Midyear Observations On Industry Issues And Claims

By David Hamerslough and Victoria B. Naidorf

July 15, 2025

This article presents a few of our mid-year observations on some industry issues we have been monitoring and those claims/lawsuits that we have either been involved in or heard about in the last six months.

Industry Issues

The Board of Directors for MLS Listings, Inc. met recently and, as we understand it, recommended that the proposed NAR policy regarding Delayed Marketing Exempt Listings (“DMEL”) not be adopted and implemented. We understand that the rationale for this recommendation was, in part, that the current marketing options available via MLS Listings, Inc., already provide a platform for real estate licensees and their clients to “stay cooperative and provide the best service choices possible to clients under national Realtor policies.” Those categories include the following types of listings: (1) Exclusive (requiring brokers to submit to the MLS a signed form by the seller); (2) Members Only-Do Not Show; (3) Members Only-Show; and (4) Regular Active. We also understand that the Board is maintaining their current policies regarding how Days on Market (“DOM”) and price change history will be tracked and/or reported. All of the foregoing types of listings that are entered in the MLS are “on the MLS.”

Last month’s article discussed some of the fiduciary and ethical duties for brokers and agents to consider regarding NAR’s Multiple Listing Options For Sellers (“MLOSP”). The fact that MLS Listings, Inc. did not adopt DMEL does not mean that the fiduciary and ethical issues we outlined do not apply to the listings, marketing, and/or transactions that are subject to the rules and policies of MLS Listings, Inc; the analysis in our prior article regarding DMEL has equal applicability to the MLS Listings, Inc. platform.

Licensees need to familiarize themselves with the differences and use scenarios that exist when the transaction is subject to the rules and policies of MLS Listings, Inc. vs. NAR’s MLOSP. These differences and use scenarios include (1) whether the listing can be shared with other brokers’ agents, (2) the scope of any advertising, (3) whether the property can be shown and what constitutes a showing, (4) whether the listing agent can ask for offers, (5) to what extent the listing can and cannot be distributed/disseminated, and (6) to what extent agents can otherwise market, advertise, and/or communicate regarding the listing. The best source of information regarding these issues is the publications and videos that have been generated by MLS Listings, Inc. We recommend that licensees review these publications and videos and, if any questions remain, contact MLS Listings, Inc. directly for clarification. Please be aware that violations of these rules and procedures may result in actions being taken by MLS Listings, Inc., including fines, etc.

While the majority of transactions that we see involve listings that are on MLS Listings, Inc., to the extent that any of you are involved in listings and/or transactions governed by another MLS, you will need to determine, among other things, whether that MLS has adopted NAR’s MLOSP and, if not, what rules and policies they may have regarding types of listings and what actions are permitted under each type of listing. All of us will need to continue to monitor MLOSP with respect to the issues identified above and what actions are permitted under the applicable rules and policies. Please remember that there is a September 30, 2025 deadline for all MLSes to address the issues regarding the implementation of MLOSP.  Also remember that the actual implementation of MLOSP by NAR continues to evolve. NAR’s website periodically updates its information on and interpretation of MLOSP, including a “Frequently Asked Questions” section that addresses the issues referred to above.

There are several other industry issues that we wanted to highlight. First, Compass just sued Zillow over its policy that any listing that is not posted to an MLS within 24 hours of the listing will be barred from Zillow’s site during the life of the listing. Compass is claiming, among other things, that this policy violates federal antitrust laws. The potential impact of Zillow’s policy was one of the subjects we identified in last month’s article as part of a discussion between a listing agent and a seller regarding listing options.

We have also become aware of the reactivation of another antitrust lawsuit against NAR. This lawsuit was filed by Pocket Listing Service in 2020 but was withdrawn in January of 2024 with the right to re-file it as of July 1, 2025. This lawsuit challenges, among other things, NAR’s Clear-Cooperation Policy, even as it has been amended, claiming that it does not give a homeowner absolute freedom of choice with respect to how to market his/her home.

While the industry is attempting to resolve a myriad of questions and disputes regarding what constitutes public marketing, brokers and agents should not forget to continue with other laws affecting marketing efforts such as “Do Not Contact.”  It was with some surprise that a non-licensee who has no past or ongoing business relationship with Broker X received an email from Broker X’s sales associate detailing the “office exclusives” handled by Broker X.  Regardless of whether or not that action constituted “public marketing,” it violated the Do Not Contact law.

Finally, the California Departments of Real Estate (DRE) and Financial Protection and Innovation (DFPI) have recently announced that they are concerned about brokers instructing an escrow officer to pay a broker’s or agent’s business expenses directly out of earned commissions in escrow.  Quite frankly, this practice has existed for many years, but it will now be under governmental scrutiny.

We will continue to monitor the progress of these industry issues.

Claims And Litigation

As we have written before, we bring to your attention claims and litigation that we see recurring. We operate under the old saying expressed by Auric Goldfinger, one of Ian Fleming’s classic villains – “Mr. Bond, they have a saying in Chicago: Once is happenstance. Twice is coincidence. The third time it’s enemy action [or, in our context, a pattern].”

The following claims/litigation over the last six months met this criteria:

• The expression “location, location, location” has been around for a long time. In the context of claims/litigation, the comparable saying is “disclosure, disclosure, disclosure.” We know we are repeating ourselves when we identify this type of claim/litigation, but the fact remains that hardly a week goes by that we and other qualified California real estate attorneys do not receive inquiries from buyers, sellers, and/or brokers/agents about disclosure issues. The timely delivery to buyers (or lack thereof)  of all historical documents and historical knowledge continues to be the most significant source of claims. Here are links to articles discussing this this issue: Reading The Tea Leaves – 09-01-2023, Revisiting the Identification, Disclosure, and Production of Historical Documents – 05-02-2022
• Deposit disputes/breach of contract claims continue to keep lawyers gainfully employed. Here is a link to the article we wrote discussing these issues in May 2025.
• Claims involving the California Right To Repair Act (Civil Code § 895 – 945.5) (the “Act”). Many of you still refer to these as SB800 claims. The claims/litigation that we have seen are those brought against a seller based upon the seller signing a purchase contract that includes a provision that the seller agrees to be bound by the Act. The legal issue facing sellers is whether the seller was actually obligated to comply with the rigorous statutory requirement before signing the agreement. If the seller did not have to comply with those requirements “but for” signing a pre-printed purchase contract, the financial and legal consequences to the seller may be significant, and thus this could create potential liability for a listing agent who encouraged to seller to sign such an agreement.

Some of the issues that should be considered include (1) whether the scope of the renovation/work constitutes “new construction” and (2) whether the seller is in fact a “builder” as that term is used in the Act. Both of these questions turn on a number of facts. For example, does new construction include a tear-down that retains the original foundation or some portion of the original framing? What impact, if any, does the terminology used on permit applications, construction documentation, etc. have on this determination? With respect to whether a seller is a “builder,” to what extent does that definition require that the individual be in the business of developing and building property? How many transactions of that nature does a seller have to be involved in (in what period of time, if any) to qualify as a “builder”?

The bottom line is that real estate professionals should not assume that every home that has been renovated and every seller who has been involved in such a renovation meet the criteria of the Act. These issues, and others, should be evaluated by a qualified California real estate attorney before a buyer presents an offer that includes any reference to the seller complying with the Act.

We hope that our articles have motivated our readers to keep these issues and developments in mind in order to best represent their clients.