WASHINGTON, D.C. — Fourteen multiple listing services have received subpoenas that seek documents in relation to the U.S. Department of Justice’s antitrust lawsuit against the National Association of Realtors.
Laurie Janik, general counsel for the Realtors trade group, said it is not likely that the case, which was filed in September 2005, will be settled soon.
“Fourteen subpoenas have been served on 14 multiple listing services that I’m aware of,” Janik said Thursday during a meeting of the association’s Multiple Listing Service Forum. The meeting was held during the Realtor group’s annual legislative conference. “Those third-party document requests — the subpoenas that have been received, are all part of (the Justice Department’s) lawsuit,” she said.
Janik also told the audience that the lawsuit is in the discovery phase, and the Realtors association is requesting and receiving information from the Justice Department and responding to Justice Department requests for information. “We are now receiving documents form the Justice Department that they accumulated over two years, and we are likewise sharing our documents.”
In December, the association filed a motion to dismiss the case, though Janik said it’s unlikely for a judge to dismiss a lawsuit brought by the Justice Department.
In late March, representatives for the Justice Department and Realtors association met with a judge, and while the session was helpful, “I do not foresee this case being settled in the near future,” Janik said.
The lawsuit revolves around the association’s adoption of rules for the display and sharing of online property listings information among real estate brokers. The Justice Department’s lawsuit charges that the rules are overly restrictive, while the association says that the rules are legal and provide large quantities of information to the public while protecting brokers’ interests.
The association has already exhausted its $500,000 worth of errors and omissions insurance coverage as of February, Janik said, and she encouraged association-run MLSs that are facing costs related to the Justice Department subpoenas to contact the national association if they are burdened by the subpoenas. “I’ve seen all of these subpoenas. I don’t think it should incur any hardship on the MLS,” she said.
One of the primary sticking points with the Justice Department relates to new MLS membership requirements, Janik said. The association believes that MLS subscribers should all be in the business of assisting with the sale or purchase of homes, or working as a real estate appraiser. Otherwise, Janik said, they should not be allowed to participate in the MLS.
“If they’re truly in the business they can participate in the MLS,” she said. Companies like Zillow, a Web site that provides value estimates of homes across the country using public data, arguably should not be allowed MLS access, she said. Zillow has applied for real estate licenses in some areas but reportedly has no plans to assist in the purchase or sale of properties.
If a company doesn’t have plans to engage in the business of real estate brokerage, that company “shouldn’t have access to the rich content of the MLS to make money. We have been told this is an important issue and that’s why we are pursuing it,” Janik said.
In other legal matters, the association has received 32 complaints under its errors and omissions insurance policy in the past 12 months. “We have had more claims filed with regard to MLS policy issues than we have with respect to the traditional association issues,” she said. Of 32 complaints, about 18 involved an MLS, and 15 of those related to federal investigations of MLSs, she said.
The Federal Trade Commission is conducting eight investigations involving association-affiliated MLSs, the Justice Department is conducting seven investigations and a state attorney general’s office is conducting another investigation, Janik said.
“They are all government investigations — all but one is looking at the same issue: whether the MLS excludes exclusive agency listings for the feeds it provides to public Web sites,” Janik said.
In an exclusive agency listing, a home seller can seek to sell a home without an agent’s assistance in order to avoid paying a commission on the sale, so the transaction can function as a for-sale-by-owner sale. Some brokers who offer limited services to consumers, such as the listing of a home in an MLS without providing any other assistance in a transaction, have argued that MLSs should not block the online display of these property listings because an agent who is representing a buyer could potentially receive a commission when the home is sold.
Meanwhile, some MLSs have established policies that prevent these listings from being shared with popular home-search sites, such as Realtor.com, as these listings are essentially for-sale-by-owner listings.
Janik said several MLSs have already resolved the investigations by adding exclusive agency listings by agreeing to “feed” or share these types of listings with other Web sites, while other MLSs haven’t budged on the issue. “We do have MLSs that said they want to continue along this path of the investigation for awhile.” Those MLSs argue, “Why should we use our fees to help advance the cause of the seller who is trying to sell a property on their own and avoid participation (by Realtors),” Janik said.
During a Multiple Listing Issues & Policies Committee meeting that followed, the committee recommended to delay until January 2007 the adoption of new language asserting the ownership and use of property listings information. The recommendation stated that listing brokers own listing agreements.
“Prior to submitting a listing to the MLS, the listing broker should own or have the authority to cause all listing content … to be published in the MLS compilation of listing information. Use of listings and listing information by MLSs for purposes other than the defined purposes of the MLS requires participants’ consent. Such consent cannot be required as a condition of obtaining or maintaining MLS participatory rights,” according to the recommendation.
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