What is the legal requirement for paying a finder's fee to a previous tenant referring a new tenant?

The correct answer is that it is legal only if the previous tenant has a real estate license. In many jurisdictions, paying a finder's fee or referral fee to someone who refers a new tenant can be considered a form of brokerage activity. This generally requires that the person receiving the fee be a licensed real estate agent or broker.

A real estate license ensures that the individual has met the necessary educational and ethical standards to engage in real estate transactions, including handling and advising on rental properties. Without this licensing, paying a finder's fee to a previous tenant could potentially violate real estate laws, which are designed to regulate such activities and protect consumers.

This distinction is important in ensuring compliance with state and local laws, as fines and penalties can be incurred for unlicensed activity. Therefore, when involving payments in real estate transactions, being legally compliant with licensing requirements is crucial.