Sitzer/Burnett Settlement Approved

On Nov. 26, 2024, Judge Stephen R. Bough approved the NAR class action settlement in what’s commonly called the Sitzer/Burnett case. This decision now finalizes the terms of the settlement announced on March 15, 2024, as well as the related MLS and practice rules that were to have been implemented no later than Aug. 17, 2024.

“PAR, along with our local associations and MLSs, has been working hard since the spring to be sure that Pennsylvania Realtors® understand the new rules and policies that resulted from this settlement,” said PAR President-elect Bill Lublin. “Members who have been taking advantage of PAR’s resources and education should be well-positioned to provide valued services to their clients within the structure of these new rules now that the terms are finalized,” he added.

In short, for those brokers and agents who have been paying attention, planning ahead and adjusting practices appropriately, the actual changes took place in August, and this step by the court just cements those new rules into place. 

As a reminder, PAR has a resource page on our website with links to many of the articles, webinars, forms and other resources we’ve published and distributed. This includes resources such as instructions on using the 22 new or revised forms that were published on Aug. 1, a webinar on practice and forms changes and a reference back to NAR’s thorough resource page at facts.realtor. 

As one more reminder of the settlement terms, the plaintiffs’ attorneys referenced back to several key provisions in their motion. Specifically, in any buyer broker fee agreement, “the amount of compensation reflected must be objectively ascertainable and may not be open-ended,” and a buyer broker “may not receive compensation for brokerage services from any source that exceeds the amount or rate agreed to in the agreement with the buyer.”

As a reminder, buyer brokers: 

• CANNOT establish a fee and then modify it based on the amount of compensation the seller side is offering.  
• CANNOT sign multiple buyer agreements based on the compensation offered by the seller side of each transaction (e.g., signing a new buyer agreement for each property only after getting compensation information from the listing broker). 
• CANNOT agree to a fee that’s expressed as a range (e.g., “a minimum of X%, but up to Y%”) based on the amount of compensation offered by the seller side. 
• CANNOT collect more than the amount in the buyer agreement, regardless of what it’s called. If the negotiated fee is X%, the buyer broker could not collect X% as a “fee” plus another $yyy as a “bonus.” The total amount collected can’t be more than what’s in the buyer agreement. 
• SHOULD BE VERY CAREFUL about any type of buyer agreement that says brokers will provide buyer representation services for minimal or no fees (such as showing/touring agreements), with the hope or expectation that the fees could be renegotiated at a later date. Plaintiffs appear to be of the opinion that a broker is locked into whatever fee was initially agreed upon, regardless of the reason for a change. (Note that PAR has not published such a contract, based on concerns about both the settlement terms and whether/how it would comply with license law.) 
• NEED a local brokerage attorney who is up to speed on these new issues to help you create and implement appropriate processes with checks and balances to ensure brokerage and agent compliance, and to advise on any new or modified business practices you may want to implement. The PAR Legal Hotline will continue to answer questions about rules and forms, of course, but specific brokerage policies and business decisions must be handled at the individual brokerage level.