More local Realtor associations and MLSs are likely to merge in 2017. But as some high-profile cases show, consolidation does not necessarily last forever and fights between associations can be costly.

More local Realtor associations and MLSs are likely to merge in 2017. But as some high-profile cases show, consolidation does not necessarily last forever, and fights between associations can be costly.

Upon hearing about litigation between associations, some observers may wonder what role their parent, the National Association of Realtors (NAR), plays.

After all, local associations fall under NAR’s umbrella and are required to follow NAR’s rules to keep their professional liability insurance and NAR charter. But the national trade group’s hands, it appears, are mostly tied once a disagreement reaches the litigation stage.

Conflict and competition

Regional MLSs owned by multiple Realtor associations can be especially fertile ground for disputes. Because the National Association of Realtors’ (NAR) “board of choice” policy allows its 1.2 million members to choose which local association to join, such associations often compete for membership.

If one association feels its fellow MLS shareholder (or shareholders) isn’t playing fair, the MLS that agents and brokers depend on can become collateral damage, as evidenced by cases in Florida, California and New York.

Real estate attorney Mitchell Skinner has suggested crucial questions that regional MLS stakeholders should ask themselves to avoid MLS dysfunction.

Katie Johnson

But when asked about NAR’s role when associations that co-own an MLS brawl, NAR General Counsel Katie Johnson and Vice President of Board Policy Kevin Milligan noted the limits of the trade group’s involvement.

NAR’s involvement and limitations

Associations may file complaints with NAR against their counterparts alleging violations of NAR policy, and a process within NAR addresses such complaints. The trade group does not disclose the contents of the complaints.

But “disputes related to disagreements over interpretation of MLS shareholder agreements [such as those involving San Diego MLS Sandicor and New York’s former Capital Region MLS] are outside the scope of NAR review,” the NAR representatives said in an email.

Under NAR policy, associations are required to submit to mediation before filing a lawsuit in attempt to resolve their differences. In the case of the associations that owned the Capital Region MLS, this requirement was apparently fulfilled when they went through (unsuccessful) court-ordered mediation.

Kevin Milligan

“NAR makes every effort to work with associations to help them resolve such disputes, including assisting with mediation,” Johnson and Milligan said.

While NAR provides insurance to all Realtor associations and their MLSs, “as associations and MLSs well know, the insurance coverage is not available when associations sue or MLSs sue each other,” they added.

Advice for keeping the peace

To avoid disputes that lead to litigation, Johnson and Milligan suggested MLS shareholder agreements should:

  • Define the rights and responsibilities of associations that jointly own and operate an MLS
  • Account for specific procedures regarding the dissolution of such MLS ventures, and
  • Be carefully reviewed by legal counsel.

Caitlin McCrory

Johnson and Milligan also invited MLSs to contact the trade group’s new MLS manager, Caitlin McCrory, with any questions at CMcCrory@realtors.org.

They also noted that a work group comprised of representatives of NAR’s MLS committee and the Council of Multiple Listing Services (CMLS) is currently developing a toolkit with practical resources MLSs can use when they consider consolidating services.

“The group is in the initial planning stage, and we anticipate an update at NAR’s midyear business meeting in May with the toolkit being available sometime in 2017,” they said.

Email Andrea V. Brambila.

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