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

Client Alert

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.


CLIENT ALERT: Bureau of Workers' Compensation Budget Amends Law

Bureau of Workers' Compensation Budget Amends Law As we head into 2018, you should be aware of some recent changes made in Ohio’s laws concerning Workers’ Compensation. These changes became effective September 29, 2017. Some will affect business more than others, but these are changes you should really know about.

Client Alert: NLRB Reverses 2015 Browning-Ferris Joint Employer Decision

The NLRB issued a 3-2 decision reversing the Board’s standard for joint employment in collective bargaining that it issued in the 2015 Browning-Ferris decision. That controversial decision by the liberal leaning Board overturned years of precedent and significantly expanded the definition of joint employment. The decision spurred legislation (H.R. 3441, the Save Local Business Act) to overturn the expansive definition, and replace it with a far more narrow and proper definition of joint employment.

Ohio Court of Appeals Upholds Sanctions for Attorney’s Frivolous Conduct

On August 28, 2017, the Ohio Court of Appeals for the Eleventh District upheld a trial court’s order imposing frivolous conduct sanctions in the amount of $22,926.72 on a plaintiff’s attorney and his law firm in the case of Keith-Harper v. Lake Hosp. Sys., Inc., --- N.E.3d ----, 2017-Ohio-7361 (11th Dist. Lake).

The Impact of the 2008 ADA Amendments on the Definition of "Substantial Limitation" Under the Ohio Civil Rights Act

The Impact of the 2008 ADA Amendments on the Definition of “Substantially Limitation” Under the Ohio Civil Rights Act

EFFECTIVE July 24, 2017: USCIS to Resume H-1B Premium Processing for Certain Cap-Exempt Petitions