apply to both pathways. Section 30(f) requires you to disclose to your client all known material information respecting the real estate services and the trade in real estate to which those services relate, and it applies expressly "without limiting" the disclosure rules in Part 5 (which includes Sections 52, 56, and 57).⁷ That language matters. The specific remuneration rules do not cap the general duty, so if you receive consideration (anything of value, which does not need to be money, including gift cards, trips, or points) that is not captured by the specific disclosure requirements in sections 56 and 57, you may still have to disclose it because it is material to your client.  

Sections 30(i) and 30(j) add that you must take reasonable steps to avoid a conflict of interest and, where a conflict exists, disclose it promptly and fully, in writing and in a document separate from the service agreement and separate from the contract.⁸  

When accepting any outside referral fee, be mindful of the following: 

• The fee must run through your brokerage first, because the Real Estate Services Act (RESA) provides that you must not accept remuneration in relation to real estate services from anyone other than the brokerage in relation to which you are licensed.⁹ 

• The disclosure to your client must be in writing and, as a general rule, in a document separate from the service agreement and from any agreement giving effect to a trade (that is, separate from the Contract of Purchase and Sale).¹⁰ 

• The disclosure must give your client the source of the remuneration, the amount, and any other relevant facts. When the amount is not known at the time you make the disclosure, you must include the likely amount or the method of calculating it.¹¹ For example, with a mortgage broker referral fee, it is not enough to simply tell your client that you "may receive a benefit." Name the broker as the payer, and provide either the dollar figure or the formula it will be worked out on. Two further points: The figure is what is paid or payable to your brokerage, not what reaches you after your split, and if a new referral opportunity comes up after initial disclosure or a referral amount changes substantively before your services are complete, you must again promptly disclose the change.¹² 

What Does "Material" Actually Mean? 

Interpreting the interplay between Sections 30, 56, and 57 is difficult. The general duty to disclose all known material information in Section 30(f) applies without limiting the disclosure rules in Part 5, so the specific rule does not cap the general duty. Even where disclosure is not specifically required under the remuneration disclosure rules in Sections 56 and 57, Section 30(f) can still require it, because the arrangement is material to your client. 

Neither RESA nor the Rules define "material." Materiality is a standard rather than a rule, and a standard has to be applied impartially to the facts of each situation. 

In Ocean City Realty Ltd. v. A & M Holdings Ltd., a licensee agreed to rebate roughly half her commission, about $46,000, to the purchaser, who had said he would not proceed otherwise.¹³ She did not tell the vendor. When the vendor found out, he refused to pay, and the Court of Appeal agreed with him. The entire commission was lost. 

The Court of Appeal stated that what is material extends to "everything known to him respecting the subject-matter of the contract which would be likely to influence the conduct of his principal (the client)." The finding also states: 

The test for materiality is an objective one to be determined by what a reasonable person in the position of the agent would consider in all the circumstances would be likely to influence the conduct of the principal.

An agent’s own conflict of interest can cloud judgment. This has been recognized by the courts: 

[The Court] would emphasize that the agent cannot arbitrarily decide what would likely influence the conduct of his principal and thus avoid the consequences of non-disclosure.

The Supreme Court of Canada took the same approach in Sharbern Holding Inc. v. Vancouver Airport Centre Ltd., a British Columbia case decided under the former Real Estate Act. The Court held that materiality is determined objectively. In essence, an omitted fact is material where there is a substantial likelihood it would have been considered important, not merely that it might have been. Furthermore, "subjective views of the issuer do not come into play when assessing materiality."¹⁴  

Finally, the BC Financial Service Authority’s guidance on the Section 30(f) duty puts the same idea in the language of daily practice: "What is material to one client may be drastically different than what is considered to be material to another." And: "If in doubt, disclose."¹⁵ 

At first glance, the courts’ objective standard and the regulator’s client-specific one look like different tests. They are not. The standard is objective in form, because it asks what a reasonable licensee would conclude. That said, it is client-referential in content, because what that reasonable licensee is assessing is the likely effect on this client, knowing what you know about them and their plans. 

Inside the Brokerage: What Section 56(3) Does and Does Not Do 

Now we come back to the internal commission splits within a brokerage. If Section 30(f) stood alone, the materiality test would push a cautious licensee toward disclosing a good deal of internal detail, because if asked whether they would like to know how the commission is divided, a client will usually say yes.  

Section 56(3) modifies that obligation. It narrows the disclosure obligation generally for common referral fees between licensed agents, but only where three conditions are all met:  

1. the services are trading services,  

2. they are provided by a licensee who has been designated to provide them as a designated agent, and  

3. that designation is to or on behalf of only one party to the trade. 

Where those three conditions hold, you are only required to disclose what your brokerage earns for your side of the transaction rather than everything the brokerage earns on the deal.¹⁶ Internal splits are a compensation arrangement between the brokerage and its licensees, and they do not change what the client pays. 

But Section 56(3) tells you only what the remuneration rule requires. It does not tell you that nothing else is material. Where the split would influence your client’s conduct, Section 30(f) still requires disclosure. 

Five Common Situations at a Glance 

Situation	Which rules apply	What must be disclosed	What Section 30 adds
Commission paid by your seller client to your brokerage on a listing	s. 57; the service agreement	Section 56 is not engaged, because this is remuneration paid directly by your client. Disclose the dollar amount on the Disclosure to Sellers of Expected Remuneration form when presenting each offer.	Nothing further in the ordinary case. (Acting for the buyer and being paid out of the listing brokerage’s fee is different: that is remuneration from a source other than your client, so s. 56(1)(a) applies.)
Commission bonus from another agent for bringing a buyer	ss. 56(1)(a), 56(2), 52; RESA s. 7(3)(b)	To your buyer client: the source, the amount (or likely amount or method of calculation), and any other relevant facts. In writing, in the service agreement or a separate record. Paid through your brokerage.	A bonus tied to one property is an incentive to steer. Treat it as material under s. 30(f) and consider ss. 30(i) and 30(j).
Referral fee from a mortgage broker	ss. 56(1)(b) and (c), 56(2), 52(1); RESA s. 7(3)(b)	The referral fee, on its own written disclosure.	Disclose early any relationship you have with the provider under ss. 30(i) and 30(j).
Split with another agent in your office, single-ended deal	s. 56(3)	Your brokerage’s remuneration for your services to your client. The internal split is not separately disclosable.	Nothing further, provided the other licensee is not advising or serving your client (or the other side).
Split with another agent in your office, office double-ended deal (no dual agency)	s. 56(3); ss. 30(f), 30(i), 30(j); s. 32(4)	Section 56(3) appears to require nothing beyond your own side, but consider the Section 30 rules. Especially if the split is abnormal: Is it material, or could it create the perception of a conflict of interest? If so, disclose the arrangement anyway. A financial interest in the other side’s file will usually be material.	This is the situation Section 30 exists for. Disclose in writing in a separate document and raise it with your managing broker.

Agents are advised to use care in remuneration disclosure, as failure to do so can attract large penalties from the regulator. In Ratcliff (Re), a licensee did not make appropriate remuneration disclosure, and this, among other findings, resulted in a $40,000 disciplinary penalty and $3,500 in enforcement expenses.¹⁷ 

Things to Remember about Disclosure of Remuneration 

• The two pathways are separate. A referral fee from a third-party professional requires its own written disclosure, separate from the seller’s expected remuneration form. 

• Do not forget the general disclosure obligations. Section 30 is the general rule. Ask whether the arrangement tells your client something about whose interests you or your colleague is serving. If it creates a real or perceived conflict of interest, it is likely material. 

• Discuss it with your managing broker. The test is what a reasonable licensee in your position would conclude, and an independent person can be helpful in talking through that analysis.

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	1.	B.C. Reg. 209/2021 (the Rules), s. 56(1)(a). Section 56 applies only where the licensee receives or anticipates receiving remuneration "other than remuneration paid directly by a client."
	2.	Rules, s. 57.
	3.	A referral in this direction is a one-way street. Code of Professional Conduct for British Columbia, r. 3.6-7, prohibits a lawyer from sharing or dividing fees with, or giving any financial or other reward for the referral of clients to, any person other than another lawyer. A BC lawyer therefore cannot pay you a referral fee, whatever Section 56 might otherwise permit you to receive.
	4.	Rules, ss. 56(1)(b) and (c).
	5.	Rules, s. 57(2)(d).
	6.	Rules, s. 52(2).
	7.	Rules, s. 30(f).
	8.	Rules, ss. 30(i) and 30(j).
	9.	Real Estate Services Act, S.B.C. 2004, c. 42 (RESA), s. 7(3)(b).
	10.	Rules, s. 52(1).
	11.	Rules, s. 56(2).
	12.	Rules, s. 52(3).
	13.	Ocean City Realty Ltd. v. A & M Holdings Ltd. (1987), 36 D.L.R. (4th) 94 (B.C.C.A.), at paras. 8, 20, 22 and 23, and cited with approval in Wang v. Laura W. Zhao Personal Real Estate Corporation, 2021 BCCA 97.
	14.	Sharbern Holding Inc. v. Vancouver Airport Centre Ltd., 2011 SCC 23, [2011] 2 S.C.R. 175, at paras. 51 and 61.
	15.	BC Financial Services Authority, Duties to Clients Information (Knowledge Base).
	16.	Rules, s. 56(3).
	17.	Ratcliff (Re), 2024 BCSRE 25 (consent order, 23 April 2024).

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