NAR Class Action Settlement Update

The National Association of REALTORS and plaintiffs have reached a proposed settlement agreement that would end litigation of claims brought on behalf of home sellers related to broker commissions.

MRED has opted into this settlement. We will be adopting the required practice and policy changes. These changes went into effect Saturday, August 17, 2024. 

What’s covered on this page:

What does the settlement require? 

All relevant information provided by NAR can be found here. Some key points are as follows: 

  • •     Remove compensation information from the MLS.  
  • •     Prohibit sharing of offers of compensation in aggregate on sites using information from MLS, and prohibiting filtering or searching for offers of compensation. 
  • •     Buyers’ representation agreements are now required to be in place prior to showing properties. 

What did MRED remove or modify in the MLS?   

Effective Saturday, August 17, the below MRED documents were updated to reflect these changes. See edited documents below:
 

  • MRED Operating Agreement 
    • •     This change was made via the following Operating Agreement section.
    • •     14.5 NAR Changes. The foregoing notwithstanding, any amendment to either this Agreement or the Articles of Organization and which is required by NAR, may be adopted by the Board of Managers at any time without any vote or consent of the Members. 
  • MRED Rules and Regulations 
    • •     Update definition of ‘cooperation and compensation’ to remove compensation, including all further mentions of compensation.
    • •     Add required language about compensation being fully negotiable and conspicuously disclosed.
    • •     Add required language about written buyer agreements.
    • •     Add required language about not advertising services as free.
  • MRED Participant Agreement 
    • •     Approved an amendment to the Participant Agreement, to remove references to compensation. The Designated Realtor will receive a pop-up in connectMLS beginning August 17th to accept the new terms.  
  • MRED Subscriber Agreement 
    • •     Approved an amendment to the Subscriber Agreement, to remove references to compensation. All subscribers will receive a pop-up in connectMLS beginning August 17th to accept the new terms.  

On Saturday, August 17th, the following fields will be removed from the connectMLS listing add/edit section.  

  • •     Buyer Agency Compensation Type 
  • •     Buyer Agency Compensation 
  • •     Special Compensation Info 
  • •     Closed Buyer Agency Compensation Type 
  • •     Closed Buyer Agency Compensation 
  • •     Closed Special Compensation Information 
  • •     Other Compensation (only on Commercial listings) 

All MLS reports as of August 17, 2024 were modified to remove the above fields and/or data, including:

  • •     One-Line Summary (only pre-August 17, 2024 information to be displayed)
  • •     Market Conditions Addendum to the Appraisal Report (search fields to be removed)
  • •     connectMLS CMA (search fields to be removed)
  • •     All agent reports (only pre-August 17, 2024 information to be displayed)
  • •     All client reports (only pre-August 17, 2024 information to be displayed)

Additional forms and policies to be updated: 

  • •     MRED System Access Policy  
  • •     MRED Listing Input Forms 
  • •     Upload updated association forms, as needed 

What did not change in the MLS? 

 No changes were made to: 

  • •    Historical information around compensation for any off-market listings (closed, rented, canceled, or expired prior to Aug. 17) except for pending.
  • •     Seller concession fields for closed listings (Change Sales tab).

What will MRED staff monitor?  

  • •     Remarks fields for any mentions of compensation, bonuses, fees, etc. 
  • •     Photos and other media for mentions of compensation, bonuses, etc. 
  • •     Third-party sites receiving data from MRED for aggregated compensation information, or ability to filter/search by compensation.
  • •    Existence of valid written buyer agreement, requested as needed to resolve complaints and appropriate fines up to $2,500 will be levied as needed.

What are the frequently asked questions?

  • •   How will MRED enforce the new requirement for written buyer agreements?
    • Like our exempt listing and listing agreement policies, MRED will ask for a copy of the buyer agreement if there is a complaint. Future violations will fall under the Pattern of Behavior rule. Your brokerage or association may have their own policies to follow.

 

  • •   If I encounter a violation, how do I report it?

 

  • •   Can I input compensation anywhere else on the listing?
    • No. Remember, a seller’s willingness to negotiate “concessions” cannot be construed as a code word for an offer of compensation to the buyer’s agent.

 

  • •   How do I prepare for August 17?
    • •   Review your current listing agreements and make sure they are in line with the changes before August 17.
    • •   Review your buyer rep agreements and make sure they are in line with the changes prior to August 17.
    • •   If you have any questions, please consult with your brokerage or your legal counsel.

 

  • •   What do I do regarding the compensation field on listings I’m inputting before August 17?
    • No changes are necessary before August 17.

 

  • •   Do I need to wait until August 17 to implement these changes on my end?
    • There is nothing that prevents a brokerage or agent from adhering to the terms of the settlement immediately. Please consult with your managing broker and/or legal counsel.

 

  • •   If listings are entered into the MLS before August 17 and have yet to be sold or under contract, how will I get paid?
    • The compensation field will be removed from all active, contingent, and pending listings. Please consult with your managing broker and legal counsel regarding how to ensure you are paid accurately after August 17. If you would like to keep a record of the compensation field for contractual reasons, you can download or print the page showing the compensation before August 17 before it is removed.

 

  • •   Will compensation data be removed from rental listings in the MLS?
    • Yes.

 

  • •   Will compensation data be removed from commercial listings in the MLS?
    • Yes.

 

  • •   Will MRED add concession fields to listing input?
    • No. Currently, MRED is only making changes that comply with the settlement. We will not add new fields to listing input. The concession information entered post-closing remains the same.

 

  • •   Can I put compensation information (including links) in any other fields within the system?
    • No.

 

  • •   Can I link directly to a page on a website that shows compensation being offered for a listing in any remarks field in the MLS?
    • Links are not allowed at all in public remarks. In the Broker Private Remarks field, you can only include information related to the property or additional contact details for the agent. The broker private remarks field may only include a web address for a property that requires an offer submission form however, the web address cannot lead to any website or landing page displaying compensation information. Additionally, the remarks field must not feature any digital or electronic communication methods, such as phone numbers, QR codes, or other digital means, that could reveal compensation details. The field cannot be used for soliciting sales agents, recruitment, job searches, personal classified ads, or contain inappropriate language.

 

  • •   Where can I display compensation outside of the MLS?
    • A broker may display offers of compensation for their listings only on their brokerage website. Offers of compensation will not be available in MLS-provided data feeds. Additionally, no website receiving data from MRED can be used to aggregate compensation information from other agents or brokerages or communicate compensation information to other agents or brokerages.

 

  • •   What happens if a website does show compensation information from multiple brokerages and is receiving data from MRED?
    • MRED and its data delivery vendor will send out a warning to remove compensation information. If it is not removed, access to MRED’s data will be turned off for the entire office, per the settlement terms.

 

  • •   Am I allowed to enter a seller contribution / concession to buyer expenses in the broker private remarks?
    • Yes. The NAR settlement specifically allows for seller concessions to be offered to the Buyer as long as they are not conditioned on paying broker fees. The Buyer has the sole discretion of how any contribution toward their expenses would be used.

 

  • •   What can the seller contribution / concession be used for?
    • The Buyer has the sole discretion of how any contribution toward their expenses would be used.  They may use it for repairs, closing costs, interest rate buy down, etc., however, the contribution may not be conditioned on paying any broker compensation nor can broker compensation be stated anywhere in the MLS. It is solely up to the buyer to determine how the contribution is applied.

 

  • •   Am I allowed to enter a specific amount of seller contributions / concessions in the broker private remarks?
    • Yes.  You can enter a monetary concession amount the seller is willing to contribute toward buyer closing expenses in the broker private remarks, along with specifics.  However, please note you may not indicate the amount of the concessions using a percentage— dollar amounts only!

 

  • •   As an opted-in brokerage, what have I agreed to with this settlement?
    • Please speak with your own legal counsel on this matter.

 

  • •   Will there be new buyer broker agreements?
    • Please consult with your managing broker and/or legal counsel. Many associations will be updating these, and MRED will post them in the MLS.

 

  • •   How will MRED monitor for violations of these rules?
    • MRED’s software and Compliance team will monitor daily for any workarounds of the updated rules (including but not limited to listing input text fields and images uploaded to the MLS). MRED subscribers will also have the opportunity to anonymously alert MRED to the presence of information that violates the settlement’s terms.

 

  • •   When entering a listing in connectMLS, under adding a document/additional information, can I add or create a document that provides compensation information?
    • No. Compensation information cannot be displayed anywhere in the MLS.

 

  • •   Will tenant agreements be required before leasing and/or rental showings?
    • This is not covered under the settlement. Please consult with your managing broker and legal counsel.

 

  • •   Can I share offers of compensation through ShowingTime or any other showing services or lockbox services, etc.?

    • No, offers of compensation cannot be displayed in showing time or any other showing service, lockbox services, etc. that receive listings from MRED.

 

  • •   How will we get compensation information going forward for closed properties in order to do a CMA?
    • Historical information will remain within connectMLS. It will not be fed out to other sites after August 17. MRED is advising sites providing CMA tools to make their own backups as needed. Per the settlement terms, MRED will not display compensation information after August 17.

 

  • •   Can I share offers of compensation through other MLS communication tools or MLS-provided tools? (Offer management, reverse prospecting, etc.)
    • No. Any multi-party communication within MLS tools that provides compensation information is prohibited.

 

  • •   Will compensation information be available to appraisers?
    • Historical information will remain within connectMLS. It will not be fed out to other sites after August 17. MRED is advising sites that appraisers may use to make their own backups as needed. Per the settlement terms, MRED will not display compensation information after August 17.

 

  • •   Can the Listing Agent require the buyer broker to submit the buyer broker agreement with their offer?
    • This is not an MLS requirement. Please consult your managing broker or legal counsel.

 

  • •   What is the process for when MRED encounters violations of these new rules updated as a result of this settlement?
    • On the first instance of a violation, MRED’s process is to reach out to the agent and their managing broker for awareness and immediate correction. For repeated or blatant violations, fines up to $2,500 may be assessed to the agent under MRED’s Pattern of Behavior rule. The agent and managing broker will be contacted on every instance of a violation. Consistent Pattern of Behavior violations from a brokerage could result in suspension of service.
    • MRED may conduct spot inspections and request data. As a reminder, a Failure to Respond carries its own fine of $250 and can evolve into Consistent Pattern of Behavior violations.
    • Brokerages have also opted into the settlement, and we would recommend you consult with your managing broker or legal counsel on any additional requirements you may have related to the settlement.
    • Example of a violation:
    • MRED’s system flags a compensation-related term or a subscriber reports a listing in the MLS indicating that compensation information has been included in one or more of the data fields. 
    • MRED will send a notification to the listing agent and their designated realtor requesting the removal of the information. Before issuing fines, MRED will also provide education regarding the policy that prohibits compensation information from being entered into the MLS.
    • If MRED continues to receive complaints about the same brokerage firm for the inclusion of compensation information, this shall result in a $2,500 fine for each occurrence per section 9.17 of MRED’s rules and regulations.

 

  • •   What is the process for when MRED encounters violations for the lack of a written buyer agreement?
    • On the first instance of a violation, MRED’s process is to reach out to the agent and their managing broker for awareness and immediate correction. MRED will request a copy of the executed buyer agreement to address the violation. For repeated or blatant violations, fines up to $2,500 may be assessed to the agent under MRED’s Pattern of Behavior rule. The agent and managing broker will be contacted on every instance of a violation.
    • MRED may conduct spot inspections and request data. As a reminder, a Failure to Respond carries its own fine of $250 and can evolve into Consistent Pattern of Behavior violations.
    • Brokerages have also opted into the settlement, and we would recommend you consult with your managing broker or legal counsel on any additional requirements you may have related to the settlement.
    • Example of a violation:
    • MRED receives an email complaint via rules.regs@mredllc.com that the buyer’s agent does not have the buyer’s documentation required by the NAR Settlement terms.
    • The Rules and Regulations team will send a notification requesting the documentation to the buyer’s agent the complaint was filed against and their designated realtor. Before issuing fines, MRED will also provide education regarding the requirement for all buyer agents to have proper buyer’s agreements in place. 
    • This documentation will be required to be sent within 72 hours. Failure to provide proper documentation shall result in a $250 fine per section 9.12 of MRED’s rules and regulations. If MRED continues to receive complaints about the same brokerage firm for not providing proper documentation, this shall result in a $2,500 fine for each occurrence per section 9.17 of MRED’s rules and regulations.

 

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