After years of litigation, major developments are happening in one of the three class action buyer broker commission lawsuits. New England’s largest multiple listing service (MLS) on Friday signed off on a settlement agreement that would force it to pay $3 million, overhaul its policies and cooperate against the remaining real estate franchisor defendants in the suit.
The other defendants in the lawsuit, known as Nosalek after its lead plaintiff, include Anywhere, RE/MAX, Keller Williams and HomeServices of America.
Originally filed in December 2020, the lawsuit alleges that the broker-owned MLS Property Information Network (MLS PIN) is not directly required to abide by the National Association of Realtors (NAR) rules. However, it has nonetheless adopted a rule similar to an NAR rule requiring listing brokers to offer a blanket, unilateral offer of compensation to buyer brokers in order to submit a listing to MLS PIN.
According to the proposed agreement, the brokers who own MLS PIN will be covered by the settlement unless they are defendants in the lawsuit. MLS PIN has 46,000 subscribers throughout New England and New York, as well as a staff of 60 employees.
MLS PIN denied any wrongdoing of liability in the settlement agreement but stated that it agreed to the settlement in order “to avoid the further risk, expense, inconvenience, and distraction of burdensome and protracted litigation, and thereby to resolve this controversy, to avoid the risks inherent in complex litigation, and to obtain complete dismissal of the Action as to MLS PIN.”
Of the $3 million MLS PIN has agreed to pay in the settlement, up to $900,000 will go toward attorney’s fees, up to $200,000 will go toward expenses, $250,000 will go toward notifying settlement class members, and each of the three named lead plaintiffs will get up to $2,500 for being class representatives.
According to the settlement agreement, the plaintiffs would like to use the remaining funds of at least $1.6425 million to pay for further expenses for the litigation against the remaining defendants “for the benefit of Settlement Class Members.”
“Plaintiffs believe that MLS PIN was not and is not in a position to contribute significantly to individual Class Member monetary recoveries,” a supporting memo filed by the plaintiffs’ attorneys states. “However, plaintiffs respectfully submit that the creation of a $3 million Settlement Fund with a substantial litigation fund … will benefit the Class by funding Plaintiffs’ active prosecution of their and the Class’ claims against the Broker Defendants who remain in the Action, including funding expert testimony.”
In addition to the $3 million settlement, MLS PIN has also agreed to change some of its buyer broker compensation policies. If the U.S. District Court in Massachusetts approves the agreement, MLS PIN must include the following in its rules:
“The Service will accept for Filing a Listing only if the Listing Broker has first certified, through the appropriate key, code or symbol on the Property Data Form as specified by the Service, that the Listing Broker, before entering into the Listing Agreement with respect to that Listing, notified the Seller (i) that the Service does not require the Seller to offer compensation to Cooperating Brokers, and (ii) that, while a Cooperating Broker may request compensation from the Seller in lieu of requesting from the prospective purchaser all or a portion of any compensation to which the Cooperating Broker and prospective purchaser may agree for the Cooperating Broker’s services to that prospective purchaser, the Service does not require the Seller to accede to such a request.”
Unlike Sitzer and Moehrl, the other two class action lawsuits that deal with buyer broker compensation rules, Nosalek does not name NAR as a defendant. However, NAR is paying attention to the proceedings.
“While NAR is not a party in the litigation you have referenced, we continue to stand by the fact that pro-competitive, pro-consumer local MLS broker marketplaces ensure equity, efficiency, transparency and market-driven pricing options for home buyers and sellers,” Mantill Williams, NAR’s vice president of communications, wrote in response to a request for comment. “The practice of the listing broker paying the buyer broker’s compensation saves sellers time and money by having so many buyer brokers participating in that local marketplace and thus creates a larger pool of buyers for sellers. For buyers, these marketplaces save them the burden of extra costs at closing, enable them to receive professional representation and make homeownership possible for more people. For these reasons, NAR will continue to fight for consumer protection.”
MLS PIN, HomeServices of America and Anywhere did not wish to comment on the settlement agreement.
“We are aware of MLS PIN’s decision to settle the claims against it,” Darryl Frost, a spokesperson for Keller Williams, wrote in an email. “We are not a part of the settlement. We do not believe the claims against us have merit and will continue to defend ourselves vigorously.”
RE/MAX had not returned a request for comment by the time of publication.