LEGAL
UPDATES
Clarifications to NAR's Proposed Settlement and Policy Changes
August 28, 2024
We have received numerous inquiries regarding the National Association of REALTORS® (“NAR”) recently proposed settlement and its impact on the publication of broker compensation in residential real estate transactions. In consultation with CBA's legal counsel, this bulletin aims to clarify the impact of NAR's policy changes and allay any concerns about CBA’s continued practice of allowing sellers to offer compensation to buyer brokers.
In March of 2024, the National Association of REALTORS® (“NAR”) announced a proposed settlement of national class action litigation involving broker compensation in residential real estate transactions. On August 17, 2024, NAR implemented several policy changes in connection with the proposed settlement.
Multiple Listing Services (MLS) included in the settlement are prohibited from publishing compensation offers. CBA brokers who publish a seller’s or landlord’s offer compensation to a buyer’s or tenant’s broker through CBA, however, DO NOT violate the terms of NAR’s proposed settlement. This is because nothing in the proposed settlement agreement requires brokers covered by the settlement, or their sellers/landlords, to refrain from offering compensation to buyers’ or tenants’ brokers through the MLS or otherwise.
The prohibition on offering compensation in the MLS is a condition of MLSs opting into the settlement, not their brokers. As a commercial MLS unaffiliated with NAR, CBA DID NOT opt into the settlement and thus has no such obligation, nor do CBA’s brokers. All CBA brokers may continue to include a seller’s or landlord’s offer of compensation in the listing data submitted to CBA.
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If you have any additional questions, please contact Mary Lyell Larsen at mary@commercialmls.com.
IMPORTANT REVISIONS TO LEASE ACKNOWLEDGMENTS AND CBA'S LISTING TURN-IN RULE
Jun 03, 2024
There are two important changes that CBA members should be aware of that impact your business. The first pertains to a recent change in Washington law relaxing the requirements for leases to be acknowledged. The second is a set of revisions to CBA’s rules concerning mandatory and optional turn-in of listings.
Lease Acknowledgments
Washington law requires any lease with a term longer than one year to be acknowledged by a notary. A revision to that requirement goes into effect on June 6, 2024. Under SSB 5840, which the Washington legislature passed unanimously in the 2024 legislative session, RCW 64.04.010 is modified to provide that leases do not require acknowledgment unless the parties will record the lease or a memorandum of lease. Accordingly, effective June 6, 2024, CBA lease forms will be revised to include a note on the notary pages informing parties that acknowledgment is required only if the lease or a memorandum thereof will be recorded. Any lease with a term greater than one year that is entered before June 6, 2024, must still be notarized.
CBA members with questions about this change in the law should consult their firm’s legal counsel.
Listing Turn-In
CBA Rules 1 and 2 govern mandatory and optional turn-in of certain types of listings. Because CBA’s overall purpose is specific to commercial real estate, CBA made the following changes to clarify the types of listings to be turned in for publication in CBA’s listing database.
Rule 1, pertaining to Mandatory Turn-In, has been revised to clarify that any listing for commercial real estate, as that term is defined by applicable law, must be turned in to CBA.1 The rule also clarifies that subdivisions, as defined by applicable law, must be turned in to CBA. 2 The rule continues to make clear that business opportunities must be turned in to CBA.
Rule 2, pertaining to Optional Turn-In, has been revised to exclude listings for residential real estate, defined by Washington state law as "Real property consisting of, or improved by, one to four residential dwelling units." Effective immediately, CBA will not accept listings for residential real estate. Note that this does not apply to subdivisions, which, as noted above, are subject to mandatory turn-in under Rule 1.
Members who have listings for residential real estate should submit those listings to the applicable residential multiple listing service. NOTE: residential listings under 5 units that are currently active in CBA will remain in our system until they sell/expire.
The definition of “commercial real estate” in Washington is contained in RCW 60.42.005, and the definition of “commercial real estate” in Idaho is contained in I.C. 54-2004.
The definition of “subdivision” in Washington is contained in RCW 58.17.020, and the definition of “subdivision” in Idaho is contained in I.C. 50-1301.
