Massachusetts MLS lawsuit – update
DOJ argues that listing brokers and sellers should be prohibited from offering compensation to buyer brokers, thereby seeking to eliminate the choice sellers and listing brokers currently have as to whether to offer compensation for buyer representation.
This shows, as NAR has long said, that the DOJ wants to regulate what sellers and their listing agents are allowed to do with their own money and homes. We believe the DOJ is wrong and that the government fundamentally misunderstands the market. Prohibiting offers of compensation will harm consumers, including by making it more costly for home buyers to access capable representation and by reducing fair access to housing. Notably, the DOJ does not provide any new or original analysis to support its opinion—it merely wants to substitute its own policy judgments for how the market has evolved through free market competition to best serve consumers. The DOJ’s proposal would also invalidate the numerous state statutes which explicitly permit offers of compensation to buyer brokers.
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As if there weren’t enough complications in the Nosalek case, the Mar. 15 settlement proposal from the National Association of Realtors has created new uncertainty in the Massachusetts lawsuit, even though NAR is not a party to the case.
On March 20, the Nosalek plaintiffs submitted a request to extend the deadline for responding to the U.S. Department of Justice’s statement of interest. The plaintiffs requested the extension because NAR’s proposed settlement could impact the earlier settlement agreement between the plaintiffs and MLS PIN — one that the DOJ objected to in its statement.
Among other rule changes, the NAR settlement mandates the elimination of offers of compensation to buyer brokers on the MLS. In the MLS PIN agreement, those offers could still be made but would not be required.
“Because many Massachusetts real estate brokers are members of NAR and, therefore, could be affected by different rules, the parties need to consider the impact of the proposed NAR rule change on this settlement,” the court documents stated.
When asked about the plaintiffs’ latest filing, Melissa Lindberg, chief strategy and partnership officer for the organization, said MLS PIN, also known as MLS Property Information Network, cannot comment on pending litigation.
Next steps: The plaintiffs need to analyze the NAR settlement and discuss any proposed changes with MLS PIN and the DOJ, according to court documents filed March 20. This is happening as the U.S. Judicial Panel on Multidistrict Litigation gets ready to hear oral arguments on whether cases like Nosalek and the copycat lawsuits filed in the past four months should be consolidated into one case.
The plaintiffs wanted to submit a response before those oral arguments take place on March 28, but are now asking to submit a status update within seven days of the panel ruling on consolidation. The plaintiffs anticipate a ruling on consolidation will be made in April.
Original agreement: The initial settlement required MLS PIN to pay $3 million and change its rules surrounding buyer-broker compensation. Interestingly, if MLS PIN had not already reached an agreement and later chose to use the settlement formula outlined in the NAR agreement, it would be on the hook for more than $4.4 million.
The $3 million settlement, which was expected to be finalized this spring, was contested by the DOJ, who said the proposed compensation rule changes were insufficient. The DOJ has suggested it wants an injunction that would “prohibit sellers from making commission offers to buyer brokers at all.”
And that suggestion goes even further than what’s outlined in the NAR settlement agreement.
Specific rule changes originally agreed to by MLS PIN include eliminating a mandatory offer of compensation from the seller to the buyer-broker, requiring listing agents to notify their sellers that such compensation is not required, and making it clear that any compensation offered by the seller to the buyer-broker can be negotiated among all parties.
Case details: The lawsuit, filed in 2020, is one of several ongoing cases challenging the current system of buyer-broker commissions. MLS PIN, which serves much of Massachusetts, along with several brokerage companies, was sued by home sellers who object to rules that force them to pay buyer agent commissions.
The original defendants in the case were MLS PIN, Anywhere, RE/MAX, Keller Williams and HomeServices of America. HomeServices is the only remaining defendant, as the MLS and other brokerages previously reached settlements covering commissions lawsuits brought by sellers.
Updated: Boston Real Estate Blog 2024
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Massachusetts MLS lawsuit – update
Recently, I’ve been asking around if the NAR lawsuit will impact our local MLS. The responses I’ve received varied, so I dug into the topic.
Here’s what I discovered.
First, the Boston local MLS (MLSPIN) is not affiliated with the NAR lawsuit. MLSPIN is separately owned from the NAR.
However,
The Massachusetts MLS (MLSPIN) is in a separate lawsuit that’s still in litigation.
Where in the process is this lawsuit against MLSPIN?
Boston-based U.S. District Court Judge Patti B. Saris will allow the Nosalek commission lawsuit plaintiffs and MLS Property Information Network (MLS PIN) defendants to file a response to the Department of Justice’s statement of interest.
In late February, MLS PIN and the plaintiffs filed a joint motion asking Saris for permission to file separate responses to the DOJ’s mid-February filing.
In their motion, the parties wrote that they “dispute the factual and legal arguments made in the DOJ’s Statement of Interest.”
The DOJ’s statement was in relation to the settlement agreement reached between the Nosalek plaintiffs and MLS PIN. Since the initial filing, the plaintiffs and MLS PIN have filed two amended agreements in order to appease the DOJ.
In its statement of interest, the DOJ advocated for the prohibition of cooperative compensation, meaning that “sellers would be responsible for determining only the compensation of their own broker in the listing contract … [and] buyers would be responsible for determining the compensation of their own broker in a buyer-broker representation contract.”
The DOJ argued that changes similar to those proposed in the settlement agreement — including the lowering of the required compensation amount to $0 or abandoning the requirement for listing brokers to make a blanket offer of compensation to the buyer’s broker in order to list on the MLS — have done nothing to decrease agent commissions.
“Preventing sellers and listing agents from setting buyer-broker commissions would promote greater price competition and innovation in the market for brokers’ services,” the DOJ argued.
The parties have until March 28 to file their responses. Saris will have to reopen the lawsuit, after she stayed the case pending action by a multidistrict litigation panel, which is set to decide this spring if nine of the commission lawsuits can consolidate.
Since the parties had up to respond to the March 28tth deadline, I emailed MLSPIN to see if they would answer my inquiries.
Fortunately, they were very responsive and timely to my questions.
Here is MLSPIN response:
Hi John,
Thank you for following up with us.
We are continuing to evaluate the proposed NAR settlement in the context of our own proposed settlement. We are currently unable to comment, so for now, we can only suggest that you stay tuned for updates.
Regards,
Nate Callahan
Sr. Manager, Regulations and Compliance
MLS Property Information Network, Inc.
p. 800.695.3000 ext. 7158 | f. 508.936.1458
Massachusetts MLS lawsuit – update
I will be providing updates on this Boston real estate blog posts as I receive them. If you questions or if any of the information I provided above you feel its in error, please feel free to email me at realtyford@yahoo.com
I hope this helps, please feel free to call me anytime at 617-595-3712
Source: MLSPIN lawsuit 2024
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Updated: Boston Real Estate Blog 2024
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The property listing data and information, or the Images, set forth herein were provided to MLS Property Information Network, Inc. from third-party sources, including sellers, lessors, landlords, and public records, and were compiled by MLS Property Information Network, Inc. The property listing data and information, and the Images, are for the personal, noncommercial use of consumers having a good faith interest in purchasing, leasing, or renting listed properties of the type displayed to them and may not be used for any purpose other than to identify prospective properties which such consumers may have a good faith interest in purchasing, leasing or renting. MLS Property Information Network, Inc. and its subscribers disclaim any and all representations and warranties as to the accuracy of the property listing data and information, or as to the accuracy of any of the Images, set forth herein.
