Posted By Cliff Tuttle | April 24, 2011
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.
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