NAR Law Background
Illustration by Lanette Behiry/Real Estate News

NAR succeeds in halting DOJ investigation 

Despite reaching a settlement agreement in 2020, the Department of Justice reopened a probe into NAR policies. The association fought back — and won.

January 25, 2023
3 minutes

Key points:

  • NAR had previously secured an agreement in writing from the DOJ pledging to end their investigation.
  • The ruling ends the government's review of NAR’s Participation Rule and Clear Cooperation Policy.

A deal's a deal, and the Department of Justice cannot reopen the investigation into the National Association of Realtors that it agreed to drop, a federal judge ruled Wednesday.

U.S. District Court Judge Timothy J. Kelly acknowledged that a letter from the DOJ agreeing to close the investigation was not part of the formal settlement decree. "But that does not mean, as the government suggests, that the agreement contemplated only a letter worth nothing but the paper on which it was written."

Kelly rejected the government's assertion that it was a new investigation, separate from the one it agreed to close. "But as the Court sees it, the investigation is not 'new,' but a reopening — or 'resumption' — of the investigation the agency had agreed to close."

"We are pleased the court has granted our petition to set aside the Department of Justice's action and agree it is a violation of the executed settlement agreement, said NAR VP of Communications Mantill Williams.

"As stated in the court's decision, 'not setting aside the CID (civil investigative demand) at issue would deprive NAR of the benefit for which it bargained: the closure of the Antitrust Division's investigation into its Participation Rule and Clear Cooperation Policy. The government, like any party, must be held to the terms of its settlement agreements,'" Williams said.

The ruling ends the government's review of NAR's Participation Rule and Clear Cooperation Policy but does not impact two private class action suits over the trade group's commission policies.

NAR added that it has voluntarily adopted changes to its policies in response to DOJ concerns, allowing brokerages to make offers of compensation public on their websites. It also updated its ethics code in 2022 to prohibit Realtors from describing their services as free unless they are truly offered at no charge. For example, a buyers agent compensated via commissions paid by a home seller would not be able to say they work for free.

How we got here

The DOJ opened its investigation into NAR in 2019 but reached a settlement with the group in 2020. The DOJ's draft settlement included a proposed clause declaring that nothing in the judgment would limit the government's ability to investigate NAR's policies in the future.

NAR refused and said it would not agree to the settlement without a promise in writing that the DOJ would close its investigation into the policies covered by the consent decree. The DOJ agreed, deleting any reference to its ability to reopen the investigation and writing a separate letter explicitly closing the investigation.

In 2021, NAR approached the DOJ to get approval of the proposed policy changes required by the settlement. Instead, the DOJ opted to reopen its investigation, noting that the final settlement agreement did not include a clause prohibiting that.

But Washington, D.C. District Court Judge Kelly ruled that the signed agreement didn't mean the DOJ wasn't still bound by its letter promising the investigation would close.

"The parties' communications illustrate that the Stipulation and Proposed Final Judgment were not the only ways their agreement was memorialized," Kelly wrote.

"Opening an investigation is the opposite of closing one. So by reopening the same investigation it had agreed to close, the Antitrust Division breached the settlement agreement," he wrote.

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