Co-marketing or joint marketing has become a hot issue under the Real Estate Settlement Procedures Act. In co-marketed materials two parties — usually settlement service providers — share advertising materials. The question is whether and to what extent one party can pay the full cost of the materials.
In general, the cost of the advertising should be split pro rata based upon the amount of advertising space each party uses. Of course, more complicated issues arise based upon the nature of the recipients and mode of transmission and production. For instance, an internally produced email carries minimal cost, but nonetheless would be considered a RESPA violation if done by a mortgage bank at no-cost exclusively for the benefit of Realtors. The reason is that RESPA has no de minimus exception. Moreover, there is a commercial value associated with the service of preparing and sending the emails. Yet, if the mortgage bank in our example was receiving 10% of the ad space, and the advertisement was sent to a list of potential borrowers supplied by the Realtor, it may very well be compliant. The issue would be whether the relative value of the list supplied by the Realtor outweighed the cost of the bank’s production and dissemination such that the overall value for the exchange paralleled the advertisement space. In this regard the in-kind value of the respective services/benefits essentially represented the relative payment for the advertisement.
This is but one example of many that could be written concerning shared advertising. Each situation has to be assessed on its own merits, as it is a particularly case-by-case determination. Nonetheless, both the value of any payments as well as in-kind services should be considered in evaluating the relative costs/benefits of the advertisement.
