Litigation Involving Commissions: Practical Tips to Avoid Claims

Louisiana REALTORS® • July 5, 2022

By: Eric B. Landry, Partner

Breazeale, Sachse & Wilson, L.L.P.

301 Main Street, One American Place, Suite 2300

Baton Rouge, Louisiana, 70801


Litigation involving commissions has recently made headlines across the country. You have probably already seen lots of information on these suits and what they may mean for the real estate industry. Most notable are class action suits entitled Moehrl v. NAR, which was filed in federal court in Illinois 2019, and Sitzer/Burnett v. NAR that was filed in Missouri in 2019. Each of these suits remain ongoing. 


In short, the lawsuits claim that NAR conspired with brokers to inflate commissions through its Multiple Listing Service (MLS) policy. The cases challenge the “Participation Rule” that requires all brokers to make a blanket, non-negotiable offer of buyer broker compensation when listing a property on an MLS. The suits state that the rule is anti-competitive.  Read below for more information about these lawsuits and why the allegations in these lawsuits evidence a lack of understanding about broker commissions


  • What is Moehrl v. NAR about?

    In Moehrl, one of the primary open issues is the definition of the “class” of plaintiffs that would potentially be entitled to damages if the suit were successful. The proposed “Monetary Damages Class” would include home sellers who paid a commission between March 6, 2015, and December 31, 2020, to a brokerage affiliated with certain defendants in connection with the sale of residential real estate listed on certain MLSs in certain jurisdictions (not less than 20) across the country, but not any MLS located in Louisiana. The suit also includes a request for injunction that would prohibit the practice of having sellers pay the buyer broker and would seek to enjoin activity that restricts competition among buyer brokers. The final determination as to who will be part of the “class” has not been finalized but they are seeking to include thousands of people who had their property listed on one of the “Covered MLSs” during a period of more than five (5) years. Those people would potentially be entitled to damages if the suit is successful. 

  • What is Sitzer/Burnett v. NAR about?

    The Sitzer/Burnett v. NAR case is similar to the Moehrl case. This lawsuit features the same allegations and some of the same defendants as Moehrl, but are focused on Missouri only while Moehrl covers multiple states. Recently, the federal judge in the Sitzer/Burnett case granted class certification. This means that the suit can proceed as a class action. The class of plaintiffs has been established to include people who sold a home after April 29, 2014, via the MLSs in Columbia, MO; Springfield, MO; St. Louis and Kansas City (or after April 29, 2015, in Kansas and Illinois) and that paid a broker commission in connection with the sale of residential real estate listed on one of four MLSs previously listed. 

  • How do these lawsuits miss the boat on broker commissions?

    From a general perspective, it is important to recognize that brokers’ commissions incentivize participation in local real estate marketplaces and create a vast, accessible and accurate source of housing information available to consumers. That levels the playing field among brokerages, allowing small brokerages to compete with large ones, and provides for robust competition among brokers, including different service and pricing models. That is a benefit to the consumer (home seller/home buyer) because competition results in the best possible situation for the consumer – choices, options, flexibility, reduced prices, negotiating power.

  • Are there any similar lawsuits pending in Louisiana?

    There are currently no pending suits that affect MLSs and/or brokers in Louisiana that are similar to the suits described above. While no one can control whether such a suit is filed in Louisiana, you must always be mindful of the ways in which your actions are perceived by consumers, both individually and as an industry. 

  • Why are these cases significant for members of Louisiana REALTORS®?

    While these details regarding the suits are important so that members of the Louisiana REALTORS® are fully informed, what’s most important is the steps you can take to minimize the risk that such suits are filed and avoid any behavior that would be the subject of a similar suit. 

  • What are common misunderstandings about how real estate commissions work?

    Often consumers don’t understand how commissions work when buying or selling a home.  This is partly because agents assume how commissions work is common knowledge and therefore do not always clearly communicate this information to consumers. 


    Also, some point out that agents can see the commission split offered for each home on MLS but home buyers cannot, and, there are allegations that this may result in buyers’ agents trying to “steer” clients to homes they have listed so as to receive a higher commission. 


    It is important to be mindful of these types of misunderstandings and misconceptions by consumers. By understanding these concerns, you can be better prepared to educate your clients on the facts about how commissions work.


  • How can I educate my clients on the facts about how commissions work?

    We have tried to provide some practical tips to help you with your efforts. In short, it is good practice to explain clearly to clients how commissions are paid and to also explain the reasoning and benefits of this arrangement to the consumer. Set forth below are a few more details to help illustrate that idea.


    • NAR encourages the continued use of Buyer Representation Agreements to formalize a working relationship between buyers and brokers, including details on what services are provided by the broker and what the broker expects from the client.  


    • Any Buyer Representation Agreement should be in writing and include a clear statement establishing that a commission may be paid by a cooperating broker and/or that you may pay a commission to a cooperating broker.


    • Always inform and remind clients that commissions are negotiable at any point in the transaction. Commissions are not fixed. Be open to alternative commission arrangements that are reasonable. 


    • Avoid making any statements or representations indicating that commissions “are always done this way”, that this is a “standard commission” or similar statements.
              The free market organically establishes commission costs within local real estate markets based on service, consumer preference and what the market can bear.


    • Disclose all commission payments prior to closing and do so as far in advance of closing as possible. 

            While the settlement statement circulated shortly before closing will include commission payments, bring those payments to your client’s attention in advance and make sure that the inclusion of those commission payments on the settlement statement are explained.


    • If representing a buyer, provide all listings that fit your client’s needs, not just those offering a higher commission. Ask your buyer if they want to see homes that may have a lower commission but be clear about what commission will be owed to you by the buyer (if any) based on your agreement with the buyer. 


    • Avoid misunderstandings by being clear about payment of commissions, including payments from cooperating brokers. 


    • Keep in mind the misunderstandings explained above and understand that consumers are not typically in the real estate industry – how commissions are determined may be completely foreign to a consumer. 


    • Do your best to ensure that clients understand.


    And, finally, inform your clients that REALTORS® are bound by the NAR’s Code of Ethics in the home buying process and are always bound to further their clients' best interests, including showing homes that meet buyers’ needs regardless of commissions offered. Make sure that clients are aware of your ethical duties, and make sure you comply with those ethical duties.


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Consumer Guide Update: Assistance Programs

By Louisiana REALTORS® • May 28, 2025
As previewed last week, NAR is pleased to share the latest consumer guide focused on assistance programs. This guide explains how to identify the right assistance program for your needs, the types of expenses these programs can help with, and what steps to take to access support. As a reminder, all guides in this series are available for download—in both English and Spanish—on facts.realtor . Please allow a few days for the Spanish version of the latest resource to be translated and uploaded. For ease of reference, below is a list of the most recent guides: NEW: Assistance Programs Buyer’s vs. Seller’s Markets Estate Planning Mortgage Interest Tax Deduction Understanding & Protecting Yourself from Title Fraud Thank you for continuing to engage with the “Consumer Guide” series and for sharing the resources with prospective clients so that they have the information they need to find success in their homebuying or selling journey. Please remember that these guides are for informational purposes only and are not meant to enact or change any existing NAR policy. Be on the lookout for next week’s guide on Wednesday, which will cover real estate auctions.

Consumer Guide Update: Buyer’s vs. Seller's Market

By Louisiana REALTORS® • May 23, 2025
As previewed last week, NAR is pleased to share the latest consumer guide focused on Buyer’s vs. Seller’s Markets. This guide explains how knowing whether conditions favor buyers or sellers can help consumers make smarter, more confident decisions when buying or selling a home. As a reminder, all guides in this series are available for download—in both English and Spanish—on facts.realtor . Please allow a few days for the Spanish version of the latest resource to be translated and uploaded. For ease of reference, below is a list of the most recent guides: NEW: Buyer’s vs. Seller’s Markets Estate Planning Mortgage Interest Tax Deduction Understanding & Protecting Yourself from Title Fraud Buying Land and Building a New Home Deeds and Titles Thank you for continuing to engage with the “Consumer Guide” series and for sharing the resources with prospective clients so that they have the information they need to find success in their homebuying or selling journey. Please remember that these guides are for informational purposes only and are not meant to enact or change any existing NAR policy. Be on the lookout for next week’s guide on Wednesday, which will cover assistance programs.

Tax Reform Bill Clears House With Key Real Estate Provisions

By Louisiana REALTORS® • May 23, 2025
The House of Representatives early this morning passed the One Big Beautiful Bill Act that delivers significant wins for the real estate sector, reinforcing tax provisions long championed by the National Association of REALTORS®. NAR’s advocacy team successfully secured its top five tax priorities in the bill, including an enhanced small business tax deduction, a strengthened state and local tax deduction, and protections for the mortgage interest deduction. The bill also makes the current lower individual tax rates permanent and increases the child tax credit, moves that could help increase homeownership access for more American families. In addition to NAR’s top tax priorities, the bill includes a broad range of other NAR-supported provisions—such as enhancements to the Low-Income Housing Tax Credit, estate tax certainty, renewed Opportunity Zone incentives, and the creation of tax-advantaged child investment accounts that can be used for qualified expenses of the beneficiary such as first-time home purchases—all of which strengthen housing affordability, investment, and generational wealth. “We appreciate House leaders for taking this important step with a bill that supports hardworking families and strengthens the real estate economy. With lower tax rates, SALT relief, and new incentives for small businesses and community development, this proposal brings real benefits to everyday Americans,” says Shannon McGahn, NAR executive vice president and chief advocacy officer. “While significant changes are possible as this bill moves to the Senate, NAR will stay closely engaged with lawmakers to ensure real estate remains a central focus,” McGahn says. “We are committed to advocating for provisions that expand opportunity, support homeownership, strengthen communities nationwide, and put the American Dream within reach for more families.” In a recent national survey commissioned by NAR, Americans expressed strong support for retaining provisions in the 2017 Tax Cuts and Jobs Act critical to the real estate economy and homeownership. Fully 76% of voters are aware of efforts to extend the Tax Cuts and Jobs Act. Among those familiar with the law, support grows significantly when specific provisions are highlighted—86% back lower income tax rates for individuals and married couples, 83% support a new 20% deduction for independent contractors and small businesses earning under $400,000, and 80% favor tax incentives aimed at spurring investment in underserved communities. The national survey of 1,000 registered voters was commissioned by NAR and conducted by Public Opinion Strategies and Hart Research April 3–6, 2025. It has a margin of error of 3.10%. Below is a summary of the provisions included in the current bill: Top Five NAR Tax Priorities 1. Qualified Business Income Deduction (Section 199A) The bill permanently increases the QBI deduction from 20% to 23%. This deduction benefits more than 90% of NAR members, who are classified as independent contractors or small business owners. 83% of voters said they supported the 20% tax deduction for independent contractors and small businesses making less than $400,000 a year, according to NAR’s national poll. 2. State and Local Tax Deduction (SALT) The SALT deduction cap is quadrupled from $10,000 to $40,000 for households earning under $500,000. However, the bill does not eliminate the marriage penalty. Thus, whether taxpayers are single filers or married couples filing a joint return, they can deduct a maximum of $40,000 in state and local taxes. The income cap and deduction both grow 1% every year over a 10-year window. 3. Individual Tax Rates Current individual tax rates, lowered as part of the TCJA, are made permanent and indexed for inflation, aiding taxpayers and improving affordability for prospective homebuyers. 86% of voters support the lowered income tax rates for individuals and married couples, according to NAR’s national poll. 4. Mortgage Interest Deduction (MID) The draft preserves and makes permanent the MID at its current level, maintaining a key tax benefit for homeowners and supporting housing market stability. There had been concern MID might be reduced or eliminated as a budget offset 91% of voters support maintaining tax incentives such as the mortgage interest deduction for homeowners, according to the NAR poll. 5. Business SALT and 1031 Like-Kind Exchanges The draft bill protects Section 1031 like-kind exchanges, which are often erroneously regarded as a tax loophole. It also includes no changes for most businesses deducting state and local taxes (sometimes referred to as “Business SALT"). While the bill does provide limits in state-level business SALT workarounds for certain high-income professionals (e.g., law firms, hedge funds, consulting businesses, and other services), the provisions do not appear to impact real estate professionals. Additional Positive Tax Provisions for Real Estate Economy Low-Income Housing Tax Credit (LIHTC) Key provisions from the LIHTC Improvement Act will be included to support affordable housing development. Child Tax Credit Increased to $2,500 (2025–2028) Temporarily raises the child tax credit through 2028 and then indexes it for inflation starting in 2029. The child tax credit supports families and could help with housing affordability. Creation of Tax-Advantaged Child Investment Accounts Can be used for qualified expenses of the beneficiary such as first-time home purchases. Permanent Estate and Gift Tax Threshold Set at $15 Million (Inflation-Adjusted) Prevents a significant drop in exemption levels and supports generational wealth transfer, aligning with NAR priorities. No Top Tax-Rate Increase The proposed 39.6% top rate was removed from the bill. Restoration of "Big 3" Business Tax Provisions Full expensing of research and development (R&D) Bonus depreciation Fixes to interest expense deduction limits Immediate Expensing for Certain Industrial Structures Applies to structures used in manufacturing, refining, agriculture and related industries. No Change to Carried Interest Treatment Opportunity Zones Renewed with revised incentives to encourage targeted investment, including in rural areas. 80% of voters expressed support for tax incentives for investors to encourage economic growth and development in underserved and poorer communities, according to NAR’s recent national poll.
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