The latest e-flash from respanews.com has a headline that reads: “Eleventh Circuit drops bombshell in RESPA case over brokerage fee.” Long story short, the U.S. District Court for the Northern District of Alabama refused class action status to a plaintiff* who claimed that an administrative fee of $149.00 violates section 8(b) of RESPA (the Real Estate Settlement and Procedures Act, which bars payment at closing for anything unearned). On January 17^th, the U.S. Court of Appeals for the Eleventh Circuit reversed this ruling. This is a major bombshell!

The decision by the U.S. Court of Appeals for the Eleventh Circuit paves the way for the U.S. District Court for the Northern District of Alabama to grant class action status. It also gets the class action bar one step closer to pursuing these type of cases throughout the rest of the nation.

It has always been the policy of Achieve Realty to not charge the administrative fee. Achieve Realty holds the position that brokers who charge the fee are not doing any additional work to justify the imposition of the fee. In the event that additional work is being performed, the amount of the fee charged dramatically over-compensates the broker. I am confident that the courts will agree. There are class action attorneys who must think so too.

The downside for Achieve Realty is that we’ll lose our competitive advantage as our competitors stop charging the fee when they finally realize they’re going to get sued.

The upside for Achieve Realty is that some of our competitors who charge this fee will be unable to both absorb the loss incurred from legal fees, penalties and reimbursement of the fees and stay in business.

So which brokerage do you think will be the first to stop charging the fee?

*Vicki V. Busby v. JRHBW Realty Inc (full text of decision)

This entry was posted on Tuesday, January 22nd, 2008 at 7:18 pm and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.