The California Association of Realtors (CAR), the largest state Realtor association in the U.S. and owner of forms software provider zipLogix, has told the transaction management software provider dotloop that users cannot fill out the association’s copyrighted forms using dotloop’s software.

The decision effectively negates one of the core aspects of the scrappy Cincinnati-based upstart’s business model — the ability for all parties of a transaction to access and fill out the forms necessary to complete a deal in the company’s cloud-based system — and has sparked a heated debate in the industry about the relationship between innovation and copyright.

“This strikes me as being more about protecting an incumbent software product than about protecting members,” said Brian Boero, co-founder of real estate marketing and design firm 1000watt.

CAR runs its own forms and transaction management platform software through its for-profit subsidiary Real Estate Business Services Inc. (REBS) and does not license its forms to any other forms software company.

If any of CAR’s 150,000-plus members want to fill out one of the 115 association forms on a computer, they must use zipForm software from the firm zipLogix, which was founded in 1991 by REBS and is partly owned, via a 2001 deal, by the National Association of Realtors (NAR).

ZipLogix also provides services to hundreds of state and local associations and brokers nationwide, including Realtor associations in Texas, Wisconsin, Maine, and North and South Carolina, and claims more than 600,000 real estate professionals use its zipForm contract software.

Some CAR members, who pay annual dues of $115 and receive electronic versions of the forms at no additional cost, are unhappy with how the software works and want to modify the forms in other platforms like dotloop’s, but can’t because the association does not license the forms to any other firm.

Two CAR execs, Joel Singer and Josh Sharfman, hold the same positions — CEO and chief technology officer, respectively — in both CAR and REBS, causing some industry watchers to question whether the leaders, and the firms themselves, have an inherent conflict of interest.

“When a trade association gets into the software business, you’re going to run into these sorts of conflicts,” Boero said. “What’s in the best interest of the software business and what’s in the best interest of the members is not always one and the same thing.”

Dotloop, which released a new version of its platform this week, received CAR’s cease-and-desist letter on April 2 and promptly complied with it, said dotloop CEO Austin Allison. The letter cited the 1998 U.S. Digital Millennium Copyright Act, he said.

Singer says CAR sends a letter like the one it sent to dotloop “quite often.” However, it’s rarer, he said, that it sends one to a competitor.

Choice or copyright?

“The question at issue is whether or not an association should restrict freedom of choice,” Allison told Inman News.

Having one CEO in control of both companies — CAR, a nonprofit, and REBS, a for-profit firm — means they have goals in conflict, Allison said.

Singer told Inman News that retaining control over CAR’s forms allows the association to protect its members’ legal interests in the very litigious state of California.

CAR spends a lot of resources making sure the forms are up-to-date and legally ironclad, Singer said. “Our interest here is making sure the members have the best forms in the legal arena.”

“(Other companies) create a risk-management conundrum,” Singer said.

Also, using CAR-owned REBS to build and manage the software exclusively for its members allows the association to provide the software at an affordable price, Singer said.

“We provide software at incredibly low prices,” he said.

David Podley, an operation manager with Podley Properties, a brokerage with six offices and 175 agents in the San Gabriel Valley east of Los Angeles, says CAR sent him a letter in early April reminding members of CAR’s position on the proper use of its forms.

“ZipForm is the only electronic forms filling software program for which (members) have permission to complete C.A.R. standard forms,” read a portion of the letter.

“However, exporting a blank form, or a partially completed form with nominal characters such as ‘…’ or ‘____’ from zipForm is a violation of CAR’s copyright and end user license agreement. Therefore, CAR members may not export a blank or partially completed form into another software program to overlay or add additional text to complete the form,” read another section of the letter.

Removing CAR forms that are not in locked PDF format from zipForm and uploading them to other software programs, the letter went on, “may allow non-members access to the forms without paying their fair share or [allow] infringers to unjustly profit from copying and reselling CAR’s forms to non-members.”

Boero and 1000watt partner Marc Davison think the position taken by CAR stifles innovation, and keeps CAR members locked in subpar systems.

“(CAR’s position) not only feels short-sighted, it seems to be driven by CAR’s interest in protecting its revenue stream from REBS,” Davison said. “There’s something strangely wrong, if not incestuous, about this. It not only prevents brokers from using their technology and platform of choice, but it prevents them from using a better way to transact than what REBS offers.”

Others, including Martin Scrocchi, CEO of dotloop competitor Instanet Solutions Inc., say CAR invested heavily in developing complex, legally sound forms and the software to process them, and has a right to protect its copyright and recoup its investments.

“I’d love to license the forms from CAR,” Scrocchi said. “But they own the license and it’s up to them whether they want to license them.”

Currently, Instanet Solutions licenses forms from 167 associations, boards and multiple listing services covering 400,000 agents and maintains 20,000 individual form libraries for clients in different databases, Scrocchi said.

Access to forms is the core of his business, Scrocchi said. “That’s our bread and butter,” he said. “The value in our company is not just the software, it’s the relationships over the 25 years the firm’s been in business of getting licenses.”

This issue could put a cap on dotloop’s business outlook, because regardless of whether the company generates customers in a market, the efficacy of its platform is contingent on getting licenses to modify the copyrighted forms in those markets.

Dotloop customers can use other elements of the dotloop platform, such as e-signature and document storage, but they can’t legally modify forms where dotloop doesn’t have a license.

In hundreds of markets, however, dotloop customers have uploaded forms copyrighted by the local association into dotloop’s library that are then accessed and used by other association members, or in some cases, by free trial users, who may or may not be members of an association that licenses those forms, said Gregg Larson, CEO of Clareity Consulting, who has looked into the issue.

Currently, dotloop licenses forms from between 35 and 40 state Realtor associations in the U.S., Allison said. Some associations provide the service as part of their dues, he said, but most have revenue-sharing agreements with dotloop.

Other associations have reportedly sent dotloop similar cease-and-desist letters.

“What CAR is doing is not without some degree of risk,” said Robert Butters, an attorney specializing in antitrust law with Arnstein & Lehr LLP.

Butters, who sat for about five years on the board of Real Estate Industry Solutions LLC, a for-profit subsidiary of Florida Realtors that made its own forms software Form Simplicity, says that if access to forms is deemed essential for a competitor like dotloop to do business and there are not any feasible form alternatives, then CAR could be vulnerable to an antitrust suit.

Florida Realtors, unlike CAR, licenses its forms to competitors, Butters said, but members have to pay to use their services when they have access to Form Simplicity for no fees beyond member dues. The association decided to allow competitors like dotloop and Instanet Solutions in, he said, because it felt that if members wanted to use a different service, they should have that choice.

In 2010, REIS filed a copyright suit against Instanet for allegedly appropriating Form Simplicity forms. Instanet countersued, alleging Form Simplicity was based on software code and other confidential information from Instanet’s own transaction management platforms. The companies settled the suit in May 2012 with each side paying its own costs and attorneys’ fees. Butters said Florida Realtors dissolved REIS at the beginning of this year, but it was not related to the settlement.

Force-feeding subpar technology?

“Our technology is the best to begin with,” Singer said of zipForm and relay, zipLogix’ transaction management platform.

Some CAR members, and a national franchisor that provides services to them, disagree.

Kendyl Young, a broker with Teles Properties in Southern California, says zipForm doesn’t work well on an iPad and requires her to do a “print/sign/scan/email” routine for some forms. She feels that CAR is preventing her from seeking out a better software solution.

“I just want to make my job easier,” Young said. “My association is preventing me from figuring out a better real estate experience.”

Young says she wants software that allows her to fill out forms — she says there are about 21 forms needed to complete a deal in California — without wasting paper and time. And right now, the software CAR members are required to use to fill out forms online isn’t doing a good job, she said.

On top of that, CAR has not been responsive when she has reached out to them about her concerns, Young said. “There’s no attitude that they’re looking to explore for a better way,” she said.

Not all forms are difficult to fill out in zipForm, Young said, but several with check boxes and numerous comment fields, including the “Real Estate Transfer Disclosure Statement” that’s required for all real estate transactions, cannot be completely filled out with the software.

To fill these forms out legally, Young said she must print them, fill them out by hand, have the client do the same and then scan them back into her computer.


CAR’s “Real Estate Transfer Disclosure Statement” form, required in all real estate transactions, that California broker Kendyl Young says is impossible to fill out completely using zipForm. Everything in Section II, Young said, cannot be filled out with zipForm. 

Podley, the operations manager at Los Angeles-area Podley Properties, said zipForm was temporarily “broken” because of complications with plug-ins.

“For the month of February, I didn’t even know if zipForm would work,” Podley said.

An update released in beta in May got rid of a reliance on plug-ins that caused complications, he said.

Podley said he didn’t look at alternatives to zipForm, “because there was nothing else available.”

“If there was a better product available, we would look at it,” he said.

Vanessa Bergmark, co-owner and manager of Oakland, Calif.-based Red Oak Realty, has no complaints about how forms are processed now. Bergmark said she understands the legal complexities involved with creating forms, and values CAR’s assurance that they’re legally sound.

“They’re fabulous forms,” Bergmark said. An average file, she said, includes from 75 to 100 pages, and she’s happy to put up with what she considers the inefficient forms software CAR requires for the peace of mind that comes with knowing she has legally bulletproof forms.

Bergmark also says she feels that CAR should be able to recoup its investment by requiring members to use its software — even if it’s not the most efficient.

However, Bergmark says using zipForm means that she has to have four full-time staff members who focus solely on handling forms and making sure they move properly through Red Oak Realty’s system.

For just about 750 transactions the firm does a year, having that many full-time staffers looking over forms is “kind of clunky,” Bergmark said. “It’s a lot of work. There’s a lot of room for error.” That staff would be utilized elsewhere in the company if zipLogix’ forms software was smoother, she said.

“Maybe CAR is holding up a great technology piece,” Bergmark said.

In the current system, Bergmark said, a form is processed by filling it out in zipForm, loading it into Gmail, mailing it to the right parties to have it signed using DocuSign and then getting the signed forms back via email and then uploading them to its transaction management platform SureClose.

Austin, Texas-based franchisor Keller Williams Realty, one of the largest real estate brands in the country, integrated dotloop into its all-in-one software system for agents, eEdge, in late 2011, and its 9,000 California agents using the system haven’t been able to use it as the firm intended, from the beginning.

The ability to fill out forms digitally in dotloop in California “is a missing link,” said Cary Sylvester, executive director of technology at Keller Williams.

Keller Williams, via its eEdge platform, uses dotloop for four things, Sylvester said:

  1. Document storage
  2. Compliance management
  3. Electronic signatures
  4. Filling in forms

Sylvester says Keller Williams looked at zipForm and relay when it was shopping around for a firm to fill its need for an all-in-one transaction management platform, but dotloop was the best option the company found.

CAR’s unwillingness to license its forms hampers the seamlessness of the eEdge platform for Keller Williams’ California agents, Sylvester said.

Now, Keller Williams agents in California have to fill out forms using zipForm software, email it into the dotloop account and then process it through dotloop. If they want to make a change to a form, they would have to bring it back into zipForm, change the form, and then re-enter it into dotloop.

“Our California agents are paying members of CAR,” Sylvester said. “We thought we could come to an agreement with them to modify forms in the system.”

That hasn’t happened yet.

NAR’s role

In 2001, NAR partnered with CAR’s for-profit subsidiary REBS in zipLogix, the “official” forms software of the National Association of Realtors. NAR currently has a 30 percent stake in zipLogix, which was valued at $7.3 million on Sept. 30.

In 2009, NAR, via its 5-year-old investment wing Second Century Ventures LLC, took a stake in DocuSign, which was integrated into zipLogix late last year. And a few weeks ago, DocuSign acquired up-and-coming transaction management platform and dotloop competitor Cartavi.

What all this means for competition in the real estate space is unclear.

“(Our) investment relationship has resulted in millions of dollars of value and savings to NAR members,” said Stephanie Singer, a spokesperson for NAR. “Our continued relationship provides influence to ensure companies are continuing to innovate in the real estate space and are creating products and services to help Realtors deliver the best services to their clients and customers.”

Via NAR’s Realtor Benefits Program, new users of zipLogix software (relay and zipForm) receive $20 off the initial price and member brokers receive a 10 percent discount, Singer said. Individual user discounts vary by the specific arrangements zipLogix has with an association or broker.

Currently, Cartavi is not a part of the benefits program, Singer said, but members have access to DocuSign at a $60 discount of the annual $240 subscription price.

The overlapping ownership stakes are a bit complex, said Butters, the lawyer specializing in antitrust issues, but not anti-competitive. “Other companies could offer price reductions to members to compete,” he said.

NAR endorses all types of businesses to its members, from insurance providers to lockbox technology, Butters said. The lockbox firm Sentrilock, he pointed out, was founded by NAR to create some competition for lockbox provider Supra.

In March, NAR, through Second Century Ventures, accepted its first batch of companies into its new tech accelerator program REach (featuring seven companies), which provides mentorship and product feedback to new companies, but no cash.

What do you think? Is CAR providing a service to its members or restricting innovation? What role do you think NAR should play?

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