A power struggle between Realtor associations may be the beginning of the end for one of the nation’s largest MLSs.
Two of the three associations that own San Diego-based Sandicor Inc. have filed a lawsuit asking the court to order the dissolution of the regional MLS in order to, they say, protect their rights and interests in the MLS’s data.
Two of three associations file suit
Sandicor has 19,500 agent and broker members. Some 7,000 of those members belong to the two associations that have filed suit: the Pacific Southwest Association of Realtors (PSAR), and the North San Diego County Association of Realtors (NSDCAR).
Sandicor’s third and largest shareholder is the San Diego Association of Realtors (SDAR), which has more than 12,000 members.
Earlier this year, SDAR filed a federal lawsuit against Sandicor and its fellow shareholder associations, alleging NSDCAR and PSAR denied SDAR access to its own MLS data for its own website (called “Just Knock”); used Sandicor to compete unfairly against SDAR for members; and used Sandicor funds to “push” a potential merger with California Regional Multiple Listing Service (CRMLS) in spite of SDAR’s objections.
That lawsuit is pending. A district court has dismissed SDAR’s complaint twice, and SDAR has submitted a third amended complaint that the defendants have asked the court to dismiss as well.
Laws and agreement prevent dissolution, Sandicor says
In a statement, SDAR said laws governing the agreement and the parties’ shareholder agreement prevent a dissolution of Sandicor.
“Inexplicably, the other two shareholders seek to dissolve Sandicor. We believe their actions negatively impact the MLS and further distract and drain its limited resources,” SDAR said.
“It is also important to note that if those two shareholders make the unfortunate decision to leave, SDAR stands prepared to exercise the buyout provisions of the governing documents and to continue to operate Sandicor for all of the MLS’s subscribers. There will be no interruption of services.”
The argument for dissolution
PSAR CEO Richard D’Ascoli told Inman PSAR and NSDCAR do not currently wish to exercise the buy-out agreement.
“A buyout could result in SDAR having control of member’s data for use on profit-generating sites like Just Knock,” he said via email.
“The purpose of the suit is to transition members to a statewide MLS so that they can control their data. Our members consistently tell us that they do not want SDAR to have control of their data, so the only effective remedy is dissolution of Sandicor.”
If Sandicor is dissolved, the two associations say they plan to join California Regional Multiple Listing Service, which aims to be a statewide MLS and, at more than 80,000 members, is the biggest MLS in the country.
“Transitioning to a more robust statewide MLS like CRMLS benefits all consumers, as well as agents and brokers who work in San Diego County’s real estate industry,” said Anthony Andaya, 2016 PSAR president, in a press release.
“A move to an MLS that is controlled by brokers who own the data and endorsed by our state association provides our agents with an enhanced ability to serve the clients.”
CRMLS CEO Art Carter told Inman CRMLS did not encourage NSDCAR and PSAR to file to dissolve, but that CRMLS is “here to help if that’s a decision they want to make on their own.”
The suit filed by SDAR in January stalled active merger talks between Sandicor and CRMLS, but the “offer still stands from CRMLS to accomplish that merger,” he added.
“We think that the best solution for Sandicor, per a vote by the Sandicor board of directors [that] was approved and ratified … [is] that it is in the best interests of Sandicor to continue to explore that merger. There’s a strong belief amongst many that we’re talking to that that should occur,” he said.
Though some online comments show that support of the merger is not universal, the vast majority of the largest brokers in the San Diego area support it, Carter said.
“We don’t want to comment too much on the litigation that’s occurring down in San Diego, but from our standpoint … the broker community should determine their ultimate fate,” he said.
A data share between the two MLSs is set to go live in February or March, according to Carter.
Sandicor CEO Ray Ewing did not respond to a request for comment for this story.
Editor’s note: This story has been updated.
Email Andrea V. Brambila.
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