National Association of Realtors (NAR) threatens the Phoenix Association of Realtors with a Cease-and-Desist demand

NAR has sent a cease-and-desist letter to the Phoenix REALTOR®, the local association of real estate licensees in the Phoenix area, over its new membership option called “MLS Choice.”  The NAR message appears to be that the MLS Choice option may be in violation of so-called “three-way agreement” between NAR, Arizona REALTORS® (the state association of real estate licensees) and Phoenix REALTORS® (the local association of real estate licensees).

NAR claims that it is a federation or union of organizations, rather than a single entity organization.  The basis for the federation structure is what it calls a “three-way agreement” between the local, state, and national associations.  It argues that all local associations and their REALTOR® members are members of state associations of REALTORS® and of the National Association of REALTORS®.  By entering into the “three-way agreement,” the local and state associations have agreed to comply with the policies and code of ethics of NAR and are granted permission to use the “REALTOR®” designation.

The MLS Choice option seems to create another type of membership that allows real estate licensees to become members of Phoenix REALTORS® without becoming members of the Arizona REALTORS® or NAR.  Therefore, a licensee would have to make a decision: stay with current brokerage with NAR affiliation and REALTOR® branding or move to a different brokerage that is essentially unaffiliated with NAR.

Phoenix REALTORS® explains their position as follows:
“Real estate professionals need different levels of support to succeed, and we believe that having a choice is important. Moreover, due to recent brokerage settlements related to the Sitzer/Burnett case which removed the requirement for brokerages to be a member of NAR, we have updated what was previously our MLS Only option to adapt to the new ways brokers may want to do business. This is the first time brokers will be able to offer their agents the opportunity to access both the MLS and legal forms, along with several existing benefits, outside of the traditional 3-tier membership system with local, state, and national associations.  We believe that the real estate landscape is evolving, and we want to continue to evolve with it.

We have developed a set of forms that are fully compliant with state laws. These forms will be available to MLS Choice agents in a user-friendly system, and free training will be provided so they can easily navigate it. Real estate professionals who make the decision to go MLS Choice may not call themselves “REALTORS®” nor do they have access to the member benefits provided by the state and national associations. MLS Choice is offered at $249/year.”

You can find the announcement of MLS Choice option by Phoenix REALTORS® here.

December 23, 2024: Phoenix Realtors’ counsel disagreed with NAR’s opinion of “MLS Choice” option and said that NAR’s threats will chill innovation of other Associations and MLSs.  The Choice option simply allows non-Realtors to use MLS and real estate transaction forms without joining the state or national association.  He said the Phoenix Realtors are willing to negotiate but will not withdraw the Choice option.

December 23, 2024: In response, NAR notified Phoenix Realtors of its intent to begin the process of Charter revocation.

December 24, 2024: Phoenix Realtors said that NAR’s decision to move forward with revocation is a disservice to the industry, that Phoenix Realtors with defend the “MLS Choice” option, and will pursue all legal and equitable remedies.

Letter by Alabama Association of Realtors
This development follows similar story in September 2024. On September 17, 2024, the Alabama Association of Realtors wrote a letter to National Association of Realtors protesting the 3-tier (local, state, and national/NAR/ REALTOR®) membership requirement by the NAR.

See our September 17, 2024 update for the link to the letter.

Brokers sue NAR and State, Local Associations of Realtors
It is also noteworthy that on August 12, 2024, a class action lawsuit was filed by Douglas Hardy, Glenn Champion and Dylan Tent at Sotheby Realty in Michigan challenging the requirement that all Realtors and brokers in the State of Michigan be members of the National Association of Realtors, the Michigan Association of Realtors, and a local Board of Realtors such as The Grosse Pointe Board of Realtors, The Greater Metropolitan Association of Realtors and/or The North Oakland County Board of Realtors to access the Multiple Listing Service, the “MLS”.

See our August 12, 2024 update for the link to the original lawsuit complaint as well as our handpicked key allegations of the complaint.

The complete legal filing of the Batton 2 Complaint, all 58 pages, can be found here.