How the affiliated business arrangement disclosure works: 12 CFR §1024.15 and appendix D, quoted whole

1. What §1024.15 does, its three conditions, and who is "in a position to refer"

Paragraph (a) is one sentence and it defines nothing itself: an affiliated business arrangement "is defined in section 3(7) of RESPA (12 U.S.C. 2602(7))". That statutory definition is quoted whole on this site's RESPA section-8 page, together with the section 3(8) definition of "associate" that paragraph (c) of this section also points at, and neither is repeated here. This page does not say what either contains.

Paragraph (b) is the operative sentence, and it is written as an exemption with conditions attached: an affiliated business arrangement "is not a violation of section 8 of RESPA (12 U.S.C. 2607) and of § 1024.14 if the conditions set forth in this section are satisfied". Three numbered conditions follow — (b)(1), (b)(2) and (b)(3) — and they are sections 2, 4 and 5 of this page. §1024.14 is named there and is not quoted or described on this page. The second sentence of (b) is a yield rule about the first condition only: "Paragraph (b)(1) of this section shall not apply to the extent it is inconsistent with section 8(c)(4)(A) of RESPA". That statutory clause is printed whole, inside §2607(c), on the section-8 page. This page quotes the yield sentence and does not say where, if anywhere, the two texts are inconsistent.

One of the ten definitions in paragraph (c) is quoted here rather than in section 6, because it is the one entry in (c) that names a real estate agent. "Person who is in a position to refer settlement service business" is a list, and it begins "any real estate broker or agent"; lender, mortgage broker, builder or developer, attorney, title company and title agent follow, and the list closes with "other person deriving a significant portion of his or her gross income from providing settlement services".

2. Condition one: a written disclosure, on a separate piece of paper, and when it is due

Paragraph (b)(1) is two sentences, the second ending "except that:", followed by three sub-paragraphs; all are quoted below. The first sentence has four parts. Who: "The person making each referral". To whom: "each person whose business is referred". What: "a written disclosure, in the format of the Affiliated Business Arrangement Disclosure Statement set forth in appendix D of this part" — the form quoted whole in the next section. Of what: two things, "the nature of the relationship (explaining the ownership and financial interest)" between the provider and the person making the referral, and "an estimated charge or range of charges generally made by such provider". The parenthetical after the charge says it is described "using the same terminology, as far as practical, as section L of the HUD-1 settlement statement"; that form is named there and is not described on this page.

The second sentence is the medium and the clock. The medium: "on a separate piece of paper". The clock: "no later than the time of each referral or, if the lender requires use of a particular provider, the time of loan application". The word "each" appears twice in the first sentence and once in the second; the unit the sentence is written around is the referral.

Two exceptions then follow. (i) is for a lender referring a borrower: the condition "may be satisfied at the time that the good faith estimate or a statement under § 1024.7(d) is provided" — both named there, neither quoted or described here. (ii) is for an attorney or law firm that requires a client to use a particular title insurance agent: the disclosures are due "no later than the time the attorney or law firm is engaged by the client". Neither exception names a real estate broker or agent.

The clock in this paragraph is also not the whole of it: the second sentence of paragraph (b), quoted in section 1, makes (b)(1) yield to section 8(c)(4)(A) of the statute "to the extent it is inconsistent" with it, so the clock is not read from this paragraph alone. That clause is quoted whole on the section-8 page; this page does not restate it.

Sub-paragraph (iii) is not a timing rule but a defense, and it has three sentences. The first: a failure to comply with the disclosure requirements "may be overcome" if the person making the referral proves, by a preponderance of the evidence, two things — that "procedures reasonably adopted to result in compliance with these conditions have been maintained", and that the failure "was unintentional and the result of a bona fide error". The second sentence takes one kind of error out: "An error of legal judgment with respect to a person's obligations under RESPA is not a bona fide error." The third says that "Administrative and judicial interpretations of section 130(c) of the Truth in Lending Act" are not binding interpretations of the preceding sentence or of section 8(d)(3) of RESPA; both are named there and neither is quoted on this page. Nothing here says whether any failure is or is not a bona fide error.

3. The form: appendix D, paragraph by paragraph

Paragraph (b)(1) requires the disclosure to be "in the format of" the statement "set forth in appendix D of this part", so the appendix is quoted whole here: its notice paragraph, the two bracketed paragraphs [A.] and [B.], the acknowledgment, and the instructions to the preparer, which say of themselves that they "should not appear on the statement". Around those five paragraphs the form has labelled lines — "To:", "From:", "(Entity Making Statement)", "Property:" and "Date:" above the notice; two bracketed column labels, "provider and settlement service" and "charge or range of charges", beneath each of [A.] and [B.]; a heading "ACKNOWLEDGMENT"; and a "Signature" line — and the figure below draws that order.

The notice paragraph is three sentences, and the bracketed words in it are its blanks: "[referring party]" and "[settlement services provider(s)]" in the first sentence, an instruction in the second to describe the nature of the relationship "including percentage of ownership interest, if applicable", and in the third the sentence that the referral "may provide [referring party] a financial or other benefit". Paragraph [A.] is the one the instructions assign to "referrals other than those by a lender to an attorney, a credit reporting agency, or a real estate appraiser that a lender is requiring a borrower to use". It carries the sentence "You are NOT required to use the listed provider(s)", with bracketed alternatives for a loan settlement and for a purchase, sale or refinance, and two sentences the appendix prints in capital letters about other providers being available and the reader being free to shop around. Paragraph [B.] is written in a lender's voice, "we, as your lender", and is assigned by the instructions to the lender-required attorney, credit reporting agency and appraiser referrals; the instructions add, "When applicable, use both paragraphs."

The acknowledgment is written in the voice of the person referred — "I/we have read this disclosure form" — and states two things that person understands: that the referring party is referring them to purchase the described settlement service or services, and that the referring party "may receive a financial or other benefit as the result of this referral". The "Signature" line sits beneath it. The instructions to the preparer say where the timing rules live — "12 CFR 1024.15(b)(1) of Regulation X" — which is the paragraph quoted in section 2. Nothing on this page says whether any form in use anywhere is in this format; the appendix is printed so the reader can compare.

4. Condition two: no required use, and the §1024.2 definition

Paragraph (b)(2) is one sentence. Strip out its parenthetical and the core reads: no person making a referral has required any person to use any particular provider of settlement services or business incident thereto. The parenthetical, "(as defined in § 1024.2, “required use”)", points at the definition quoted beneath it. Two exceptions follow inside the same sentence, and both are written for a named kind of person. The first is for "a lender", for requiring a buyer, borrower or seller to pay for the services of an attorney, credit reporting agency, or real estate appraiser "chosen by the lender to represent the lender's interest in a real estate transaction". The second is for "an attorney or law firm", for arranging the issuance of a title insurance policy for a client, "directly as agent or through a separate corporate title insurance agency that may be operated as an adjunct to the law practice", as part of representing that client. No other kind of person is named in either exception.

The §1024.2 definition has two halves joined by "and", followed by a carve-out with its own conditions. The first half: a situation in which a person "must use a particular provider of a settlement service in order to have access to some distinct service or property". The second: the person "will pay for the settlement service of the particular provider or will pay a charge attributable, in whole or in part, to the settlement service". The carve-out is the second sentence: offering "a package (or combination of settlement services)" or "discounts or rebates to consumers for the purchase of multiple settlement services" does not constitute a required use. The two sentences after it are conditions on the carve-out, not on the definition: any package or discount "must be optional to the purchaser", and the discount "must be a true discount below the prices that are otherwise generally available, and must not be made up by higher costs elsewhere in the settlement process".

Paragraph [A.] of appendix D, quoted in section 3, is where the person referred sees this condition in the form: "You are NOT required to use the listed provider(s) as a condition for" the settlement, purchase, sale or refinance. RESPA section 9 — the seller-and-title-company rule, quoted whole on its own page of this site — is a separate section and is not quoted here. The buyer's opening question — whether they have to use the title company the brokerage owns a share of — lands on these words, and nothing on this page says whether any person has required anyone to use anyone.

5. Condition three: nothing of value except §1024.14(g) payments and a return on ownership or franchise

Paragraph (b)(3) is one sentence with four sub-paragraphs under it, all quoted below. The condition: apart from "payments listed in § 1024.14(g)", the one thing of value received from the arrangement is "a return on an ownership interest or franchise relationship". §1024.14(g) is named there; it is not quoted on this page and nothing here says what it lists. Sub-paragraph (i), which opens "In an affiliated business arrangement:", is the permitted side, and both of its clauses carry the words "Bona fide". (A): dividends, and capital or equity distributions, "related to ownership interest or franchise relationship, between entities in an affiliate relationship, are permissible". (B): business loans, advances, and capital or equity contributions between such entities "(in any direction)" are not prohibited "so long as they are for ordinary business purposes and are not fees for the referral of settlement service business or unearned fees".

Sub-paragraph (ii) is the other side: three things "A return on an ownership interest does not include", and each of the three is keyed to referrals — (A) the basis of calculation, (B) variation between recipients, (C) a share that has been adjusted. Sub-paragraph (iii) then says that neither "the mere labeling of a thing of value" nor the fact that it "may be calculated pursuant to a corporate or partnership organizational document or a franchise agreement" decides the question, which "will be determined by analyzing facts and circumstances on a case by case basis".

Sub-paragraph (iv) does the same work for a franchise relationship. A return may be a payment to or from a franchisee, but it does not include three things: a payment "not based on the franchise agreement", one "which varies according to the number or amount of referrals by the franchisor or franchisee", or one based on an agreement "adjusted on the basis of a previous number or amount of referrals". It closes: "A franchise agreement may not be constructed to insulate against kickbacks or referral fees." The opening situation about a joint venture whose distributions track files sent lands in (i)(A), the permitted side, and in (ii)(A), (B) and (C) and (iii). This page prints those words and does not say whether any particular distribution is or is not a return on an ownership interest; (iii) says that is decided case by case, on facts this page does not have.

6. The definitions: affiliate relationship, four tests of control, two kinds of ownership

Paragraph (c) opens "Definitions. As used in this section:" and has ten entries. Nine are quoted below; the tenth, "Person who is in a position to refer settlement service business", is quoted in section 1. Four of the nine are pointers rather than definitions: "Associate" is defined in section 3(8) of RESPA, quoted whole on this site's section-8 page; "Franchise", "Franchisor" and "Franchisee" are defined in 16 CFR 436.1(h), (k) and (i), which are named here and not quoted. "FTC" means the Federal Trade Commission.

"Affiliate relationship" is drawn three ways, joined by "or": effective control "by virtue of a partnership or other agreement"; "common control with the other by a third entity"; or parent and subsidiary "by an identity of stock ownership". "Control" is then defined for use "in the definitions of “associate” and “affiliate relationship,”", and it is four tests joined by "or": a general-partner, officer, director or employer test; "more than 20 percent of the voting interests of another person"; influence over "the election of a majority of the directors of another person"; and "more than 20 percent of the capital of the other person". The figure beside this section prints all four whole. §1024.15 states two percentages, and these are the two.

"Beneficial ownership" and "Direct ownership" are a pair. Beneficial ownership is "the effective ownership of an interest in a provider of settlement services or the right to use and control the ownership interest involved even though legal ownership or title may be held in another person's name". Direct ownership is "the holding of legal title to an interest in a provider of settlement service except where title is being held for the beneficial owner". These are the entries that say what each term means for this section.

7. Five years, and the illustrations in appendix B

Paragraph (d) is one sentence: "Any documents provided pursuant to this section shall be retained for 5 years after the date of execution." Three phrases carry it. What is kept: "Any documents provided pursuant to this section". For how long: "5 years". From when: "after the date of execution". The sentence is written in the passive and names no one as the keeper; this page does not supply a name. The transaction coordinator's opening question lands on these words.

Paragraph (e) is a pointer: "Illustrations in appendix B of this part demonstrate some of the requirements of this section." Appendix B is named there and is not quoted on this page, and this page does not say which of its illustrations concern this section or what any of them shows.

Where each of the opening situations lands in the text

This page opened with four situations. The figure below names the paragraphs each one runs into, so the reading starts in the right place instead of at a search result. None of the rows is a verdict; each stops at the words.

Checking the quotes, and what they do not cover

12 C.F.R. §1024.15 has five paragraphs, (a) through (e). This page quotes every one of them, with every sub-paragraph and every definition — 34 quotations — plus the five paragraphs of appendix D to part 1024 and the §1024.2 definition of "required use". Forty quotations in all. The statute the section sits under, the other sections of Regulation X it names, the HUD-1, the Truth in Lending Act section, the FTC regulation the three franchise entries point at and appendix B are named in the figure below and quoted nowhere on this page.

Every quote comes from eCFR's current text of the part, read section by section, and eCFR states an "as of" date for the whole title which is printed beside each entry in the source list below. Each quote also carries the date it was loaded.

Real Deal Pro, Inc. is a software company. It is not a settlement agent, not a real estate brokerage, not a title agency, not a lender and not a law firm. The gap between "the regulation says this" and "so this arrangement is exempt" or "so this form is in the right format" is exactly the gap a lawyer is for.

Wrapping up

The section at the centre of this page is written as an exemption with three conditions. An affiliated business arrangement is not a violation of section 8 and of §1024.14 if all three are satisfied. One: the person making each referral has given each person referred a written disclosure in the appendix D format, on a separate piece of paper, by the time (b)(1) and its two exceptions set — subject to the sentence that makes (b)(1) yield to the statute. Two: no one making a referral has required the use of any particular provider, with "required use" defined in §1024.2 and two exceptions written for a lender and for an attorney or law firm. Three: nothing of value is received from the arrangement, other than what §1024.14(g) lists, except a return on an ownership interest or franchise relationship — which, by the section's own words, does not include the three referral-based payments in (b)(3)(ii), and is decided case by case.

Around the three conditions sit a yield sentence to the statute, a bona fide error defense that excludes an error of legal judgment, ten definitions, one of which opens its list with "any real estate broker or agent", a five-year retention sentence with no named keeper, and a pointer to illustrations this page does not quote. Every one of those words is printed above, and none of them is applied to anyone here.

Next step

Paragraph (a) defines an affiliated business arrangement by pointing at 12 U.S.C. §2602(7), and paragraph (c) sends "Associate" to §2602(8); those two definitions, and the section 8 that paragraph (b) names alongside §1024.14 when it makes a compliant arrangement no violation, are quoted whole on that page and nowhere on this one.

RESPA section 8, and the two statutory definitions this section points at

Related reading

• Which loans RESPA reaches: 12 CFR §1024.5, the coverage section, quoted in full

  Whether RESPA and Regulation X apply to the loan in the first place, from the coverage section and its exemptions

• What RESPA section 9 says about choosing a title company

  The separate RESPA section on a seller requiring a particular title company, quoted whole

Sources

Every quotation above is taken from the documents below, on the date shown; the explanation around each quote is ours. Statutes are amended and uniform acts are revised — check the current text before relying on any of it.

1. [1] 12 CFR §1024.15 — Affiliated business arrangements (eCFR, current as of October 1, 2026) — Office of the Federal Register / Government Publishing Office, www.ecfr.gov/current/title-12/chapter-X/part-1024/subpart-B/section-1024.15, read October 3, 2026
2. [2] Appendix D to 12 CFR part 1024 — Affiliated Business Arrangement Disclosure Statement Format Notice (eCFR, current as of October 1, 2026) — Office of the Federal Register / Government Publishing Office, www.ecfr.gov/current/title-12/chapter-X/part-1024/appendix-Appendix%20D%20to%20Part%201024, read October 3, 2026
3. [3] 12 CFR §1024.2 — Definitions (eCFR, current as of October 1, 2026) — Office of the Federal Register / Government Publishing Office, www.ecfr.gov/current/title-12/chapter-X/part-1024/subpart-A/section-1024.2, read October 3, 2026