From Neil B. Garfinkel, REBNY Broker Counsel•
Two multi-billion dollars federal lawsuits are currently being litigated (Moehrl, et al. v. NAR, et al. and Burnett (Sitzer), et al. V. NAR, et al.) that could greatly affect the way NAR members do business. The trial in the Burnett case started this week, and involves the four NAR-affiliated MLSs in Missouri, while the Moehrl case, pending in Chicago, is slated to go to trial next year and involves 20 NAR-affiliated MLSs in numerous states. In addition to NAR, four major brokerage firms were named in these suits: Realogy Holdings Corp. n/k/a Anywhere (the parent company of Better Homes and Gardens Real Estate, Century 21, Corcoran, ERA, Coldwell Banker Realty and Sotheby’s International Realty), Home Services of America, Inc., RE/MAX Holdings Inc. and Keller Williams Realty, Inc.
Specifically, the class plaintiffs claim that certain NAR MLS rules, including the blanket offer of compensation rule, require sellers to make a uniform offer of compensation to buy-side brokers in order to be able to list their properties on multiple listing services (“MLS”) and help to keep commissions high, and reduce the ability to negotiate for lower commissions. The brokerages appear to have been included in these class-actions because they require their agents to be members of the NAR in order to access the MLS’s where their listings were being placed, and also served in high ranking positions at NAR. The plaintiffs seek damages, and practice changes which will allow for greater negotiation of the commission rate to be paid in a transaction.
Two of the Brokerage firms, RE/MAX and Anywhere, recently settled with the plaintiffs for $55 and $83.5 million dollars, respectively. There are other conditions to these settlements involving practice changes that have been proposed and will be implemented following Court approval of the settlements. The settlements cover both the Burnett and Moehrl lawsuits, and therefore neither RE/MAX nor Anywhere is participating in the Burnett trial. The lawsuits against NAR and the two other remaining brokerages are ongoing. We will provide updates as more information becomes available.
Separate and apart from these lawsuits, members should be aware that REBNY is also working on making changes to the Universal Co-Brokerage Agreement (“UCBA”). This is not as a reaction to the lawsuits but rather these amendments are independently being reviewed in the constant effort to promote transparency and consumer confidence in the residential real estate transaction.
From REBNY