Ten Chicago-area Realtor groups that are shareholders of the Multiple Listing Service of Northern Illinois have signed off on a settlement agreement that would resolve a legal battle and pave the way for a merger with another MLS if it is accepted by both MLS boards.
The MLSNI board, which is composed mostly of brokers, is scheduled to meet on Jan. 16 to consider the shareholders’ settlement agreement, and shareholders and board members for broker-owned MAP MLS — the MLS of Mount Prospect, Arlington Heights, Palatine and Prospect Heights — will also meet in January to consider the settlement agreement, said Ginger Downs, CEO for the Chicago Association of Realtors. The Chicago association is one of the MLSNI shareholder boards.
While MLS mergers have been successful in some other market areas and MLS mergers and data-sharing are gaining in popularity, internal politics and power struggles among MLSs, Realtor associations and brokers can be sticking points. Consideration of the MLSNI-MAP deal began about three years ago.
Five MLSNI shareholder Realtor groups, including the McHenry County Association of Realtors, Realtor Association of Fox Valley, the Aurora Tri-County Association of Realtors, the Oak Park Board of Realtors and the West Towns Board of Realtors, filed a lawsuit last year against MLSNI, the five other shareholder associations and individuals associated with the MLSNI-MAP merger proposal.
The five shareholder boards, which have opposed the terms of the merger proposal and raised questions about financial aspects of the deal and governance of the merged MLS, had argued that a vote approving the deal was invalid because they did not participate in the vote.
Cook County Circuit Court Judge Martin S. Agran ruled on May 9 that the board vote, which was held in November 2006, was “void for lack of a quorum” and ordered that the shareholders participate in a future meeting to decide whether to approve the merger. The dissenting shareholders appealed, and the settlement agreement seeks to resolve this ongoing litigation.
“Everyone is pleased that there has been consensus among the shareholder associations,” Downs said. “This is clearly the first step in moving toward the end of this process. I think at this juncture everyone is looking forward to moving on to the next stage.”
According to a statement released by shareholder groups last week, “neither MAP nor MLSNI were directly involved in the shareholder discussions that resulted in the proposed settlement.”
Downs said that the MLSs could decide not to go along with the shareholders’ settlement agreement or seek changes to the settlement agreement, though she said she would be surprised if that happens. “Clearly at this point everyone wants to see this come together.”
Rob Schaid, president of the McHenry Association of Realtors, and David Hanna, president-elect of the Chicago Association of Realtors, said in the prepared statement, “This settlement is the result of months of intense, good-faith negotiations. We are especially pleased that it recognizes the important role Realtor associations play for their members and for the real estate business in the communities they serve.”
Herbert C. Steinmetz Jr., a lawyer who is representing the five Realtor groups that filed the lawsuit, said he had no comment about the settlement agreement.
Downs said that the settlement agreement seeks a change in the composition of the interim board that would lead the merged MLS to guarantee that the dissenting shareholders can appoint two of seven members of this interim board.
The settlement agreement also seeks changes to other aspects of the election process and governance of the proposed new MLS, she said. The proposed MLS consolidation plan provides that every licensed real estate brokerage company in the Chicago area could purchase a unit in the new MLS at a cost of $1,000, and those brokers would then elect 13 of the 15 seats on the new company’s board of managers.
MLSNI would elect the other two seats and retain a vote on some corporate actions, according to the prepared statement. The consolidated MLS would be operated at a break-even basis and MLSNI would own economic interest in the new company.
Under the terms of the settlement agreement, individual Realtor associations would continue to serve as the primary portal for the purchase of MLS services by their members for at least the next seven years.
Downs said that the appointment process for the interim board of the combined MLS could begin as soon as the settlement agreement is accepted, followed by the election of a permanent board. If the agreement is not accepted then the lawsuit, now on appeal, could proceed.
Despite the lawsuit, the MLSNI and MAP MLS boards in October announced a data-sharing agreement that allows each MLS to display a combined inventory of property information from both MLSs to their members. MLSNI has about 50,000 members while MAP has about 15,000.
Prior to the lawsuit, the debate over the MLS merger surfaced publicly on a “Save Our MLS” Web site launched by opponents, and proponents of the merger countered with a rebuttal titled, “Truth and Lies Behind ‘Save our MLS.’ “