Things to know about sale-leasebacks, using recording devices, and conducting criminal background checks.

Sale-leasebacks

When home sellers need to retain possession of the home for a few days— or longer—after the closing:

1. Put it in writing. Buyers shouldn’t let sellers retain possession of a home for any amount of time without an agreement in place that lays out all the conditions.
2. Check insurance coverage. Generally, as the new homeowner, buyers are responsible for any damage after closing, but sellers aren’t off the hook and should convert their homeowners policy into a rental policy for the duration of their post-closing possession.
3. Get the lender’s approval. Many lenders won’t accept leaseback agreements that are longer than 60 days, at which point the home could be classified as an investment property.

Use of Recording Devices

If your sellers use audio or video recording in the course of a home sale:

1. Know your state’s law. Most allow video surveillance without consent, but hidden cameras may require notice; some states require the consent of all parties for audio recording.
2. Address it in the listing agreement. Require sellers to disclose any devices, warn them of the legal risks of using surveillance devices, and require indemnification for any unlawful surveillance.
3. Disclose it in the listing. Note in the MLS any known property surveillance

Use of Criminal Background Checks

If you do criminal background checks on prospective tenants:

1. Know your liability risk. Housing providers risk liability if their policies predictably would result in negative impact on groups protected under federal fair housing law.
2. Have a written criminal history policy. Apply it consistently, don’t ask about or consider arrests without convictions, and avoid blanket bans on applicants with a criminal conviction.
3. Document housing decisions. If you reject an applicant and your decision is called into question, you should have a record showing why the decision is consistent with your policy.

©National Association of REALTORS®
Reprinted with permission

Understand the letter of the law when it comes to teaming with allied businesses.

The Real Estate Settlement Procedures Act is a federal law designed to protect consumers in the settlement of real estate transactions. Before you get involved in any business-building partnership with allied professionals, be sure you know what is and isn’t allowed under RESPA.

1. RESPA generally prohibits kickbacks and offering a thing of value in exchange for the referral of business to a settlement service provider. The law applies equally to all settlement service providers, which goes beyond title insurance, loan origination, and real estate brokerage to include property surveys, credit reports or appraisals, pest and fungus inspections, home warranty companies, and more. Furthermore, a “thing of value” need not be expensive to lead to a RESPA violation. Anything provided in exchange for a referral of business can violate the law.
2. The law doesn’t prohibit real estate brokers from setting up marketing service agreements, or MSAs, with other settlement service providers, but such agreements should be reviewed to ensure that any payment is for marketing services, not referrals, and that the payments made for these services represent fair value for the services provided.
3. A referral is an action directed to a person to influence the person’s selection of a settlement service provider, whereas marketing is directed to a wider audience. Handing someone a brochure is a referral; displaying a brochure in the office lobby is marketing. A referral arrangement need not be written or oral to violate RESPA; a violation can be established by a practice, pattern, or course of conduct.
4. RESPA regulations provide an exception for normal promotional and educational activities that are not conditioned on the referral of business and don’t defray expenses that the real estate professional would otherwise incur.

Learn more at nar.realtor/respa.

©National Association of REALTORS®
Reprinted with permission

Three years ago, in March 2019, the National Association of REALTORS® and four corporate defendants were sued in class-action lawsuits filed in Missouri and Illinois alleging that home sellers have been damaged because their listing broker compensates the buyer’s representative. These lawsuits claim that various NAR rules and members’ adherence to those rules have led to artificially fixed and inflated commissions being paid to real estate professionals.

Class-action litigation is long and arduous, and NAR has been keeping you and your associations updated on relevant milestones as they have transpired over the years. NAR has also been asking you to do what you can to help the association prevail in the court of public opinion. Now it is time for another update and another ask.

The Update

Last Friday, a federal judge in Missouri granted class certification. This is not a victory for the plaintiffs and does not change the facts of the case. The ruling was only procedural and now allows others who have allegedly been impacted to join the litigation as plaintiffs. The process is expected to be lengthy before the case is fully resolved.

NAR is extremely disappointed in the decision, believes it was wrongly decided, and plans to appeal. NAR continues to believe the pro-competitive, pro-consumer local broker marketplaces serve the best interests of buyers and sellers. Sellers making offers of compensation to buyer brokers also gives all home buyers a better shot at affording a home and professional representation. It’s only the free market that organically establishes commission costs within local real estate markets based on service, consumer preference, and what the market can bear.

The Ask

This decision does not require any action or comments on the part of members; NAR will keep you informed of any notable litigation milestones. But there is something you can do to help the association prevail in the court of public opinion. Please review the new competition.realtor website, which provides a comprehensive overview of how REALTORS® and the local MLS broker marketplaces benefit consumers.

• Use this information to tell your customers the value you bring to the transaction, what they can expect from your services, and how you will be compensated.
• Use this information to start an education campaign or publish articles (like this one) in your local media outlets.
• Use this information to show why the American real estate system that honors cooperation amongst professionals serves the best interest of home buyers and sellers alike.

The page will continually be updated with new developments, information, and materials, so we want members to consider it their go-to resource. In addition, we highly encourage the continued use of Buyer Representation Agreements(link is external) in order to formalize your professional working relationship with clients as well as detail what services consumers are entitled to and what the buyer agent expects from their client in return.

In Other Antitrust Litigation News

NAR received a disappointing opinion this week from the 9th Circuit Court of Appeals reversing a lower court’s decision granting our motion to dismiss a lawsuit challenging the Clear Cooperation Policy. This too only addresses a procedural issue in the litigation and does not address the merits of the underlying challenge. While we are disappointed in this decision, we will continue to defend the lawsuit, as we firmly believe that the Clear Cooperation Policy advances equal opportunity in housing by ensuring listings are widely available and accessible to all. Without the protections from the CCP, consumers would be disadvantaged because agents could refuse to give them or their representatives access to those listings. We look forward to the next stage of this case, in which we will show the CCP is pro-competitive, pro-consumer, and consistent with all laws and regulations.

It’s been quite a week in litigation to be sure. As we look forward to the future, let us remember to take time each day to tell the world who we are.

©National Association of REALTORS®
Reprinted with permission

The National Association of REALTORS® and realtor.com® on Wednesday honored the four inaugural winners of the Fair Housing Champion Awards during NAR’s Fair Housing Month event, “What Will it Take to Close the Racial Homeownership Gap?” Honorees were recognized for making a significant impact on efforts to advance fair housing and expand homeownership to traditionally underserved communities, either through their business or as a volunteer or advocate.

This year’s winners are as follows:

Harrison Beacher is the managing partner of the Coalition Properties Group team at Keller Williams Capital Properties in Washington, D.C. He serves as the 2022 president of the Greater Capital Area Association of REALTORS®, and he’s an at-large director for the District of Columbia Association of REALTORS®. Many of Beacher’s clients are first-time buyers, and he helps them succeed by connecting them with down payment assistance programs and other resources.

Sabrina Brown, ABR, SRS, is broker-owner of Brown and Brown Real Estate in Fresno, Calif. She’s a director at her local and state associations, the Madera Association of REALTORS® and the California Association of REALTORS®. Brown regularly holds workshops that connect first-time buyers with programs to help them achieve homeownership and invest in real estate, with an emphasis on outreach to people of color.

Bobbi Howe, CRS, is a second-generation real estate professional with more than 24 years of experience in the field. Howe currently serves as the treasurer-elect for Missouri REALTORS®, and she says she is dedicated to using her platform to spread the word and educate colleagues and consumers about systemic racism in real estate. She works to expand opportunities for Black real estate investors in the Kansas City area.

Rafael Perez has extensive experience as a mortgage banker, lender, and educator. Perez serves on NAR’s Fair Housing Policy Committee and is a member and past president of the San Diego chapter of the National Association of Hispanic Real Estate Professionals. He continues his eight-plus years of service as a commissioner for the City of San Diego on the Citizens’ Equal Opportunity Commission. Perez is passionate about helping families create household wealth through homeownership. He also helps San Diego residents who have been displaced by development to move back into their old neighborhoods.

“NAR is committed to helping build thriving, inclusive communities in every ZIP code in America,” NAR President Leslie Rouda Smith said in a statement. “I am so proud of all the work our winners have done to increase access to homeownership and hope their leadership can serve as an example to inspire others into action.” The Fair Housing Champion Awards, sponsored by realtor.com®, provide a $4,000 prize to each winner that they can dedicate to a housing-related nonprofit organization of their choice.

©National Association of REALTORS®
Reprinted with permission

NAR’s Board of Directors meeting highlights strategic priories for the association and solidifies the 2023 leadership team.

Strengthening fair housing enforcement was a priority for the National Association of REALTORS® Board of Directors during its Friday meeting. The governing body passed resolutions supporting fair lending provisions of the Fair Housing Act and the Equal Credit Opportunity Act—which prohibit discrimination in consumers’ access to credit on prohibited bases—and urged state associations to promote legislation for minimum, universal fair housing education requirements for all real estate licensees.

Also, according to an informal poll conducted during the meeting, the board believes legislative and regulatory advocacy—and the changing role of REALTORS®—are issues that will be top priorities for the real estate industry in the next five years. Board members also said the lack of new construction is the biggest factor constraining inventory.

Member dues will remain $150 per year. Directors also voted in favor to continue supporting the NAR consumer advertising campaign with an increase in the special assessment cost of $10 a year, bringing the annual cost per member up to $45 starting in 2023 through at least 2027. This is the first increase since the “That’s Who We R” campaign was launched in 2019.

More actions at the Board of Directors meeting:

Distinguished Service Awards

Cindy Chandler of Charlotte, N.C., and Chris McElroy of Fort Collins, Colo., were named NAR’s 2022 recipients of the Distinguished Service Award—the highest honor outside the presidency bestowed to an NAR member.

A 30-year industry veteran, Cindy Chandler, CRE, AHWD, C2EX, is the founder of The Chandler Group, a consulting and training company, and authored The Insider’s Guide to Commercial Real Estate (Dearborn/Kaplan Publishing, 2013). Chandler has served in numerous leadership roles for NAR, including as chair of the Commercial Leadership Forum, the REALTORS® Commercial Alliance Committee, the Commercial Real Estate Research Subcommittee, and the Commercial Legislation and Regulatory Subcommittee. In 2011, she was regional vice president for Region 4 (Kentucky, North Carolina, South Carolina, and Tennessee). She is currently serving as NAR’s Executive Committee representative for The Counselors of Real Estate, and she’s a two-time REALTORS® Political Action Committee Hall of Fame member.

Chris McElroy, CRS, AHWD, a REALTOR® for 45 years, is a broker associate and partner with The Group Inc.–Harmony. His involvement with NAR spans more than 30 years and includes chairing the Federal Taxation Committee, the Housing Opportunity Advisory Board, the Research Committee, the State & Local Issues Policy Committee, and the Public Policy Coordinating Committee. He is currently serving on the Legal Action Committee. McElroy has twice been inducted into the REALTORS® Political Action Committee Hall of Fame. In 2007, McElroy was regional vice president for NAR Region 11 (Arizona, Colorado, Nevada, New Mexico, Utah, and Wyoming). For his work promoting the need for affordable housing, McElroy was named a “Hometown Hero.”

2023 First Vice President

Kevin M. Sears, AHWD, C2EX, a broker and partner with Sears Real Estate in Springfield, Mass., was elected 2023 first vice president of NAR, putting Sears on the ladder to serve as NAR president in 2025.

Sears, who ran against Daryl L. Braham, CRB, GRI, C2EX, of Fargo, N.D., received 631 votes of the 942 votes cast. His service to NAR spans 20 years, including terms as regional vice president in 2016, vice president of government affairs in 2017, and president’s liaison in 2019. He was president of the Massachusetts Association of REALTORS® in 2010 and state REALTOR® of the Year in 2006.

2023–2024 Treasurer

Gregory J. Hrabcak, CCIM, C2EX, was elected to serve as 2023–2024 NAR treasurer. Hrabcak is a commercial specialist with HER, REALTORS®, in Westerville, Ohio, and heads the Central Ohio company’s commercial and property management divisions. His service to NAR spans 15 years. He served as regional vice president in 2020 and has been a member of the NAR Finance Committee since 2015, the year he served as president of Ohio REALTORS®.

The 2023 Leadership Team

President Kenny Parcell, ABR, CRS, AHWD, C2EX, Salem, Utah

President-elect Tracy Kasper, CIPS, CRS, GRI, AHWD, SFR, C2EX, Eagle, Idaho

First Vice President Kevin Sears, AHWD, C2EX, of Springfield, Mass.

Immediate Past President Leslie Rouda Smith, ABR, AHWD, CIPS, CRB, CRS, EPRO, PMN, C2EX, Plano, Texas

Treasurer Gregory J. Hrabcak, CCIM, C2EX, of Westerville, Ohio

CEO Bob Goldberg, EPRO

Regional Vice Presidents

Region 1: Joanne Breen, AHWD, GRI, C2EX, Newington, Conn.

Region 2: Ilene Horowitz, AHWD, C2EX, Rockaway, N.J.

Region 3: Gail Renulfi, AHWD, C2EX, Hockessin, Del.

Region 4: Amy Hedgecock, AHWD, CPM, GRI, C2EX, High Point, N.C.

Region 5: Eric Sain, AHWD, GRI, C2EX, Palm Beach Gardens, Fla.

Region 6: Gary Reggish, SFR, CRS, C2EX, Novi, Mich.

Region 7: Ed Neaves, AHWD, C2EX, Bloomington, Ill.

Region 8: Patty Zuzek, SFR, CRS, SRES, Burnsville, Minn.

Region 9: Steve LaRue, AHWD, CRS, C2EX, Lawrence, Kan.

Region 10: Cindi Bulla, AHWD, GRI, C2EX, Amarillo, Texas

Region 11: Kevin Sigstad, CCIM, CPM, Reno, Nev.

Region 12: Connie Fogle, AHWD, SFR, CRS, GRI, C2EX, Sugar City, Idaho

Region 13: Geoff McIntosh, C2EX, Rancho Mirage, Calif.

©National Association of REALTORS
®Reprinted with permission

Use this risk management strategy, especially if you’re using any third-party content on your website or business materials.

Copyright claims are growing in the real estate industry, and many cases end in a judgment against the agent or brokerage accused of violations. Your website or business materials may put you at greater risk for litigation than you think. 3:24

You could be held liable for copyright infringement even for photos from the MLS that are provided by a third party but appear on your website through an IDX display. Having a risk management strategy in place can help protect you and your business, says Chloe Hecht, senior counsel at the National Association of REALTORS®, in NAR’s latest “Window to the Law” video.

The Digital Millennium Copyright Act, or DMCA, which was passed in 1998, may offer some protections when posting third-party content—but it’s not a foolproof defense. The DMCA is a federal law that provides a “safe harbor” to avoid some copyright infringement claims, but certain procedures must be met.

Hecht highlights some of those steps in the video, including:

• Designate a copyright agent. This person will be responsible for receiving any takedown notices in case of copyright claims and will need to be listed as a contact and copyright owner on your website, along with their contact information. Also, register the copyright agent with the Copyright Office.
• Comply with the DMCA’s takedown procedure. After receiving any takedown notice due to a copyright allegation, promptly remove the content in question. Then, notify the person filing the complaint of its removal. “If the alleged infringer submits a counternotice, provide a copy of that counternotice to the copyright owner and state that the allegedly infringing content will be restored in 10 business days unless the copyright owner initiates a lawsuit,” Hecht says in the video. “Absent such a lawsuit, you may restore the content to your website.”
• Include a notice at your site. Inform website users of your copyright policy and include it within your website’s terms of use. View an example under the “Digital Millennium Copyright Act (DMCA)” section at nar.realtor/terms-of-use. Also, view the “Termination” section, which informs website users of enforcement for terminating repeat infringers.

Access additional copyright resources at nar.realtor/copyright.

©National Association of REALTORS
®Reprinted with permission