‘Unfiltered’: NAR lawyer on settlement do’s, don’ts — and risks 

On this episode of Real Estate Insiders Unfiltered, Lesley Muchow, NAR's top lawyer, clears up some of the questions and confusion surrounding NAR's settlement in the commissions cases.

Wondering about appeals? Worried about breaking the rules? Muchow reviews what's happening in the courts and explains what agents and brokers should, and shouldn't, be doing under the new rules.

Is the settlement really final? A judge signed off on NAR's agreement in late November, but there are some appeals floating around — does that mean the deal is still up in the air? Yes and no, said Muchow. 

Appeals are "very common in settlements like this," and even if the Appellate Court sent the case back to the trial judge to "correct errors," usually the deal would be re-approved. "In a more rare case, those changes may be more difficult or prevent the settlement from moving forward," Muchow acknowledged, which could put the settlement at risk.

"But in the meantime, I want to be very clear that the settlement is approved," she emphasized. "The appeals that have been filed don't change the practice changes that have been implemented or NAR's obligations under the settlement."

"It's super important that our member brokerages and MLSs abide by the practice changes and that they do so in good faith, because ultimately they could lose the benefit of the release and also subject themselves to new potential future liability."

What about the DOJ? Two days before NAR's final approval hearing, the Justice Department caught the industry off-guard with a Statement of Interest in the case — could the DOJ try to undo the deal? 

For now, people shouldn't be too worried, Muchow said, because the DOJ "did not raise a specific concern," only a possible concern. NAR, she added, is continuing to have "a productive dialogue" with the agency. And regardless of what the DOJ might do in the future, real estate professionals must abide by the existing terms of the settlement. 

Do non-Realtors have to comply? If they use an MLS, then in most cases, yes: "Any participant or subscriber of an MLS that opted into the settlement is equally subject to the settlement practice changes, even if you're not a member."

What if a buyer only wants to see homes that include an offer of compensation? "I have heard that question many times," said Muchow. While a buyer can direct their agent, "in no way should the real estate professional be filtering or restricting what the buyer sees or has access to, based on what that offer of compensation is."

Can brokerages still do cooperative compensation? "Yes," Muchow said, but "it has to be a conversation between the broker and the seller as to whether or not the seller authorizes the broker to make an offer of compensation. … Nothing requires it. Nothing sets any amount. It's a conversation with the seller, and an independent business decision for brokerages to make."

What about seller concessions? "Concessions continue to be an option. Those can be communicated on the MLS as long as they are not limited to or conditioned on the retention or payment to a buyer broker," with one caveat, Muchow said: "MLSs are different. And so there is local discretion as to whether or not an MLS has a concession field and allows for that transmittal of information."

What's the status of the buy-side commissions cases? NAR's deal only covers the lawsuits brought by home sellers, but two notable cases involving buyers are still out there — Batton 1 and 2 — despite attempts to get them dismissed.

"They've been moving along very slowly," Muchow said, and the next "big moment" will be class certification, which is expected in the next year or so. Because home sellers who also bought a house released their buy-side claims via the Sitzer/Burnett settlement (prompting some Batton plaintiffs to file appeals in that case), the potential class size will be "greatly reduced," Muchow noted. 

Watch the full episode for even more details on the settlements, and stay tuned for part 2!