Effective August 17, 2024, standing policy letters and blanket compensation agreements violate the NAR Settlement Agreement.
As part of the Settlement Agreement terms, a listing firm must conspicuously disclose to sellers, and obtain seller approval, for any payment or offer of payment that the listing firm or seller will make to another firm acting for buyers. This disclosure and seller approval must be in writing and must be provided in advance of any payment or agreement to pay to another broker acting for buyers and must specify the amount or rate of any such payment.
This disclosure to sellers, such as in a listing contract, must be provided in advance of any agreement to pay a cooperating firm, such as a compensation agreement or policy letter agreement between firms. The underlining is added to emphasize the language that disclosure and seller approval of any offer of compensation to be made by the listing firm or the seller must occur prior to any agreement between firms regarding the compensation.
Therefore, as of August 17, 2024, an existing blanket compensation agreement such as a standing policy letter, would most likely be an agreement entered into before any offer of compensation was disclosed to and approved by a seller and thus would be a violation of the terms of the NAR Settlement Agreement.
Going forward, firms may enter into a separate compensation agreement for an individual transaction after the property is listed, assuming offers of compensation to be made by a listing firm or the seller are disclosed and approved by the seller in the listing contract.
For other questions relating to the NAR lawsuit and Settlement Agreement, please visit the WRA Antitrust resource page where you will find both WRA and NAR resources.
