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On Nov. 26, the U.S. District Court for the Western District of Missouri will hold a hearing on approval of NAR’s settlement that would resolve nationwide class action claims related to broker commissions. The NAR legal team and Plaintiffs will be in Court to advocate for final approval of the NAR settlement.
Here is what you need to know about the process for final approval.
Final Arguments
Ahead of the hearing, there was an opportunity for members of the settlement class to either opt out of or file an objection to the settlement agreement. As NAR General Counsel Lesley Muchow has explained, this “is a standard and necessary part of the approval process for class action settlements like ours.” The deadline for these objections was Oct. 28.
In the coming days, the Plaintiffs will file a motion supporting final approval of the settlement, in which they will address objections and provide the Court with their arguments in favor of settlement approval. You can also expect to see a filing from NAR responding to the filed objections and laying out its case for final approval. In addition, other parties—including those who opted in to the NAR settlement—may also present their positions to the Court.
Although the objection deadline has passed, the Department of Justice (DOJ) has the authority to and may file something on the settlement agreement at any time ahead of Nov. 26 through a “Statement of Interest.” The DOJ is permitted to do so in any case pending in federal court in which the United States may have an interest. The Court would consider the DOJ’s perspective alongside the other arguments made by objectors, and will independently decide whether to grant final approval.
In a different case pending in the District of Massachusetts also related to broker commissions—Nosalek v. MLS PIN—the DOJ publicly stated in a “Statement of Interest” its view that offers of compensation should be banned entirely. NAR President Kevin Sears told REALTOR® Magazine, “Should the DOJ choose to submit a Statement of Interest to the Court, we expect that it will reflect DOJ’s known position on cooperative compensation. For our part, NAR explicitly worked to preserve offers of compensation off-MLS as an option as part of the settlement because of the value these offers bring to both buyers and sellers. Offers of compensation are pro-consumer and are explicitly or implicitly allowed by law in most, if not all states, including Missouri.”
NAR continues to believe that offers of compensation are an important option to help make professional representation more accessible, decrease costs for home buyers to secure these services, increase homeownership opportunities for underrepresented buyers, and expand the potential buyer pool for sellers.
Eyes on the Courthouse
All these filings are part of the normal process of settlement approval. No individual objection or Statement of Interest indicates what the outcome will be. As for timing, a decision on final approval could come as soon as the conclusion of the hearing but the Court may also rule after the hearing. If the Court grants final approval, objectors have the right to appeal.
Final approval of the settlement would secure a release of liability for over 1.4 million NAR members, all state/territorial and local REALTOR® associations, REALTOR® Multiple Listing Services (MLSs), NAR’s affiliate organizations and all brokerages with an NAR member as principal that had a residential transaction volume in 2022 of $2 billion or below. It would also release MLSs and brokerages that opted into the settlement.
All released parties are required to abide by the mandatory practice changes that went into effect on Aug. 17. The practice changes required by NAR’s settlement must be implemented in good faith. NAR opposes any attempt to circumvent the practice changes. NAR continues to provide resources and guidance to help members and consumers understand how the practice changes impact their homeownership journey. Go to facts.realtor to see the latest resources and installment of NAR’s Consumer Guide series.