Possible Implications of Fixed Broker Compensation Court Cases in Southern District of New York

There are now two distinct lawsuits against New York brokerage firms and their fee practices. Both were spurred on by last October’s Missouri verdict that declared fixed arrangements between agents a violation of the Sherman Antitrust Act. The most recent case, filed — with the hopes of broader, class-action status — by Brooklyn resident Robert Friedman in U.S. District Court, clouds the brokerage space even further, and suggests that sell-side listing agents will have to recuse themselves from their client’s decisions on the buy-side agent’s compensation. 

Just before the Missouri case came to its close, the Real Estate Board of New York (REBNY) updated its Residential Listing Service’s Universal Co-Broker Agreement (UCBA) to eliminate commission payments between agents. Instead, property seller’s, though not obligated, must negotiate buy-side brokerage fees via direct communication with the buy-side agent; these revised guidelines went into effect on January 1st.

Although sellers have coughed up the change for buy-side agents, it's the property purchasers who bear the brunt of this expense, since sellers tend to tack their commission costs onto the sale price. 

The effect these cases may have on the future of New York real estate transactions remains uncertain, however it’s fair to presume that brokers may be more compelled to disclose specific compensation information to avoid similar lawsuits. 

There’s also a chance that under-fire brokerage firms settle for damages, regroup, and move forward under new regulations.

As we wait for the Court’s decision, call the Law Office of Marc Scolnick, P.C. today for any input on how to navigate the delicate commission environment at (718) 554-6445 or refer to the header at the top of this page to set up a FREE consultation.

Sources: New York Times, Real Estate Board of New York, CBS News

https://www.nytimes.com/2023/10/31/realestate/nar-antitrust-lawsuit.html

https://www.rebny.com/articles/decoupling-commissions-faq/

https://www.cbsnews.com/news/nar-lawsuit-verdict-real-estate-agent-commissions/

This blog post is intended to provide information generally and to identify general legal requirements. It is not intended as a form of, or as a substitute for legal advice. Such advice should always come from in-house or retained counsel. Moreover, if this post in any way seems to contradict the advice of counsel, counsel’s opinion should control over anything written herein. No attorney-client relationship is implied by this blog.