A spate of objections to NAR, HomeServices settlements
With less than a month until the deals are finalized, objectors are making claims of insufficient damages, harm to minorities, lack of accountability and more.
Key points:
- Nine objections to the NAR and HomeServices of America settlements were filed in district court this week.
- One objector said the agreement "fails to address the ultimate issue" of price fixing and "compensation for the millions of harmed home owners."
- Another noted that HomeServices franchisees were essentially off the hook, making the practice changes less effective.
With the two largest settlements in the buyer agent commissions cases now less than a month away from final approval, a flurry of objections are pouring in.
The final hearing for the NAR and HomeServices settlements, which total $668 million, is scheduled for Nov. 26 in U.S. District Court in Kansas City. The final hearing for the nine brokerage settlements that include Compass and Redfin is scheduled for Thursday morning, Oct. 31, and has also been the subject of multiple objections.
A stack of objections: Nine filings from more than a dozen individuals were posted Oct. 28 in the Sitzer/Burnett case in U.S. District Court for the Western District of Missouri. Many were submitted by plaintiffs from other class action lawsuits, including the Batton cases in Chicago and the cases involving the Real Estate Board of New York (REBNY).
The lengthiest objection came from law professor Tanya Monestier, who called the settlement with the National Association of Realtors "the worst of all possible worlds," and warned about the "chaos and frustration" it may create.
Not getting 'the punishment due': Many objections argued that the settlement didn't go far enough, both in terms of monetary damages and policy changes.
One objection made a particularly sweeping indictment of NAR and the industry as a whole: "This settlement agreement is a complicated one, but one that amply demonstrates the monopoly position of the National Association of Realtors," attorneys for plaintiffs in a South Carolina case wrote in one filing.
"Indeed, the settlement agreement endeavors to insulate comprehensively the entire real estate industry from the punishment due it for its long, storied history of commission fixing. It further fails to address the ultimate issue, price fixing within the real estate business and adequate compensation for the millions of harmed home owners."
Damage to minorities? One new objector to the NAR settlement argued that the settlements disadvantage homebuyers, and by extension, have a disproportionately negative effect on racial minorities.
"Because first-generation Americans have nothing to inherit and tend to pay more in buyer broker fees… the settlement that home-seller plaintiffs reached with NAR not only disfavors homebuyers but is racially discriminatory in impact and effect," Hao Zhe Wang said in a filing.
Wang, much like the plaintiffs in the Batton cases, is concerned about homebuyers who also sold homes being unable to pursue class-action suits.
"The success of these lead home-seller plaintiffs is the bane of buyers' hope to recover for NAR's deceit and predatory and coercive sales of buyer services," Wang said in the filing.
Too big of a class: Some objectors argued that the class size is far too large. Attorneys for the plaintiffs in the Moratis (formerly Spring Way) case in Pennsylvania noted that the Moerhl and Sitzer/Burnett classes were originally certified for a total of 24 multiple listing services. The proposed settlement expands the class to the hundreds of MLSs across the country, which operate differently from each other.
"Plaintiffs in these cases have apparently bargained away the rights of the citizens of other states in order to opportunistically settle their own cases, ensure their own representative clients receive additional compensation and guarantee coverage of their own trial fees and expenses," the attorneys said in the filing.
HomeServices franchisees should pay: Many of the objections to the HomeServices' settlement are similar to the NAR objections — the damages are too small and the class is too big — but attorneys also argued that the franchisees come away relatively unscathed.
The settlement would not require the franchisees — which include Berkshire Hathaway, Long & Foster and several others — to directly pay into the fund or make serious practice changes, according to the attorneys in a South Carolina case.
"Rather, with respect to the franchisees the settlement agreements contain language like 'make clear and periodically remind.' In order to be effective, these settlement agreements should make mandatory adoption of these practice changes as a condition of owning a franchise," attorneys wrote in the objection.