NAR Settlement Resources

In March of 2024, the National Association of REALTORS® (NAR) announced a settlement agreement that would resolve litigation brought by home sellers related to the practice of mandatory offers of listing broker compensation in MLSs.

In the wake of the Sitzer/Burnett jury verdict and awarding of $5 billion in damages in October 2022, more than 30 copycat lawsuits were filed across the country targeting MLSs, REALTOR® associations, brokerages large and small, and agent teams. NAR looked for a path to settle the lawsuits and create rules for the real estate industry going forward on compensation.

Additionally, the United States Department of Justice had been investigating the real estate industry for its commission practices - and finally, gave a preview of its position in January 2024 as objected to a proposed settlement in the Nosalek v. MLS PIN lawsuit.

Ultimately, NAR chose to settle the Sitzer/Burnett lawsuit by making a financial payment to the plaintiffs and agreeing to a series of practice changes as part of the settlement, including removing the offer of compensation fields, the removal of the unilateral offer of compensation REALTOR®-owned MLSs, and the banning of sharing commission through the MLS.

On Friday, June 14, 2024, CCIMLS executed Appendix B of the NAR settlement, opting into the practice changes and being granted liability coverage. For more on the changes to CCIMLS, go here.

Why Did CCIMLS Opt Into the Settlement?

The CCIMLS Board of Directors felt there was a need to settle the threat of a lawsuit against the company and after much consideration, decided that opting in to the NAR settlement was the best available option to avoid future risk to the company. Additionally, the overwhelming majority of REALTOR® brokerage members received liability protection due to NAR’s settlement. To protect our brokerage members moving forward, CCIMLS felt the best option was to adopt the practice changes in the settlement agreement - ensuring future liability protection for all member brokerages and agents.

CCIMLS opting into the settlement is not an endorsement of the verdict reached in the trial or the practice changes in the settlement. Opting in is simply the best of the options available to CCIMLS and our members in the wake of the October 2023 verdict.

What Was the Mandatory Cooperative Compensation Rule?

The lawsuits were over a rule that was mandatory for Association of REALTOR®-owned MLSs and which many broker-owned MLSs also had: - that to list a property in the MLS, the listing broker must offer cooperative compensation. As a result of the settlement, that rule will be eliminated. No offer of compensation may now be made in the MLS, or in any tool or data feed available in the MLS.

Why Did NAR Settle?

NAR and the corporate defendants were found liable in the Sitzer/Burnett court case and were also assessed with more than $5 billion in damages. This jury decided that the mandatory compensation rule was anti-competitive and violated the Sherman Antitrust Act.

As a result, NAR was limited to the following options::

  • Post Bond and Appeal: NAR felt it had solid legal grounds for appeal based on several decisions in the case. However, to appeal, a defendant must post a bond. Simply put, NAR did not have the cash to post the bond based on the damage award amount.

  • Declare Bankruptcy: Since NAR does not have the assets to pay the award damages, NAR could have declared bankruptcy and attempted to reorganize. However, doing so, would not settle the more than 30 copycat lawsuits and created continuance legal strains on its member brokerages, MLSs, and associations across the country. Even after declaring bankruptcy, the liability would remain.

  • Settle: NAR has established a settlement agreement that includes affordable damages and implements a series of practice changes for MLSs to adopt, aimed at altering behavior moving forward. Additionally, NAR successfully negotiated liability coverage for its associations, MLSs, and the majority of its member brokerages and agents.

What is the NAR Settlement?

  1. Release of Liability
    1. The agreement would resolve claims against NAR, over one million NAR members, all state/territorial and local REALTOR® associations, all association-owned Multiple Listing Services (MLSs), and all brokerage entities with a NAR member as principal that had a residential transaction volume in 2022 of $2 billion or below.
    2. The agreement provides a mechanism for nearly all brokerage entities that had a residential transaction volume in 2022 that exceeded $2 billion to obtain releases efficiently if they choose to use it.
    3. To be eligible for the release of liability, you must be a REALTOR member on the class certification date, currently scheduled for August 17, 2024.
  2. Offers of Compensation Prohibited on MLS
    1. Any MLS that opts in must prohibit offers of compensation from being shared on its platform. Additionally, it must ensure no offers of compensation will be added to its data feed in distribution and can not facilitate the offer of compensation.
  3. Written Agreements with Buyers
    1. An MLS that opts in must mandate written agreements for MLS participants working with buyers before showing the buyers property. This rule will be further detailed in the local regulations of an MLS before it is put into effect in mid-August.
  4. NAR to Pay $418 Million to Settlement Fund
    1. Under the terms of the agreement, NAR would pay $418 million over approximately four years with the first payment due in February 2025. NAR has said that dues for 2024 and 2025 will not be affected and will be evaluated after that moving forward.
  5. No Wrongdoing Admitted
    1. NAR still believes that requiring cooperative compensation is good for buyers and admits no wrongdoing in settling, however, it was a legal necessity based on the outcome of jury trials.

The MLS cooperative compensation model rule (MLS Model Rule) was introduced in the 1990s in response to calls from consumer protection advocates for buyer representation.