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CHANGING TIDES: Summary and Effects of Burnett et. al. v. National Ass’n of Realtors, et. al.

Client Alert
January 17, 2024

In April 2019, a class-action Complaint was filed in federal court for the Western District Court for Missouri arguing that the traditional payment agreements employed by many across the United States amounted to conspiracy resulting in the artificial increase in brokerage commissions. Plaintiffs, a class-action group comprised of sellers, argued that they paid excessive brokerage commissions upon the sale of their home as a result of the customary payment structure where Sellers agree to pay the full commission on the sale of their property, with Seller’s agent notating the portion of commission they are willing to pay to a Buyer’s agent at closing on the MLS or other similar system.

The Plaintiffs argument pivoted on the requirement that the National Association of Realtors (“NAR”) requires that agents could only list properties for sale if they provided the commission for Buyer as a percentage of the gross sale price of the property.  No provision or exception is allowed for Sellers or Seller’s agents willing to pay a flat fee to a Buyer’s agent, for Buyer’s paying their realtor’s commission, or for any other variation in the payment structure.

Like many markets throughout the United States, the Sellers lived in areas where the compensation for Buyers’ agents is solely derived based on the commission from the properties buyers actually purchase. As such, it behooves them to show only those properties that offer better commission to the buyers. Additionally, realtors agree that they cannot attempt to negotiate or modify commission arrangements through the purchase-sale contract. The Plaintiffs contended, while sellers are still able to negotiate the percentage commission in theory, any attempt to meaningfully do so could significantly undermine the seller’s effort as it can affect whether their property is presented to Buyers and artificially restraining price competition among real estate brokerages.

Re/Max Holdings, Inc., one of the defendants, ultimately entered into a settlement agreement for $55 million, and they further agreed to change their business practices to no longer require their agents to be members of NAR nor have minimum commission requirements. Anywhere Real Estate Inc. (parent company for Better Homes and Garden Real Estate, Century 21, Coldwell Bank Realty, Corcoran, and Sotheby’s International Realty) was another defendant in the case. They entered into a $83.5 million settlement that also prohibits them and their brokerages from sorting home listings by commission amount unless requested by the client.

On October 31, 2023, the National Association of Realtors, HomeServices of America, Inc., and Keller Williams Realty, Inc. received a verdict against them for $5.6 Billion.  The case has created additional ripple effects as at least 11 different suits have been filed in courts across the nation, including Florida, New York, Texas, Illinois, and Pennsylvania. Additionally, the Justice Department argued to re-open its investigation against the National Association of Realtors in front of an appellate court panel in Washington DC in mid-December 2023.

Even though it may be years before the Burnett verdict or any of the new cases result in a systemic change in the payment system for realtors, the landscape of real estate sales and commissions is already shifting as a result of these cases.  Immediate effects include the changes in policies that Re/Max and Anywhere’s brokerage have agreed to as part of their settlement agreement; RedFin requiring its brokers and agents to withdraw from NAR; and, the “clarification” released from NAR that brokers can list commissions at any amount, including $0. While some realtor boards are changing its policies, including the Real Estate Board of New York and Miami Association of Realtors, 2024 will likely see additional changes once the judge’s order detailing what injunctive relief he is granting is released and takes effect, expected no sooner than April 2024.

For more information, please contact BMD Senior Counsel Audrey Wanich at aswanich@bmdpl.com.

Real Estate
Client Alert

CLIENT ALERT: Prohibition on Recoupment Prior to Exhaustion of Administrative Remedies

May 18, 2018In April, the Fifth Circuit Court of Appeals, in Family Rehabilitation, Inc. v. Azar No. 17-11337 (5th Cir. 2018), held that district courts are authorized to enjoin the Centers of Medicare & Medicaid Services (“CMS”) and its contractors from recouping alleged overpayments prior to the completion of the administrative appeal process.Client Alert

CLIENT ALERT: Low Volume Appeals Settlement for RAC Appeals

May 4, 2018In April, the Centers for Medicare & Medicaid Services (“CMS”) issued a new settlement proposal to providers with outstanding appeals at the Office of Medicare Hearings and Appeals (“OMHA”) and the Medicare Appeals Council (“MAC”). Essentially, CMS is offering to pay up to 62% of the claim to the provider for qualifying claims that are currently in the appeal process. Interested providers may submit an Expression of Interest (“EOI”) to CMS by June 8, 2018. Providers should explore this settlement opportunity and submit an EOI to receive an offer of settlement. Providers may decline the offer after the EOI is submitted. Brennan, Manna & Diamond, LLC’s Provider Relations, Audit, and Appeals Unit, a division of its Healthcare Department, is able to assist providers with filing the EOI, analyzing the outstanding claims subject to the settlement, and reviewing the Administrative Agreement that is offered by CMS.Client Alert

CLIENT ALERT: Ohio Managed Care Organization (MCO) Open Enrollment

May 1, 2018Open Enrollment started April 30, and will continue through May 25, 2018, for your MCO (Managed Care Organization). Every State Fund Ohio employer can select their MCO for the coming policy year. The MCO is responsible for helping to manage Ohio Workers’ Compensation claim costs. All State Fund employers will begin to receive correspondence urging them to select that particular MCO, or urging them not to make a switch.Client Alert

Medical Marijuana Rules and You

April 4, 2018The Ohio Medical Board has adopted regulations in conjunction with the Ohio Pharmacy Board that would govern physicians who may elect to participate under the Ohio Medical Marijuana statutes.Client Alert

BMD Obtains Dismissal of ADA Title III Suit Against National Outlet Mall Chain

February 6, 2018On January 12, 2018, Brennan, Manna & Diamond obtained the dismissal of an Americans with Disabilities Act (“ADA”) lawsuit filed against Tanger Factory Outlet Centers, Inc. in the U.S. District Court for the Western District of Michigan. The suit, which was brought under Title III of the ADA, alleged that Tanger’s Byron Center, Michigan outlet mall contained barriers to access in violation of the ADA’s accessibility requirements. The plaintiff demanded prospective injunctive relief, including a retrofit of the entire mall, as well as expert witness and attorneys’ fees.
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