Real Estate Commission Price Fixing Class Action Expanded to Cover All of Canada

TORONTO--(BUSINESS WIRE)--A class action alleging price fixing commissions within the residential real estate industry has expanded to cover all of Canada. The Statement of Claim was filed in the Federal Court on January 19, 2023. The lawsuit says that real estate brokerages across Canada have agreed to a series of illegal rules leading to illegal increases in the price of residential real estate commissions. It also alleges that the Canadian Real Estate Association and local real estate boards across Canada are responsible for this misconduct.

A prior lawsuit was filed on behalf of residential real estate sellers in Toronto. This new lawsuit covers all real estate regions in Canada, other than Toronto. It follows on the heals of a decision by the Federal Court finding that it was “at least arguable” that the rules agreed to by the Toronto real estate brokerages were illegal and contrary to the Competition Act.

The case centers around a rule that requires home sellers who list their house on a Multiple Listing Service, or MLS, to make an offer of commission to the buyer’s real estate brokerage. In so doing, the rule makes the seller responsible to pay for the buyer brokerage services used by the buyer. The lawsuit alleges that this rule prevents competition in the buyer brokerage industry leading to higher commissions than what would otherwise exist in a competitive market.

“The rules should protect the homeowners, not the entrenched real estate industry,” said Kevin McFall, the plaintiff in the class action.

“This practice needs to end,” said Garth Myers of Kalloghlian Myers LLP, one of the lawyers who brought the lawsuit. “The cost of housing is a major problem in Canada. The unfortunate reality is that the real estate industry is contributing to this problem.”

“Technological advances should have caused the price for buyer brokerage services to drop. Instead, the cost of buyer brokerage services has skyrocketed,” said Paul Bates of Bates Barristers P.C., another lawyer working on the case.

“When you make the seller responsible for paying for services used by buyers, there is no longer any incentive for buyers to consider not using a buyer brokerage at all, or to seek a reduced price. In this way, the rule eliminate the downward pressure on the price for buyer brokerage services,” explained John Syme of John Syme Law, another lawyer working on the case.