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Douglas Elliman has agreed to settle nationwide antitrust commission lawsuits brought by homesellers for up to $17.75 million, depending on the company’s cash balance through 2027, the real estate brokerage announced Monday.
The proposed settlement, signed on Friday, April 26, would resolve claims brought against the company in cases known as Gibson and Umpa, which were consolidated under the Gibson banner on April 23, as well as “similar claims in other lawsuits alleging claims on behalf of sellers against Douglas Elliman and its subsidiaries,” according to an SEC filing the company submitted on Friday. The suits seek to represent millions of homesellers.
The suits allege Douglas Elliman violated the Sherman Antitrust Act by enforcing rules requiring listing brokers to offer compensation to buyer brokers in order to submit a listing to a multiple listing service, thereby inflating broker commission costs for homesellers. Douglas Elliman did not admit to any liability as part of the deal.
Howard Lorber | Photo credit: Douglas Elliiman
“The settlement agreement reflects Douglas Elliman’s commitment to mitigating future uncertainties and limiting legal costs, which will benefit our Company, agents and stockholders,” said Howard M. Lorber, Douglas Elliman’s chairman and CEO, in a statement.
“Our global network of leading agents and luxury brand continue to position Douglas Elliman for future success as real estate markets stabilize. We remain confident our differentiated business position will enable continued growth over the long term.”
That growth may determine how much Douglas Elliman ultimately pays as part of the settlement. The company agreed to pay an initial guaranteed payment of $7.75 million into an escrow fund within 30 business days of when the court preliminarily approves the settlement, which the company said it expected to be in the second quarter of 2024.
The company also agreed to pay two $5 million contingent payments. Douglas Elliman would make the first such payment if, as of Dec. 31, 2025, its cash balance is at least $40 million or if, as of that day, it is less than $40 million but subsequently exceeds $40 million in any month after that date until Dec. 31, 2027.
Douglas Elliman would make the second $5 million contingent payment if, as of Dec. 31, 2026, its cash balance is at least $40 million or if, as of that day, it is less than $40 million but subsequently exceeds $40 million in any month after that date until Dec. 31, 2027. All payments due must be made by Dec. 31, 2027.
If the company’s cash balance is not more than $40 million “at any point from December 31, 2025 until December 31, 2027,” the company won’t have to make either of the two $5 million payments.
“Cash Balance is calculated based on the average daily cash balance of Douglas Elliman for the 30 days preceding December 31st of the year in question for which the contingent payment is due,” the proposed settlement, which was included in the SEC filing, reads.
“Douglas Elliman and Plaintiffs agree that all material cash payments that Douglas Elliman makes, between April 18, 2024 and December 31, 2027, that are not in the ordinary course of business, shall not be counted as deductions against the calculation of the cash balance other than payments made pursuant to this Settlement Agreement.
“Examples of such cash payments that may not be in the ordinary course of business include: (i) dividends to shareholders; (ii) distributions to shareholders; (iii) redemptions of stock by Douglas Elliman (other than in connection with employee stock plans that are consistent with existing employee stock plans); or (iv) acquisitions of businesses by Douglas Elliman.”
For example, if Douglas Elliman were to make a cash dividend payment of $10 million to its shareholders on Nov. 30, 2025, that amount would be included in the calculation of the company’s cash balance, the agreement adds.
Douglas Elliman also agreed that if it enters into “certain strategic corporate transactions, including, but not limited to, certain mergers and acquisitions or a sale of all or substantially all of its assets,” then the contingent payments become due within 30 days of the transaction.
Douglas Elliman also agreed to business practice changes that it will implement “[a]s soon as practicable,” but not later than six months after the deal has received final court approval.
According to the agreement, those changes are:
- to remind its brokerages and agents that the company has no rule requiring agents to make or accept offers of compensation from buyer brokers and no rule that, if made, such offers have to be blanket, unconditional or unilateral;
- to require its brokerages and agents to clearly disclose to buyer and seller clients that commissions are not set by law and are fully negotiable;
- to prohibit its brokerages and buyer agents from claiming buyer agent services are free;
- to require its brokerages and agents to disclose to the buyer the listing broker’s offer of compensation for prospective buyers’ agents as soon as possible;
- to prohibit its brokerages and agents from filtering out or restricting listings that are searchable by and displayed to consumers by offer of compensation, unless requested by a client, and to eliminate any internal systems that may facilitate such filtering;
- to remind its brokerages and agents of their obligation to show properties regardless of compensation for buyers’ agents for properties that meet the buyer’s stated priorities; and
- to develop training materials for its brokerages and agents that support all the practice changes outlined and eliminate any contrary training materials currently in use.
If the settlement receives final approval from the court, it will only resolve claims brought by homesellers, not homebuyers. Douglas Elliman is currently a defendant in a suit known as Batton 2, which alleges that National Association of Realtors rules enforced by brokerages have inflated agent commissions and resulted in higher home prices paid by the buyers in violation of state and federal antitrust laws.
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