The Alabama state Legislature has quickly proposed and passed a law that would require all real estate agents and brokers to perform a minimum set of services for their clients. The state’s governor will now consider whether to pass the measure.
Despite objections by the U.S. Department of Justice and Federal Trade Commission to identical language in an earlier proposed bill, the state House voted 94-1 on July 26 to approve the real estate law, Senate Bill 17. The federal agencies had stated that the earlier proposal would likely “decrease competition among real estate professionals and result in Alabama home buyers and sellers paying higher real estate commissions.”
Federal-agency representatives also have written to legislators, regulators and governors in other states, encouraging them to reject similar legislative and regulatory proposals to establish minimum-service requirements for real estate professionals.
Realtor trade associations have backed the new measures, claiming that they would protect consumers by ensuring that they receive adequate services from real estate professionals in all transactions, while the federal agencies and other opponents have said that consumers should be allowed to decide which services they receive in a real estate transaction.
These laws can effectively ban real estate companies that perform less than the required range of services, such as companies that offer to list properties in a multiple-listing service for a fee while performing no other services for their clients.
Senate Bill 17, if approved by Alabama Gov. Bob Riley, would require that all real estate agents and brokers in the state, “When accepting an agreement to list an owner’s property for sale…shall, at a minimum, accept delivery of and present to the consumer all offers, counteroffers, and addenda to assist the consumer in negotiating offers, counteroffers and addenda, and to answer the consumer’s questions relating to the transaction.”
The Justice Department and Federal Trade Commission, in a May 12 letter to Alabama senators, urged them to reject House Bill 156, which would have required that listing agents and brokers “at a minimum…accept delivery of and present to the consumer all offers, counteroffers, and addenda to assist the consumer in negotiating offers, counteroffers, and addenda, and to answer the consumer’s questions relating to the transaction.”
While House Bill 156 fizzled in the Legislature, Senate Bill 17 was introduced July 19 by state Sen. Hinton Mitchem, D-Guntersville, and co-sponsored by Sens. Del Marsh, R-Anniston, and Larry Dixon, R-Montgomery. Mitchem was not immediately available for comment about the legislation.
Randle McKinney, president of the Alabama Association of Realtors, and Danny Cooper, executive officer for the association, were not available today for comment about the legislation, according to association staff.
James Grant III, a past president for the association, said today that he isn’t familiar with Senate Bill 17 but he did support House Bill 156. “In general you need to have minimum services for real estate agents. If you don’t, it gets mighty confusing if you have to work both sides (of a transaction),” he said.
Realtor associations in other states also have said that real estate agents from full-service companies who are working with a prospective buyer could in some instances feel obligated to work with the seller, too, because the seller may lack full representation by the company that listed the property for sale.
R. Hewitt Pate, then-assistant attorney general in charge of the Justice Department’s Antitrust Division, said in a May statement about House Bill 156, “This proposed change in the law should be rejected because it deprives Alabama consumers of the benefits of lower prices and more choices. Consumers who have fee-for-service brokerage options can save thousands of dollars on a single home.”
D. Philip Lasater, executive director for the Alabama Real Estate Commission, said today that he knew about Senate Bill 17 but had no comment about the legislation. “It’s not something I’m going to comment on right now. I’m just not going to comment at this point.” Senate Bill 17, in addition to minimum-service requirements for real estate professionals, also contains law revisions relating to the real estate commission’s fees, fines and hearings.
Gina Talamona, a Justice Department spokeswoman, said today that the department continues to advocate for competition in the marketplace. “Our views remain the same. We’re about giving consumers choice,” she said. The department had not yet formally commented on the new legislation in Alabama. “We want to make sure that everyone making decisions is making those decisions based on informed facts,” she said.
The Alabama governor’s office did not immediately have a comment about the legislation.
The two federal agencies also had objected to similar law proposals in Missouri, Oklahoma and Texas. Missouri Gov. Matt Blunted signed a real estate minimum-service bill into law in July, and governors in Texas and Oklahoma also passed minimum-service measures after federal-agency objections. More than one dozen states have passed or are considering minimum-service legislation, and a number of states have passed similar real estate regulations that specify service requirements for real estate professionals.
While the National Association of Realtors has not announced a formal position on states’ pursuit of minimum-service laws, the association has not asked states to abandon pursuit of such laws.
Laurie Janik, general counsel for the National Association of Realtors, issued an April 22 memorandum to all state Realtor association executives advising that the Justice Department and FTC cannot successfully challenge such minimum-service laws once they are enacted, and that “efforts by Realtors to lobby the state legislature or the state real estate commission for legislative or regulatory action are protected by the First Amendment as long as they are undertaken in good faith.”
Al Mansell, National Association of Realtors president, is also a state senator in Utah. He sponsored minimum-service legislation in that state that was enacted in May.
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