If you sold a house in Montgomery County between Sept. 5, 1974 and Mar. 31, 1977 and paid a 7 percent commission to one of six real estate firms, Maryland's U.S. District Court may be interested in you.
The court ran legal notices last week in area newspapers to inform sellers of their rights in litigation involving the realtors. Following their conviction last fall on criminal charges of conspiracy to raise commissions from 6 to 7 percent, the companies were slapped with civil suits on behalf of those homeowners who paid the excess commission.
The firms involved are Jack Foley Realty, Bogley Real Estate, Colquitt-Carruthers, Robert L. Gruen Inc., Shannon & Luchs, and Schick & Pepe Realty.
The court said that sellers who paid a 7 percent commission before Sept. 29, 1976 are covered under the private class action, and those who paid after that date are covered under a suit brought by the Maryland Attorney General. (The division is necessary for legal reasons, but the instructions are virtually the same for both actions.)
Approximately 3,500 sellers and affected, according to the realtors' records. Notices have been mailed to all the sellers, but a least 400 notices have been returned because the addresses have moved. The court would like those persons to make their whereabouts known if they wish to participate in the suit. It would also like to hear from those who did not receive a notice but who believe they are eligible.
Since participation for those identified is automatic, it is not necessary to contact the court unless a person chooses not to take part in the suit or is planning to file a separate suit.
Interested parties who sold a house before September 30, 1976 should contact the Clerk of the Court by Sept. 15, 1978; those who sold afterward should write by Sept. 4. Letters should be addressed to the Clerk, U.S. District Court, U.S. Courthous, Room 404, Baltimore, Md. 21201, marked for the attention of Montgomery County Real Estate Litigation.
Both the private class action and the state suit seeks treble damages. If the plaintiffs win in the joint trial set for November, the realtors may have to pay each former customer 3 percent of the selling price of the house, (the difference between 6 and 7 percent commission times three), for a grand total of $2.5 million. If the plaintiffs lose in court, they will receive no damages.
Meanwhile the realtors and their former customers have been working on an out-of-court settlement. The deal reportedly calls for the realtors to issue scrip, allowing the former customers to buy a home in the future at 5 percent commission. The scrip would also be negotiable: if the owner declined to use it, he or she could try to sell it to another homebuyer.
The settlement, which must be approved by U.S. District Judge C. Stanley Blair for it to go into effect, has been held up a legal procedures. Blair presided at the criminal trial last fall and will preside at the civil trial this fall, unless a settlement is reached in the interim.
Maryland's Attorney General, who represents only 450 plaintiffs out of about 3,500, has refused to accept a scrip settlement for them. According to attorneys close to the case, the state official is holding out for a cash settlement which he feels would be easier to get in the case involving the smaller number of people.
Moreover, the sources said, he objects on antitrust grounds: the scrip solution would force the plaintiffs to become customers of the six realtors again. Those who have moved away would experience difficulty in selling their scrip.