Breadcrumb trail links
The groundbreaking result gives hope to lawyers pursuing a similar lawsuit in Canada
Published on March 15, 2024 • 2 minutes reading time
A new home for sale in a residential development in Ottawa. Photo by Sean Kilpatrick/The Canadian Press Files
Article content
A major U.S. real estate brokerage group has agreed to implement rule changes and pay out millions of dollars in compensation to homeowners, ending a four-year class action lawsuit over broker commissions – a groundbreaking result that gives hope to lawyers pursuing a similar lawsuit in Canada .
On Friday, the National Association of Realtors (NAR) agreed to a $418 million settlement to resolve all claims by home sellers against the group over artificially inflated real estate commissions. This agreement still requires court approval.
Advertising 2
This ad has not loaded yet, but your article continues below.
THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLY
Subscribe now to read the latest news in your city and across Canada.
- Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, Victoria Wells and more.
- Daily content from Financial Times, the world's leading global business publication.
- Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.
- National Post ePaper, an electronic copy of the print edition that you can view, share and comment on any device.
- Daily puzzles including the New York Times Crossword.
SUBSCRIBE TO UNLOCK MORE ARTICLES
Subscribe now to read the latest news in your city and across Canada.
- Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, Victoria Wells and more.
- Daily content from Financial Times, the world's leading global business publication.
- Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.
- National Post ePaper, an electronic copy of the print edition that you can view, share and comment on any device.
- Daily puzzles including the New York Times Crossword.
REGISTER/LOGIN TO UNLOCK MORE ARTICLES
Create an account or log in to continue your reading experience.
- Access articles from across Canada with one account.
- Share your thoughts and join the discussion in the comments.
- Enjoy additional articles per month.
- Get email updates from your favorite authors.
Log in or create an account
or
Article content
Article content
Garth Myers, partner at Kalloghlian Myers LLP, the firm behind the Canadian commission lawsuits against CREA and local real estate authorities, believes this development could strengthen the case for Canadian home sellers.
“In addition to the agreement to compensate sellers, the NAR's agreement to implement a new rule prohibiting listings of agent compensation in the MLS shows that this requirement was not necessary at all,” Myers said in an email. “This will undoubtedly help Canadian home sellers prove that equivalent rules in Canada are an illegal form of control of buyers’ agent commissions.”
Under U.S. settlement terms, NAR is prohibited from creating rules that would allow a seller's agent to determine compensation for a buyer's agent. The agreement also requires the removal of fields on the MLS that display agent compensation and prohibits the requirement for agents to subscribe to the MLS to offer or accept compensation.
Commissions on home sales in the United States were typically in the five to six percent range, with both sides paid by the home seller.
In April 2019, a federal jury in Missouri concluded that the NAR and several major real estate brokerages colluded to require home sellers to pay commissions to buyer agents, in violation of federal antitrust law.
Advertising 3
This ad has not loaded yet, but your article continues below.
Article content
In April 2021, Kalloghlian Myers LLP filed a lawsuit on behalf of Toronto resident Mark Sunderland and everyone who has sold a home in the Greater Toronto Area (GTA) since 2010, alleging misconduct by several of the country's leading brokerage firms Canadian Real Estate Association (CREA) and the Toronto Regional Real Estate Board (TRREB). TRREB was later removed from the case.
Five months later, the Canadian Federal Court gave the green light for the class action lawsuit to proceed.
In January 2024, the same legal team filed an additional statement of claim alleging that real estate agents across the country engaged in illegal practices that resulted in unjustified increases in residential real estate commissions.
The Canadian lawsuits seek compensation and regulatory changes regarding commission payments.
According to the Associated Press, the original payout in the US class action was $1.8 billion. However, in exchange for the reduction in damages, NAR waived its right to appeal.
Recommended by Editorial
-
Is the 5-year fixed-rate mortgage dead?
-
Accessibility is the housing crisis no one is talking about
-
Is it time to commit to the 30-year mortgage?
The changes to the commission rules are due to come into force in mid-July.
• Email: [email protected]
Would you like to learn more about the mortgage market? Read Robert McLister's new weekly column in the Financial Post for the latest trends and details on funding opportunities you won't want to miss
Bookmark our website and support our journalism: Don't miss out on the business news you need to know – bookmark Financialpost.com and sign up for our newsletter here.
Article content
Share this article on your social network