Resources

Client Alerts, News Articles, Blog Posts, & Multimedia

Everything you need to know about BMD and the industry.

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

Your Workplace Under Biden

November 9, 2020This is my favorite recurring post – Predictions of How a New Administration Will Affect Your Workplace. Four years ago, we accurately called the emasculation of the 2016 proposed FLSA Overtime Rules (the salary exemption threshold was set at $35,568 in 2019, rather than $47,476 as proposed), we forecasted a conservative shift of the NLRB and its results (a roll-back of employee rights, social media policy evaluations, and joint employer rules), and we nailed the likelihood of multiple conservative appointments to the United States Supreme Court and its long-term effects (although I completely failed to predict that my ND classmate Amy Coney Barrett would fill the final vacancy during the Trump administration). This time, the L+E Practice of BMD has decided to make it a group effort at predicting what will happen, what probably happen, and what might happen under President Biden. As always, please save this in your important files and pull it out four (or eight) years from now to judge our accuracy.Client Alert

HHS Provider Relief Funds Reporting Requirements: Important Updates Every Provider Should Know

November 4, 2020HHS continues to revise its reporting requirements for the use of the Provider Relief Funds. Providers with more than $10,000 in Provider Relief Fund payments must report on the use of the funds through December 31, 2020. The reporting window will begin on January 15, 2021 and providers must complete reporting obligations for FY 2020 by February 15, 2021 through a portal designed by HHS. However, providers that have unexpended funds as of December 31, 2020, will have an additional 6 months to use the remaining funds through June 30, 2021. These providers must submit a second and final report no later than July 31, 2021.Client Alert

Should I Apply for Phase 3 Funds? Important Considerations Every Provider Should Know

November 2, 2020On October 1, 2020, the Department of Health and Human Services (“HHS”) announced an additional $20 billion in new funding for providers through a Phase 3 distribution. Importantly, providers that previously received HHS Provider Relief Funds or already received payments of approximately 2% of annual revenue from patient care are eligible to apply. Eligible providers have until November 6, 2020 to apply for these Phase 3 Funds. However, the question from providers continues to be: Should I Apply for Phase 3 Funds?Client Alert

CISA Ransomware Practices

October 29, 2020On October 28, 2020, the United States Cybersecurity and Infrastructure Security Agency (CISA) issued an alert warning of imminent threats to US hospitals and healthcare providers. The specific threat involves RYUK Ransomware attacks. RYUK is a novel ransomware that goes undetected by commercial anti-virus/malware detection programs. Once deployed, RYUK encrypts all data and disables systems. In short, it cripples all functionality down to phone systems and automated doors. Healthcare providers should alert their employees to remain hyper-vigilant and report any suspicious activity seen in email or on networks. It has been reported healthcare providers in New York, Pennsylvania and Oregon have been targeted in the last 48 hours. If your organization encounters issues, BMD can assist in mobilizing a response team and has contacts with forensic IT firms that are familiar with RYUK. It is advisable to engage professionals with experience dealing with this specific threat.Client Alert

HHS Announces an Additional $20 Billion In Provider Relief Grants

October 5, 2020The U.S. Department of Health and Human Services (“HHS”) announced an additional $20 billion in new funding for providers on October 1, 2020. Eligible providers include those that have already received Provider Relief Fund payments as well as previously ineligible providers, such as those who began practicing in 2020, and an expanded group of behavioral health providers confronting the emergence of increased mental health and substance use issues exacerbated by the pandemic. The new Phase 3 General Distribution is designed to balance an equitable payment of 2% of annual revenue from patient care for all applicants plus an add-on payment to account for revenue losses and expenses attributable to COVID-19.
Older posts
Newer posts