A board member for the Regional Multiple Listing Service in Minnesota has stepped down in protest of a rule banning the use of “MLS” and related terms in company names and Web site addresses, and is now considering whether to take legal action against the MLS.

Several other MLS members, including the former chairman of an ethics committee for the Minnesota Association of Realtors trade group, also oppose the rule. As of Sept. 3, those companies that violate the new rule must cease their use of the term “MLS” and “multiple listing service” in company names and Web site addresses.

Steve Westmark, of Counselor Realty in Wayzata, Minn., said that after serving for 20 years as a member of the MLS and a board member he resigned this month because he does not agree with the new MLS rule, adding that he may resort to legal action. “I wanted to be conciliatory, I wanted to work through this process with fairness and reasonableness,” he said, though he said he cannot agree with the board’s decision.

“There has to be something fair for the agents that have put money into (Internet) domain names. You have to be fair with them.” The members of the MLS board, by passing the new rule, are “not helping the MLS participants — they’re hurting them,” he said.

He noted that brokerages and companies that are not members of the MLS are free to use MLS terms in their company names and Web sites, while members are constrained from the same practice. “They don’t have to play by the rules but we do,” he said. “Why would you want to do this to people who are the participants and are really not your enemy?”

Westmark maintains two Web sites that have the term “MLS” in the address, and he said he does not believe the argument that consumers are being damaged or misled by the use of the term “MLS.”

While he would support blanket rules that would block all companies — not just MLS-member companies, from using “MLS” terms, Westmark said he does not believe those sorts of protections are not possible to achieve. He also said that he would support the creation of a new, protected name to identify MLSs — perhaps they could be called Realtor Listing Services, he suggested.

“If the idea is to protect it then figure out how you are going to protect it. In my opinion they’re doing nothing to protect the MLS,” he said.

An exemption in the rule provides that a handful of MLS-member companies that had used MLS terms in their primary business names and Web sites prior to the rule’s adoption on March 3 are allowed to continue this use, though these companies must publish a disclaimer at the Web site and in marketing materials stating that the company is not an MLS and does not offer MLS access.

Those companies that violate the rule will face expulsion from MLS data feeds and a loss of MLS membership. Other MLSs, including the Washington’s regional Northwest MLS and Oregon’s Portland-based RMLS, have adopted similar rules.

Earlier this month, the Board of Governors for Minnesota’s RMLS voted not to reopen a discussion of its March 3 decision on the rule. Those companies with Web sites that violate the new rule can re-direct online visitors to a new address, though this redirect must terminate by Jan. 1, the board ruled.

John Mosey, president for Regional MLS of Minnesota Inc., told Inman News earlier this month that the new rule is intended to make it clear that consumers are not gaining any special access to the MLS at property-search sites. And Jack Johnson, CEO for Northwest MLS, said the MLS sought to clear up confusion over the use of the MLS term, and is also “concerned about the MLS becoming a public utility, and this is one thing we thought we could do to move away from that.”

Mosey said this week that no lawsuit has been filed over the new MLS rule, to his knowledge.

“We haven’t received anything that would suggest that we’re faced with legal action,” he said. At this point, the board will not likely revisit the new rule, he also said. “From the board’s perspective it’s a closed issue. The sentiment of the board (is) we’ve been talking about it for months and months — it’s a done deal.”

Keith Castonguay, president and CEO for TheMLSonline.com, a member of RMLS in Minnesota, said that while his company’s name was grandfathered in through the new rule, he does not support the rule.

“This is their way to regulate … to squash competition through regulation. That’s pretty apparent. (The rule) affects the ads we run and the kind of marketing we do. Obviously I’m not happy about it. I think they’ve already pushed the limits on (the rules),” he said.

“We don’t compete with the MLS and I’m not soliciting broker members to be part of an MLS — I provide no competition to the MLS,” he added. “We help consumers buy and sell homes. So there’s simply no fair justification for these new rules. In my mind there’s no unfair use of the term (MLS). No one owns the rights to the term MLS.”

Jon Perkins, an agent for RE/MAX Results in Plymouth, Minn., and a former ethics committee chairman for the Minnesota Association of Realtors, said that there are many Web addresses that use the term “MLS,” and many of them are not members of the MLS. “Make up any domain name with MLS in it, you will find a Web site,” he said. Some of these Web sites are referral-based, pay-per-click and lead-generation sites, he said. “If we force the legitimate real estate companies to stop using this business practice, we are just opening the door for the companies that take away dollars without adding to the industry.”

Perkins said he has about two-dozen domain names that feature the term “MLS” in the domain name. But because the term “MLS” is not in his formal corporate name, the rule requires that he shutdown all of those Web sites.

MLS rule changes, Perkins said, are “giving (non-members) the opportunity to snap up all these domain names that we’re not allowed to have. The intent of the board of directors for RMLS is good and admirable but … they are creating a business environment that is imbalanced (and) giving preferential treatment to a handful of brokers. They’re trying to corner a term, ‘MLS,’ that isn’t copyrighted — isn’t protected in any manner. What’s next, you can’t use the term ‘home?'”

“MLS” has become a term that the public associates with houses, he said. “They want to protect the MLS (terms). My thought is it’s too late.”

In a December 2005 report, a National Association of Realtors work group issued several recommendations about the proper use of “MLS” and related terms, including a recommendation that professional standards policy and/or MLS policy prohibit “Realtors/MLS participants from creating the mistaken impression in the minds of consumers that consumers have direct, unlimited MLS access.”

Ann Hale Bailey, president of Pranix, a consulting firm, has performed consulting work for the National Association of Realtors related to MLS branding issues. She told members of a NAR MLS committee meeting in October that the generic use of the term “MLS” can weaken the function of the MLS, which she said is “a professional cooperative and not a public database” and that regulators may start to “regulate it as a public utility” if the industry refers to it as a public utility. She also said at the meeting, “The public does not have access to the MLS yet we keep telling them they do.”

Bailey told Inman News that she doesn’t have any comment about MLSs that are adopting rules relating to members’ use of the “MLS” term.

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