A buyer broker whom I know told me that he regularly shares part of his fees with the buyer he represents. Also, he pays the buyer outside of closing with no indication of the payment shown on the HUD-1 Settlement Statement. Isn't that illegal?

A broker is not prohibited by The Real Estate License Act from sharing a fee with a principal. Any fee-sharing arrangement, however, should be disclosed on the HUD-1 Settlement Statement.<br/><br/> Sellers and buyers signing the HUD-1 Settlement Statement represent that the settlement statement is a true and accurate statement of all receipts and disbursements made in connection with closing of the transaction. The HUD-1 Settlement Statement usually contains a warning that making a false statement on it is a federal crime punishable by a fine or imprisonment. A broker participating in any scheme to pay money to a buyer outside of the closing might risk similar penalties. <br/><br/> Note: REALTORS® advertising or otherwise representing that they will share fees with a party in a transaction must disclose in the ad that the rebate is subject to the consent of the party that the broker represents. Also, if the rebate is contingent upon certain restrictions, such as approval by the lender, the ad must contain a disclosure that payment of the rebate is subject to restrictions.