Recent Court Ruling

Hi Everyone,

I hope you are enjoying a great Holiday weekend.  I wanted to share with you a recent court decision that may or may not affect you.

A class action suit was filed against a very large real estate company in the Southeast.  The plaintiffs (thousands of clients) sued the RE Company because they charged a $295 transaction/service fee on all their deals.  The customers’ basis against the RE Company was that it was illegal to charge additional fees to customers where actions are conducted during the everyday course of business and the agent is getting commission for those actions.  Understand that the company disclosed these charges up front and did everything “by the book”.    The 11^th circuit (Southeast Region of USA, we in CA have the 9^th) ruled with the plaintiff (thousands of real estate clients) and the RE Company is faced with a multimillion dollar judgment.  Although everyone thinks the ruling was off base (NAR, CAR, and sane people J), there now is a Federal ruling, even if not for our Region.  Hopefully the ruling will be appealed.

I know some of you charge a transaction coordination fee or other fee in addition to your commission and temporarily, this is of concern and the basis of the suit.

Until there is an appeal or future legal decisions, this is what you need to do:

1. Don’t charge the fee OR
2. Charge 6.1% or put the expense/charge in the total commission percentage OR
3. Commission of 6% plus $XXX.  (Need to disclose amount, just don’t say what the fee is for).  They got in trouble for labeling that it was a transaction fee.

 

I’m sure I will get more updates on this at CAR in a few weeks but I wanted to share this with you so you can adjust your business practice ASAP.

 

Thanks,

Mike