Signature Sotheby’s files suit over MLS access
Several members of the Signature Sotheby’s real estate firm, with offices in Birmingham, Grosse Pointe and Northville, have filed a lawsuit in federal court Eastern District against the National Association of Realtors (NAR), the Michigan Association of Realtors, three local real estate organizations and the firm controlling the Multiple Listing Service (MLS) for homes for sale, alleging that compulsory membership in those groups amounts to a restraint of trade and that recent rules adopted have made the MLS listings of questionable value.
The class action lawsuit was filed by Michael S. Clawson, Bloomfield Hills attorney, on behalf of Douglas Hardy, owner of the real estate firm; Glenn Champion, president and managing broker; and agent Dylan Tent.
Plaintiffs claim that on several occasions they raised questions with the real estate boards and organizations about the compulsory memberships but were rebuffed each time.
Clawson told Downtown that his clients had been discussing the issue for the past one and a half to two years but a recent settlement of an older federal NAR lawsuit over agent commissions “put them over the edge.”
The recently settled NAR legal challenge, according to the lawsuit filed this week, “eliminated the broker’s compensation transparency for buyers and restrained sellers’ choice by prohibiting sellers from making offers of compensation through the MLS, essentially inviting brokers and agents to participate in deceptive compensation practices” that the plaintiffs say will not benefit consumers or the real estate industry.
Champion offered that the new NAR rules prohibiting compensation information on the MLS created the “potential for steering” and discrimination.
Both Hardy and Champion said that the current rules, which were to take effect on August 17 but had been implemented in July, could drive up costs of home sales and would not prove a benefit for those in the market to make a purchase, especially at the lower end of the home market and with first time home buyers.
Hardy said the rules were “creating less transparency” and the “solution is to publish compensation.”
Clawson said the lawsuit just filed could take a couple of years to wind its way through the court system.
At the present time, the lawsuit requests class action status for firms and real estate agents in Michigan but both Hardy and Champion noted that they have received over 50 phone calls representing “half the states in the country” from firms willing to join the lawsuit.
In terms of relief, the plaintiffs ask for the award of damages to members of the class and reimbursement of all costs and attorney fees.
