Editor’s note: The COURT REPORT is RISMedia’s weekly look at current and upcoming lawsuits, investigations and other legal developments around real estate.
The last week of April 2024 saw many settlements in the class-action lawsuits facing the National Association of REALTORS® (NAR), brokerages, and MLSs. (For a full list of these lawsuits and their scope, read our handy index.) This indicates an industry that is ready to move forward and make instructed changes. However, other bits of news indicate that legal action facing the real estate industry is far from over.
NAR settlement receives preliminary approval
On March 15, 2024, NAR proposed a class-action lawsuit settlement where it would pay $418 million in damages and agree to changes in its commission policies.
On April 23, 2024, Federal Judge Stephen R. Bough (who oversaw the Burnett case) issued a preliminary approval for this “fair, reasonable and adequate” settlement, as he described. Hearings for final approval are scheduled for November 2024, barring intervention by the Department of Justice.
Due to this preliminary approval, homesellers are currently barred from “filing, commencing, prosecuting, intervening in, or pursuing as a plaintiff or class member” claims against NAR and other entities covered by the settlement, which includes most small and mid-sized brokerages.
Realty ONE Group settles
The Realty ONE Group and the parent company of @properties and Christie’s International Real Estate both chose to settle seller lawsuits on April 24, 2024—the first settlement in a long week of them.
While the companies both continue to deny wrongdoing, Mike Golden—co-CEO of @properties and Christie’s International Real Estate—explained the decision in a statement: “Settling these claims today allows us to move beyond a very costly litigation process and focus our full time, energy and resources on what matters most: our agents, affiliate brokerages, staff and clients.”
A spokesperson for Realty ONE Group told RISMedia that this settlement will cover Realty ONE Group franchises and affiliates, with an @properties and Christie’s International Real Estate spokesperson saying their affiliates, franchises and subsidiaries will be covered as well.
HomeServices of America settles
HomeServices of America, one of the original four brokerage defendants in class-action commission lawsuits, has agreed to a settlement as of April 26, 2024. The brokerage denies any wrongdoing, but will pay $250 million to the plaintiff class and restructure some commission policies.
HomeServices of America was specifically excluded from the lawsuit facing NAR, but the organizations’ respective leadership appear to have reached similar conclusions about their next steps.
“It took us time to get to a point where we could negotiate with plaintiffs a deal that HomeServices itself could pay independently, and to convince them that that was something that they should agree to do,” said Chris Dusseault, an attorney representing HomeServices. “I don’t think that the NAR timing, or if NAR hadn’t settled, would have changed (our strategy). I think we were looking for an opportunity if one presented itself that was reasonable and within our ability to pay.”
HomeServices (the largest brokerage defendant) will pay this settlement solely out of its own pockets, the company told RISMedia, rather than via contributions from the Warren Buffett-owned parent company.
Douglas Elliman settles
The most recent settlement (as of print time) came on April 29, 2024 from Douglas Elliman.
The New York-based brokerage will pay an estimated $17.75 million over the next three years, while also making changes to its commission structures in line with proposals from other brokerages. The difference is that Douglas Elliman’s settlement payments will be “contingent” upon its then-current cash balance.
The company will pay the initial $7.75 million within the first 30 days of settling, and then only pay the remaining $10 million (in two $5 million installments) if it maintains a cash balance of $40 million over the next three years.
MLS PIN case re-opened
Nosalek v. MLS Property Information Network, Inc. et al, was the first commission-focused case where the defendants (including the eponymous Massachusetts-based MLS and affiliated brokerages) chose to settle. However, both the settlement and the case were paused pending a decision to consolidate various commission lawsuits around the country, as well as due to intervention by the Department of Justice (DOJ).
The DOJ previously rejected MLS PIN’s proposed changes to its commission structure as not sweeping enough and called for “decoupled” commissions. With the consolidation question settled, and plaintiffs and defendants indicating they are preparing to respond to the DOJ’s arguments, the judge today reopened the case in a brief order.
On April 19, 2024, the plaintiffs and defendants requested a May 24, 2024 deadline to file their responses to the DOJ’s statement. HomeServices of America, one of the brokerage defendants, filed a request that the case be added back to the active docket on April 23, 2024.
