“The Department of Justice appears to be particularly concerned about whether form agreements are vehicles for circumventing changes in business practices,” Sears wrote in a message to the Realtors Center.
“To be clear, NAR — and I personally — oppose any attempt to circumvent the settlement agreement,” Sears wrote. “Changes in practice should be implemented comprehensively and in good faith to promote consumer empowerment, consumer choice and healthy competition.”
While open communication between the DOJ and NAR is a positive sign, Sears noted that the meeting does not indicate that the DOJ will abandon its investigation of NAR and the industry.
Even without the Sears message, there’s no doubt regulators are keeping a close eye on the industry based on recent actions by the Justice Department.
Last week, the Justice Department filed an amicus brief RexAppeals from NAR Proceedings and Zillo. The lawsuit revolves around the NAR’s optional “no mixing rule,” which prevents MLS and listing portals from mixing MLS and non-MLS listings, such as homes listed by REX, a now-defunct discount brokerage. The DOJ asserted in its brief that although the NAR’s rule was optional, it could still support anticompetitive conduct — a primary focus of the Commission’s litigation — which it claimed the district court did not adequately examine in its ruling. .
“The district court adopted an incomplete legal framework in evaluating whether REX raised a genuine dispute of material fact in this case regarding concerted action,” the filing said.
The department also argued that the court’s decision did not consider the risk that trade groups like NAR would evade antitrust regulation through optional regulations.
“The judge’s decision creates a loophole that could allow associations to circumvent antitrust scrutiny by disguising restrictive rules as optional rules,” the Justice Department said in its filing.
Days after DOJ takes action in REX lawsuit California Association of Realtors (CAR) is notifying members that the Department of Justice has initiated a formal investigation into certain of the industry association’s forms related to changes in business practices outlined in the NAR Settlement Agreement.
The formal investigation by the U.S. Department of Justice was Consumer Federation of America A report was sent to the Department of Justice stating that a proposed draft of CAR’s Buyer Representative and Broker Compensation Agreement is “virtually unreadable.” The analysis was conducted by Tanya Monestier, a law professor at the university. University at Buffalo.
On Tuesday, the Court of Final Appeal announced that it had sent an analysis of the CAR seller agreement to the Ministry of Justice. “No seller would read this massive document, let alone be able to understand it,” Montestee wrote in her report.
Responding to the latest criticism, CAR general counsel Brian Manson said in a statement: “Similar to the CFA report on the CAR Buyer Representation Agreement, this comment was made in response to an earlier draft of the agreement, which Still a work in progress and taking an inordinate amount of time.
“Additionally, the report contains some wild speculation that brokers using CAR forms will attempt to circumvent NAR settlement agreements. CAR supports the goals of the settlement and is working to help members have clear conversations with sellers about compensation options,” Mann said. Sen said. “The report also states that the draft form contains too much information about what sellers can expect in marketing their home. Instead, we believe information about the MLS and offer process would help educate sellers and make the form more consumer-friendly.
“Claims that the agreement is overwhelming and unlikely to be read or understood by the average seller underestimates the capabilities and responsibilities of sellers and their real estate agents. The complexity of the agreement reflects the complexity of California real estate transactions. The agreement is designed to cover a variety of Scenarios and providing clear guidelines ultimately benefit the seller by ensuring all potential issues are addressed up front.
“Sellers cannot navigate these complex issues alone; their real estate professional will guide them through each provision and ensure they fully understand it before agreeing to it,” Manson said.
To many in the industry, these recent actions by the U.S. Department of Justice, which made clear its desire to ban cooperative compensation, create a sense that regulators are tightening their grip around NAR settlements.
“The Department of Justice is not tired of the industry’s cage,” Steve Murray, co-founder Real Trend Consultants, explain. “They put the real estate industry in a difficult position. They had a say in the Nosalek and Sitzer/Burnett cases – they had the opportunity to provide input into the settlement, the judge had preliminarily approved the settlement, and everyone was working on these Get ready for change – but now their whole intention seems to be to bully the industry. The DOJ’s massive interference with CAR forms or those written by others is overstepping their authority.
Ever since a Missouri jury found NAR and some of the nation’s largest brokerage firms liable in the Sitzer/Burnett trial for conspiring to artificially inflate real estate agent commissions, industry analysts have speculated that the DOJ may be involved in the lawsuit. An appeals court ruled that the Justice Department can reopen its investigation of the trade group, further fueling that suspicion.
With the implementation deadline for the business practice changes outlined in the NAR settlement quickly approaching, and a final approval hearing for the settlement scheduled for the end of November, industry analysts believe the DOJ’s recent actions are a good sign that certain There will be some type of participation.
Ryan Tomasello, Analyst KBsaw some possible avenues for the Department of Justice’s potential involvement.
“One is for the Department of Justice to formally intervene through the NAR settlement approval process, which could impede the approval process for that settlement and prolong the period of uncertainty for the industry,” Tomasello said. “The other avenue is for the Department of Justice to intervene with more Enforcement action in a piecemeal manner, similar to what we’ve seen with them issuing formal investigations on CAR forms. It’s possible that they are doing that now and we just don’t know about it.
“It’s also possible that the Justice Department could essentially manipulate more changes by putting pressure on different large groups to signal what the Justice Department likes and doesn’t like. Whether the industry agrees with the Justice Department depends on whether they want to “At the risk of not listening to these signals and risking additional legal action or more formal scrutiny from the Department of Justice, of course, the Department of Justice could reopen a full investigation of NAR, which would lead to another legal battle,” said Toby. Marcelo said.
Tomasello said that as the industry awaits possible action from the Justice Department, many major players are struggling in the uncertain environment it has created.
“The industry doesn’t yet know what the final changes may be and what new ways of doing business will look like in the future. This casts a pall over the entire industry,” Tomasello said. “I think this is just a period where the industry is going through this transition and no one really knows how long it’s going to take and what the end result is going to look like.”
