Real Estate

Douglas Elliman settled the commission suit for $17.75 million.

On Inman Connect Las Vegas, July 30-Aug. 1, 2024, the noise and misinformation will be eliminated, all your big questions will be answered, and new business opportunities will emerge. Join us..

Douglas Elliman has agreed to settle nationwide antitrust lawsuits brought by home sellers for up to $17.75 million, depending on the company’s cash balance, through 2027, the real estate brokerage said. announced Monday.

The proposed settlement, signed Friday, April 26, will resolve claims brought against the company in lawsuits known as Gibson and Umpa, which were consolidated under the Gibson banner on April 23, as well as There were “similar claims in other cases asserted by Sellers against Douglas Elliman and its subsidiaries,” according to a SEC Filings The company filed on Friday. The suits seek to represent millions of home sellers.

The suits allege that Douglas Elliman violated the Sherman Antitrust Act, which requires listing brokers to offer compensation to buyer brokers for submitting listings to a multiple listing service. This increases broker commission costs for home sellers. Douglas Elliman did not accept any liability as part of the agreement.

Howard Lorber | Photo credit: Douglas Elleman

“The settlement agreement reflects Douglas Elliman’s commitment to reduce future uncertainty and limit legal costs, which will benefit our company, agents and stockholders,” said Howard M. Lorber, Douglas Elliman. Chairman and CEO said in a statement.

“Our global network of leading agents and luxury brand positions Douglas Elliman for future success as real estate markets stabilize. We believe our differentiated business position will enable continued growth over the long term.”

That development could determine how much Douglas Elliman ultimately pays as part of the settlement. The company agreed to pay an initial guaranteed payment of $7.75 million into an escrow fund within 30 business days after the court initially approved the settlement, which the company said it expects to take place in the second quarter of 2024. .

The company also agreed to make contingency payments of $5 million. Douglas Elliman will make such first payment if, as of December 31, 2025, its cash balance is at least $40 million or if, as of that date, it is less than $40 million but more than $40 million in any month thereafter. will exceed Date till 31 December 2027.

Douglas Elliman will make a second $5 million upfront payment if, as of December 31, 2026, its cash balance is at least $40 million or if, as of that date, it is less than $40 million but $40 million in any month thereafter. will exceed After that date till 31 December 2027. All outstanding payments must be made by December 31, 2027.

If the Company’s cash balance “at any time from December 31, 2025 through December 31, 2027” does not exceed $40 million, the Company will not have to make either of the two $5 million payments.

“The cash balance is calculated based on Douglas Elliman’s average daily cash balance for the 30 days preceding December 31 of the year for which the contingency payment is due.” Proposed settlementwhich was included in the SEC filing, reads.

“Douglas Elliman and Plaintiff agree that all material cash payments made by Douglas Elliman between April 18, 2024 and December 31, 2027, which are not in the ordinary course of business, as deductions from the cash balance calculation. shall not count.Except for payments made under this Settlement Agreement.

“Examples of cash payments that may not be made in the ordinary course of business are: (i) dividends to shareholders; (ii) distributions to shareholders; (iii) stock compensation by Douglas Elliman (with respect to employee stock plans); that correspond to existing employee stock plans); or (iv) the acquisition of the business by Douglas Elliman.

For example, if Douglas Elliman pays a $10 million cash dividend to its shareholders on Nov. 30, 2025, that amount will be included in the company’s cash balance calculation, the agreement added.

Douglas Elliman also agreed that if it “enters into certain strategic corporate transactions, including, but not limited to, certain mergers and acquisitions or the sale of all or substantially all of its assets,” Contingent payments become due within 30 days. Give and Take

Douglas Elliman also agreed to changes in business practice that would implement “[a]As soon as practicable,” but not later than six months after the agreement receives final court approval.

According to the agreement, those changes are:

  • To remind our brokerages and agents that the Company has no rules requiring agents to offer or accept compensation from purchasing brokers and no rule that, if such offers are made, Such offers must be blanket, unconditional or unilateral;
  • Require its brokerages and agents to clearly communicate to buyer and seller clients that commissions are not fixed by law and are fully negotiable;
  • Prohibiting its brokerages and buyer agents from claiming that buyer agent services are free.
  • Require its brokerages and agents to disclose to the buyer as soon as possible the listing broker’s offer of compensation to prospective buyers’ agents.
  • To prohibit its brokerages and agents from filtering or limiting the listings that are searched and displayed to users by offering compensation, unless requested by a client, and any such Eliminate internal systems that may facilitate such filtering.
  • to remind its brokerages and agents of their obligation to show properties that meet buyers’ stated preferences, regardless of compensation to buyers’ agents; And
  • Develop training materials for its brokerages and agents that support all described practice changes and eliminate any contrary training materials currently in use.

If the settlement receives final court approval, it will only resolve claims brought by home sellers, not home buyers. Douglas Elliman is currently a defendant in a lawsuit known as Batton 2, which alleges that the National Association of Realtors rules enforced by brokerages have inflated agent commissions and resulted in state extortion by buyers. And home prices are high in violation of federal antitrust laws.

Email Andrea V. Brambella

Like me on Facebook. | Follow me on Twitter.




Source link

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button