‘Forced membership’ case now alleges deceptive practices
Agents suing NAR over membership requirements say associations no longer offer any benefit, while eight defendants were dropped from a Georgia commissions case.
While much of the real estate industry is focused on the NAR and HomeServices of America settlement hearings taking place in Kansas City next week, other high-impact cases are continuing to play out in the courts.
Perhaps the next big legal battle will be over "forced membership," the idea that real estate professionals must be dues-paying members of a local, state or national association — or all three, per NAR's three-way agreement — in order to access the multiple listing service.
Cases challenging mandatory membership rules are currently active in Michigan and Pennsylvania, while a California case was dismissed this week but could be refiled next month.
What's new in Michigan: Plaintiffs filed an amended complaint on Nov. 21 to expand on their original lawsuit, which claims that mandatory association memberships are a violation of antitrust laws and an unfair restraint on trade.
The defendants in the case are the National Association of Realtors, Michigan Association of Realtors, The Grosse Pointe Board of Realtors, Greater Metropolitan Association of Realtors, North Oakland County Board of Realtors and RealComp, an MLS serving more than 16,000 Michigan agents, according to its website.
The amended filing alleges that agents and brokers are being forced to participate in deceptive compensation practices, and says the defendants no longer provide benefits that justify their membership fees, "yet to successfully practice the sale of residential real estate and access the information compelled by the MLS, nationally and in the state of Michigan, membership in these organizations is mandatory."
If the plaintiffs are successful in overturning the mandatory membership rules, it would mean even more turmoil in an industry still reeling from the impacts of the NAR settlement.
Some associations are updating their policies proactively, however. Phoenix Realtors recently unveiled MLS Choice, a lower-cost subscription option that provides MLS access without requiring membership in a Realtor association.
Brokerages dismissed in Georgia case: With several brokerages receiving final settlement approval on Oct. 31 in the Gibson/Umpa case, a motion was filed to drop eight defendants from a copycat commissions case known as Hooper: Christie's International Real Estate, Engel & Völkers, Engel & Völkers Atlanta, Redfin, HomeSmart, Solid Source Realty, Palmerhouse Properties and Ansley Atlanta Real Estate.
Several defendants remain in the Georgia class-action lawsuit, which was filed in November 2023 and amended in December to add 16 more brokerages. One of those firms is eXp, which revealed on Oct. 1 that it had reached a $34 million deal in the case — a settlement that was then challenged by the Gibson/Umpa plaintiffs who claimed eXp negotiated "an improper sweetheart deal" with the Hooper plaintiffs.
Earlier this month, Weichert also reached a settlement in Hooper for an undisclosed amount. Weichert was a defendant in the Gibson case but not in Hooper.
Judge Stephen Bough, who is overseeing the Gibson/Umpa case, has ordered further discovery into the eXp and Weichert settlements to determine whether the agreements constituted a "reverse auction," referring to the practice of seeking out plaintiffs who are willing to make a more favorable deal.