Editor’s note: The COURT REPORT is RISMedia’s weekly look at current and upcoming lawsuits, investigations and other legal developments around real estate.
This past week proved historic in real estate lawsuit news, as the National Association of REALTORS® (NAR) decided to settle and significantly modify its rules around commissions, paying $418 million in damages, which covers all current seller-brought commission suits. Additionally, Burnett copycat suits have remained the norm, with a new case brought by buyers and sellers in a potential state-level case against Baird & Warner. Additionally, Curbio is now the target of alleged fraudulent acts by scamming the elderly and presenting overpriced contracts for renovation work that takes far longer than advertised.
Here’s an in-depth recap:
National Association of REALTORS® (NAR) settlement
NAR’s fight against commission lawsuits has come to an end, agreeing to a settlement of $418 million, as all cases brought by sellers will be covered. NAR will also remove some rules surrounding commissions, and remove compensation offers from the MLS—which has long been a fight for some regulators and consumer advocates.
A source familiar with the agreement said that it does not cover a potential class of homebuyers that could still be certified in ongoing, parallel class-action claims. Those lawsuits will continue, the source said.
The settlement still awaits approval from a judge, and brokerages across the industry will soon need to adapt to fast-moving changes that may have significant impacts on their business model overall, including effects on revenue and commissions.
NAR is also still facing the Department of Justice (DOJ), which is pushing for change beyond just this settlement.
“NAR has worked hard for years to resolve this litigation in a manner that benefits our members and American consumers. It has always been our goal to preserve consumer choice and protect our members to the greatest extent possible. This settlement achieves both of those goals,” said Nykia Wright, interim CEO of NAR in a statement.
Baird & Warner
Baird & Warner is facing a state-level, Burnett copycat suit, receiving allegations that they colluded within the residential real estate industry to make agent commissions costly.
Plaintiffs Mary Maslanka and David Frefield allege anti-competitive practices that restrain price competition, and lawyers Evan Meyers, Paul T. Geske and Brendan Duffner are calling for a class action on behalf of both buyers and sellers. The lawyers also claim that a large number of consumers have paid inflated commissions as a result of such practices.
“NAR, Defendant and their co-conspirators have created and implemented anti-competitive rules and policies related to broker commissions that have harmed consumers by, among other things, causing them to incur substantial additional costs in the form of inflated broker commissions and increased home prices,” lawyers wrote in court filings.
Plaintiffs—who each used agents from Baird & Warner to handle transactions—claim that Baird & Warner has violated state laws such as the Illinois Antitrust Act and the Illinois Consumer Fraud and Deceptive Business Practices Act. NAR is listed as a co-conspirator in this case, as sole defendant Baird & Warner allegedly followed their anti-competitive rules and policies.
Notably, this lawsuit will continue despite the NAR settlement, as it seeks to move claims by buyers forward, which are not part of that agreement.
Curbio
Two suits have been filed against Curbio, a fix-now, pay-at-closing home improvement solution for real estate professionals, alleging a scheme that targets the elderly and financially disadvantaged. The first was filed by Washington, D.C., Attorney General (AG) Brian L. Schwalb, and another was filed by Anita Johnson, an elderly homeowner who reportedly was a victim of such claims made by the Office of the Attorney General (OAG).
Schwalb looks to ban Curbio from operating alleged illegal practices in the District of Columbia to protect vulnerable residents from what he claims as “exploitative contracts that threaten them (victims) with financial ruin.”
The OAG claims that Curbio has misrepresented most of their business model to consumers, such as level of risk, absence of fees or interest, rigorous vetting of its contractors, return investment, extended time working on homes and more.
Curbio has broadly denied the allegations and defended its practices, calling allegations “a false narrative.”
eXp
eXp and CEO Glenn Sanford are seeking to dismiss a second lawsuit filed by a woman who claims she was sexually assaulted by high-profile recruiters at company events, arguing again that they are not responsible for the alleged misconduct of agents—although the same judge just recently overruled similar arguments in a separate case.
Anya Roberts is a current eXp agent, and came forward with claims that eXp influencers Michael Bjorkman and David Golden drugged and sexually assaulted her at a 2020 event. She also alleges that Michael Sherrard, another influencer, groped her, while executives turned a blind eye.
Utilizing a law meant to protect sex trafficking victims, both lawsuits seek to hold the company as a whole responsible as participants and beneficiaries of the alleged abuse.
“Roberts…alleges, without factual support, that eXp…and its CEO Glenn Sanford participated in a sex trafficking venture with (Golden and Bjorkman),” eXp wrote. “No facts support that eXp or Sanford received anything of value as a result of sexual assaults against (Roberts), or that eXp or Sanford knew or should have known about Golden and Bjorkman’s alleged abhorrent actions.”
The judge has yet to rule on eXp’s motion. In the second case, in which four women are making similar claims against the company, Sanford, Bjorkman and Golden, a trial is scheduled for April 2025.
