Real Estate Newsletter

  • Security Deposits and Landlord-Tenant Law
    Landlord-tenant laws govern the rights and liabilities of parties in a landlord-tenant relationship, as well as the transaction that takes place when a commercial or residential property is rented or leased. Landlord-tenant laws involve... Read more.
  • Coverage Provided by Renters Insurance
    Like homeowners insurance, renters insurance may be purchased to cover specific liabilities associated with renting property. However, renters insurance lacks the same breadth of coverage. The terms, conditions, laws and regulations for... Read more.
  • Converting a Home Into a Source of Income: Reverse Mortgages
    Many are familiar with the concept of a mortgage, where an individual makes monthly payments to a lender. However, for those who qualify, there is another type of mortgage called a “reverse mortgage” (RM), where the lender... Read more.
  • Valuation of Contaminated Property
    The Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA) imposes liability for the investigation and cleanup of contaminated real property without regard to whether the landowner created or allowed the... Read more.
Real Estate News Links

Do Antitrust Laws Affect Real Estate Brokers?

The federal Sherman Antitrust Act prohibits any combination, contract or conspiracy in restraint of trade, violations of which are subject to civil and criminal sanctions.

The Sherman Antitrust Act became law in 1890. However, it was only recently that real estate professionals became affected by the Act’s policy to support competition in a free marketplace by prohibiting predatory and unfair business practices. This was based on a 1980 U.S. Supreme Court ruling that real estate professionals and organizations are subject to the requirements and prohibitions of the Sherman Antitrust Act.

As applied to the real estate brokerage industry, the majority of civil and criminal actions have stemmed from the following prohibited practices:

  • Price fixing
  • Group boycotts
  • Tying arrangements
  • Territorial market divisions

Price Fixing

Price fixing is when competing brokers agree to set commissions. Prohibited actions extend to all agreements that have the effect of manipulating the price of real estate services. Furthermore, such agreements do not have to be in writing for illegal price fixing to occur.

Group Boycotts

Group boycotts are concerted refusals to deal based on an agreement among industry members for the purpose of driving a competitor out of business. In the real estate industry, this usually occurs in the context of exclusions from multiple listing services and local real estate boards.

Tying Arrangements

A tying arrangement is when a sale or purchase of one product is conditioned upon the sale or purchase of another product. In real estate, this usually happens in the context of a “list-back” agreement, where a broker, for example, is willing to sell parcels of land to a developer only upon the condition that the developer agrees to list the completed homes on the parcel with the same broker.

Territorial Market Divisions

Territorial Market Divisions occur when competitors agree not to compete with each other in certain geographical areas. An example of this is when real estate firms enter into an agreement not to enter into designated locations in an effort to avoid competing with each other.

Share This Page: