Earlier this year, Houlihan Lawrence faced a lawsuit alleging the brokerage engaged in dual agency without proper disclosures. Now, more clients have signed on to the lawsuit.
Anonymous letters sent to the firm also claim the firm pays or paid its agents bonuses for keeping deals in-house, Inman reported.
“Since at least January 1, 2011, Houlihan Lawrence has operated a bait-and-switch scheme to lure thousands of homebuyers and sellers into dual-agent transactions,” plaintiffs’ attorneys wrote in an amended complaint filed Oct. 1.
The complaint alleged the firm “pays secret kickbacks” agents who secure double commissions through dual-agent transactions. That culture helped boost the brokerage’s market share and become a more appealing acquisition target for Berkshire Hathaway affiliate HomeServices of America, the suit further alleged.
In a statement to Inman, Houlihan Lawrence said it continues to deny the allegations.
“We will vigorously defend the quality and integrity of our business practices,” a spokesperson said. “Houlihan Lawrence has an outstanding reputation for our commitment to the communities we serve.”
The initial class-action lawsuit against Houlihan Lawrence was filed in July. It accused the brokerage of representing both sides of the deal in nine out of 10 of its biggest Westchester sales.
Brokers in New York are allowed to work on both sides of the deal, so long as they disclose their dual roles. The practice isn’t uncommon, but lack of transparency can make the arrangement unethical or illegal. [Inman] — Meenal Vamburkar