Modesto broker John Diaz took aim at NAR, CAR and two local organizations for the creation and enforcement of the Variable Dues Formula, which he claims is illegal and anticompetitive.
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A California broker is the latest to take on the National Association of Realtors in court with a challenge alleging one of the trade group’s rules is anticompetitive and illegal.
John Diaz, a broker in Modesto, took aim at NAR’s Variable Dues Formula policy, which imposes dues on brokerages for licensees who aren’t Realtors. NAR sets the policy and the state and local organizations enforce it.
Diaz’s complaint listed the Lodi Association of Realtors, Central Valley Association of Realtors, California Association of Realtors and National Association of Realtors as defendants.
“Under VDF, a broker member of the Realtor associations (or the “designated REALTOR® member”) is required to pay dues not only for themselves and their licensed agents, but also for every non-member licensee in their firm, regardless of whether those agents join the Realtor Associations for their area,” the complaint says.
The complaint states that the three organizations provided a valuable service to real estate professionals in the market, “such as key access to listed properties, fillable forms for contacts and disclosures, etc.”
“However, Defendants also require brokers to pay dues for their licensees who are not members of Defendant associations,” the complaint said, alleging that “this is anti-competitive and in violation of federal antitrust law.”
Specifically, the complaint notes that failure to pay any dues, including for non-member licensees, would result in loss of access to the multiple listing service and, therefore, the ability to transact business.
The complaint said the rule, which was formally adopted in 1972, also blocks brokers’ ability to hire sales agents who choose not to join state or local Realtor organizations and that it requires dues for commercial leasing agents and visual inspectors.
“These are licensed sales agents, but not Realtors because they do not join the NAR Associations such as Defendant Associations because of the financial burden that results from the fees they charge,” Diaz’s complaint says.
He said the creation and enforcement of the policy amounts to a nationwide scheme that violates federal antitrust law.
In a statement in response to the new lawsuit, NAR said that it “is proud to provide unparalleled value for brokerage firms and individual members.”
“The unified Code of Ethics enhances consumer trust, the best-in-class advocacy improves members’ ability to execute their next transaction, and our resources and professional development ensure members are always on the cutting edge of the industry,” an NAR spokesperson said in a statement. “We will respond to the plaintiff’s claims in court.”
CAR said that it offered tools to help all members to succeed, and that much of its work to help the industry went on behind the scenes.
“In addition to resources like the Legal Hotline and transactional products, C.A.R.’s advocacy efforts have played a key role in protecting mortgage interest deductions, opposing point-of-sale mandates and other proposals that could impact property rights,” the group said in a statement. “These efforts have helped reduce potential legal and regulatory costs for members, brokers and consumers. C.A.R. will address the pending lawsuit through the appropriate legal channels.”
Diaz is only the latest broker to take aim at an NAR policy in court, though NAR has had recent success defending itself from some of the claims.
In April, a Pennsylvania judge agreed to partially dismiss a case filed by a broker against NAR over its three-way agreement that requires agents and brokers to join a local, state and national Realtor association in order to qualify for membership in any of those NAR affiliates.
The broker in that case represented himself, and in partially dismissing the case, the judge recommended the broker hire an attorney, likening the matter to hiring a Realtor to transact real estate.
NAR also scored a legal victory on Monday, when a U.S. Magistrate Judge recommended that a court dismiss a case filed by a Texas broker who also challenged the three-way agreement. That broker also represented herself in the case.
Diaz is not representing himself in his antitrust challenge.
