A Southern California man alleges in a lawsuit that Cendant Corp.-affiliated real estate companies steered home buyers to purchase disclosure statements from a company that allegedly engaged in unlawful kickback or referral fee practices.

The complaint, filed in August, charges that Coldwell Banker and possibly other Cendant affiliates illegally received a portion of fees paid by home buyers to Property I.D., a Los Angeles company that provides disclosure statement services for real estate transactions.

But Sergio J. Siderman, Property I.D. president and COO, says the lawsuit is without merit, and is strikingly similar to an earlier lawsuit that the court dismissed.

In California, natural hazard disclosure statements are required to make buyers aware that a property is in an area that is at risk of flooding, earthquakes or fires. Other states have similar disclosure requirements.

The lawsuit charges that Coldwell Banker and possibly other Cendant affiliates “have entered into joint ventures or similar arrangements with Property I.D. to create sham entities in an effort to evade the anti-kickback and anti-fee-splitting provisions” of federal real estate law.

Mark Panus, a spokesman for Cendant, said that Cendant is engaged in a joint venture with Property I.D., though “we are not the managing partner of that joint venture,” and added, “We don’t comment on matters of pending litigation.” Cendant is the largest real estate brokerage company in the country, operating major franchises such as Coldwell Banker and ERA. And through a subsidiary company, NRT Inc., Cendant owns a massive network of real estate offices nationwide.

Barry R. Himmelstein and Caryn Becker, lawyers for the San Francisco firm of Lieff, Cabraser, Heimann & Bernstein LLP who are representing home buyer Mark Berger in the lawsuit, did not respond to Inman News’ requests for comment.

A superior court judge in Orange County, Calif., in March 2003 dismissed a lawsuit alleging that Property I.D. overcharged a home buyer for a natural hazards disclosure report because she purchased it through a brokerage company that had an affiliated business relationship with Property I.D. The company had said in a statement that one of Property I.D.’s competitors was likely behind that lawsuit, and Siderman today said he suspects the latest lawsuit may also have been driven by a market competitor.

“The case has never had any merit and it’s always been done as a marketing stunt,” Siderman said. “The only difference is the name of the plaintiff. This (appears to be) more a harassment tactic than a legitimate complaint, and we will certainly be pursuing all of the true proponents of this frivolous complaint.”

Bob Gold, a spokesman for Property I.D., added, “What we fully plan to do is to file a cross complaint against the perpetrators of this lawsuit.”

Siderman said that Property I.D.’s natural hazard disclosure reports cost the same whether they are purchased directly from the company or from any of the companies that have a relationship with Property I.D. He added, “We are completely independently owned and operated. We have business relationships with every major brokerage in the country.”

The lawsuit, which seeks class-action status, states that plaintiffs Berger and his wife paid $114 through escrow for a natural hazard disclosure statement issued by Property I.D., and claims that competitors “charge as little as $29.50 for (natural hazard disclosure) statements.”

Lawyers for Berger are seeking to represent all persons who were represented by a Cendant affiliate in a sale of residential real estate in California and who paid for a Property I.D. natural hazard disclosure statement from August 2001 to a date of judgment in the lawsuit.

The lawsuit alleges that one or more Cendant-affiliated companies are participants in joint ventures with Property I.D., and that Property I.D.’s LLCs were created “as shells that merely funnel requests for (natural hazards disclosure) statements to Property I.D. Corp.” Property I.D. and Cendant affiliates “have purposely concealed their kickback scheme…within a sophisticated set of business transactions,” the lawsuit alleges.

Coldwell Banker and Century 21 offices have promoted Property I.D. natural hazard disclosure services above other competing services, the lawsuit charges.

The lawsuit seeks damages “equal to three times the amount” that affected home buyers paid for Property I.D. natural hazard disclosure statements, and a court order that requires Property I.D. and Cendant affiliates named in the case “to identify all consumers who have paid any unlawful referral fee associated with the purchase of one or more Property I.D. (natural hazard disclosure) statements” in violation of the law, and to make full restitution of any unlawfully gained profits.

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Send tips or a Letter to the Editor to glenn@inman.com or call (510) 658-9252, ext. 137.

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