Alabama Passes Law Contradicting NAR Settlement

Back in November, as a judge considered final approval of the National Association of REALTORS®’ (NAR) landmark settlement agreement, NAR attorney Ethan Glass warned of the possibility that REALTORS® could be put in a position where complying with the terms of that deal could conflict with other laws.

That has proved prescient, as earlier this week, Alabama Governor Kay Ivey signed a bill that explicitly bans any requirement for buyer agreements before agents tour properties with a client.

Notably, the bill was shepherded through the legislature by the Alabama REALTORS®, which has previously criticized NAR and highlighted legal threats to the industry.

“With (the new law) in place, potential buyers cannot be forced to sign a binding agreement just to view a property. Instead, a written agreement is required before submitting an offer, ensuring greater transparency and consistency in real estate transactions statewide,” the association wrote on Facebook.

In response to an emailed inquiry, Alabama REALTORS® CEO Jeremy Walker emphasized the law was supported by members, and that they “had a voice for the first time in this process through a democratically elected body.”

“State Associations have a First Amendment right to organize, engage in the political process, and pursue legislation that benefits their members and consumers- and importantly, state legislatures are the appropriate body to govern laws affecting real estate matters,” Walker wrote. “We are excited that (the new law) will provide greater transparency for consumers in their first interaction with an agent in the home buying process and allow them the opportunity to build a relationship with an agent before entering into a buyer’s agreement.”

Walker did not respond to a specific question regarding what kind of guidance Alabama REALTORS® was providing to members in relation to the law and the settlement, or whether he had been in contact with NAR. An NAR spokesperson deferred specific questions regarding to Alabama REALTORS®, but pointed to previously released guidance saying that state law takes precedence over the settlement.

“Written buyer agreements will be required of all MLS Participants working with buyers prior to touring a home, unless state law requires a written buyer agreement earlier in time,” the guidance also reads.

But it remains unclear exactly how direct conflicts between a state law and the legally binding settlement agreement will play out. Glass noted back in November that this exact scenario was untenable.

“(I)f NAR is compelled under pain of contempt to require written buyer agreements, it can’t be that there is an investigation, a litigation, or anything by someone challenging NAR for doing that and circumventing this court’s order,” he said.

Glass was referring specifically to a letter by the Department of Justice (DOJ) Antitrust Division, which singled out the buyer agreement requirements as potentially in violation of antitrust laws. While there is no explicit mention of this from Alabama REALTORS® or the bill’s sponsors in the legislature, the DOJ’s interest is seemingly hanging over the conversation.

The bill—which passed almost unanimously through the Alabama legislature—was characterized by elected officials as simply “clarifying” previous law, with lawmakers describing it as “well-vetted” and more about “staying ahead” of national policy changes. It will go into effect next month.

Other states have taken very different approaches, with Ohio passing a bill last summer to directly align state law with the NAR settlement by requiring buyer agreements before buyers can tour a property.

More proposed bills have challenged the NAR policy changes in other ways, including a proposed bill in Oklahoma, which would explicitly allow agents or brokers to compensate each other.

Editors note: this story was updated with a response from NAR at 4:45 p.m. Eastern time.