LegalReal Estate

Commission lawsuits spread to Manhattan

The lawsuit accuses REBNY and 26 brokerages of conspiring to inflate agent commissions

It appears that no real estate brokerage firm in the U.S. is safe from a commission lawsuit. On Wednesday, Manhattan home seller Monty March filed a lawsuit in U.S. District Court in the Southern District of New York, alleging that Real Estate Board of New York rules governing the multiple listing service in Manhattan kept commissions high and violated state and federal antitrust laws.

In addition to REBNY, the robust list of defendants includes: Real Estate Board of New York Listing Service, Brown Harris Stevens, Christie’s International Real Estate, Coldwell Banker, Compass, Core Marketing Services, The Corcoran Group , Douglas Elliman, Elegran, Engel & Volkers, Fox Residential Group, Halstead Real Estate, Homesnap, Keller Williams NYC , Leslie J. Garfield & Co, Level Group, M.N.S. Real Estate, Modern Spaces, The Agency, The Modlin Group, Nest Seekers International, Oxford Property Group, R New York, RE/MAX, SERHANT., Sloane Square, and Sotheby’s International Realty Affiliates. Noticeably missing from the list is the National Association of Realtors.

The 105-page complaint takes aim at a REBNY Listing Service rule called the Buyer Broker Commission Rule, which states that the brokers “shall each be paid an equal share of the commission as specified in the Exclusive Listing.”

In the complaint, March, who sold a home in Manhattan and is the only named plaintiff, states that REBNY’s Universal Co-Brokerage Agreement forced him to pay an allegedly inflated commission fee to the buyer’s broker.

“The inclusion of language concerning the commission to be paid by the Seller Broker to the Buyer Broker in the listing agreement, commonly known as the Buyers Broker Commission Rule, constitutes an antitrust violation under Section 1 of the Sherman Act and the Donnelly Act as there is no separate negotiation/competition concerning the commission paid to the Buyer Broker,” the filing reads. “The REBNY Listing Service’s commission rule fosters an environment in which brokers work co-operatively to split a total commission instead of open and separate negotiation. The anti-competitive nature of commission rule is clear when compared to other countries with competitive markets for residential real estate brokerage services.”

The lawsuit is seeking class action status, with the proposed class including Manhattan home sellers who worked with an agent from one of the defendants between Nov. 8, 2019, and the present.

In mid-October, REBNY announced changes to its rules, including a rule preventing listing agents from paying or offering to pay buyers’ agents compensation. Instead, if a seller wishes to compensate the buyer’s agent, they must pay the agent themselves. It is not required for a seller to compensate a buyer’s agent. The rule goes into effect on Jan. 1, 2024.

“We are reviewing the complaint with our attorneys. In the meanwhile, we are confident that RLS practices and procedures abide by all relevant laws,” a spokesperson for REBNY wrote in an email.

HousingWire reached out to all 26 brokerage defendants in the lawsuit. Brown Harris Stevens, Christie’s International Real Estate, Homesnap, SERHANT., Compass, Keller Williams and Douglas Elliman all did not wish to comment, while the others did not return a request for comment.

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