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A recent lawsuit may affect how we buy and sell real estate in Minnesota

Over the years, Americans have changed the way they buy and sell real estate. The internet and multiple listing service (MLS) databases allow easy access to information previously available only through real estate agents. Most buyers are able to view photos and data regarding listed properties, narrowing their search for a new home or
commercial property before consulting a real estate professional.

Typically, information is freely shared between MLS services across the nation, allowing individuals to compare and contrast available listings, agents and sold properties. However, NorthstarMLS – the largest MLS in Minnesota – diligently protects its photos and data, allowing access only to registered individuals and companies who pay for licenses to view and use its information.

Recently, an out-of-state real estate website company – NeighborCity – filed a lawsuit against NorthstarMLS in the U.S. District Court in Minnesota, claiming the MLS violates federal and state anti-trust laws.

Dual agency and anti-trust

The main thrust of the
litigation has to do with a practice called “dual agency.” In Minnesota, a listing agent may act as a dual agent, representing both the buyer and seller of a property. Some claim that dual agency relationships create conflicts of interest because the dual agents learn secrets from both parties and collect commissions from both sides of the transaction.

NeighborCity claims that NorthstarMLS licenses its information only to those companies who refer prospective buyers to the listing or selling agent, allegedly promoting dual agency. On NeighborCity’s website, buyers have access to information about competing real estate agents, allowing individuals the option of choosing their own agents. NeighborCity was denied a license to use NorthstarMLS’s information.

Federal and Minnesota antitrust laws forbid business practices that unreasonably restrain competition. NeighborCity’s lawsuit states that NorthstarMLS – in conjunction with its members and the National Realtors Association – violates antitrust laws and engages in anticompetitive conspiracies, stifling competition among agents and other MLS services.

Real estate in Minnesota

Home prices and sales are rising in the Twin Cities, where NorthstarMLS is based. The Star Tribune reports that growth in the Minneapolis/St. Paul area is fifth highest in the nation, with
real estate transactions as one of the leading industries. The metro area is home to a vast majority of the state’s population and a change to the way real estate is bought and sold would affect millions of people.

If the judge for the lawsuit decides that NorthstarMLS is in violation of anti-trust laws, thousands of real estate agents will be affected. The trickle-down effect to those who buy and sell properties in the state is unknown.

If you own real estate, it is important to retain the counsel of an experienced real estate attorney. When buying or selling a property in Minnesota, legal issues may arise concerning zoning, land use, financing and landlord and tenant laws. A lawyer knowledgeable about real estate transactions can help.