Payments on ownership shares that are readjusted based on previous referrals. Bona fide dividends, and capital or equity distributions are permitted if they are based on ownership interest or franchise relationship. Bona fide loans, advances, and capital or equity contributions that are made between parties to CBAs for normal business reasons unrelated to any referrals. However, a license is not required if the mortgage lender makes less than five mortgage loans within any period of twelve consecutive months. Numerous state and federal laws and regulations regulate the CBAs.
Violations can be a serious federal crime.
Parties are strongly encouraged to secure particular, current, legal advice applicable to their specific situation before they establish or administer a controlled-business arrangement. Delivery of the controlled-business arrangement disclosure must be at or before the time of the actual referral. The referring party should establish and adhere to a routine policy as to when the disclosure is to be provided. There are exceptions to the disclosure delivery requirement. Consult legal counsel to ensure compliance with the delivery requirement.