Latest Updates

C.A.R. to release revised forms (Updated July 3, 2024)

On June 25, C.A.R. released 48 new and revised forms as part of its semi-annual update to its standard forms. We informed you then that C.A.R. would be postponing the release date of other forms to ensure that they met our high standards for use by members and consumers in light of the practice changes associated with the NAR settlement.

On July 10, the remaining forms will be posted on www.car.org. Beginning with the release of these forms and given the significant practice-related changes facing members at this time, C.A.R. will be providing numerous training opportunities to members on the use of these forms. Our leadership and legal staff will be hosting townhall meetings beginning July 10, with additional training through August as part of an aggressive training schedule. Many of these sessions will be recorded, as well. Additionally, our online class on the new buyer representation form will be made available free of charge to members. The forms will be released in zipForm® and other forms platforms on July 24. In order to be in full compliance by August 17, when the mandates of the NAR settlement go into effect, it is imperative that C.A.R. members are ready to use the new forms and prepared to discuss the changes with their clients.

While we understand change is difficult, we are also in an environment that continues to shift. As your partner, C.A.R. is fully committed to adapting however necessary and communicating with you, our members, as often as needed.

We have taken great care to create new and revised forms that are easy to understand. Standard forms are evolving documents, and we believe that these revisions not only meet the needs of the current moment but also equip our members with the best possible tools to ensure their ongoing success.

Melanie Barker
C.A.R. President

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C.A.R. responds to CFA Report on C.A.R. Residential Listing Agreement (Updated July 2, 2024)

The Consumer Federation of America (CFA) today released a report on C.A.R.’s new residential listing agreement (RLA). Similar to the CFA’s report on C.A.R.’s buyer representation agreement, this commentary is on an earlier draft of the agreement that was still a work in progress, and spends an inordinate amount of time examining grammar, formatting, and design in an early draft of the form.

Moreover, the report contains wild speculations that brokers using C.A.R. forms will try to get around the NAR settlement. C.A.R. supports the goals of the settlement and is working to help members have clear conversations with their sellers around compensation options. The report also says that the draft form has too much information about what sellers can expect regarding marketing their home. Instead, we think information about the MLS and the offer process helps educate the seller and makes the form more consumer friendly.

The assertion that the agreement is overwhelming and unlikely to be read or understood by the average seller underestimates the capabilities and responsibilities of both sellers and their real estate agents. The complexity of the agreement reflects the complexity of California real estate transactions. The agreement is designed to cover various scenarios and provide clear guidelines, which ultimately benefit the seller by ensuring that all potential issues are addressed upfront. Sellers are not left to navigate these complexities alone; their real estate professional is there to guide them through each provision, ensuring they fully understand the terms before agreeing to them.

For decades, C.A.R. forms have been the best in the industry for a number of reasons, from transparency to compliance. C.A.R. continues to work diligently to create new forms that will continue that tradition.

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C.A.R Responds to CFA Report on C.A.R. Buyer Representation Agreement (June 25, 2024)

The Consumer Federation of America (CFA) yesterday released a report on C.A.R.’s new buyer representation agreement. While C.A.R. welcomes valid feedback, this report is, for the most part, a misguided critique of the forms.

Amid the significant changes facing the industry as a result of the NAR settlement and the recent inquiry from the Department of Justice (DOJ), C.A.R. continues to revise its forms in order to produce the best possible documents for buyers, sellers, and C.A.R. members. Prior to the release of any revised or new forms, C.A.R. solicits broad input and takes all feedback into consideration. This CFA commentary is on an earlier draft of our agreement that was still a work in progress. In fact, C.A.R. has already made changes that address many of the concerns from the CFA.

For example, the CFA piece says the form doesn’t comply with the NAR settlement. That is wrong. Both the draft reviewed and the latest draft of the form comply with all practice changes required by the NAR settlement, as well as with California law. The CFA also suggests that buyers might expect their agents to represent them even if the buyer says they don’t have enough funds to pay the broker. They suggest that offers of compensation outside the MLS are attempts to circumvent the NAR settlement, even though the settlement explicitly makes clear this is permitted. The CFA’s suggestions are absurd. Hardworking buyers’ agents are entitled to be compensated by their clients according to the terms of their agreements. Indeed, that clarity around compensation is the very substance of the NAR settlement. Nearly half the report consists of commentary on punctuation, capitalization, and the author’s opinions on design, rather than substantive legal issues.

C.A.R. forms are drafted to comply with California law and facilitate California real estate transactions. The report demonstrates the author’s lack of familiarity with California-specific statutory language required for our real estate contracts. Moreover, consistent forms that cover myriad situations are important so that buyers, sellers and their agents can efficiently manage complex transactions.

For decades, C.A.R. forms have been the best in the industry for a number of reasons, from transparency to compliance. C.A.R. continues to work diligently to create new forms that will continue that tradition.

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An Important Message on Forms Release (June 24, 2024)

Every June, C.A.R. updates its standard forms to reflect the latest legal requirements and best practices in real estate transactions. This week, we released 48 new and revised forms to help you work with your clients and transactions. Originally, 67 forms were scheduled for release, but 19 of them related to the changes in business practices required by the NAR settlement have been postponed. C.A.R. will make those additional forms and relevant education available prior to August 17.

C.A.R. is continuing to review not just the NAR settlement but also Dept. of Justice (DOJ) statements to the industry, as well as feedback from our members. C.A.R. has received a formal inquiry about these forms from the DOJ, and the organization requires additional time to consider the DOJ’s concerns.

We understand that some MLSs may already be implementing certain practice changes, and that members must conform their client agreements accordingly. To help members comply with the MLS rule changes, C.A.R. has released the necessary forms to modify listing and buyer representation agreements ― the DM-LA and DM-BR forms ― along with the other forms released this week. 

C.A.R. forms have set the gold standard for conducting California real estate transactions in a systematized, ethical, and transparent way for decades, and we are working diligently to create the next set of forms that will continue to protect our members and serve consumers.

We are in the midst of significant changes within our industry and, as such, there will be times when we have to adjust our plans, our timeframes, and even our expectations. As we’ve done, we will continue to keep you, our valued members, informed every step of the way.

Melanie Barker
C.A.R. President

 

RESOURCES: 

NAR’s REALTOR® Magazine Special Supplement (Updated  April 11, 2024)
NAR Settlement Fact Sheet
NAR Settlement FAQs
NAR Settlement Financing FAQs

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Business Practice Changes - Tool and Tips (Coming Soon)

To help members get ready for upcoming practice changes resulting from the NAR settlement, C.A.R. is preparing several resources about the various revised and new forms that REALTORS® will need in a real estate transaction once the new MLS policies are effective August 17, 2024.

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May 30, 2024

Plaintiff voluntarily dismisses lawsuit involving C.A.R. et al.

A seller class action lawsuit filed in February in which C.A.R. was named a defendant was dismissed today.

The copycat lawsuit, Freedlund v. Redfin Corporation et al., was against NAR, Redfin and C.A.R. The lawsuit alleged that the defendants conspired to engage in anticompetitive conduct relating to NAR’s cooperative compensation rule. 

The plaintiff, Andrea Freedlund, voluntarily dismissed the case.

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May 29, 2024

VA to temporarily suspend commission rules

The U.S. Department of Veterans Affairs (VA) said it will temporarily lift its rules preventing veterans from paying real estate agents when buying homes. This suspension, known as a "circular," will last for at least two years and takes effect June 12, 2024. The National Association of REALTORS® and REALTORS® across the nation lobbied for this change, arguing that current rules disadvantage veteran buyers.

This temporary rule will remain until permanent rules are established. The change aims to help veterans compete in the tight housing market by allowing them to compensate their agents. The suspension is particularly important as the NAR plans to implement broader changes by August to increase transparency in agent commissions, potentially affecting veterans' ability to use VA loans if sellers do not offer commissions to buyers' brokers.

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May 3, 2024

NAR announces practice changes under Settlement Agreement

NAR today shared key details of the required practice changes under the industry Settlement Agreement. These practice changes result in revisions to the MLS policy handbook which are summarized below. The revised policies will go into effect on August 17, 2024. A more detailed explanation of each practice change is available on facts.realtor. 

The settlement requires NAR to implement the practice changes no later than the date of class notice. Through the preliminary settlement approval process, it’s been determined the earliest date of class notice is August 17, 2024. NAR is announcing these important changes now to ensure NAR members and MLSs have ample time to prepare.

MLSs that have opted into the settlement agreement have until September 16, 2024 to implement the necessary policy changes and to be considered released parties, as provided in the relevant appendices they executed. However, NAR’s accelerated rule change process gives MLSs three months to adapt. In accordance with mandatory NAR policy, REALTOR® MLSs must implement the practice changes by August 17, 2024. NAR recommends all opting-in MLSs implement the practice changes by this date.

Over the coming days, NAR will discuss these changes in more detail and look for members’ questions and feedback. In the interim, NAR’s FAQ has been updated to reflect the effective date and provide additional detail on implementation. NAR is committed to working together to navigate these adjustments and providing as much guidance to its members as possible. As further details emerge, additional materials will be shared and posted to facts.realtor.

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April 25, 2024

Judge approves consolidation of two national commission lawsuits

The judge overseeing the Sitzer-Burnett class action lawsuit has merged two similar lawsuits known as the Gibson and Umpqua cases.

His order approved an April 19 motion to consolidate the two cases because they “involve common questions of law and fact, consolidation will conserve judicial resources and promote efficiency, and consolidation will not cause undue delay, confusion, or prejudice.”

None of the defendants opposed the motion to consolidate.

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April 23, 2024

Judge grants preliminary approval of NAR settlement

The judge who presided over the Sitzer Burnett class action lawsuit has granted preliminary approval to the proposed settlement reached last month by NAR. The judge ruled that the changes proposed within the settlement agreement were “fair, reasonable and adequate” and set a November hearing for final approval.

The settlement is still subject to final court approval, and plaintiffs have requested a hearing on final approval of the settlement to be held on November 26, 2024.

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April 20, 2024

Motion filed for Preliminary Approval of NAR agreement

On April 19, plaintiffs’ counsel filed a Motion for Preliminary Approval of the NAR agreement with the federal court in the Western District of Missouri.

This means that this filing initiates the 60-day time period during which all REALTOR® MLSs, brokerages with 2022 total transaction volume for residential home sales in excess of $2 billion, and non-REALTOR® MLSs who want to be covered by the settlement must take action. The deadline for these actions is June 18, 2024.

If you or your organization fall in one of these categories and wish to be covered by the settlement, please follow these instructions:

• REALTOR® MLSs: In order to be released under the settlement agreement, all MLSs wholly owned by REALTOR® associations must agree to and execute Appendix B - REALTOR® MLS “Opt In” Agreement and return it to the email addresses [email protected], [email protected], and [email protected] within 60 days.

• Brokerages with 2022 total transaction volume for residential home sales in excess of $2 billion: In order to be released under the settlement, eligible brokerages must agree to and execute Appendix C – Brokerage “Opt In” Agreement and return it — along with the required documentation and indication noted in paragraph 20 of Appendix C — to the email addresses [email protected], [email protected], and [email protected] within 60 days.

• Non-REALTOR® MLSs: In order to be released under the settlement, MLSs not wholly owned by REALTOR® associations must agree to and execute Appendix D – Non-REALTOR® MLS “Opt In” Agreement and return it — along with the required indication noted in paragraph 20 of Appendix D — to the email addresses [email protected], [email protected], and [email protected] within 60 days.

• For questions about completing an opt-in agreement, please contact Mike Rohde at [email protected].

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April 15, 2024

C.A.R. releases commonly asked questions document
C.A.R. has received many questions about NAR’s proposed settlement of the antitrust class action lawsuits brought on behalf of home sellers related to broker compensation. The settlement is subject to final court approval; however, because the release of claims extends through the date of class notice, NAR will be putting practices changes in place in late July to avoid any gap in the release of liability.

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April 15, 2024

Fannie Mae clarifies interested party contributions

Fannie Mae received numerous inquiries concerning the proposed settlement agreement entered into by NAR in the Burnett et al and Moehrl et al cases, subject to court approval.

Fannie Mae’s Industry Letter addresses the current treatment of property seller-paid buyer agent fees under its interested party contribution requirements.

Interested party contributions

In Guide Section 5501.5, property sellers are permitted to make financing concessions toward the Borrower’s Closing Costs in maximum amounts between 2% and 9% of the property value. Fees or costs customarily paid by the property seller according to local convention are not subject to these financing concessions limits. Buyer agent fees have historically been fees customarily paid by the property seller or property seller’s real estate agent, and, as such, they are currently excluded from these financing concession limits. If these fees continue to be customarily paid by the property seller according to local convention, they will not be subject to financing concessions limits.

It is Fannie Mae’s standard practice to continuously evaluate its requirements to determine whether updates are appropriate based on changes to the market and industry. Fannie Mae will continue to monitor and assess the impact of the proposed NAR settlement and other real estate agent commission lawsuits to determine if any updates to its requirements are necessary.

REALTORS^® who have questions about the content of this Industry Letter, please contact your Freddie Mac representative or call the Customer Support Contact Center at 800-FREDDIE.

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April 12, 2024

Judges rule against consolidating commission lawsuits

This morning, the Judicial Panel on Multidistrict Litigation rejected a request to centralize in Kansas City many cases around the country challenging rules regarding buyer broker compensation. The Court decided to wait and see if the settlement is approved and how many claims or cases remain after the settlement approval process. This decision did not address whether the settlement should be approved.

The settlement approval process will continue. The likely next step in cases against C.A.R. will be for the parties and courts to determine whether the cases will go forward while the settlement approval process is playing out.

NAR is pleased with the ruling. It reflects that NAR’s settlement, which, if approved by the court, would end litigation nationwide for NAR and other released parties in the cases brought by home sellers. NAR stressed that the ruling does not affect the approval process for the settlement agreement.

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April 5, 2024

Appeals Court Allows DOJ to reopen antitrust investigation into NAR

An appeals court has ruled that the Dept. of Justice can reopen its investigation into NAR. Several years ago, the DOJ began an investigation into NAR’s cooperative compensation rule, and the parties agreed to a proposed settlement in 2020. However, the DOJ then withdrew from the settlement in 2021 and sought to reopen the investigation. NAR sued to prevent the DOJ from doing so, and on April 5, an appeals court ruled in favor of the DOJ, allowing them to reopen the investigation.

NAR has stated that this ruling in the DOJ investigation does not affect the settlement agreement that NAR announced on March 15 in the class action litigation to resolve nationwide litigation over claims from home sellers related to broker commissions. NAR has not indicated whether it will appeal this ruling.

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March 15, 2024

NAR reaches agreement in claims brought by home sellers

The National Association of REALTORS® (NAR) today announced an agreement that would end litigation of claims brought on behalf of home sellers related to broker commissions. The agreement would resolve claims against NAR, over one million NAR members, all state/territorial and local REALTOR® associations, all association-owned MLSs, and all brokerages with an NAR member as principal that had a residential transaction volume in 2022 of $2 billion or below.

The settlement, which is subject to court approval, makes clear that NAR continues to deny any wrongdoing in connection with the Multiple Listing Service (MLS) cooperative compensation model rule (MLS Model Rule) that was introduced in the 1990s in response to calls from consumer protection advocates for buyer representation. Under the terms of the agreement, NAR would pay $418 million over approximately four years.

NAR’s full announcement. 

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