The National Association of Realtors is officially back in the federal spotlight.
The Department of Justice can reopen its antitrust investigation into the trade group’s policies, according to a ruling in a Washington D.C. federal appeals court on Friday.
In a 2-to-1 vote, judges rejected the organization’s request to uphold a settlement reached with former President Donald Trump’s administration in 2020, in which the federal agency agreed to end its investigation into the 1.5-million-member trade group.
The DOJ withdrew from the settlement under President Joe Biden. In June, the agency filed an appeal brief disputing a district court ruling that said NAR was released from any obligations included in the settlement while the DOJ was barred from continuing its probe.
The DOJ opened its probe into the group in 2018 with a focus on its participation rule, among others, which requires listing brokers to offer compensation to buyers’ agents on NAR-controlled multiple listings services.
At the time, the department determined the practice was anti-competitive and allowed buyers’ agents to “steer” their clients toward homes represented by brokers offering higher commissions.
As part of the settlement negotiations in 2020, NAR requested the agency agree not to investigate its participation rule for 10 years, though the DOJ refused.
“A commitment to not challenge NAR rules and policies in the future [was] a nonstarter, especially in light of longstanding Department policies concerning settlements that affect future potential investigations,” according to the opinion authored by Judge Florence Pan.
The decision issued by the appeals court describes the settlement deal as a quid pro quo, with the DOJ closing its investigation into two existing NAR policies in exchange for the trade group’s ending of four policies authorities deemed anti-competitive.
“We discern no commitment by DOJ — express or implied — to refrain from either opening a new investigation or reopening its closed 12 investigation,” the decision reads.
Federal judges in a December hearing signaled support for the agency’s appeal.
Scrutiny of real estate’s most powerful group came to a head in October, when a Kansas City jury in the Sitzer-Burnett case delivered a $1.8 billion verdict against NAR and two brokerages, saying the organization was liable for colluding to keep commissions high.
The trade group agreed last month to pay $418 million in damages to settle lawsuits brought by homesellers disputing the organization’s commission sharing rules. The deal, which is pending court approval, notably didn’t include legal action brought by homebuyers, or federal authorities.