The Real Brokerage agreed to make changes to its business operations as part of a proposed settlement in Umpa v. NAR.
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The Real Brokerage announced it has agreed to pay $9.25 million as part of a proposed settlement of a class-action lawsuit against the real estate industry on Monday.
The company also agreed to make changes to its operations, including clarifying customers’ ability to negotiate commissions.
The company, one of the few real estate companies not covered by the National Association of Realtors settlement, has not yet reached settlement terms with the plaintiffs and their attorneys.
The settlement in the pending class-action lawsuit known as Umpa will indemnify Real, its subsidiaries and its 16,000 agents from claims in the suit.
When NAR announced it had reached a proposed settlement, the trade group found a way to protect about 1 million of its 1.5 million members.
Brokerage firms with sales of at least $2 billion in 2022 are not included. That year, Real traded $12.14 billion and was one of a relatively short list of companies not covered.
But NAR’s proposed settlement opens up a way for the more than 90 brokerage firms not covered to protect themselves and their agents from a growing number of existing and proposed class-action lawsuits filed across the country in recent years.
Initially, the real estate companies named by Umpah were unsure whether they would be eligible to opt into the settlement.
But Michael Ketchmark, the lead attorney in the Sitz | Burnett case, said the defendants in Umpah’s case and another called the Gibson case “are absolutely qualified to participate.” They just have to catch us. “
Brokerage firms that are not covered have two options to participate in this transaction:
First, within four months after the court’s preliminary approval of the NAR settlement agreement, the brokerage deposited an amount equivalent to 0.0025 of the brokerage’s average annual trading volume in the past four years into an escrow account.
The second option is for brokers who do not have the ability to pay the amount required for the first option. In such cases, the brokerage firm will engage in non-binding mediation with the plaintiff’s attorney.
Daniel Umpa filed a lawsuit on December 27, following the Sitzer | Court’s decision. The Burnett case alleges that NAR and various real estate companies conspired to implement and enforce anti-competitive practices to increase commissions.
The case specifically targets the practice of having seller’s agents provide compensation to buyer’s agents, known as cooperative compensation rules or participation rules.
The proposed settlement was not posted on the court docket Monday. Real Madrid announced the proposed settlement in a press release but did not immediately respond to a request for comment or a copy of the agreement. Requires approval in court.
In addition to other changes outlined in the proposed settlement, Real said it would not imply to clients that buyer representation services are free.
This story will be updated…
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