Real estate law regulates the process of buying and selling a home or commercial property. It provides protection for anyone buying and selling a home and who enters into a contract with contractors, builders, and real estate agents. Real estate law also protects buyers from paying illegal real estate fees.

What are Illegal Real Estate Fees?

Illegal real estate fees are fees paid by a buyer or mortgage borrower during a real estate transaction that they are not required to pay under law or under their contract. A real estate transaction can take many forms, from buying a home to acquiring a mortgage. Along the way, during this process, there may be several instances in which fees may apply.

For instance, many buyers are often required to pay a fee when submitting an application. Other fees involve referral fees that are paid from one party to another to obtain business. Illegal real estate fees can involve:

  • Asking the buyer to pay for fees which they are not required to pay;
  • Overcharging a client on a legitimate fee;
  • Failing to refund a fee when under obligation to do so;
  • Charging hidden or undisclosed fees; and/or
  • Fees connected with real estate scams.

What is an Example of an Illegal Real Estate Fee?

Illegal real estate fees usually involve some form of misrepresentation, deception, or withholding of vital information in order to get the buyer to pay additional fees. These types of illegal fees can sometimes represent substantial amounts paid by the buying party.

One example occurred in 2013 when the Fidelity Title Insurance Company settled a $2.3 million case alleging real estate fraud. The title company was accused of paying real estate agents kickback fees, or incentives, in exchange for service providers using their company.

A title company provides insurance for property owners to ensure there are no liens or defects against the properties. Typically, those completing a real estate transaction have a choice regarding which title insurance company receives their business.

Another example happened to California homeowners who were trying to save their homes from foreclosure but were victims of a scheme. They allegedly paid upfront fees ranging from $1,000 to $10,000 to eliminate mortgage debt. The debt was never satisfied by the people receiving the upfront fees.

Illegal fees can also result in real estate fraud issues, especially when one party uses false information or coercion to gain a competitive edge in a real estate transaction. 

Should I Contact a Lawyer Regarding Illegal Real Estate Fees?

You may need to contact a real estate lawyer if you believe you are a victim of an illegal real estate transaction. They can assist you in recovering any damages you may be entitled to as a result of an illegal real estate transaction and help protect you from further harm in connection with the transaction.