On October 14, 2010 Pope McGlamry, in conjunction with Taylor English Duma, P.C. and the Sterbcow Law Group, LLC, filed suit in a Federal Court in Gainesville, Georgia on behalf of buyers and sellers of residential real estate in metro Atlanta and north Georgia against First Multiple Listing Service, Inc. (“FMLS”), its member real estate brokers, the agents who handled the transactions of the named Plaintiffs, and three boards of REALTORS®. The lawsuit alleges that members of FMLS, which include virtually every residential real estate broker and agent in north Georgia, are engaged in the practice of charging buyers and sellers of residential real estate unearned hidden settlement fees at the close of a real estate transaction. The lawsuit also alleges that brokers receive a kickback of all or substantially all of those fees from FMLS, and share in the transaction fees paid on other closings.

After the lawsuit was filed, FMLS and other Defendants filed a motion to have the lawsuit dismissed. FMLS and the other Defendants claimed that their conduct did not violate the Real Estate Settlement Practices Act of 1974 (“RESPA”), and that the Plaintiffs could not prove various other claims made against them. On January 18, 2012, the U.S. District Court for the Northern District of Georgia stood with the Plaintiffs and ruled that buyers and sellers of residential real estate can sue FMLS (the dominant FMLS in Georgia) and member brokerage firms under RESPA to recover undisclosed fees and kickbacks. The Court decided that Plaintiffs can recover damages if, as they allege, brokers and agents refer consumers to FMLS and pay FMLS unearned hidden settlement fees from real estate commissions or if FMLS pays kickbacks to productive brokers. The Court’s Order denying the Defendants motion to dismiss can be seen here.

The Plaintiffs do not plan to bring their claims alone. They hope to establish a class action law suit that will permit them to seek damages on behalf of all purchasers and sellers of residential real estate in Georgia during at least the four years preceding the day on which their lawsuit was filed. If the class action lawsuit is successful, it will send a message to those who benefit from consumers that purchase and sell residential real estate that the regulations put in place to protect the consumers cannot be ignored.