I’m taking break from the MLS core vs. optional services series to get out this post. An email has been circulating in the MLS community that has been misinterpreted as saying MLSs have some extraordinary obligations to police the VOW rules. The language that has folks confused reads this way:
“With the shadow of the DOJ hanging over real estate, MLSs are starting to come to two conclusions:
“1) Audits must be performed regularly on each VOW (at least yearly). If MLSs audit only a few brokers or audit on an irregular basis it will invite speculation regarding, or lawsuits alleging, preferential treatment of some brokers or AVPs (Affiliated VOW Partners) and/or discrimination against others.
“2) The audit should ideally be performed by an independent third party using standardized criteria. It is very important that MLSs establish consistent standards for VOW auditing, to a level of detail far beyond the NAR policy, ideally starting from the very first VOW audit.”
This is not, nor do I think the email’s author intended it to be, a statement of some kind of requirement of NAR policy or the settlement between NAR and the Department of Justice. Rather, it’s an assertion that the email’s sender is urging on the industry (thus the language “MLSs are starting to come to two conclusions”).
Unfortunately, within a couple hours of this email going out last week, I had inquiries from clients about whether there is some enforcement requirement in the VOW policy or the NAR/DOJ settlement.
Here is a summary of my understanding about MLS enforcement of the VOW rules:
- Your MLS should run its own plans for enforcing the VOW rules by its legal counsel. (This blog post is not intended as legal advice.)
- As far as I know, MLSs are under no obligation to police the VOW rules proactively. MLSs are not required to ‘audit’ or review VOWs on any interval by the NAR VOW policy or by the NAR/DOJ settlement. Nothing I’m aware of in the law or VOW policy requires MLSs to go out looking for rule violations.
- I have not seen any legal analysis that suggests MLSs have to be more proactive policing VOWs than they are with IDX sites. In fact, because the DOJ mistakenly views VOWs as tools of ‘new-model’ brokers and IDX as a tool of ‘traditional brokers’ – reviewing all VOWs proactively may look suspicious to DOJ if MLS does not also review all IDX sites proactively. (That would be very expensive in many markets.)
- MLSs can probably use the ‘tattle-tale’ model to police VOWs. That is, MLS investigates a VOW if and when someone complains about it. That has been the model of rule enforcement with regard to IDX and many other parts of the rules in most MLSs as long as I can remember. I have seen no legal analysis to suggest that it is no longer appropriate.
- If your MLS does want to review VOWs for rule compliance, it should do so on a non-discriminatory basis. That might mean reviewing all VOWs (which is easy when there are only two or three). Or it might mean reviewing a sample of VOWs selected at random (which would properly be called an ‘audit’).
- MLS must apply the VOW rules in a non-discriminatory manner. Of course, most MLSs have plenty of experience doing that in the IDX context.
- I don’t know of any reason why an MLS would need an independent third party to conduct reviews of VOWs, at least with regard to compliance with display and registration rules. An independent third-party evaluator might provide valuable assistance with reviewing a VOW’s compliance with some of the more technical provisions of the VOW rules or in cases where the MLS management does not believe it has staff that are well-trained enough to handle the task.
As to that last point, we have assisted a couple MLSs with their first reviews of VOWs to help them establish an approach and procedure; after that, they seem to manage on their own.
Note that on many of these points, I’ve said I’m not aware of any line of reasoning that contradicts the views I’ve expressed here. That doesn’t mean I’m not open to arguments to the contrary. If you’ve got some, serve ’em up!