The California Association of Realtors this week delayed the release of 21 forms after receiving feedback from members and questioning from the U.S. Department of Justice.
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The California Association of Realtors (CAR) this week delayed the rollout of nearly two dozen new forms involving NAR Commission lawsuit settlements after receiving inquiries from the U.S. Department of Justice.
The Golden State trade group confirmed the delay to Inman on Friday, with CAR general counsel Brian Manson saying in an email that each June the group “updates its standard forms to Reflects the latest legal requirements and best practices in real estate transactions”. This year, CAR has prepared 67 new and revised forms, which will be released next week.
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“Out of an abundance of caution, CAR is delaying the issuance of 21 of these forms related to changes in business practices required by the NAR Settlement Agreement,” Manson continued. “CAR has received requests from [U.S. Department of Justice] About these forms and the extensive feedback from our members. We believe it would be prudent to spend more time considering these issues comprehensively.
CAR did not provide further details about the form or describe the nature of the Justice Department’s investigation. The U.S. Department of Justice did not respond to Inman’s request for comment. Real estate strategist Rob Hahn Initial Release Learn about the form and the Justice Department investigation on Twitter Friday.
While details about what happened are scant, the delay in the Justice Department’s investigation and document release comes at an important time. The real estate industry is currently grappling with how to implement new rules, such as prohibiting sellers’ agents from compensating buyer’s agents in MLSs affiliated with the National Association of Realtors. The rules are the result of a major antitrust settlement negotiated earlier this year by the National Association of Realtors.
The settlement-promoted rules are set to take effect in August, and the industry has spent much of the spring trying to figure out exactly what is allowed and how the practice of buying and selling homes may have to evolve.
Against this backdrop, however, many eyes are looking to the Department of Justice, which has said it wants to make significant changes to agent compensation, such as “decoupling” – meaning sell-side agents would not, as often happens today, Preemptively provide indemnification to the buyer’s agent. The Justice Department has been a wildcard in the Antitrust Commission matter because it’s unclear how much incentive the agency might have in pushing for change.
While the Justice Department remains a wildcard, the investigation into CAR’s legal and business forms at least suggests that the agency is busy behind the scenes keeping a close eye on the real estate industry, even as problems persist.
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