Monday, March 4, 2024

An Introduction to the Changing World of Residential Broker Commissions (Article)

 Christopher J. Mercurio

REBA is monitoring certain class-action lawsuits against the National Association of Realtors (“NAR”), various multiple listing services, and other brokerages and industry participants concerning how real estate brokers are compensated. As most readers of REBA News are aware, last October, a federal jury in the case of Burnett v. NAR (W.D. Mo.) found NAR (and other industry defendants) liable in a case challenging some longstanding practices that, according to the plaintiffs’ arguments, violate antitrust laws and artificially inflate broker commissions.

  Burnett is one of several similar cases making their way through the courts, including Nosalek v. MLS PIN (D. Mass), and Moehrl v. NAR (N.D. Ill.), the latter of which is not expected to go to trial until the end of 2024 at the earliest. 

While each case is unique, they all challenge the requirement (enforced by NAR and other industry groups) that sellers must offer to compensate a buyer’s broker in order to list a property on an MLS listing service, or other similar databases.  As the plaintiffs in Moehrl argue, this arrangement is anticompetitive and inflates commissions because, among other reasons, (i) it creates a system wherein sellers are shouldered with an extra cost that would normally be borne by buyers in a competitive market, (ii) it compels sellers to offer the same compensation to every buyer-broker, regardless of their experience or the services they provide, (iii) it creates an incentive for sellers to offer the (arguably high) industry-standard commission rates out of fear that buyers brokers will “steer” their clients away from listings that offer a lower commission.  As the plaintiffs in Burnett summarize, the foregoing factors result in the perpetuation of inflated commissions for buyer-brokers in a world where recent technological and social changes (e.g., the rise of the internet) should have led to savings in transaction costs being passed on to consumers like in other industries (e.g., travel booking, insurance and banking). 

While the implications of these lawsuits on the real estate industry will not be clear for some time, recent settlement agreements may offer some clues as to where the industry is going. In a recent proposed settlement in Nosalek, MLS PIN agreed to amend its rules by, in pertinent part:

(1) eliminating the requirement that a seller must offer compensation to a buyer-broker; (2) requiring the broker for the seller to provide notice to the seller that (a) the seller is not required to offer compensation to the buyer-broker and (b) if the buyer-broker requests compensation from the seller, the seller can decline; and (3) if the seller elects to make an initial offer to the buyer-broker and the buyer makes a counter offer (effectively rejecting the seller’s offer), then any commission to be paid to the buyer-broker is negotiated among the seller, the buyer, the seller-broker and the buyer-broker.

In a similar settlement in Burnett and Moehrl, RE/MAX agreed to several business practice changes, including (i) not requiring its agents to be members of NAR, (iii) encouraging franchisees to be “very clear that commissions are negotiable and not set by law or . . . corporate policy”, and (iii) not providing software that allows franchisees to filter listings by the amount of compensation offered to buyer-brokers.  It should be noted that the foregoing settlements are limited to certain defendants, and both the Nosalek and Moehrl cases are continuing.    

NAR has yet to participate in a settlement, and despite the setback in Burnett, former NAR President Tracy Kasper stated in October of 2023 that the matter “is not close to being final”, arguing that:

[c]onsumers are better off and business competition is able to thrive because of our rules and how well local MLS broker marketplaces function. In fact, the NAR cooperative compensation rule for local MLS broker marketplaces ensures efficient, transparent and equitable marketplaces where sellers can sell their home for more and have their home seen by more buyers while buyers have more choices of homes and can afford representation.

Given that these cases are being heard in different courts and include different participants and unique arguments, industry professionals who are advising clients should pay close attention to both the substantive rulings of the courts and the reactions (and potential rule changes) that follow from local trade groups and market participants.  If you are advising residential buyers or sellers, it would be prudent to advise them that the traditional commission structure is the subject of multiple lawsuits and, depending on their location and how the property in question is being marketed, they may have additional options for the way in which commissions are paid in their transaction. REBA will continue to monitor developments in these cases, including NAR’s appeal in Burnett.  

A member of REBA’s Title Insurance and National Affairs Section, Chris is an associate at the international law firm of Proskauer Rose LLP. He represents and advises businesses and organizations in all aspects of real estate transactions, commercial leasing, and land use and development.  Chris has experience in drafting and negotiating purchase sale agreements and managing due diligence for commercial real estate transactions involving industrial, office, multi-family residential and retail properties.  Chris’s email address is

Wednesday, February 21, 2024

Will Transferring Title to an Estate Planning Trust Terminate a Title Insurance Owners Policy?

Rhonda L. Duddy

Does an owner policy of title insurance terminate when title is transferred to a trust for estate planning purposes?  That is the question

title insurance underwriters are frequently asked by insured owners and/or their estate planning attorneys. 

The answer to this inquiry is both yes and no, based on the policy issued because the covered risks, terms, conditions and exclusions vary depending on the kind and version of policy issued.  For instance, a 1992 ALTA owner policy differs from a 2006 and a 2021 ALTA owner policy. Additionally, the 1998 ALTA homeowner policy (sometimes referred to as an enhanced policy) differs from a 2008, 2010, 2013 and 2021 ALTA homeowner policy.

A typical scenario is subsequent to the purchase of the property, the named insured conveys the property to trustee(s) of a trust for estate planning purposes.  Depending on the policy form issued at the time of purchase, if the named insured on the policy is no longer the owner of the real estate as a result of the transfer, under the terms of the policy coverage may have terminated due to the fact that the property is no longer owned by the named insured.  In that instance, the current owner no longer has the benefit of the title insurance policy. Therefore, it is important that terms and conditions of the policy be reviewed, particularly the policy’s continuation of coverage section and the definition of insured section in order to determine whether coverage under the policy might be impacted prior to transferring title from a named insured. 

For example, looking at the 1992 ALTA owner policy, the continuation of coverage section contains the following or similar language:

The coverage of this policy shall continue in force as of the Date of Policy in favor of an insured only so long as the insured retains an estate or interest in the land, or holds an indebtedness secured by a purchase money mortgage given by a purchaser from the insured, or only so long as the insured shall have liability by reason of covenants of warranty made by the insured in any transfer or conveyance of the estate or interest.  This policy shall not continue in force in favor of any purchaser from the insured of either (i) an estate or interest in the land, or (ii) an indebtedness secured by a purchase money mortgage given to the insured.

If the policy that was issued includes this or similar language and subsequently the insured conveys the property, the insured would no longer have an estate or interest in the land.  Depending on the terms of the trust and how the beneficial interest is allocated, an owner might have a personal property interest in the trust, but they would no longer have an individual interest in the land and would no longer have coverage under the policy. 

Other owner and homeowner policies may contain continuation of coverage language that includes language that the policy also insures the trustee or successor trustee of the insured’s trust or any estate planning entity to whom the insured transfers their title after the policy date.  In these instances, no further action may be required since the terms specifically state that policy coverage is continued under these specific circumstances, so long as it was an insured’s trust or a trust or entity created for estate planning purposes.    

It is also important to review the policy’s “definition of insured” section in order to determine whether there are any other parties or entities that are included falling under the term, other than the named insured.  In certain circumstances, a transfer to a third party or entity might not terminate coverage if that party or entity is included in the definition of insured.  It is important to note that the definition of insured varies depending on the version and type of policy issued.   

For example, looking again at the 1992 ALTA owner policy that contains the following or similar definition of an insured:

“Insured”:  The insured named in Schedule A, and, subject to any rights or defenses the Company would have had against the named insured, those who succeed to the interest of the named insured by operation of law as distinguished from purchase including, but not limited to, heirs, distributees, devisees, survivors, personal representatives, next of kin, or corporate or fiduciary successors.

Some policies expand the list of successor insureds to include certain parties who obtain title other than by operation of law, including a spouse who receives title upon dissolution of marriage and the trustee of a trust to whom title is transferred.  If the policy recognizes a transfer to a person or entity falling under the definition of an “Insured” then no further action may be required in order to continue coverage. 


Due to these nuances in the various title insurance policy forms, it is important to confirm continuation of coverage before transferring real estate so that the title insurance policy purchased at the time you purchased the property is not terminated upon transfer. As discussed, some policies have strict and limiting language relative to when coverage terminates while others have broader continuation of coverage language. 


What should you do if you would like to transfer your property and you have a current policy?  If it is determined that the existing policy does not cover transfers to trusts, you may have the option to either buy a new policy or obtain what is called an “additional insured” or “change” endorsement to the original policy.  A policy endorsement would then name the trustee(s) of the trust as an additional insured and coverage would continue.  Be aware that it is not an option to transfer the property out of the trustee(s) of the trust back to the named insured in order to regain coverage.  The first conveyance may terminate coverage so conveying it back would not reinstate the policy.


Please be sure to review your title insurance policy before transferring real estate into a trust.  You can always reach out to your attorney or title insurance underwriter to confirm whether coverage would continue or terminate on transfer to your trust for estate planning purposes.


Rhonda is Massachusetts and New Hampshire Underwriting Counsel for Steward Title Guaranty Company.  Her email address is

Tuesday, February 20, 2024

Collecting Delinquent Condominium Fees - A Matter of Time

 Richard E. Brooks

If there is a single phrase that summarizes legal advice on collecting delinquent condominium fees, it is this: “Time is of the essence.”

As most Condominium board members and managers are aware,

Massachusetts law allows Condominium associations to foreclose on owners who do not pay their Condominium fees and to collect up to six months of delinquent payments plus attorneys’ fees, ahead of the claims of the mortgage lender. The law gives owners a powerful incentive to make the required payments (to avoid foreclosure) and it gives mortgage lenders an equally powerful incentive to make those payments if the owners do not, to ensure that the lender does not lose money if the association or the lender forecloses. But the law also creates a strict timeline association must follow to ensure that they collect all the money they are owed.

Ideally, the process works something like this:

1.   The board (or manager) should send the owner a friendly reminder when a delinquency reaches the 15-day mark.

2.   After 45 days, a less friendly reminder should follow, informing the owner that the fee is overdue and if it isn’t paid, the association will begin a formal collection action. These two notices will provide documentation for the association should the owner complain that he/she was never informed of the delinquency.

3.   If the owner doesn’t respond to the second notice, the board should turn the collection over to the association’s attorney. Our firm typically sends a formal legal notice at the 75-day mark, informing the owner that: The association will take legal action, if necessary, to protect its interests; the association has the right to foreclose; and the owner will be responsible for paying attorneys’ fees and legal costs related to the collection effort.

We like to send this notice to the owner and a second one, if necessary, before we send the mortgage lender the two notices required before the association initiates a foreclosure action.  This schedule gives the owner time to respond and resolve the problem before the lender has been notified and before the association has incurred further legal costs the owner will be required to pay. In addition to protecting the association’s superlien (the primary goal), an aggressive collection schedule also helps the owner, by reducing the risk that a relatively small delinquency problem will become a larger and potentially insurmountable one.

The collection process is, or should be, straightforward.

But it can be complicated by the fact that the delinquents in a condominium community are the neighbors and possibly the friends of board members who are seeking payment from them. While the instinct to help neighbors in trouble is understandable, the board’s obligation, is clear: That obligation is to protect the interests of the association and association members, who would be harmed if some owners don’t pay their share of the association’s expenses.

Owners have a legal obligation to pay their fees and boards have an obligation to collect them. That doesn’t leave any wiggle room for owners, and it doesn’t leave much for board members, but it does leave room for some discretion in the collection process. Boards can’t forgive delinquent payments, but they can consider special circumstances and offer options that may facilitate repayment, as long as those options don’t weaken the board’s position or undermine its ability to enforce the priority lien.

Payment Plans

For example, if the property has sufficient equity and no mortgage (or a small one), the board might defer payment to give a widowed owner time to sell the unit. A payment plan may also be a viable option for a struggling owner who has fallen behind - because of a medical emergency or a temporary job loss - but has the ability to catch up. Associations that offer payment plans should:

  • Offer them to owners who need temporary relief.
  • Require owners to remain current going forward and to repay the delinquent amount quickly – six months should usually be the maximum time allowed.
  • Enforce the repayment terms strictly. Boards can waive late fees on the delinquent amount during the repayment period (although they are not required to do so), but if owners miss a payment, late fees and the collection process should resume immediately.
  • Prohibit payment plans for “serial delinquents” who cure one delinquency and then fall behind again. Boards should be strict about this, but they don’t have to be inflexible. “Stuff happens” and new “stuff” may justify more than one payment plan. But at some point, owners have to run out of second chances. You don’t want them to treat payment plans like lines of credit they can tap whenever they need extra cash.

Some Supplemental Advice

For boards dealing with the Superlien, timing is essential. Words also matter – a lot. With that caution in mind: Never use the term “special assessment.” Erase it from the board’s vocabulary, avoid references to it in collection notices, in meeting minutes and in owner votes. Association fees and expenses are protected by the superlien; special assessments are not. Call the additional payments required from owners to finance a capital repair a “Condominium fee” or a “supplemental fee” or an “additional fee “ -- but don’t call them an assessment or a special assessment. If you do, you won’t be assured of collecting what the association is owed.

Getting Tough

Boards sometimes ask if they can (or should) bar access to association amenities for delinquent owners, or even go further and cut power or water service to their homes. The answer is no for several reasons.

  • The courts frown on such draconian measures.
  • The association might incur legal liability for illness, injury or damage to the unit resulting from the denial of essential services.
  • The public relations damage will be enormous. “Condominium association cuts off power to elderly widow on Christmas Eve” is not a headline you want to see associated with your community.

Privacy concerns and legal liability risks also argue strongly against trying to embarrass delinquent owners by identifying them – in meeting minutes, in the newsletter, on the Web site, or in other public venues.

Aggressive collection measures such as these aren’t just fraught with legal liability and other risks for associations – they are also unnecessary. The Superlien has been in place since 1993 and it has proven to be a highly effective and efficient collection mechanism. Although there are extremely rare exceptions, associations that approach delinquencies proactively, operating within the six-month priority lien window, are always repaid.

A partner in the Braintree firm of Marcus Errico Emmer & Brooks, P.C., Richard concentrates his practice on general condominium law and lien enforcement, focusing on the representation of condominium associations and everything that it entails, including:  lien enforcement, document interpretation, rule enforcement, administrative procedures, contract review, developer issues and insurance matters.  Richard can be contacted at

Do Condominiums Have the Right to Restrict Signs?


Gary Daddario

Q:  Our condominium association has a rule barring the display of signs in common areas or in locations visible from common areas. Some board members say we are required to make an exception for political signs. Is that true?

A:  The key question is whether condominium boards have the authority to restrict the right to freedom of speech, guaranteed by the Constitution. A decade

or so ago, we would have said unequivocally that the answer was yes. The courts had consistently recognized that only governmental entities are required to protect constitutional rights. Because condominiums are private property, not public spaces, because associations are not governmental entities, and because owners choose to live in their communities voluntarily, the courts had reasoned, condo associations could restrict Constitutional freedoms in ways that governmental entities cannot.

That legal consensus has shifted over time, however, and the courts have become more inclined to view condo associations as quasi-governmental actors, required to recognize, at least to some degree, the constitutional rights of their residents, particularly if the condominium relies on state law to support its claims or a portion of them.

Also worth noting, a Massachusetts Superior Court has held that residents of a condominium have free speech rights related to the state’s constitution. In addition, the Massachusetts Appeals Court has found that condominium associations may, in fact, be viewed as “government actors” in some cases. Specifically, the Massachusetts Appeals Court held that where a condominium seeks to use the state condominium statute to support its claim to recover legal fees against an owner accused of violating a sign prohibition, the condominium’s policy will be subjected to First Amendment scrutiny. And the New Jersey Supreme Court has ruled significantly that a condo association’s ban on all signs was unconstitutional because it prohibited the display of political signs, impinging on political speech which, the court noted, “lies at the core of our Constitutional speech protection…[which] is fundamental to democratic society.”

In considering a policy governing political signs, your board should consider these decisions, the judicial reasoning behind them, and what appears to be clear trend toward curbing the authority of condominium boards to govern their communities. The board should also consider the reaction of owners, many of whom may want to express their political views by displaying political signs. Some owners are likely to challenge a policy banning signs and there is a better than even chance that the courts will side with them.

But “reasonable” restrictions similar to those the courts have accepted for the display of flags are likely to pass muster with both owners and the courts. Following those guidelines, owners could display political signs but the board could restrict the “time, place and manner” of the displays.

That means you can dictate the size of the signs and where owners place them – on their own property, for example, and not in common areas, or, if in common areas, not on sidewalks or streets where they would create a safety hazard. You can also specify a period before and after an election when the signs can be posted. And you can restrict the “manner” of the display, prohibiting signs with flashing neon lights or loud noises that would constitute a nuisance to residents.

Any restrictions you impose must be content neutral, however. That is, you can’t dictate what signs can and cannot say, you can’t permit signs supporting one candidate or one position but not others, and enforcement must be consistent and even-handed.

Some owners may challenge any restrictions the board imposes, but reasonable restrictions on signs are less likely to anger owners and more likely to survive a challenge than a policy banning them entirely.

Gary Daddario is a partner in the Braintree firm of Marcus Errico Emmer & Brooks. P.C.  concentrating his practice in the field of community association law since 2003.  In addition to assisting Massachusetts clients, Gary also assists New Hampshire clients and manages the firm’s new location in Merrimack, New Hampshire. Gary’s email address is