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News services, including The New York Times, are spreading misinformation about the recent National Association of Realtors settlement. These news organizations said that the N.A.R. agreed to slash agent commissions — but that is flat-out not true. Watch my embedded video below to understand the details of the settlement and its actual impact on the real estate industry.
Takeaways of the National Association of Realtors settlement
The truth is that N.A.R. settlement comes down to the fact that it decided to separate buyer and seller commissions.
Under certain circumstances, the cost of buyer representation could be shifted to the buyer. And, as we all know, the buyer (who is bringing all of the money to the transaction) is the person who can least afford to pay a commission in the transaction. But it doesn’t mean that buyers don’t need representation.
Related: How to Make Money in Real Estate — 8 Proven Ways
A home buy for most families is the most expensive and most important financial decision they will make in their lifetime. Highly skilled realtors will get paid exactly what they’re worth. The market will reward realtors who add significant value to the transaction, Those realtors who add little value will get little compensation or be put out of business altogether. (Which at the end of the day, I don’t think that’s a bad thing.)
Here’s my synopsis of the settlement, which is likely to take effect in mid-July 2024:
- Buyer Representation Agreements will be required for agents showing homes listed on the Multiple Listing Service (MLS).
- Sellers can still offer compensation to the buyers’ agent but it cannot be specified in the MLS. It can be advertised to the public elsewhere.
- Agents must make commission disclosures, including the disclosure that commissions are not set by law and are fully negotiable.
The net effect is that buyers will have to specify in the contract the amount they are willing to pay an agent to represent them.
Sellers may feel that it is important to offer buyer’s agents compensation to incentivize agents to show their properties, maximum exposure, and the highest price possible.
Related: These Real Estate Trends Are Set to Change the Market Forever
Although MLSs are prohibited from publishing what a seller is willing to pay toward the buyer agent’s compensation, the settlement allows brokerages and their agents to publish seller-approved compensation offers for their own listings (but not other brokerages’ listings) on their websites, in emails, texts, and other communications.
I do believe that buyer agents will have to demonstrate far more expertise to justify their compensation. This change will drive more buyers to the seller’s agent. That agent has a duty to negotiate for and represent the seller. More dual-agency (one agent representing both seller and buyer) will take place, and more litigation will ensue from this conflict of interest.
A woman who purchased a vacant lot in Hawaii was surprised to find out a $500,000 house was built on the property by mistake.
She’s now mired in legal wrangling over the mix-up.
Annaleine “Anne” Reynolds purchased a one-acre (0.40-hectare) lot in Hawaiian Paradise Park, a subdivision in the Big Island’s Puna district, in 2018 at a county tax auction for about $22,500.
She was in California during the pandemic waiting for the right time to use it when she got a call last year from a real estate broker who informed her he sold the house on her property, Hawaii News Now reported.
Local developer Keaau Development Partnership hired PJ’s Construction to build about a dozen homes on the properties the developer bought in the subdivision. But the company built one on Reynolds’ lot.
Reynolds, along with the construction company, the architect and others, are now being sued by the developer.
“There’s a lot of fingers being pointed between the developer and the contractor and some subs,” Reynolds’ attorney James DiPasquale said.
Reynolds rejected the developer’s offer for a neighboring lot of equal size and value, according to court documents.
“It would set a dangerous precedent, if you could go on to someone else’s land, build anything you want, and then sue that individual for the value of it,” DiPasquale said.
Most of the lots in jungle-like Hawaiian Paradise Park are identical, noted Peter Olson, an attorney representing the developer.
“My client believes she’s trying to exploit PJ Construction’s mistake in order to get money from my client and the other parties,” Olson told The Associated Press Wednesday of her rejecting an offer for an identical lot.
She has filed a counterclaim against the developer, saying she was unaware of the “unauthorized construction.”
An attorney for PJ’s Construction told Hawaii News Now the developer didn’t want to hire surveyors.
A neighbor told the Honolulu news station the empty house has attracted squatters.
A lavish Las Vegas property owned by alleged Ponzi schemer Greg Martel will be sold for $5.1 million US this week after a U.S. court authorized the deal and agreements settling opposing claims on the home.
But once the dust settles on the sale of the seven-bedroom, eight-bathroom, 9,221-square-foot house, it’s unlikely any of the money recovered will reach the many hundreds of people who lost money investing with Martel.
For one, the property has an outstanding mortgage of about $4 million US, according to receiver and trustee PricewaterhouseCoopers (PwC).
In addition, PwC needs to pay back an investor who funded its legal efforts in the United States to the tune of $400,000 Cdn. PwC also says it needs to pay itself after racking up a bill of over $1 million Cdn investigating Martel, according to documents posted on its website.
Martel is the disgraced Victoria, B.C., mortgage broker at the centre of an alleged financial fraud run through his company, Shop Your Own Mortgage (SYOM), also known as My Mortgage Auction Corp.
According to the latest estimate, he owes 1,300 investors $312 million Cdn, in what an expert intimate with the details of the case said has all the hallmarks of a Ponzi scheme.
SYOM collapsed last year amid a flurry of lawsuits filed by investors. The claims were consolidated by the court under a receivership order in May of 2023 and PwC was appointed receiver with the duty to recover money and assets of Martel and his company to pay back jilted investors.
The Las Vegas property is one such asset — and a contentious one at that — requiring many months of legal machinations on both sides of the border.
In order to seize and sell the Las Vegas property, an agreement had to be reached between PwC and a group of creditors led by American Daniel Castellini, who lost $2 million investing with Martel.
Tracked down in Thailand
A sworn declaration submitted in U.S. court by PwC senior vice-president Neil Bunker detailed how in September of last year, a private investigator hired by Castellini tracked Martel down in Thailand where he was hiding out.
The investigator arranged for Thai authorities to detain Martel on an expired tourist visa, before cutting a deal that saw Martel transfer title of the Las Vegas property to Castellini, along with two Teslas and a “substantial” amount of cash.
According to Bunker, the deed for the Las Vegas property was secured through audio-visual communication on Aug. 29, 2023. Martel was released from Thai custody the next day and ordered to leave the country.
After learning that Martel had transferred the Las Vegas property to Castellini, PwC successfully argued in U.S. court that the powers previously granted in Canadian court gave PwC primary authority to recover and sell the home.
PwC then struck a deal with Castellini that says once PwC completes the sale of the Las Vegas property, Castellini will be paid $28,000 from the proceeds. The reimbursement is for “certain expenses [Castellini] represents were incurred investigating Martel and his business dealing,” according to court documents.
Court documents also say Castellini has agreed to co-operate with PwC by sharing the name of the investigator who went to Thailand, as well as all reports and information the investigator provided.
After leaving Thailand, Martel went to Dubai, according to PwC. His whereabouts are unknown.
The Las Vegas property is being sold to Kirk and Janette Mendez, who had also filed a claim on the home.
The couple signed a lease agreement with Martel in February of last year, about the time SYOM was blowing up. They agreed to pay $27,500 per month, with an option to buy the home outright for $5.1 million in February of 2024.
The Mendezes paid Martel for the year upfront but court documents say it appears he absconded with all the money.
CBC has reached out to Castellini and the Mendezes for comment.
According to PwC, two other properties owned by Martel were sold late last year as part of the asset recovery effort.
A heavily mortgaged house in Victoria sold for $2.47 million in December, resulting in $109,606 in net equity for the creditor pot. And an Ontario property Martel co-owned with a former spouse sold for $310,000, resulting in $82,698 in net equity recovered.
Last September, Martel was found guilty of contempt of court and warrants for his arrest have been issued in Canada and the U.S.
Largest Ponzi fraud in Canadian history?
Martel and SYOM were supposedly in the business of pooling investor money to provide short-term bridge loans to real estate developers, but so far investigators have found no evidence that any bridge loans were ever extended.
Martel attracted investors by promising sky-high rates of return, sometimes as high as 100 per cent on an annualized basis.
Bunker said previously that the absence of company records point to the concept that SYOM was a Ponzi scheme orchestrated by Martel.
If true, it would put him in the running for perpetrating Canada’s largest Ponzi fraud ever.
In 2017, two Alberta men were found guilty of fraud and theft after bilking investors out of a combined total of between $100 million and $400 million. At the time the RCMP characterized the crime as the largest Ponzi scheme in Canadian history.
A Ponzi scheme is where people hand over money believing it will be used in legitimate investments, often with the promise of large returns. Behind the scenes, the money actually goes toward paying earlier investors who have also been promised profits.
The range of consultancy services in the field of intellectual property is quite wide. Lawsuits, appeals before registry offices, application services, monitoring services, licensing procedures and a variety of other services including but not limited to these are provided to clients by intellectual property consultancy firms or law firms specialized in this field.
Many companies operating in this field have specialized their services and several of them have limited their services and operate only as a law firm, several as a monitoring-research bureau, several as companies serving only in certain fields (patents, trademarks, copyrights, etc.), and others only in application-administrative procedures. Of course, there are also firms which provide all of these services on their own, but this should in general be considered as an exceptional form of service.
When firms that provide intellectual property consultancy services want to register their own trademarks, they apply under the Class 45 of the Nicé classification. The following data taken from TmClass database of the European Union Intellectual Property Office (EUIPO) show that all intellectual property services with the exceptions of education (Class 41) and financial valuation of intellectual property rights (Class 36) are included in Class 45. (https://euipo.europa.eu/ec2/search/find?language=en&text=intellectual+property&niceClass=&size =25&page=1&harmonised=true&searchMode=WORDSPREFIX&sortBy=relevance) In addition to this, as it can be seen in the last image, intellectual property related services in Class 45 are under the general title of legal services at the EUIPO Taxonomy structure. In other words, EUIPO considers intellectual property consultancy services as a part of legal services, and services such as intellectual property licensing services, intellectual property monitoring services, intellectual property management services, intellectual property investigation services and intellectual property protection services are considered to be a part of this main title.
Within the Turkish Patent and Trademark Office implementation, the classes of Nicé classification are divided into groups that contain the same type of goods and services. The purpose of the groups is to gather the same type (very similar) of goods or services under the same title and these groups are used only in the ex-officio similarity examination. However, in case of oppositions, the Office performs a broader examination for similar goods or services and is not limited with these groups which contain only the same type of goods or services.
One of the groups included in Class 45 is “Legal services (including consultancy services on industrial and intellectual property rights)” as of 2020 within Turkish implementation. (https://www.turkpatent.gov.tr/TURKPATENT/commonContent/MClassification/) In other words, the Turkish Patent and Trademark Office considers consultancy services in the field of intellectual property as a service within the general title of legal services and as the same type of service.
Nevertheless; when a new application involving legal services is refused due to a trademark registered for intellectual property consultancy (or vice versa), applicants often argue that services in the field of intellectual property and legal services, for example services of a lawyer, are not the same type of services, and that there is a difference between services in terms of purpose and service provider.
The arguments that are stated are based on the arguments that lawyering services are generally provided by lawyers or law firms, however, intellectual property services are a separate field of expertise, services provided in this field are not legal services, and mediating services for the application and protection before the administration cannot be considered as legal services, besides most of the service providers are not lawyers or legal professionals. In this context, the fact that the Turkish registration authority considers intellectual property consultancy services as a part of the general title of legal services comes up as an issue that is frequently criticized and underlined in appeals.
The judgement, which is the subject matter of this article; will convey to our readers how the same issue has been evaluated by EUIPO and the Court of Justice of the European Union and explain the EU perspective on the debates regarding this issue.
“PONTINOVA AG” established in Switzerland makes an application to EUIPO in 2016, requesting the registration of the trademark that can be seen below. The scope of the application is “Class 45: Legal services.”
“PONTI & PARTNERS, SLP”, resident in Spain, files an opposition to the application. The ground for opposition is the word mark “Ponti” registered in Spain, which is protected for “Class 45: Intellectual and industrial property consultancy services”.
The opposition division of EUIPO upholds the opposition, and the applicant files an appeal. Upon the refusal of the appeal by the EUIPO Board of Appeal, the applicant files a lawsuit against the decision and the case is heard by the General Court of the Court of Justice.
The General Court concludes the case with its judgement numbered T-76/19 of 13 May 2020. http://curia.europa.eu/juris/document/document.jsf?text=&docid=226465&pageIndex=0&doclang= EN&mode=lst&dir=&occ=first&part=1&cid=14766758
The General Court begins its judgment by establishing, after enumeration of the relevant case-law, that the relevant public is made up both of companies and individuals and that its level of attention is higher than average.
This is followed by the comparison of the services, namely legal services and intellectual and industrial property consultancy services, in other words, examining their similarities.
It was stated in the decision of the EUIPO Board of Appeal that the legal services in the application include the intellectual and industrial property consultancy services in the earlier trademark, and that therefore it should be accepted that the services at issue are identical.
The applicant objects to this finding. The applicant contends that the services covered by the mark applied for are neither identical nor highly similar to the services designated by the earlier mark. At this point, the applicant claims that the class of intellectual and industrial property services that were in Class 42 at the time the trademark was registered and later transferred to Class 45 and the legal services Class 45 are also different. In addition, according to the applicant, intellectual property consultancy services are not among the services provided by a law firm and that they are fundamentally different. The services of a law firm are to provide legal advice and to represent their clients before the courts, and that these services can only be provided by licensed lawyers. By contrast, intellectual property consultancy services are part of consultancy services, which are general services offered by a wide variety of professionals, such as professionals in the economic, financial or legal sphere, and do not require a license or particular training.
The General Court disputes the applicant’s arguments as follows:
The Nicé classification only serves administrative purposes, and simply because the goods or services are in different classes, goods and services may not be regarded as different on the ground that they appear in different classes under that classification. Additionally, intellectual property consultancy services, which were included in Class 42 at the time the disputed mark was registered now fall under Class 45, and therefore it is clear that the services covered by the marks are in the same class.
In addition, according to settled case-law, services can be considered identical when the services designated by the earlier mark are included in a more general category designated by the trademark application.
Moreover, intellectual and industrial property consultancy services include advice on intellectual property rights, which are legal in nature. Those services are therefore part of legal services, which cover a very wide range of services and are covered by the mark applied for, without being specified or limited.
The fact that legal consultancy services include other services such as representing clients before the courts, will not affect the justification of the above findings. In addition, although intellectual property consultancy services are provided by a wide range of professionals such as economic, financial or legal circles, this will not change the fact that these services have an absolute legal dimension.
The applicant’s argument that it does not provide legal services in the field of intellectual property will have no effect on the enquiry. As stated in the settled case law, the services included in the application will be taken into account, not the services actually marketed under those marks.
For all the aforementioned reasons, the arguments of the applicant that the services subject to examination are not the same in terms of their characteristics are not justified and the assessment by the Board of Appeal that the services covered by the marks are identical is justified.
In the continuation of the decision, the General Court came to the conclusion that the signs subject to comparison were similar to an average degree in visual and aural terms. The Board, taking into account both the similarity of the services and the average similarity of the signs, deduced that the leelihood of confusion between marks may arise. Accordingly, the decision of the Board of Appeal, which consisted of the same findings, was approved and the case was dismissed. (Since the main purpose of this article is to convey the findings on the similarity of legal services and that of intellectual property consultancy services, the General Court’s assessment on the similarity of signs is not included in the article.)
As it is clear from the decision, both the EUIPO Board of Appeal and the General Court considered legal services as a general category of services that include intellectual property consultancy services and dismissed the applicant’s arguments that these services were unsimilar.
Regardless of the nature of the person providing the service, the approach of the General Court, which takes into account the characteristic and legal dimension of the service, is appropriate in our opinion. In this context, a trademark attorney firm, which does not employ any lawyers and only provides trademark registration consultancy services, essentially provides a legal service and the interpretation based on the characteristic of the service rather than the service provider should be taken as a basis.
This approach can shed light on the discussions that we face in Turkey on the same discussions, and also supports the approach of the Turkish Patent and Trademark Office on the subject in terms of the conclusion that was reached.