U.S. Supreme Court issues decision that should end litigation against two Ohio brokerages
On May 24, 2012
By Peg Ritenour
The U.S. Supreme Court issued an opinion today that should effectively end the litigation filed against two Ohio brokerages challenging the legality of administrative fees they charge. OAR’s Legal Action Committee provided financial support to both brokers in defending this litigation, as did NAR.
Although the Supreme Court case doesn’t specifically involve brokerage fees, it does involve an interpretation of the same section of RESPA. The case, Freeman v. Quicken Loans, holds that a violation section 8(b) of RESPA can only occur if the fee charged is split between two or more settlement service providers. Because brokers who charge administrative fees don’t split these fees with other settlement service providers (i.e., lenders, title companies), this decision means the pending case against the brokerages in Ohio should be dismissed.
The decision of the U.S. Supreme Court has confirmed what has been the position of OAR and NAR— that administrative fees charged by brokers are not prohibited by RESPA and that brokers should be free to structure their commissions as they see fit, whether that is a percentage of the sales price, a flat fee or a combination of both.
UPDATE: The National Association of REALTORS has also prepared an in-depth discussion of the decision. Click here to read NAR’s assessment and it’s applicability to the industry.
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