RESPA and the Administrative Brokerage Commission.

Posted By Cliff Tuttle | April 24, 2011

No. 605

Kudos to Brendan Lupetin for bringing to our attention a federal case in Alabama that holds that the so-called Administrative Brokerage Commission (ABC) violates the Real Estate Settlement Procedures Act.

It has become a common practice for certain real estate brokerage firms (usually big ones) to charge their customer a nuisance fee at settlement in addition to the commission.  I say “nuisance”, but perhaps $150 and up exceeds nuisance.  It isn’t large enough to start a lawsuit — although perhaps large enough for a class action.  I have heard various explanations including that it is for keeping the file for two years, a requirement that is imposed on licensees by the Real Estate Commission.

RESPA prohibits unearned fees and fees for services that are required by law, such as preparing a settlement sheet.  While the decision is spot on the Pennsylvania practice, the case has no binding effect around here.  But it could provide inspiration for some enterprising law firm.

CLT

Welcome

CLIFF TUTTLE has been a Pennsylvania lawyer for over 45 years and (inter alia) is a real estate litigator and legal writer. The posts in this blog are intended to provide general information about legal topics of interest to lawyers and consumers with a Pittsburgh and Western Pennsylvania focus. However, this information does not constitute legal advice and there is no lawyer-client relationship created when you read this blog. You are encouraged to leave comments but be aware that posted comments can be read by others. If you wish to contact me in privacy, please use the Contact Form located immediately below this message. I will reply promptly and in strict confidence.

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