University of Buffalo School of Law professor Tanya Monestier, in an exclusive, lengthy and wide-ranging interview with RISMedia, revealed that the Department of Justice (DOJ) is utilizing her detailed residential real estate buyer and seller contract information and opinions to assist in its deciding whether to request the federal court’s Burnett settlement agreement with the National Association of REALTORS® (NAR) be set aside or modified.
Her DOJ experiences provide a look behind the curtain as to how the federal agency is collecting and considering the insights, perspectives and legal positions necessary to formulate its decision regarding the industry’s commissions practices going forward.
Monestier, who has worked on a handful of publicly released reports for the Consumer Federation of America (CFA) related to real estate practices and the NAR settlement, says that back in July she sent a 41-page memo detailing potential problems with the settlement to the DOJ, who reached back to her within hours, resulting in two presentations to dozens of DOJ lawyers and economists.
“I went over the different things I had mentioned in the memo. I was asked if there were any other consumer protection issues or red flags that I had been seeing. That would become another meeting. I was requested a couple of days later to have a phone call with other DOJ lawyers about somewhat different issues than we had discussed in the Zoom meeting,” she says.
Monestier was hesitant to share the specifics of her conversation with the DOJ lawyers. Pressed on the matter, she said, “It’s related to the NAR settlement. It wasn’t something that I had touched on. It wasn’t like a pure contracts issue, let’s put it that way.”
The DOJ thanked her, but did not indicate whether or not there might be future calls or meetings. To Monestier it does not matter, because her goals are not for one side or the other to win or lose. She simply wants the general public to be treated fairly, she says.
The keen interest by antitrust regulators in issues with the settlement could offer insight into the mostly opaque process by which the DOJ is approaching both the NAR settlement and a simultaneous, independent investigation, which NAR is hoping the Supreme Court will block.
Back in May, a DOJ lawyer told a judge in a separate commission lawsuit that she viewed the NAR settlement as “an improvement,” but pointedly declined to say whether the DOJ would seek to block its final approval or push for further changes. At the same time, antitrust regulators are seemingly focused on the Clear Cooperation policy, which is in the spotlight as at least some brokers urge NAR to repeal it.
“Basically, the DOJ is in an information-receiving mode, so I don’t know whether this was something they were tracking or something they care about,” she says. “I reached out to them. I never had any contact with them before. I did not necessarily expect to hear back, but just wanted to pass along information from the perspective of someone who was seeing things at kind of a granular level. I don’t know that the DOJ lawyers are on Reddit or YouTube, watching influencers. But to the extent that any of the information provides an insight into the industry? Maybe it does, maybe it doesn’t, but I think they would want to have their finger on the pulse.”
Emphasizing multiple times that she writes on topics purely as a consumer advocate, with “no dog in the fight,” Monestier explains that the inspiration for most everything she takes on comes from a very basic premise—how would her immigrant parents with limited education be able to handle the subject’s complexities?
Monestier’s interest in real estate contracts was piqued this spring when she was able to access buyer and seller contracts in use by the California Association of REALTORS® (CAR), one of the largest trade associations in the United States, with more than 180,000 members. She found what she considered to be multiple faults with them.
In contact with Steve Brobeck, senior fellow with the CFA, she initially sought to offer short critiques of the CAR forms, but he encouraged her to create two detailed reports highlighting significant issues within the buyer and seller forms, which she did. One report concerned the buyer representation agreement, while the other report was about the seller listing agreement.
Each report included four sections: reader comprehension, compensation provisions, other problematic provisions and conclusions. The author’s findings were shared by CFA with various stakeholders, including the DOJ, which subsequently convened a meeting with CAR.
“CFA released the 20-page reports, saying, ‘We’re critiquing the CAR forms. We think they can do better,’” says Monestier.
(Editor’s note: RISMedia reported about the CAR form issues and followed up when changes were made to them.)
“As part of doing all that, I did other research in terms of looking at what was happening training wise, what REALTORS® were saying on forums, kind of like the behind the scenes stuff. And the more I learned, the more alarmed I got. And not just at what CAR was doing. I mean alarmed in general. So I decided on my own time, which took 10 days, to put together my thoughts on what I saw happening.”
Those thoughts became the aforementioned 41-page memo sent to the DOJ, which Monestier notes was only shortly after NAR announced it had a meeting with the DOJ to discuss ongoing legal issues related to settlement workarounds.
Those workarounds comprised part one of Monestier’s memo.
“I talked about six workarounds I contemplated happening,” she says, meaning agents trying to gain commission advantages not allowed post-settlement. “I provided evidence of the workarounds and married that up with the language of the settlement and why that practice was prohibited. That was a contractual look at the settlement, what the settlement allowed and what was happening on the ground, either because I heard it talked about in forums and videos or I was seeing evidence of that in the forms.”
Monestier said one example of a potential workaround she included in the memo (and which was featured in at least one of her publicly released reports) was buyer agents amending the representation percentage upward, agreeing to a low- or no-commission payment and then upping it once the amount of compensation offered by a seller is known.
“The second part of the memo detailed two other industry practices I was concerned about from a consumer protection standpoint,” she says, preferring not to disclose them. “So I sent the memo to the DOJ. Their lead trial counsel reached out a couple of hours after receiving it and asked if I would be willing to lead a Zoom meeting for a large group that included their lawyers, economists and other people. A week and a half later I conducted a PowerPoint presentation for over an hour.”
The personal agenda dilemma
Monestier doubled down on what she would like to happen within the industry from a consumer advocacy point of view, while stating that in her opinion, personal agendas can sometimes trump the greater good.
“I actually don’t like the NAR settlement,” she admits. “I don’t think it was the way to go. I know my opinion doesn’t count. Who am I? But if this is going to essentially be approved and indirectly become the framework governing real estate, then it should be followed. What I was focused on in my memo is not that the DOJ should or should not do something, but if this settlement is actually going to go forward, we need to make sure people are doing the right thing.
“Everybody has an agenda,” she continues. “REALTORS® have their agenda, lawyers have their agenda, the DOJ has their agenda. So I get everyone’s position. I try to be neutral. My interest is, if this is going to be what’s adopted, let’s make sure we’re doing it right. I don’t like rule breakers.
“But I don’t want people to think that somehow I’m in cahoots with the DOJ, because nothing could be further from the truth. I sent them stuff I was concerned about because they are the criminal antitrust enforcers. I let regulators know about things that might be impactful for them, then they will do whatever they want.”
Following the DOJ experience, Monestier went into real-estate writing overdrive, compiling more reports about the legalities within transactions. First was a buyer’s guide concerning commissions and signing a representation agreement, and a seller’s guide focusing on signing a listing agreement. She shares them through various social media platforms. Her newest report, concerning buyer representation agreements post-NAR settlement, has garnered national media coverage. She is also the author of a 2022 book about how students can successfully navigate law school.
Monestier’s core problem with the CAR forms, as well as many others she has reviewed, is that they are extremely hard for average consumers to comprehend, and thus could lead to the paying of fees they normally would, could or should not have to.
“Basically, in a lot of cases, companies have taken forms that’ve been on the books probably for 20, 30 or 40 years and just tinkered with them,” she says. “That is the problem. It is not a real estate problem; it’s a contracts problem. They were drafted whenever, and take on a life of their own where nobody wants to redo them and make them better. They just want to keep what was there, add to it and change it. And because it’s there, we have to just work with it.
“So there was never going to be any widespread reimagining of the forms in terms of making them easier for consumers, having better provisions for consumers. It’s not so much about the one or two changes they’ve made. It’s about the fact that they are putting these forms, which are very hard to understand, in front of people. Then they’re like, ‘Here, you’re going to pay me my commission.’ There’s no reason the forms have to be this dense. People are just scared to depart from what has been done for many years.”
Monestier stresses that there are some companies with simple paperwork, which hopefully will become the industry norm.
“I was sent eXp Realty’s forms, and they were by far the best ones I’d seen,” she says. “I could read them. I could understand them, and the average person on the street could understand them. They weren’t overwhelming. It was very transparent what was going on. If they could do it, anybody could do it.”
Prior trial experiences
Monestier, a Canadian citizen living in America, has had previous work citations quoted by both the U.S. and Canadian Supreme Courts. She is a driven attorney and academic who has never forgotten her roots or sought the lucrative, private-sector law firm career path so many in the legal profession tread. She is also no stranger to contentious and controversial lawsuits and trials after working on high-profile cases that received massive media coverage, and thus is not phased by criticism from real estate agents or executives.
“For a couple of years I worked at a pharmaceutical company, Purdue Pharma, which sells Oxycontin,” she says. “I was involved in settling the first wave of litigation.”
She then started her academic career. Her husband, attorney David E. Coombs, served 12 years in the Army before leaving active duty and opening a military-oriented defense practice in 2009. That same year he was hired to defend Pfc. Chelsea Manning in the infamous WikiLeaks espionage case. Monestier became what Coombs called his “unofficial co-counsel.”
“That was a really interesting and difficult three years,” she says. “There was incredible media attention, and I did a lot of work on the case. It was definitely an experience, and not one that I would ever want to repeat, being involved in high-profile litigation. While I’ve gotten nasty emails from REALTORS®, they’re nothing compared to the death threats David got in that case.
“When my husband took it on, I don’t think he expected it to turn into what it did. He thought it would be a simple plea deal or something, but it turned into millions of pages of discovery, hundreds of motions, and the government had seven rotating trial attorneys to divide up the responsibilities, while David was a one-man solo practice. He needed to get up to speed on every single legal issue, so I ended up basically doing almost all of the motion drafting because he was busy getting ready for witness prep, depositions and whatnot. It was a very challenging time for sure.”
Monestier credits those years for helping to sharpen her mind to be able to handle and write about multiple complex legal issues quickly and effectively.
“It made me nimble, and realize that I learned military law and certain federal statutes,” she says. “If you look at my background, I mainly did research in the area of what’s called conflict of laws, things like choice of law, jurisdiction and enforcement of judgments. After I got tenure I felt like I didn’t need to just stick with one research agenda. That’s when I started with real estate.”
Monestier has plans to continue writing about the industry. Next will likely be a sample contract with a detailed explanation of every term.
“What I hope to do is illustrate that forms capable of being understood by a buyer are capable of being drafted,” she says. “I understand people who say that it’s easy for me to criticize. So I’m putting my money where my mouth is and saying, ‘Okay, it’s not just a critique. I’ll show you. It can be done.’”
Buying and selling a house is something Monestier has twice undertaken. The memories of the first one are not grand, which provides even more inspiration for her current cause.
“This is the second house I’ve owned,” she says. “The first time I had already been teaching contract law for seven or eight years, and I feel like I didn’t fully understand what was going on. Our agent was a dual agent. I didn’t understand what that was, and didn’t know how she was getting paid. I didn’t know anything. Now when I look back, I’m like, ‘Oh my, how did I not know?’ This is why I think it’s important that people understand the money that’s really coming out of their pocket, because I didn’t fully get everything.”
Monestier maintains the need to express her opinions in writing regardless of the consequences. Her parents are never far from her thoughts.
“When I draft something, my mind is not focused on whose feathers I may ruffle, or whose going to be mad at me,” she says. “I think the right thing to do is to call attention to some of these provisions because they can hurt people. So I’m drafting with a view that hopefully prompts change.
“My parents are immigrants from Italy. Both have a fifth grade education. They left school at the age of 11 or 12, and now they’re in their seventies. There have been situations where they’ve been taken advantage of for a variety of reasons. I think I approach the world differently, and when I see things that I perceive to be an injustice, such as these forms, I picture my parents. Would they understand what’s going on? Would they get screwed? It motivates me to want to make things better for people like that.”
Monestier believes everyone in the industry wants to make sure they’re on solid legal footing. It’s just a case now of whether they will go to the effort of making sure they are.
“Brokerages, state REALTOR® associations, MLSs…they’re all on pins and needles,” she says. “They want to do the right thing, or at least their legal departments are very concerned about doing the right thing. So now is a time when people are receptive to change, which is why I’m critiquing the existing forms and putting something else out there that represents a different model.
“For those who feel like they are under scrutiny, it might be an opportunity to transition to forms which are more understandable, which have provisions that are not draconian and onerous. I feel like if the settlement gets approved and the DOJ doesn’t intervene, we’ll go back to business as usual and it’ll be another five years before there’s another lawsuit. The forms will continue to be the hot messes they are now, and no one will understand them. Buyers and sellers are likely going to end up in litigation over what things mean. So if changes don’t happen now, I don’t know that they ever will.”
