Real Estate Broker Files Lawsuit Against NAR Over VDF Rule
In a recent legal filing, Diaz alleges that the VDF rule enforced by the National Association of Realtors (NAR) is an “illegal group boycott” with no legitimate rationale. Diaz argues that the policy leads to limited consumer choice, increased business costs, and restricted market access for alternative real estate brokerage models.
The lawsuit names the California Association of Realtors (CAR), the Lodi Association of Realtors, and the Central Valley Association of Realtors as defendants. Additionally, five unidentified individuals referred to as “Does” are included in the suit, with Diaz intending to reveal their identities in due course.
While CAR declined to provide a comment to HousingWire, attempts to reach out to the other defendants and Diaz’s representatives were unsuccessful at the time of reporting.
The legal action highlights the challenges faced by agents in regions like Modesto where the lack of benefits for non-Realtors can hinder their ability to join brokerages due to financial constraints.
Accusing the defendants of violating the Sherman Act and the California Cartwright Act, Diaz emphasizes the legitimate business interests brokers have in hiring licensed agents for specific tasks that do not require NAR membership.
One contentious issue is the VDF rule, which mandates additional dues for non-Realtor agents employed by brokerages. Failure to comply could result in the suspension or revocation of the broker’s NAR membership.
Diaz argues that the VDF rule penalizes brokers for hiring personnel to carry out essential duties such as Agent Visual Inspection Disclosures and commercial sales and leasing activities, which are not directly related to NAR membership services.
This legal challenge is part of a series of disputes against NAR policies, including the high-profile Sitzer-Burnett case that resulted in a $418 million settlement. In that case, the requirement for listing agents to offer compensation to buyer agents on NAR-affiliated MLSs was deemed anticompetitive.
Following the settlement, new regulations were introduced banning offers of agent compensation on local MLS platforms and implementing stricter guidelines for agreements between homebuyers and Realtors.
Notably, the Sitzer-Burnett case was also pursued on a per se basis, with industry experts attributing the Missouri judge’s decision to allow the case to proceed in this manner as a pivotal factor in NAR’s loss.