Dwiggins on Compass, Zillow and real estate ‘Armageddon’

by Andrea V. Brambila | Jul 9, 2025 | Industry, News Feed

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James Dwiggins is not shy when it comes to sharing his opinion about what the future of the real estate industry will be — if Compass’s private listings strategy prevails.

Inman caught up with the co-CEO of franchisor NextHome ahead of his appearance at Inman Connect San Diego at the end of this month to ask him about the potential outcomes of the debate over the National Association of Realtors’ Clear Cooperation Policy and Compass’s “three-phase marketing strategy,” which, at least initially, keeps listings off of multiple listing services to market them privately.

In Part 1 of this interview, below, Dwiggins lays out three possible paths for the industry, one of which he says is unavoidable, another that preserves the MLS, and another that blows up the industry and hands it over to Zillow. In Part 2, Dwiggins discusses what truly offering sellers options means and NAR’s role in MLS policy and in promoting Realtor value.

This interview has been edited for length and clarity.

Inman: Everybody has their views on this whole private listings situation. But what I want to know from you is, what do you think is going to happen? Where is this going? What is the end result of this?

James Dwiggins: It’s going to go one of two paths. No. 1 is there will be massive litigation from this coming in time. The only reason why it hasn’t started yet is there’s not a big enough class. I’ve spoken to class-action lawyers who are like “this is easier to win than Burnett.”

They take the marketing material being used to push this. They take the numbers on the amount of people that are going into this status, the number of people who sold their listings off MLS. They’re going to take that data. They’re going to look at those numbers. They’re going to look at comps and what it should have sold for versus what it did.

Doesn’t matter whether the seller agreed to the price or not. Doesn’t matter what the documentation is. Just look at Burnett | Sitzer, same thing: They signed listing agreements agreeing to the commission compensation sharing. The point is, in the law, in the courts, the way this works is you just got to convince a jury.

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They’re going to wait until the class is big enough and there will be massive litigation on people that are doing this. One hundred percent.

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That is the foregone conclusion at this point. In 24 to 36 months, watch for litigation to occur.

Path No. 2 is Compass doesn’t get its way, and this whole game slows down, and it’s used selectively for sellers that legitimately need to do that, and we get back towards serving buyers and sellers correctly without manipulation of the market, providing transparency and doing what we spent 40 years to build, which is what I hope will happen.

Path 3 is Armageddon. This is the path that scares me the most. What nobody seems to understand, especially at Compass, is they’re too small to compete in this game if everybody decided to build a private listing network like Compass did. There’s nothing innovative about the three-phase marketing plan. There’s nothing innovative about the technology. It’s not like that can’t be duplicated very quickly.

If everybody went down the road of building private listing networks because that’s what they had to do based upon what this one company is pushing, then what happens? It’s absolutely catastrophic. You have the worst consumer experience ever created, where all this inventory is held back, trying to be sold internally, which is what this game is about. You don’t have access to it unless you’re working with one of the agents at that firm.

So consumers are going to sign buyer rep agreements with people that they didn’t want to sign. They didn’t know what they signed. You’re going to deal with litigation there.

Nobody knows what’s for sale. The value of the multiple listing services goes to hell in a hand basket. There’s all these deals done that aren’t on the MLS now, so you have no data that’s accurate for comps. Appraisals become a problem. Imagine that, where you’re trying to appraise, but the appraiser can’t use it because they don’t have access to data.

So we’ve got massive appraisal issues, we’ve got massive loan issues, and then the game of roll-up occurs, and it’s very clear what will happen if you don’t have enough inventory to be anything relevant in a market: You get consolidated into a company that does because the only way you get to see the inventory is working for one that has the inventory. You end up seeing probably 12 to 15 real estate brokerages in the U.S. that control 70 percent of the inventory. MLS is gone. Consumer experience gets totalled.

I’ll tell you who the biggest player is out of all of it: It’s Zillow. Zillow has a motive in all of this, obviously. They need inventory because inventory allows them to generate leads, and that’s part of their business model. But if that inventory is no longer available on Zillow, I can tell you exactly how they’ll get their inventory: They’ll tell every single agent that’s part of their lead network, “You have 72 hours to switch your license over to become a Zillow agent and bring all your inventory with us, or we’re going to shut off your entire lead pipeline.”

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You think any agents have any loyalty to the brands they work for? Good luck!

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They will absolutely leave every single one of these firms, including mine, and go to the business that’s driving all their revenue. Zillow becomes the largest real estate brokerage in 30 days in the U.S. with massive market share and massive eyeballs and they push all that business to their agents now. That’s the game that gets played.

The people that are playing this game do not understand the chess pieces on the board, and it would be a very bad thing for everybody: sellers, buyers, brokerages, agents, MLSs, associations. The only people that benefit are the top 10 companies, which just become even bigger than what they are.

That’s the ironic part about this whole thing that I just don’t even understand. EXp does 50 percent more deals than Compass does and has 50 percent more agents than Compass does too, just in the U.S. And they’re not wanting to do this game. They’re outwardly saying, “This is really, really bad for consumers and not good for the industry and not good for buyers and sellers.” You know who benefits the most if this game were to go down this road that Compass is playing? EXp does. They grow to double their size.

You see 95 percent of the industry not doing this because there’s historical perspective to understanding how bad that experience was. Brokers agreed a long time ago that this isn’t good, this game of “I have inventory, you don’t. I want to work with you, and I’ll work with you on this deal, but not another.” We got rid of that. We put it into a repository because it’s good for sellers and it’s good for buyers. It’s the only system in the world that operates the way it does. As imperfect as it is, it’s still the best. So, yeah, where does it end up? One of those three paths. One of them is good; the other two are scary.

Why do you think that companies like Compass, Howard Hanna, other brokerages that are pushing private listings, don’t see what you’re seeing?

Maybe they do. Hoby [Hanna] and Robert [Reffkin] are pretty smart people. I’m sure they understand exactly what they’re doing. They have their own initiative and motives to do stuff. I’m not against that. America’s capitalistic. I get it. Do you. I just don’t think it’s the right thing to do. Our jobs are to sit down, ask questions: What are the goals of the seller? Ninety-nine percent of sellers are going to say two things: highest price possible, least amount of time.

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If the seller says I need privacy, then we provide a tool for that privacy.

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In my company, we can have it so the address isn’t displayed online, so we can generate interest about your property, but they don’t know where the property is. So we’re getting the eyeballs, we’re getting consumer inquiries, we’re making sure we’re generating that interest.

The second way is, if you really don’t want that, we won’t put it online, but it’ll be available to every Realtor in the multiple listing service, which is going to represent 90 percent of all buyers. So we’re going to take care of that exposure, while also making sure that nobody knows you know anything about that property.

The third and the last scenario is we do an office exclusive, but I want to be clear with you, what that means is I’m working this internally. There’s no public marketing. We’re not sharing it. It’s going to take us longer. There’s less consumers, and if that’s your option you want, we can pick that.

That’s the only conversation you should be having with a seller in those particular examples. The rest of it is just marketing spin. It’s just a way to convince the seller to do it. It sounds great: “We’re going to test the price.” You can’t test price unless you have enough market share to actually have enough eyeballs to determine what the price of the home is. If there are 10 potential buyers for a property and one of them is represented by an agent in the same brokerage, but nine are represented by agents in other companies, how can you test the price if they don’t know the property exists? It’s just supply-and-demand economics.

So there is a path for this. It should be asking questions, providing tools, letting the seller choose without influencing them on those decisions. That is your fiduciary responsibility. That is what 95 percent of people are doing.

Anything beyond that, where, if you can get a buyer represented by an agent in your brokerage, the brokerage benefits because you’re getting both sides of the commission. Literally, on their website, [it says] “Compass Private Exclusives. Work with a Compass agent to see private exclusives.” That’s a lead-gen tool that is designed to get people to inquire specifically to work with you to see those properties. It’s not a seller choice thing. You’re using it as a way to gain more listing inventory, gain more buyer inventory, recruit more people to it, which they’re not shy about if you read the statements the senior management team’s making.

In Scenario No. 3, what happens to your company?

I either get really big or I consolidate with someone else. The numbers are really simple. In our calculations, if you have less than 10 percent market share in a local MLS — thinking of brokerage now — you won’t survive. You’d have to team up with somebody else. Because if everybody’s holding the inventory back, and you can’t show your buyers that inventory, then all you have is one side of the deal. You’ve only got listing inventory, so you’re still having to share that because you don’t have enough. You’re just not big enough in size. It’s a monopoly game.

It sounded like Scenario No. 1, the litigation, you thought was pretty much inevitable. How do you get to Scenario No. 2?

The industry sticks up for what’s right. MLSs enforce these rules. If you’re not going to play by the rules, then you get fined. And if you get fined and want to keep doing it, then get out. It’s that simple.

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You either play by the rules like everybody else, or don’t and don’t be part of the MLS.

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Good luck. But that’s fine. It’s your choice. You do it.

But you don’t get to [see] all the listing inventory and then not share your inventory. That’s not how IDX [Internet Data Exchange] works. That’s literally the exact opposite of it. There’s a reason why these rules are in place. You can’t selectively choose who gets to view who gets your inventory in IDX. That’s actually for antitrust reasons. If you’re going to put it in the MLS, everybody gets access to it. You can’t be like “Zillow doesn’t get it. Or NextHome doesn’t get it.” Doesn’t work that way.

You’ve mentioned before that this private listing strategy doesn’t do as well in a buyer’s market.

Not at all.

It does seem like the market is not doing well at least in some places for sellers. What happens to this whole controversy if that becomes more widespread?

Well, two things to put into finer point: If Zillow’s listing ban is overturned and they can’t enforce it, then you move towards Scenario 3. That’s the Armageddon.

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So literally, the industry’s future is depending upon this ban that Zillow has in place, and that’s why Compass is suing them.

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If Zillow’s listing ban stays in place, this three-phase marketing plan that Compass has becomes very little used because there’s not a scenario where you want to explain to a seller that if we do X, Y and Z, your listing will never be shown on Zillow. That ain’t going to fly.

So really, everything hinges on the Zillow listing ban being able to be kept in place — and technically Rocket’s ban in September — or not. That will be the decider.

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With an eye on future lawsuits, Compass formally repudiates CCP in letter to NAR and MLSs

by Andrea V. Brambila | Jul 2, 2025 | Industry, News Feed

Real estate is changing fast, and so must you. Inman Connect San Diego is where you turn uncertainty into strategy — with real talk, real tools and the connections that matter. If you’re serious about staying ahead of the game, this is where you need to be. Register now!

Compass CEO Robert Reffkin has officially informed the National Association of Realtors and multiple listing services across the country, in writing, that the national real estate brokerage does not consider NAR’s Clear Cooperation Policy or any other national NAR MLS rule as “binding” and will not comply with them.

However, the brokerage said it will continue to train its agents to comply with local MLS rules, including those that MLSs adopt at NAR’s behest. MLSs that adopt the Clear Cooperation Policy require listing brokers to submit listings to their platform within one business day of publicly marketing them.

“Compass does not consider the Clear Cooperation Policy or any national NAR MLS rule impacting clients as binding and, accordingly, has not and will not adhere to CCP or any national NAR MLS rule impacting clients as a matter of course,” Reffkin wrote in a letter Compass sent to NAR and MLS leaders this week.

“Programmatically, Compass has not followed any national, mandatory NAR MLS rules in a consistent or coordinated manner. Each MLS in which Compass operates has its own rules, and our agents are trained to comply with local MLS regulations, not national NAR mandates restricting client options,” he added.

NAR did not respond to a request for comment. Howard Hanna CEO Hoby Hanna sent a similar letter to NAR and more than 70 MLSs in May.

Reffkin is clear in his letter that this is not the first time Compass has informed NAR of Compass’s lack of compliance with the CCP.

“[W]e met with NAR’s CEO on May 2, 2024, to explain CCP’s illegality and affirm our non-adherence to the rule,” Reffkin wrote.

“In September 2024, we formally proposed to NAR’s Emerging Issues Committee that the rule be removed entirely.”

Reffkin is referring to NAR’s MLS Technology and Emerging Issues Advisory Board, a subset of NAR’s Multiple Listing Issues and Policies Committee, which handed off the decision of whether to repeal the CCP to NAR’s leadership team. NAR ultimately decided to keep the policy, but added a new policy called Multiple Listing Options for Sellers, which allowed for the delayed marketing of listings.

For perhaps the first time, Reffkin’s letter stresses that Compass won’t follow “any national NAR MLS rule impacting clients.” However, it does not specify what other rules besides CCP the company is referring to. NAR’s MLS policy handbook is 199 pages long. The company said it had no other rule in mind when drafting the letter, simply “rules that may restrict consumer choice.”

The CCP, like all NAR MLS rules, is not a rule that NAR directly requires any listing broker to follow and NAR does not impose any consequences on brokers who do not follow the rules. NAR MLS rules are adopted by local or regional Realtor-affiliated MLSs, which then require and enforce the rules on their agent and broker subscribers.

MLS subscribers who violate local MLS rules may face fines — sometimes hefty ones of thousands of dollars in the case of a CCP violation — from the MLS, as well as possible suspension or expulsion for repeat violations.

Compass does not generally have a practice of reimbursing for fines, the brokerage told Inman.

“Each agent makes a decision based on the demands and needs of their sellers,” Compass said.

“There’s some agents who their seller is very specific in directing them to market their home in a specific way, and the agent is comfortable incurring the fine as a result of that. It’s the local agent’s decision to think about how to market their home based on the instruction they get from a seller.”

The letter is Compass’s latest volley against a rule the brokerage has publicly opposed from before NAR enacted it in 2020. But Compass said it had previously “never formalized” or “shared broadly across the MLSs” its business practice in regards to CCP before. Compass says it subscribes to about 250 MLSs.

“The purpose of the letter is simply to ensure that it is well understood broadly amongst the relevant stakeholder groups that Compass as a corporation is not complying with or adhering to the national NAR MLS-mandated rule around CCP,” Compass told Inman.

“This is not a new practice [or] a new behavior, but the letters are sort of putting a point on or really clarifying that practice in a pronounced way,” Compass added.

The move also appears to be one that is meant to provide the company with some legal cover.

“National NAR-mandated MLS rules have created tremendous legal risk for the industry,” Compass said.

“Obviously, the commissions lawsuits being the most recent of those … that cost the industry a billion dollars. That’s an added consideration here: the need to be on the record, so to speak, as not in compliance with the rules of CCP.”

Compass believes it’s important to articulate that it’s not necessarily going to follow everything that NAR mandates, particularly after having to pay out $57.5 million to settle its own commission-related antitrust lawsuits that stemmed from NAR’s now-defunct cooperative compensation rule, the company said.

“The rule that the commission lawsuits for Sitzer/Burnett was really anchored around was a nuanced rule, not one that I think certainly Compass or other brokerages really supported or felt strongly about, and yet we were on the hook for nearly $60 million for a rule we didn’t create and we didn’t necessarily support,” Compass said.

“Fool me once, shame on you. Fool me twice, shame on me. We’re trying to be more proactive in how we think about ensuring that we’re not blindly following every rule that’s nominated. We recognize that those are the things that can get the industry in trouble.”

Inman has asked whether Compass has thus far been sued over the CCP and will update this story if and when a response is received. Compass itself has filed lawsuits against Northwest MLS (NWMLS) and Zillow for their policies regarding marketing listings off of the MLS — a practice crucial to Compass’s business model.

According to Compass, in the last several weeks, the brokerage has updated its company policies to “state that Compass will not ask agents to follow, and will not adhere to, CCP or any national MLS mandates restricting how they work with their clients and will not ask any clients to follow any national NAR MLS mandates.”

Reffkin’s letter references the update and adds, “Instead, Compass will continue to determine on a market-by-market basis whether to require its listing brokers to submit listings on a multiple listing service within any specific timeframe. These decisions are made based solely on Compass’s own business interests, independent of NAR and any other brokerage.”

Compass told Inman that local Compass brokers are empowered to train their agents to follow whatever MLS rules make sense locally.

“Our agents are well-informed of what constitutes a violation of CCP,” Compass said.

“We are not requiring our agents to adhere to CCP. Our business practices [are] consistent with local CCP implementation. But again, there are times where sellers and their agents choose to do something different that may result in a CCP violation, and we don’t punish our agents if they do that.”

Asked whether Compass had any criteria the company wanted its brokers and agents to consider when making those decisions, Compass noted there was “a lot of local nuance in these businesses” in terms of what local and state laws are and what local Realtor association and MLS rules are.

“We think that our agents should be working as fiduciaries to the buyers and sellers they represent, and they should be advising, but ultimately following the direction of their clients,” Compass said.

“They’re legally bound to do that by state law in almost every state. Over and above that, at the local level, these are really brokers of records whose responsibility is to ensure compliance and ethical business practices per existing, localized mechanisms. So they’re going to continue to do that in a way they always have. It’s really brokers of record at the local level who are licensed, as such, who will continue to make the localized decisions around compliance.”

Read Reffkin’s letter in full below:

Subject: NAR National MLS Mandates

From: Robert

To:

Dear [MLS Name/NAR Leadership],

Compass’s position on NAR’s Clear Cooperation Policy (“CCP”) or similar rules is, and always has been, clear. Compass has never agreed to or with CCP, and explicitly voted against it in 2019. Since CCP’s inception, Compass has consistently acted to demonstrate its non-adherence to the policy’s consumer restrictions, utilizing Compass Private Exclusives and Compass Coming Soons to provide consumers with broader choices and options to market properties outside of NAR’s MLSs.

Compass has been a vocal and active opponent of the CCP since its initial proposal in 2019, consistently lobbying NAR and local MLSs for its full removal due to its anti-competitive and anti-consumer nature. In addition to voting against the policy in 2019, our sustained opposition has included organized lobbying efforts, direct engagement with NAR’s leadership and legal teams, issuing a demand letter to Bright MLS in October 2019 to prevent premature implementation, and discussing our opposition with representatives of the US Department of Justice. More recently, we met with NAR’s CEO on May 2, 2024, to explain CCP’s illegality and affirm our non-adherence to the rule. In September 2024, we formally proposed to NAR’s Emerging Issues Committee that the rule be removed entirely.

For many years, Compass repeatedly warned the industry of the legal risk of rules like CCP, especially from future class actions. In the coming years, the risk is significant that the industry could face class actions that are distinct from the currently pending compensation-focused cases, with the potential for a significant amount of damages.

Compass does not consider the Clear Cooperation Policy or any national NAR MLS rule impacting clients as binding and, accordingly, has not and will not adhere to CCP or any national NAR MLS rule impacting clients as a matter of course. This is reflected in our company policies with our agents, in which we state that Compass will not ask agents to follow, and will not adhere to, CCP or any national MLS mandates restricting how they work with their clients and will not ask any clients to follow any national NAR MLS mandates. Programmatically, Compass has not followed any national, mandatory NAR MLS rules in a consistent or coordinated manner. Each MLS in which Compass operates has its own rules, and our agents are trained to comply with local MLS regulations, not national NAR mandates restricting client options.

Instead, Compass will continue to determine on a market-by-market basis whether to require its listing brokers to submit listings on a multiple listing service within any specific timeframe. These decisions are made based solely on Compass’s own business interests, independent of NAR and any other brokerage.

Sincerely,

Robert

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Buyer antitrust suit alleges Real, Realty One, Vanguard and The Agency conspiracy

by Andrea V. Brambila | Jul 1, 2025 | Industry, News Feed

Real estate is changing fast, and so must you. Inman Connect San Diego is where you turn uncertainty into strategy — with real talk, real tools and the connections that matter. If you’re serious about staying ahead of the game, this is where you need to be. Register now!

Real estate brokerages may have thought commission-related class-action lawsuits were on their way out in the real estate industry after nationwide settlements with homesellers, but they’re getting a rude awakening. Some homebuyers have a message for them: You can’t get away that easily.

On June 28, Illinois resident Kevin Cwynar became the latest buyer to file a class-action antitrust lawsuit against several brokerages: The Real Brokerage, Realty One Group, Vanguard, and The Agency, alleging they have caused potentially hundreds of thousands of homebuyers to pay up to thousands of dollars in excess commissions.

“Defendants and their co-conspirators adopted and implemented anticompetitive practices that harmed consumers and homebuyers by, among other things, increasing and artificially sustaining the commissions paid to real estate brokers as part of residential real estate transactions,” the complaint says.

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“Because brokers’ commissions are incorporated into the price of a home, Defendants’ anticompetitive practices have burdened homebuyers nationwide with increased home prices and unnecessarily high costs in residential real estate transactions.”

Real declined to comment for this story. Inman has reached out to the other defendants for comment and will update this story if and when responses are received.

The suit is similar to other commission-related class-action suits filed by homebuyers, which are known as Batton 1, Batton 2, Lutz and Davis, and claims the same National Association of Realtors rules at issue in homeseller cases nationwide have resulted in inflated prices paid by buyers.

This includes NAR’s now-defunct cooperative compensation rule, also known as the Participation Rule, which required listing brokers to make an offer of compensation to buyer brokers in order to submit a listing to a Realtor-affiliated MLS.

“[T]his rule eliminated competition between buyer-agents with respect to their commission rate and the quality of their services,” the complaint says.

“This lack of competition led to homebuyers paying inflated commission rates and receiving lower quality services.”

The suit also took aim at Realtor-affiliated MLSs allowing agents to filter listing searches by commission amount — a practice NAR’s 2024 settlement with homesellers eliminated.

“Naturally, this conflict of interest led to buyer-agents promoting properties that would maximize their commission, which lowered demand for properties that offered lower commissions and thus eliminated competition from discount brokers,” the complaint says.

“This harmed homebuyers, who received diminished, biased services from buyer-agents who steered homebuyers toward purchasing homes that offered high commissions.”

Just because NAR has gotten rid of the policies at issue, doesn’t mean the damage they allegedly caused to homebuyers has been addressed, according to the complaint.

“[The harms caused to American homebuyers for decades have not been remedied, nor have the billions in ill-gotten commissions been disgorged,” the filing says.

The Cwynar suit was filed in the same court as the Batton suits — Chicago’s U.S. District Court for the Northern District of Illinois Eastern Division — but is not suing the same defendants. Notably, NAR is named as a co-conspirator, but not as a defendant in the Cwynar suit.

The suit stresses the broker defendants’ involvement with NAR, including that broker leaders “attend NAR meetings, provide input on NAR’s operations, and review, lobby for, and vote on NAR rules,” “assist in NAR’s enforcement of the rules,” and ”required their brokers and agents to comply with NAR rules.”

“Defendants’ market power means that their involvement was crucial to the success of the conspiracy with NAR and other brokers,” the complaint says.

“To this end, Defendants consented to engage in, facilitate, and execute the conspiracy, playing a significant role within NAR and mandating that their affiliates comply with NAR’s anticompetitive rules and policies as a prerequisite for accessing the benefits of Defendants’ brands and infrastructure, including access to MLSs.”

“Defendants are jointly and severally liable for the acts of their co-conspirators, whether named or not named as party defendants in this action,” the complaint adds.

The complaint seeks to represent two classes:

• A nationwide class made up of “[a]ll persons who, during the applicable limitations period, purchased residential real estate listed on a NAR MLS in the United States.”
• An Illinois subclass made up of “[a]ll persons who, during the applicable limitations period, purchased residential real estate listed on a NAR MLS in the state of Illinois.”

The suit does not define “the applicable limitations period.” The complaint alleges violation of the federal Sherman Antitrust Act and unjust enrichment on behalf of all class members, and violation of the Illinois Antitrust Act and the Illinois Consumer Fraud and Deceptive Business Practices Act on behalf of the Illinois subclass members.

Whether the federal claims, at least, won’t be swiftly dismissed is an open question. As indirect purchasers of buyer brokerage services, buyers are not allowed to sue under federal antitrust laws, but may sue under state antitrust laws, which has limited the claims that still stand in the other buyer commission suits.

In addition, the seller-side litigation settlements have limited the size of any potential homebuyer class in that they prevent sellers who also bought homes from suing as buyers over the same challenged rules. This would drastically cut down the number of class members should any of the buyer commission suits receive class-action status.

Read the complaint (re-load page if document is not visible):

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New York brokers double down on FARE Act opposition as city fights back

by Andrea V. Brambila | Jun 26, 2025 | Industry, News Feed

Real estate is changing fast, and so must you. Inman Connect San Diego is where you turn uncertainty into strategy — with real talk, real tools and the connections that matter. If you’re serious about staying ahead of the game, this is where you need to be. Register now!

Real estate trade groups, brokerages and landlords in New York City are taking their case against a broker fee law to a higher court and the city is fighting back.

On June 24, the City of New York responded to a lawsuit filed by the Real Estate Board of New York (REBNY), the New York State Association of Realtors, and seven real estate companies against the Fairness in Apartment Rental Expenses (FARE) Act, which requires rental property owners to cover broker fees when they enlist a broker to help them lease a unit.

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The trade groups and companies allege the legislation violates the First Amendment and the New York State Constitution, and was pre-empted by state law. The suit also claims the FARE Act violates the Contracts Clause of the U.S. Constitution since brokers and landlords can’t execute existing listing agreements that require brokers to negotiate and receive compensation from tenants.

In its answer to the suit, the city denies the allegations.

“Defendants City of New York and Commissioner [Vilda Vera] Mayuga have not violated any rights, privileges or immunities under the Constitution or laws of the United States or the State of New York or any political subdivision thereof, nor have defendants violated any act of Congress providing for the protection of civil rights,” attorneys for the city wrote.

They also pointed out that three of the four claims in the suit were dismissed by the court on June 10. Regarding the remaining claim, that the FARE Act violates the Constitution’s contracts clause, the city alleged that the plaintiffs lack standing to bring the claim.

“The only Plaintiff who has pled facts alleging that it has exclusive contracts impacted by the FARE Act is Bond New York,” the filing states, later adding that the court may lack the jurisdiction “over REBNY and Bond New York’s Contract Clause claim due to lack of standing and/or mootness.”

Meanwhile, the plaintiffs appealed the dismissal of the aforementioned claims on June 12 to the U.S. Court of Appeals for the Second Circuit. In a June 26 filing, they asked the higher court to decide “[w]hether the District Court erred in concluding that Plaintiffs failed to demonstrate a likelihood of success on the merits of their free speech claims,” among other questions.

Neither party has submitted appellate briefs yet. But in granting the city’s motion to dismiss in regards to most of the RENBY suit’s claims, District Court Judge Ronnie Abrams suggested that the plaintiffs were looking for a judicial solution to a political problem.

“In enacting the FARE Act, the City Council made clear that it sought to address a specific harm: the detrimental impact on housing mobility caused by the practice of imposing brokers’ fees on tenants,” Abrams wrote.

“Although the Act is not primarily intended to target speech and has only a relatively minimal impact on existing contracts, Plaintiffs have sought to enjoin its enforcement on the basis that it violates the First Amendment and the Contracts Clause.

“In their telling, the Act will wreak havoc on the City’s residential rental market, cause rents to rise, put brokers out of work, and make it exponentially more difficult for New Yorkers to rent apartments.”

Abrams stressed she did not believe it was the court’s job to decide which of these contrasting views was correct.

“Plaintiffs’ discontentment with the Act, however, stems not from its effects on their constitutional rights, but from a fundamental disagreement with its underlying policy,” she continued.

“The law is clear, though, that ‘[w]hether the legislation is wise or unwise as a matter of policy is a question with which [the Court cannot be] concerned.’ Thus, although some of Plaintiffs’ prophecies may prove true, Plaintiffs remedy is through the political process, not in court.”

Read NYC’s answer to REBNY’s suit (re-load page if document is not visible):

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