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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

Ohio Department of Health Releases Updated Charge Limits for Medical Records

March 7, 2022Under Ohio law, a healthcare provider or medical records company that receives a request for a copy of a patient's medical record may charge an amount in accordance with the limits set forth in Ohio Revised Code Section 3701.741. The allowable amounts are increased or decreased annually by the average percentage of increase or decrease in the consumer price index for all urban consumers, prepared by the United States Department of Labor, Bureau of Labor Statistics, for the immediately preceding calendar year over the calendar year immediately preceding that year, as reported by the Bureau. The Director of the Ohio Department of Health makes this determination and adjusts the amounts accordingly. The list is then published, here.Client Alert

No Surprises Act Compliance (Published by NAMAS, 2/25/22)

March 7, 2022The Department of Health and Human Services published three parts to the No Surprises Act towards the end of 2021, which took effect January 1, 2022. The Act is intended to protect consumers from “balance billing,” which occurs when a patient receives a bill with a higher price than they may have anticipated because they did not have knowledge that the provider or facility was out-of-network. The purpose of this article is to note certain requirements that compliance employees will need to be aware of at their facilities, including notice and consent, good faith estimates, and public disclosures.Client Alert

No Surprises Act and You (Published in the SCMS Winter 2022 Newsletter)

March 3, 2022Legislation has been adopted by the United States Congress and the Ohio Legislature known as the “No Surprises Act” which attempts to regulate billing by professionals and facilities to patients who are not in networks with those facilities or providers at those facilities. The federal bill was triggered by some sensational news stories of patients being billed for tens of thousands of dollars for emergency care when the hospital was out of the network under the patient’s insurance plans.Client Alert

Are You Impacted by the Project Labor Agreement Executive Order?

February 28, 2022Project Labor Agreements (PLAs) are a quasi-collective bargaining agreement between employers and unions. They establish the terms and conditions of employment, including dispute resolution. They are put into place on specific projects and apply to the contractor, whether it is union or non-union. Employees hired on the project will be treated as union.Client Alert

No Surprises Act Update: Federal Judge Strikes Portions of the No Surprises Act

February 25, 2022In a win for providers, a Texas federal court granted the Texas Medical Association’s (TMA) motion for summary judgment and struck down portions of a federal rule that establishes a reimbursement rate arbitration process between payors and providers under the No Surprises Act (NSA).
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