BIC TIP #1285: Venmo the Due Diligence Fee?

“Hey buyer, can you Venmo the due diligence fee? Wait, just not to me.” In this BIC TIP, Stephen Long answers a common modern question. Yes, a buyer can Venmo the due diligence fee directly to the seller. What they should never do is send it to either agent, because that money landing in a broker’s account creates a commingling problem.

Buyer to Seller? Absolutely

Stephen gets this question often, and the answer is yes. A buyer can Venmo the due diligence fee directly to the seller. It is an electronic transfer of funds, and it can be documented as such.

Payment apps have become a normal part of life, and there is nothing inherently wrong with using one to move the due diligence fee from buyer to seller.

Courier, Not Account Holder

Agents are allowed to act as a courier of funds. That means you can physically deliver a check from the buyer to the seller, for example.

But being a courier is very different from receiving the money. Once funds hit your account, in any capacity, you are doing more than delivering them.

Why It Cannot Touch Your Venmo

If the due diligence fee is sent to an agent’s Venmo, even with the best intentions of passing it along immediately, the buyer’s money has landed in the agent’s account. That would constitute commingling the client’s funds with your own.

It does not matter that it is an app, that it is fast, or that you forwarded it five minutes later. The money touched your account, and that is the problem. Do not let it happen.

The Practical Takeaway

Venmo is acceptable for the due diligence fee, but only from buyer to seller. Make sure you have documentation that the transfer went through, such as a confirmation or a signed acknowledgment, and keep it in your transaction file.

Do not let the money hit your account, and do not let it hit the other agent’s account either. If you have questions about documenting electronic payments, check with your broker-in-charge.