Salomone: PHH Decision Offers “Much-Needed Clarity”

In a decision that has the potential to change the landscape on marketing service agreements between a real estate brokerage and settlement service providers, the DC Court of Appeals ruled today that payments for bona fide services provided and made at fair market value do not violate the Real Estate Settlement Procedures Act.

NAR President Tom Salomone applauded the decision, saying it gives clarity on MSA’s and their use within the industry.

“Today’s decision offers much-needed clarity on the legality of marketing service agreements, and makes clear that MSAs are compliant with RESPA provided that payment for goods and services actually furnished or performed are made at fair market,” said Salomone. “We’re hopeful this will address any uncertainty moving forward and offer a clear road ahead for any of our members who have entered into MSAs with settlement service providers.”

Uncertainty over the legal state of play caused significant concern for real estate brokerages and others who engaged in MSAs, as it was unclear what kind of scrutiny a once-permissible MSA might receive in the future. Salomone cautioned that this is not the end of the road, however, as further appeals are “likely” down the road.

“We will continue to monitor this case,” he said, “and communicate to REALTORS® on what this means for them and their business.”