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Prohibited From Using Third-Party Systems For Locator Commission Payments In Texas

At the National Association of Apartment Locators, one of our primary goals is to help foster clarity, collaboration, and compliance between apartment locators and property owners and managers. As the apartment locating industry continues to evolve, it’s important that we stay aligned with the real estate laws enacted and enforced by the Texas Real Estate Commission.

Recently, a couple of property management companies and multifamily communities have started implementing third-party payment platforms to manage the payment of apartment locating commissions such as:

  • Skylight  – getskylight.com
  • AvidXchange – avidxchange.com

Commission Compliance

While we fully support the intention behind using third-party payment platforms to simplify operations and vendor management, it’s important to note that in Texas, these platforms create a conflict with TREC Rule 535.3 which dictates that all commissions for rental referrals must be remitted directly from the property owner to the locator’s sponsoring broker, who then compensates the locator according to their independent agreement.

  • The Texas Real Estate Commission enforces this rule to establish a clear line of responsibility and oversight for every real estate transaction.
  • This rule is to protect consumers and ensure proper accountability in real estate transactions.
  • This rule helps to ensure that consumers are dealing with licensed brokers who are ultimately responsible for the actions of their sales agents.

To solidify our position, we also checked the real estate law in other states where apartment locating is popular including Arizona, Colorado, Florida, Georgia, North Carolina, and South Carolina and in every instance the commission must be paid directly from the property owner to the sponsoring broker. Therefore, third-party payment systems put apartment locators in every state at risk of losing their license if an apartment community requires the locator to be paid through these third-party systems.

Summary

Our goal in sharing this information is to be helpful and proactive, ensuring there’s no confusion between property managers, apartment locators, and payment system providers. We recognize and respect the operational needs of property management companies and multifamily property owners to use digital payment platforms and vendor compliance tools.

The National Association of Apartment Locators remains committed to working alongside industry partners to identify practical, compliant solutions that work for all parties involved. Together, we can continue to strengthen our industry by promoting both innovation and compliance.

References

  1. TREC Rule 535.3: This rule is the core of the requirement that commissions must be paid to the broker.
  2. Sponsoring Broker: The broker with whom the sales agent is registered and under whose supervision they operate.
  3. Protection of Consumers: This rule helps to ensure that consumers are dealing with licensed brokers who are ultimately responsible for the actions of their sales agents.
  4. Accountability: By requiring all compensation to be paid to the broker, TREC establishes a clear line of responsibility and oversight.