Commissions lawsuits continue to progress in the US, Canada
The defendants in several major lawsuits have not gained any ground this summer as the first case moves toward trial in less than 3 months.
Key points:
- Recent activity includes a settlement agreement with MLS PIN, a trial date change request from KW and a request for summary judgment from HSoA.
- Each of the U.S. cases could fundamentally change how commissions work, particularly if the plaintiffs prevail.
- Canada’s real estate industry is also grappling with this issue as a case filed in 2021 makes its way through the Canadian court system.
As the peak homebuying season starts to wind down, some significant court cases around buyer agent commissions continue to ramp up.
Three class action lawsuits are getting closer to having their day in court, while a similar case in Canada is also working its way through the legal system. At their core, they all deal with the same fundamental questions: Should sellers be forced to pay a commission to buyer agents? Or should homebuyers be responsible for paying commissions independently?
While initial judgments could be rendered as soon as this fall and again in 2024, it may take a while before any outcome becomes settled law. As Mantill Williams, NAR vice president of communications, pointed out, "It is highly likely that no matter which side prevails at trial, the losing side will appeal. That means a definitive ruling is not imminent and could take several years."
Here's what's happening in the major cases right now.
Nosalek vs. several major real estate brokerages
This case was filed in Massachusetts and involved the MLS Property Information Network (PIN) and a number of major brokerage companies. MLS PIN reached a settlement in late June and agreed to pay $3 million to the plaintiffs, a group of home sellers, and eliminate the requirement that a seller must offer compensation to a buyer broker.
The case against the other defendants — including Anywhere, HomeServices of America, RE/MAX and Keller Williams — will continue.
Earlier this month, HomeServices of America requested a summary judgment dismissing the case, noting that it was not involved in the MLS PIN rule as it pertains and did not directly transact business with the plaintiffs.
"The evidence of record shows that these cornerstone allegations are false, such that Plaintiffs have no evidence of conspiracy as to any [HSoA defendants] to create, implement, or enforce the Rule, a necessary element of their single-count Sherman Act case," HomeServices attorneys said in court documents.
A review of documents on July 24 indicate a ruling has not been made on HomeServices' request for a summary judgment.
Moehrl vs. NAR and several major real estate brokerages
It's been a quiet summer so far for this class action suit, which is being heard in the U.S. District Court for the Northern District of Illinois.
In a May 30 telephone conference, U.S. District Court Judge Andrea Wood laid out a timeline of what's next for the case, which could result in billions of dollars in damages being awarded to sellers who paid buyer commissions. Deadlines for expert discovery are set for September, and a deadline for other motions is in late October. It's expected that a trial date will be announced around this time and will take place sometime next year.
Sitzer/Burnett vs. NAR and several major real estate brokerages
It appears everything is still on track for an Oct. 16 trial date in the U.S. District Court for the Western District of Missouri in Kansas City, according to a recent review of court documents.
One of the defendants in the case, Keller Williams, requested in July to have the back-up date of Feb. 26 changed because it conflicted with the company's annual Family Reunion event. That request was denied by Judge Stephen Bough.
On Sept. 8, Bough is expected to consider whether Oct. 16 will remain the trial start date.
Sunderland vs. several Canadian real estate associations and brokerages
It's not just the U.S. real estate industry that is wrestling with the issue of buyer agent compensation.
According to reporting done by Canada's Real Estate Magazine and CBC News, a 2021 case filed in Federal Court by Mark Sunderland is similar to the Moehrl case in the U.S. Among the defendants in the case are some U.S. brokerages that have operations in Canada, including RE/MAX and Century 21. Other defendants include the Toronto Regional Real Estate Board and the Canadian Real Estate Association.
According to the May 30 Real Estate Magazine article, the case may be a tougher one for the plaintiffs to win compared to Moehrl because Americans "have historically had a wider range of private antitrust actions available to them."
Court documents indicate that the case continues to work through the judicial system, with few new documents filed since April.