Case of the Month – National Association of Realtors v. United States of America Department of Justice

The Antitrust Division of the United States Department of Justice (“DOJ”) opened an investigation of potentially anticompetitive practices in the real-estate industry that were implemented by the National Association of Realtors (“NAR”).  In November 2020, DOJ and NAR settled the case.  In addition to filing a Proposed Consent Judgment in the district court, DOJ sent a letter to NAR stating that DOJ had closed its investigation of certain NAR practices and that NAR was not required to respond to two outstanding investigative subpoenas.  Eight months later, in July 2021, the DOJ attempted to withdraw from the settlement and reopen its investigation into NAR’s polices and issued a new investigative subpoena.

NAR petitioned the district court to set aside the subpoena, arguing that its issuance violated a promise made by DOJ in the 2020 closing letter.  The district court granted NAR’s petition, concluding that the new subpoena was barred by a validly executed settlement agreement.

The DOJ appealed the district courts ruling and on April 5, 2024, the United States Court of Appeals for the District of Columbia ruled that the DOJ could reopen its investigation. In the ruling the Appellate Court found that, the plain language of the disputed 2020 letter permits DOJ to reopen its investigation.

It is yet to be seen what this will mean for NAR and whether it will impact other cases NAR is defending in the civil arena. For real estate professionals, the reopening of the DOJ lawsuit raises questions about the future of industry regulations and practices. Whether the DOJ will take action to get involved in those private, civil lawsuits remains to be seen. Either way, it is reasonable to expect that the practices of members of the NAR will continue to be adjusted as result of the DOJ investigation.

Based upon the original settlement, NAR made several changes to its practices including:

  • Realtors cannot represent to consumers that their services are free;
  • Compensation being offered to buyer’s agents by listing agents must be disclosed freely, openly, and transparently;
  • Realtors cannot search the MLS for cooperating commission to exclude listings to be shown to potential buyers; and
  • Non-realtor real estate licensees allowed access to showing properties unless the Seller objects.

Other changes expected as a result of the civil suits include:

  • A prohibition on listing of cooperating commission on MLS; and
  • A requirement for the buyer’s agents to obtain a buyer broker agreement prior to showing any home or making any offer for a buyer.

With the DOJ investigation back in play, it is imperative that real estate professionals stay informed about the progress of the lawsuits and be proactive in adapting to any eventual changes in industry regulations. By staying ahead of the curve, professionals can position themselves to navigate potential challenges and continue to serve their clients effectively in an evolving marketplace.