May 25, 2012 — The U.S. Supreme Court issued an opinion 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.

Below is a link to the Court’s decision:
http://www.supremecourt.gov/opinions/11pdf/10-1042.pdf

NAR has also prepared an in depth discussion of the decision and what it means for REALTORS.