Legal: Need Legal Funding?
From defending against antitrust claims and overturning burdensome local ordinances to stopping online copyright infringement of MLS listing data, associations seek NAR funding for roughly a half-dozen cases a year. Is your association aware of the assistance available from the Legal Action Program?
Here is a detailed description of the program, including an explanation of who qualifies and how to apply.
What is the Legal Action Program?
In 2015, NAR’s Legal Action Committee, which comprises 17 REALTOR® members, reviewed five applications for financial assistance. Four qualified for funding: one case defending an association’s arbitration award, one defending an MLS against an antitrust claim, and two defending real estate firms against patent infringement claims.
Applicants before the committee qualify based not only on financial need but more importantly on the content of the cases. The committee funds important litigation affecting NAR, state and local associations, members, and real estate owners where the cases might have a direct or indirect impact on the entire real estate industry.
At the outset, the program’s focus was directed to litigation affecting member boards and arising under federal law, but the scope of the program was later expanded to include litigation arising under state or even local law—for example, fighting ordinances restricting For Sale signs.
Requests for assistance involve a broad scope of legal issues, including antitrust, fair housing, property rights, First Amendment issues, intellectual property matters, RESPA and claims against brokers for misrepresentation, and a variety of others.
Legal Action Program assistance comes primarily in the form of funding for attorney’s fees and costs incurred in the litigation, and also by authorizing NAR participation as “amicus curiae,” or “Friend of the Court,” in appropriate cases.
The NAR Legal Action Program has supported hundreds of important cases during its 45-year history. The committee encourages and welcomes requests for support and eagerly looks for opportunities to influence the results in litigation to improve and clarify the legal climate for real estate professionals, associations and MLSs, and real estate owners and users.
How to apply for funding
Parties requesting assistance submit a request form and other relevant information that sets out the nature of the case, the facts underlying the case, and the factual and legal issues that are likely to be addressed. The request also explains why the case may have an impact not only on the litigants but also on other real estate professionals, property owners, real estate transaction or brokerage practices, the operation of real estate associations, or other industry issues.
If you’re not sure if your case has national implications, call your state association’s legal action program representative or an NAR staff attorney. Most state REALTOR® associations and some locals have established legal action programs of their own and often recommend cases to NAR’s program.
Who qualifies for funding?
At its biannual meetings, the Legal Action Committee usually hears oral presentations by the requesting parties and may ask questions. In the case of an association or MLS seeking funding, the AE typically makes the presentation. The committee considers as few as two or three requests to as many as 12 to 14 requests for a very busy meeting.
A critical consideration for the committee in each case is whether it involves factual or legal issues that affect only the parties to the case (or a small segment of industry participants) or whether it may affect the industry nationwide and contribute to the development of law in a way favorable to the industry. The committee then considers each request in executive session and makes a recommendation to the NAR Board of Directors on funding.
For more about the Legal Action Program, how to apply for funding, and the Legal Action Committee, visit nar.realtor/programs/legal-action-program.
NAR has funded some of the most significant cases in real estate legal history, shaping both communities and members’ businesses.
Defend MLSs’ right to require association membership.
Beginning in the 1980s and continuing for years, the committee provided significant support to associations and MLSs faced with antitrust-based challenges to their requirement of REALTOR® membership as a condition of MLS participation. The membership requirement was upheld in most of those cases, although in a few states the MLS was not successful, and in those states MLSs may not require participants to be REALTORS®. For example, NAR helped fund the defense of the South Central Wisconsin MLS when a member brought an antitrust lawsuit against the MLS, the local association, and the association’s directors for tying association membership to MLS services. The court found in favor of the MLS, in part because the member had offered no evidence that he had unreasonably been denied access to MLS services.
Keep For Sale signs legal.
NAR has help fund numerous cases challenging municipal ordinances narrowly restricting real estate For Sale signs. For example, in a landmark case in 1999, the Sandhills Association of REALTORS® (along with other plaintiffs) challenged the constitutionality of a local sign ordinance in the village of Pinehurst, N.C. on the grounds that it interfered with their First Amendment speech rights. The association argued that the ordinance improperly disfavored real estate signs over signs displaying other kinds of content. When such speech is restricted because of its content, courts evaluate the regulation much more rigorously and in this case declared the ordinance unconstitutional because of the content-based difference in treatment.
Defend homeowners’ property rights.
The Legal Action Program has supported property owners in a variety of cases involving property rights, such as whether certain restrictions on development or use of property result in “takings” of property for which the U.S. Constitution requires payment of just compensation. Property rights cases also include regulatory issues such as whether property was correctly and fairly determined to be wetlands subject to extensive federal regulations on use.
Defend members’ duty to arbitrate.
A significant number of cases involve the duty of REALTORS® to arbitrate disputes under the Code of Ethics or challenge the result of an association arbitration proceeding. The success rate in such cases is very high, with almost all courts upholding members’ duty to arbitrate or confirming and ordering enforcement of association-issued arbitration awards. For example, in 2009 the Indiana Court of Appeals affirmed the dismissal of a real estate broker’s action to vacate an arbitration award to another broker.
Defend against patent trolls.
Recently, NAR has provided financial support to real estate professionals sued by “patent trolls” for patent infringement in cases involving patents of doubtful validity or allegations of infringement for activities outside the scope of the patent. In those cases, the defendant real estate firms denied the infringement or challenged the validity of the patents. Faced with a vigorous defense by the defendant real estate firms, assisted by NAR, the patent owners dropped their claims again the firms.
Defend brokers against personal liability for agent actions.
Several important victories have also been achieved in the U.S. Supreme Court in cases in which NAR filed “amicus curiae” briefs approved and funded by the Legal Action Program: In Holley v. Meyer, the court held, as NAR had argued, that owners of incorporated real estate firms could not be held personally liable for alleged violations of the Federal Fair Housing Act by agents of the firm.
The NAR scorecard of legal wins and losses is impressive. View a selection of cases funded, by category, online at nar.realtor/programs/legal-action-program/legal-action-case-support-scorecard.
Ralph W. Holmen is the associate general counsel at the National Association of REALTORS®. Contact him at 312-329-8375 or firstname.lastname@example.org.