Court of Appeals Denies NAR's Request for Rehearing, DOJ Probe Continues

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In a significant legal development, the U.S. Court of Appeals for the District of Columbia Circuit has denied the National Association of Realtors' (NAR) request for a rehearing in its ongoing legal battle with the Department of Justice (DOJ). This decision clears the way for the DOJ to proceed with its investigation into NAR’s practices, which have been under scrutiny for potential antitrust violations.

The Court's brief order marks the latest chapter in the DOJ’s extended effort to revisit its probe into NAR, particularly focusing on the organization's controversial commission rules. This investigation had been initially closed by the DOJ in November 2020 following a settlement agreement that aimed to increase transparency regarding broker commissions and correct misleading claims about the cost of buyer broker services.

However, the DOJ withdrew from this settlement in July 2021, citing concerns that the settlement's terms hindered further investigation into other NAR policies potentially detrimental to homebuyers and sellers. This withdrawal led to a renewed legal skirmish, with NAR contending against claims from both the DOJ and various court cases addressing real estate commission practices.

In April 2024, a three-judge panel ruled in favor of the DOJ, allowing the continuation of its investigation, reversing a prior district court decision that had upheld the settlement terms. NAR's petition for a rehearing, filed in May 2024, argued that the appellate court's decision contained significant errors affecting the outcome of the case.

Judge Timothy Kelly of the U.S. District Court for the District of Columbia had earlier ruled in favor of NAR, affirming the validity of the previous settlement terms. The DOJ’s appeal and the subsequent reversal by the appeals court underscored the ongoing tension between regulatory oversight and industry practices.

The DOJ remains focused on investigating NAR’s rules, including the Participation Rule—which mandates blanket compensation offers to buyer brokers—and the Clear Cooperation Policy—which requires timely submission of property listings to Realtor-affiliated multiple listing services. Recent meetings between DOJ antitrust attorneys and NAR leadership, including President Kevin Sears, have been described as constructive, highlighting ongoing dialogue as the investigation unfolds.

The denial of NAR’s rehearing request underscores the DOJ’s resolve to pursue its inquiry into the real estate industry's regulatory practices, potentially reshaping the landscape of real estate transactions and broker compensation.