Natural Hazard Disclosure Statement Real Estate Fee Kickback Class Action
Introduction
In mid-2005, homeowners represented by Lieff Cabraser Heimann & Bernstein, LLP, and co-counsel filed a proposed class action lawsuit against Property I.D. Corp. ("Property I.D."), affiliates of Property I.D. and several major real estate brokerage companies including Coldwell Banker Residential Brokerage Company, Century 21 Real Estate Corporation. In 2006 and 2007, Plaintiffs named more major real estate brokers as defendants in the lawsuit, including Re/Max of California & Hawaii, Inc. and several companies doing business as Prudential California Realty (including Mason McDuffie Real Estate, Inc.; Pickford Realty, Ltd. and HomeServices of California, Inc.; Silvercrest and Silver Oak Realty).
The lawsuit alleges that Defendants violated the federal Real Estate Settlement Procedures Act ("RESPA") and California state law on the grounds that Plaintiffs purchased Natural Hazard Disclosure reports from Property I.D. affiliates in connection with the sale of their homes and, without their knowledge, paid fees that included an unlawful kickback or referral fee to the brokerage defendants.
Alleged Kickback Scheme Explained
In the sale of a home, sellers or their agents are required by California law to disclose "natural hazards" (e.g., earthquake, flood) to the prospective purchaser. The majority of homesellers comply with that duty by purchasing Natural Hazard Disclosure ("NHD") Statement (also called a Mandatory Disclosures Report). Property I.D. is one of the largest vendors in California that issues NHD Statements.
The complaint charges that the Defendant real estate brokerage companies entered into joint ventures or similar arrangements with Property I.D. to refer business to Property I.D. in return for kickbacks or referral fees.
Proposed Class
Plaintiffs seek to represent a Class of all persons and/or entities who were represented by any one of the brokerage defendants in a sale of residential real estate in the State of California and who paid for a Property I.D. NHD Statement in connection with that sale.
Settlement Reached
In August 2008, Plaintiffs filed a motion for preliminary approval of a $40 million settlement of the litigation. Under the settlement, class members are eligible for $100 payments. Further, defendants agreed that Natural Hazard Disclosure reports are considered a "settlement service" subject to prohibition against kickbacks under RESPA.
Contact Lieff Cabraser
Lieff Cabraser is investigating claims that major real estate brokerages in California, including Coldwell Banker, Century 21, ERA, Prudential California Realty, Re/Max, Lyon and Intero allegedly received unlawful kickbacks in connection with disclosure reports paid for by sellers.
If you sold a home in California within the last year, and were represented by one of these brokers, please feel free to contact a Lieff Cabraser attorney to learn more about this litigation.
About Lieff Cabraser
Lieff Cabraser Heimann & Bernstein, LLP is a fifty-plus attorney law firm that has represented plaintiffs nationwide since 1972. We have offices in San Francisco, New York and Nashville. We represent plaintiffs in class and group actions and in individual lawsuits in cases involving substantial losses. For the last five years, the National Law Journal has selected Lieff Cabraser as one of the top plaintiffs' law firms in the nation.
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