What constitutes illegal commissions?

• A. A broker cannot collect a commission from both parties without knowledge and consent; this constitutes fraud.
• B. A fee that is split with a licensed assistant.
• C. A commission paid by a lender.
• D. A commission paid only after a court approval.

Answer: (A)

Illegal commissions happen when a broker takes a fee from more than one party for the same service without the parties knowing and agreeing. That double-dipping hides a conflict of interest and breaks the trust clients place in the broker, which is why it’s considered fraudulent and prohibited by licensing rules. In practice, a broker must disclose all compensation arrangements and obtain clear consent before earning fees from any party other than the client the broker is representing.

Splitting a fee with a licensed assistant is a common, permissible arrangement when it’s properly disclosed and compliant with rules about who may receive what portion of the commission. A commission paid by a lender isn’t automatically illegal; legality depends on proper disclosure and compliance with applicable laws and regulations, not on the mere fact that a lender is involved. A fee that’s paid only after court approval isn’t the defining issue here; it describes a different kind of process rather than a fundamental prohibition on taking commissions from multiple sides.