Florida consumers who wish to utilize the MLS (Multiple Listing Service) for a flat fee need to be aware that a growing number of online FSBO (For Sale By Owner) marketing firms that sell flat fee MLS online services to Florida consumers do not maintain a Florida brokerage license. These companies might be in violation of Chapter 475, Florida Statutes, given the fact that they are soliciting real estate services from Florida consumers/sellers for a fee without maintaining an active, valid Florida real estate brokerage license. Search for a Florida real estate licensee.

The following cases stand for the proposition that a foreign real estate broker is not authorized to take part in the procuring of sellers and/or buyers for a fee in the state of Florida without first obtaining a Florida license.

1) Where a foreign broker acting on his own procures a client from his own jurisdiction to purchase property in Florida, he is not entitled to collect a fee. Paris v. Hilton, 352 So.2d 534 (Fla. 1st DCA 1977). In Paris, this court held unenforceable a promissory note given by the Georgia purchaser to a Georgia broker because the note was given as consideration for brokerage services performed in Florida in connection with the sale of Florida land, the Georgia broker not being licensed in Florida

2) However, where a foreign broker, acting as cobroker with a Florida broker, procures a client within his own jurisdiction, the fact that part of his services were performed in Florida will not preclude him from enforcing his contractual right to a fee if he has performed good faith services within his own jurisdiction. Tassy v. Hall, 429 So.2d 30 (Fla. 5th DCA 1983).

3) Where one cooperating broker is under a disability to recover a commission because of being non-registered, this infirmity affects the validity of the entire contract and no recovery is permitted. Harris v. McKay, 176 So.2d 572 (Fla. 3rd DCA 1965).

4) CITE: 502 So.2d 1317 PREVIEWS, INC., a Florida corporation, and Guy Eberhardt, Appellants, v. J.T. MURFF, Sr., J.T. Murff, Jr., and Murff and Company Inc., d b a M-K Ranches, Appellees. …

“We do not have a situation where the foreign broker performed good faith services within his own jurisdiction. On the contrary, this foreign broker s activities were directed towards the solicitation of a purchaser in Florida.  The inescapable conclusion is that Eberhardt engaged in brokerage activities in this State within the meaning of Section 475.01(1)(c). Inasmuch as Eberhardt s activities were in violation of the laws of this State, his cobrokerage agreement with the Florida broker does not furnish a basis for the enforcement of a right to a fee for his services. That is, Eberhardt has not brought himself within the above quoted provisions of Section 475.25(1)(h). Were we to hold otherwise, we would, without justification, be providing a way by which Florida brokers could sublet their Florida licenses to foreign brokers. Neither is Previews, Inc. entitled to a fee.”

There appears to be a growing movement within the flat-fee MLS marketplace that businesses selling “flat-fee MLS online services” do not need to obtain the requisite licenses in order to comply with applicable state brokerage licensing laws. For a listing broker, flat-fee MLS has become a giveaway business that, at best, should only be used to capture additional revenue from alternative sources. So, why can’t this popular segment within the real estate industry generate enough in profit margins to sustain itself? The answer is quite clear: unfair methods of competition, resulting from unlicensed activity. This inappropriate intrusion into a regulated industry operates to the detriment of legitimate licensees, many of whom have become insolvent due to unlicensed activity. The extent of the damages to the industry is unknown. One could easily argue, however, that this behavior makes entry into the market place more difficult and has had a profound effect on sustainability.

These individuals engage in the performance of real estate services (within the meaning of Chapter 475, Florida Statutes) in that they maintain websites that offer consumers a host of different real estate brokerage services that include, without limitation, listing property in a local MLS (Multiple Listing Service) for a flat fee through the cooperative efforts of licensed real estate brokers with whom they have established written referral agreements. They unlawfully collect and retain a portion of the fee charged for listing the real property in the MLS. This takes market share away from legitimate, licensed real estate brokers in that licensed brokers are deprived of listings, revenue, and revenue growth, among other things. These listings would otherwise be posted on the MLS through the licensed brokerage community using legitimate forms of conduct and compliance with all relevant licensing laws.

Furthermore, these business models unlawfully procure the involvement of third party licensed real estate brokers, who, in addition to being licensed, must hold participatory rights to numerous MLS’s throughout each state. These individuals accomplish this by establishing a network of licensed brokers and sales associates divided among different regions throughout each state with whom they have written MLS referral agreements. As a result of these unlawful referral agreements, these individuals engage in an unfair method of competition, and violate licensing laws, among other things, thereby gaining market share as a result of selling MLS packages to consumers/sellers who make payment directly to them.

Finally, the revenues derived from the sale of these MLS packages, combined with all other derived benefits, such as all private property listings created as a result of tying ( bundling ) these services together, clearly indicate how these MLS referral agreements serve to increase market share, which in turn harms the industry.

This scheme of networking with licensees throughout the country as an attempt to circumvent the licensing laws, not only violates those laws but harms each licensed broker who has lost revenue, revenue growth, and market share as a result of these unfair methods of competition. Similarly, the scheme is designed to enrich the violator, and serve as a means by which the violator can sustain its operation and continue to fund portions of its costs for research, web traffic growth, and increased search engine rankings, among other things. The violator’s business model produces significant revenues from these unlawful practices to grow and stay in business.

Has the MLS gone brokerless? One would think so given the surge in popularity for Flat fee MLS (Multiple Listing Service) over the past several years. However, to properly understand this concept, one needs to be aware of the difference between a home advertised as a For Sale By Owner property and one placed on the MLS for a flat fee.

For Sale By Owner, or FSBO , is known as the process of selling real estate without the representation of a real estate broker or agent. Homeowners market their own property and represent themselves, usually with the help of a lawyer.

Flat fee MLS, or limited service MLS, refers to a practice whereby real estate brokers (flat fee MLS providers) place pertinent information about real property for sale into a database called the MLS (Multiple Listing Service) and charge a specific dollar amount as opposed to a commission based on the sales price of the property. This essentially wipes out the listing brokerage commission as it is replaced with a flat fee paid to the listing broker.

Flat Fee MLS is simply a merger between full service real estate brokerage and for sale by owner, a/k/a FSBO, creating a hybrid vehicle which essentially reduces MLS fees and contractual risks associated with using a full service brokerage firm (i.e., liability with respect to commissions paid out and contractual concerns regarding when and how to market the real property). As a result, flat-fee sellers are not committed to paying a cooperating brokerage fee and are able to advertise their homes on a for sale by owner basis.

The arrangement, however, between the real estate broker and the property owner (”seller”) typically requires that the parties enter into an exclusive-agency listing agreement, a listing contract under which the owner appoints a real estate broker as his or her exclusive agent for a designated period of time to sell the property, on the owner’s stated terms. The seller reserves the right to sell without paying a cooperating brokerage fee if he or she sells to a prospect (buyer) who has not been introduced or claimed by a broker/mls member participant. This essentially reduces contractual risks between the seller and the listing broker, as the seller is free to sell (or otherwise transfer title to the real property) to any person procured by the seller (i.e. someone who is not represented by a “Buyer’s Broker”) without having to pay a brokerage commission or penalty. The net effect is to limit brokerage services provided, thereby giving the seller greater control and flexibility at significantly reduced costs.

The downside to using a for sale by owner/fee for service (or flat fee MLS listing service) business model is that the seller must represent himself in the sale of his property. It is for this reason that Flat fee Listings may not be suitable for everyone. The seller is advised to seek competent, qualified legal advice when attempting to sell real property using a flat fee MLS listing service.

See also: Unlicensed Activity
See also: Criticism Strikes Flat Fee MLS Business Model
See also: Its Settled National Association of Realtors/Department of Justice

This matter is before this Court on Plaintiff Vicki V. Busby’s (“Busby”) appeal of the district court’s denial of class certification to a class of plaintiffs seeking damages arising out of Defendant JRHBW Realty, Inc.’s, d/b/a RealtySouth (“RealtySouth”), alleged violation of Section 8(b) of the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. § 2601, et seq. AFFIRMED IN PART, REVERSED IN PART, VACATED AND REMANDED.

On May 26, 2004, Busby, the putative class representative, purchased a home in Jefferson, Alabama, using a federally related home loan. Busby employed a RealtySouth real estate agent who earned a sales commission based on a percentage of the purchase price. This brokerage commission, paid by the seller, was lowered from 3% to 2.5% in order to encourage the seller to accept Busby’s offer. During the closing and settlement, RealtySouth charged Busby an Administrative Brokerage Commission fee of $149 (the “ABC Fee”). The closing attorney is Ms. Busby’s current counsel. He explained the closing documents and the HUD-1 statements to Busby 2 and engaged in discussions with her concerning the transactions.

Initial complaint.
Appeal from United States District Court for the Northern District of Alabama

475.42  Violations and penalties.–

(1)  VIOLATIONS.–

(a)  A person may not operate as a broker or sales associate without being the holder of a valid and current active license therefor. Any person who violates this paragraph commits a felony of the third degree, punishable as provided in s. 775.082 or s. 775.083, or, if a corporation, as provided in s. 775.083.

The following cases address the issue of unlicensed real estate activity in the state of Florida.

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA FOURTH DISTRICT July Term 2005 METEOR MOTORS, INC., d/b/a PALM BEACH ACURA, Appellant, v. THOMPSON HALBACH & ASSOCIATES, an Arizona corporation, Appellee. No. 4D04-2985 [November 2, 2005] GROSS, J.
The issue in the following case is whether a corporate business broker which put the buyer and seller together in the sale of an automobile dealership is precluded from recovering a brokerage fee because it did not comply with the licensing requirements of Chapter 475, Florida Statutes (2004). We hold that section 475.41, Florida Statutes (2004), prevents the broker from enforcing its fee contract and reverse the final judgment entered in favor of the broker.

CITE: 502 So.2d 1317 PREVIEWS, INC., a Florida corporation, and Guy Eberhardt, Appellants, v. J.T. MURFF, Sr., J.T. Murff, Jr., and Murff and Company Inc., d b a M-K Ranches, Appellees.
TEXT: NIMMONS, Judge. This is an appeal from a summary judgment in favor of defendants below in an action brought by the plaintiffs appellants to recover a brokerage fee. We affirm.

DATE, SOURCE: February 24, 1987. An appeal from the Circuit Court of Leon County, Donald Hartwell, Judge. John M. Jorgensen of Scott, Royce, Harris & Bryan, Palm Beach, for Appellants. Peter J. Winders of Carlton, Fields, Ward, Emmanuel, Smith, Cutler & Kent, Tampa, for Appellees. Nimmons, J., Wentworth and Wigginton, JJ., concur.

CITE: 487 So.2d 60 The MOORINGS DEVELOPMENT COMPANY, and its sales company, Moorings Realty Sales, Inc., Florida corporations, Appellants, v. PORPOISE BAY CO., INC., a Florida corporation, Appellee.
TEXT: DOWNEY, Judge. This is a consolidated appeal from a final order dismissing a first amended complaint with prejudice and a subsequent order taxing costs and attorney s fees against plaintiffs appellants, The Moorings Development Company and Moorings Realty Sales, Inc.

DOCKET, COURT: Nos. 84-2542, 85-167. District Court of Appeal of Florida, Fourth District.

DATE, SOURCE: April 9, 1986. Rehearing and Rehearing En Banc Denied May 6, 1986. Consolidated appeals from the Circuit Court for Indian River County; William L. Hendry and Charles E. Smith, Judges. *61 Louis B. Vocelle, Jr., of Moss, Henderson & Lloyd, P.A., Vero Beach, for appellants. Lawrence A. Barkett of Gould, Cooksey, Fennell, Appleby, Barkett & O Neill, P.A., Vero Beach, for appellee.

William A. Wegmann, Appellant, v. Nicholas Mannino Et Al., Appellees., 253 F.2d 627 (5th Cir. 1958)

This is an appeal from a judgment dismissing appellant’s suit for specific performance of a contract involving the development and sale of a subdivision on the ground that appellant had failed to register as a real estate broker under the Florida law.Howard P. Rives, Clearwater, Fla., for appellant. Wm. C. McLean, Tampa, Fla., for appellees.

Before HUTCHESON, Chief Judge, and BORAH and TUTTLE, Circuit Judges. TUTTLE, Circuit Judge.

CITE: 592 So.2d 251 Arnold BOCKAR, Appellant, v. Albert SAKOLSKY, et al., Appellees.
DOCKET, COURT: No. 90-2683. District Court of Appeal of Florida, Third District.DATE, SOURCE: July 16, 1991, Filed. Rehearing Denied Feb. 18, 1992. An Appeal from the Circuit Court for Dade County, Peter S. Capua, Judge. Lane S. Abraham, Miami, for appellant. Lapidus & Frankel and Richard L. Lapidus, Miami, for appellees. Before

FERGUSON, JORGENSON, and GERSTEN, JJ. TEXT: PER CURIAM. Arnold Bockar appeals from a final summary judgment in an action for breach of contract and for fraud. We affirm. Only salaried real estate salespersons who do not receive commissions for the sale or lease of real property may sue for compensation earned without being a licensed real estate salesperson or broker. See Department of Bus. Reg. v. Smith, 471 So.2d 138(Fla. 1st DCA 1985); Section 475.011(2), Fla.Stat. (1987). Affirmed. JORGENSON and GERSTEN, JJ., concur. FERGUSON, Judge (dissenting). By its affirmance the majority approves the trial court s ruling that the courthouse is closed, as a matter of public policy, to a citizen seeking compensation for services rendered pursuant to an employment contract.

On May 27, 2008, NAR and the U.S. Department of Justice reached a favorable settlement, concluding a two-year DOJ investigation (followed by two and a half years of litigation) regarding NAR’s multiple listing policy as it pertained to the display of listings from the MLS on brokers’ virtual office Web sites, or VOWs.

What the settlement accomplishes

The proposed terms (PDF 28K) are a win for NAR, REALTORS®, and consumers, and confirm that MLS members must be actively engaged in real estate brokerage (PDF 32K) by actually helping people buy or sell homes.

This will ensure that MLSs are used for what they were originally intended to do — to help real estate professionals find buyers for people who want to sell their homes. NAR has also agreed to adopt a revised Virtual Office Web site policy (PDF 36K) that NAR will request MLSs to adopt.