What is the term for paying part of a broker's compensation to someone who is not licensed?

The term for paying part of a broker's compensation to someone who is not licensed is referred to as a kickback. In real estate transactions, a kickback involves providing compensation, often in the form of money or other incentives, to someone who has not obtained a real estate license and is therefore not authorized to receive payment for activities related to a real estate transaction.

Engaging in kickbacks is considered unethical and in many jurisdictions, including New York, it is illegal. Real estate professionals are required to adhere to strict regulations that prohibit compensation to unlicensed individuals for services related to real estate, ensuring that all parties involved in a transaction are licensed properly and abide by the rules established to maintain fairness and transparency in the industry.

Understanding this concept is crucial for maintaining legal compliance and professional integrity in the practice of real estate. Properly compensating licensed individuals for their services fosters trust and professionalism within the industry, while kickback arrangements undermine these principles.