Directors for the National Association of Realtors have approved contributions of up to $100,000 for legal costs incurred by Realtor-affiliated multiple listing services and associations in South Carolina in response to U.S. Justice Department antitrust complaints.

That spending was approved, along with an additional $208,000, to support Realtors in a variety of legal battles across the country.

The Justice Department in May announced a lawsuit against Consolidated MLS in Columbia, S.C., which is a broker-operated MLS. The Justice Department charged that the MLS’ rules illegally restrict competition among brokers and limit choice in real estate services, while MLS officials have countered that the rules are not anticompetitive. The trial is tentatively set for April 2009.

The MLS has required an "initiation fee" of $2,500 to join, an MLS office visit "for a brief interview with the membership committee," and member offices must be located in a commercially zoned area "and cannot be located in (a) home." Additionally, the MLS has required that brokers must submit to criminal background checks.

Justice Department officials in October 2007 reached a settlement agreement (see Inman News) with another broker-owned South Carolina MLS, the MLS of Hilton Head Island Inc., over charges that the group had sought to regulate the price of brokerage services and passed rules that restricted competition. Final judgment in that settlement was reached on May 28, 2008.

An NAR report, prepared for the group’s latest annual board of directors meeting in November 2008, notes that at least a dozen local Realtor associations and their affiliated MLSs, and one individual Realtor, have received and responded to subpoenas served on them by the Justice Department related to the department’s complaints against the Hilton Head MLS and Consolidated MLS.

The Hilton Head and Consolidated MLSs are not owned or operated by local Realtor associations, and rules challenged in the complaints "would not be permitted under NAR MLS policy," according to information presented to NAR’s directors.

The South Carolina Association of Realtors requested that NAR pay one-third of legal fees and expenses incurred by associations, MLSs and individual Realtors and brokerage firms in responding to the subpoenas, while excluding assistance to "any Realtors that are also owners of (Consolidated) MLS."

Also, NAR directors approved a plan to contact all Realtor-affiliated companies, associations and MLSs that received subpoenas related to a federal case (now settled) brought by the Justice Department against NAR, with the purpose of evaluating reimbursement for related costs.

Ralph W. Holmen, associate general counsel for NAR, told Inman News that the group’s Legal Action Committee will be "asking those subpoenaed by DOJ for that information about the expenses they incurred," and will evaluate "whether and how all such firms should be compensated by NAR for (these) expenses."

The initial request for reimbursement related to the DOJ v. NAR case was brought by Bert Waugh Jr. and Prudential Northwest Properties in Oregon.

The Justice Department and NAR ended a three-year legal battle over policies NAR had approved related to the online sharing and display of property information (see Inman News) — a judge signed off on the settlement terms last month.

NAR directors also approved additional contributions to legal cases stemming from a 2006 lawsuit filed by the Chicago-area MainStreet Organization of Realtors against Calumet City in Illinois.

The group had charged that certain real estate transaction-related ordinances in the city were unconstitutional or otherwise unlawful, and the Seventh Circuit Court of Appeals found that the Realtor group did not have standing to bring the case in its own name — the lower court dismissed the case based on that ruling.

So the association brought back the case as Walker v. Calumet City, this time on behalf of an individual homeowner. Another homeowner’s name was added to that case and a similar case — also backed by the Realtor group — has also been filed against the city.

At issue in those cases is a city ordinance related to inspections at the time a property is sold and the issuance of certificates of compliance related to those inspections.

Directors approved a contribution of one-third of the outstanding legal expenses related to those cases, which amounts to $101,772, according to a report to the directors.

In another case, directors approved a contribution of $10,000 to support legal fees and expenses by the Memphis Area Association of Realtors in assisting to the city with its legal defense in a challenge over an ordinance that targets metal theft.

The NAR report to directors stated that some have characterized the crime of metal theft as "epidemic," with wiring and the metal coils in heating and air-conditioning units sometimes targeted in the thefts.

The Tennessee Scrap Recyclers Association’s lawsuit against the city ordinance requires scrap metal dealers "to record detailed personal information about individuals from whom they purchase scrap metal, including a thumbprint and where the metal was obtained," and to mark and hold certain metals purchased for a period of 10 days before resale, among other requirements, according to information presented to NAR directors.

The Memphis Realtor group was joined by the Memphis Area Home Builders Association and other groups in filing a brief to support the city in its defense of the so-called "tag and hold" ordinance.

Another case, Western Upstate Carolina Association of Realtors v. Womack, focuses on three individuals’ alleged submission of fictitious transactions to a local MLS in violation of NAR’s Code of Ethics in order to qualify for a "top producer" award offered by the local association.

One of the individuals reportedly did not pay a fine that was imposed, and NAR directors approved a contribution of $10,000 to pay the legal fees and expenses of the local Realtor group in enforcing the fine.

And NAR directors approved contribute up to $80,222 to support the California Association of Realtors in a case that alleges that real estate transaction documents published by the statewide Realtor group are "fraudulent, unfair and unlawful."

That lawsuit, Gidcumb v. Century 21 Award and the California Association of Realtors, was filed by a condo purchaser who claims that his real estate agent failed to accurately disclose the type of parking spot that was assigned to the unit’s owner, according to the NAR report to directors.

The buyer who filed the lawsuit reportedly "seeks damages from the broker and agent involved in the transaction, and also requests (relief) prohibiting use of the (California Association of Realtors) form documents," and the lawsuit seeks class-action status to include a broad group of buyers.


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