RESPA and Affiliated Business Arrangements

Congress recognized the potential consumer benefits of one-stop shopping in 1983 by amending RESPA to allow for the creation of affiliated business arrangements (AfBAs) to exempt from RESPA returns on an ownership interest in a settlement service provider (e.g., dividends, profits) as long as:

• The financial interest is disclosed to the consumer (the "affiliated business arrangement" or "AfBA" disclosure);
• The consumer is not required to use the affiliated settlement service; and
• No other payments prohibited under RESPA are made.

In 1992, the Department of Housing and Urban Development (HUD) issued a RESPA regulation that provided guidance to affiliated business arrangements as to how to comply with RESPA.  Affiliated business arrangements also need to comply with guidelines set forth in HUD's 1996 Policy Statement, which was intended to identify 'sham' joint ventures and affiliated businesses in the marketplace.

For information about state laws impacting affiliated businesses, click here.  For information on how to provide the RESPA required affiliated business disclosures, click here.

The following resources provide further information on RESPA requirements for affiliated business arrangements and joint ventures. 

RESPRO^® Regulatory Compliance Products

• RESPA Guide for Affiliated Businesses & Joint Ventures (Publication)
• RESPA Guide to Affiliated Business Disclosures (Publication)
• Regulatory Compliance Kit for Affiliated Businesses (Publication)
• The Latest from HUD: RESPA Enforcement and the New RESPA Rule (2009 Annual CD)
• Advanced RESPA Compliance for Affiliated Businesses (2008 Annual CD)
• Thinking About Starting an Affiliated Business? The First Steps (2007 Fall CD)
• The Basics of RESPA for Affiliated Businesses (2007 Fall CD)
• How Affiliated Businesses Can Manage Inconsistent (and Conflicting) Federal Laws (2007 Fall CD)
• Trends in Class Action Litigation Affecting Joint Ventures and Marketing Agreements (2007 Annual CD)
• Which Affiliated Business Structure is Right for You? (2007 Annual CD)
• Thinking About Stating an Affiliated Business? The First Steps (2007 Annual CD)

Other Regulatory Compliance Information
 

• HUD’s Model Affiliated Business Disclosure Form (2009)
• HUD Settlement Regarding Sham Joint Ventures and Required Use Issues Sheds Light on HUD Interpretations (December 2008)
• Advanced RESPA Compliance for Affiliated Businesses (Mitchell) (November 2008)
• Advanced RESPA Compliance for Affiliated Businesses (Salzano) (November 2008)
• Minnesota Lawsuit Attempts Another Broad-Scale Attack on Affiliated Businesses (July 2008)
• Creating a Real Estate Agent/Title Joint Venture: RESPA and Beyond by Phyllis Shuster, Holland & Knight (April 2008)
• HUD Targets Consumer Incentives (March 2008)
• Ask RESPRO®: Obtaining Pledges from Real Estate Agents to Promote Affiliated Services (December 2007)
• The Basics of RESPA for Affiliated Businesses (November 2007)
• How to Structure Joint Ventures and Affiliated Business Arrangements: Do's and Don'ts (November 2007)
• Franchising: The Neglected Affiliated Business Arrangement Model (2007)
• Ask RESPRO® : Gift Cards for Home Buyers Using Affiliated Services (October 2007)
• Ask RESPRO®: Thank You Cards and Surveys for Real Estate Agents Using Affiliated Businesses (October 2007)
• Does RESPA Apply to Post-Closing Affiliated Business Referrals? (June 2007)
• Competitors vs. AfBAs: Why Now?, By Sue Johnson, Esq. (June 2007)
• GAO Sends Long-Awaited Title Insurance Report to Congress Reports Mixed Views About Affiliated Businesses (April 2007)
• Trends in Class Action Litigation Affecting Joint Ventures, AfBAs, and Marketing Agreements by Rich Andreano (April 2007)
• The Legal Basics for Affiliated Businesses: How to Comply with RESPA and HUD's Sham Joint Venture Standards by Grant Mitchell (April 2007)
• Ask RESPRO®: Home Builder Gifts to Real Estate Agents for Loan Pre-Approvals (Decemer 2006)
• Ask RESPRO®: Can Relocation Company Select the Closer? (December 2006)
• House Financial Services Chair Barney Frank (D-MA): The Author of Today's AfBA Rules (December 2006)
• Good Things May Not Always Come in Small Packages: Regulators Focus on Small ABAs (June 2006)
• Ask RESPRO® : Real Estate Office Contests & AFBA Disclosures (May 2006)
• Which Affiliated Business Structure Is Right For You? by Jeffrey Arough & Sherwin Root (April 2006)
• Affiliated Businesses, Joint Ventures, and RESPA: Do's and Don'ts by Paul Scheiber (April 2006)
• The Basics of RESPA for Affiliated Businesses (November 2007)
• Affiliated Businesses, Joint Ventures, and RESPA: Do's and Don'ts by David Sands (April 2006)
• RESPRO® Audio Seminar Highlights HUD's Joint Venture Guidelines (February 2006)
• Legal Experts Caution RESPRO Audience about Paying Advance Commissions to Real Estate Agents for Referrals (2005)
• Ask RESPRO®: The RESPA Rules for Builder Incentives and Advance Commissions (2005)
• Ask RESPRO®: The RESPA Rules for Advance Commissions to Real Estate Agents (2005)
• Sample Joint Venture Agreement (2004)
• Referrals By Real Estate Agents to Relocation Firms (2004)
• Prototype Limited Liability Partnership Agreement By the Committee on Partnerships and Unincorporated Business Organizations (2003)