Tenant Incentives for Referrals

[Mark Kelley]

I've been fortunate to have great tenants. When they finally give notice, I often offer them an incentive of 25% off last month's rent ($300-$500 hundred dollars) if they refer a potential tenant who passes screening and signs a lease. 

It has worked well four or five times, and often the tenants refer an acquaintance, friend or colleague that is similar in employment and financial status. They also help 'sell' the place to the potential new tenant, talking about the lifestyle or conveniences that comes with the house, and it seems to help minimize the vacancy period.

Does anyone else do this? Other ideas? Does this violate a law or some ethic to offer incentive to a tenant?