AHS lawsuit about realtor commissions settled

The recent AHS class action lawsuit is creating waves in the real estate industry. The lawsuit alleges that American Home Shield violated federal laws by not disclosing the fact that real estate agents were paid for recommending their home warranty service. Many of the home owners and sellers were not aware of the different practices regarding the fact that the brokers and the agents are being paid for promoting the home warranty policies. There are many thousands of home owners and sellers who had purchased the warranty from the American Home Shield Corp and realtor commission was not disclosed to them during the sale.


American Home shield is one of the most popular companies in the home warranty industry. They account for majority of the sales in this industry and their last year’s revenue was about 600 million dollars.


The aim of the Home warranty policies is to offer services in terms of the repairs and the replacements for the owners when their specific home products and appliances are not working properly. Though the policy is creating controversial waves throughout, attorney‘s doubt as to how many of the customers will ultimately think of filing for the case and wait for receiving the cash from the settlement. It is alleged that the American Home Shield has not adhered by certain federal laws while promoting the warranty policies to customers. It is also claimed that they paid kickbacks to the realty brokerage firms and also the agents to serve their own purposes. This affected many of the customers who had applied for the home warranty policy. According to the Real-estate Settlement procedures Act, payments for referrals of the Settlement services in connection with the mortgage transactions is actually prohibited and it really goes against the law. It also prohibits any transactions in fees or other compensation when there is no substantive service provided.

But the American Home Shield has denied of the charges of wrongdoing heaped upon them. The Homeowners in Alabama had complained about a payment which includes a sum of $524 at the closing of the one year home warranty from the American Home Shield. The home owners also complained that a specific amount of money has already been paid to the real estate agents beforehand only. So why will they need to pay for the extra sum of money. The consumers groups said that sometimes the entire terms and conditions regarding the payment issue is not entirely disclosed to them. The warranty policies costs somewhere around $400 to $500. The lawsuit is now settled.

Regarding the payment of the fees there has been some problems in the real estate brokerage industry itself. While some of the real estate companies have declined to participate in home warranty commissioned sales, there are others who are in favor of the practice. According to the members of the National Association of Realtors the federal anti kickback terms and conditions will not cover home warranties as they are not regarded as the settlement services and have no effect on the closing of a real estate transaction. The chief regulator of a real estate settlement statute-AHS Settlement.

In a letter to the Department of Housing and Urban Development it has been clearly mentioned that the brokers and agents have always been helpful to the buyers and agents by making them aware of the existence of the different home warranty services. At times the home warranty companies complained that it has also been found that some of the consumers are not aware of the different home warranty products that are available in the market. The brochure of these products are not handed over to the individual customers by the real estate brokers. Rather they show concern in educating the consumers about the different limitation and prices of the home warranties.

Prospective customers are always advised to understand all the terms and the conditions of the home warranty before signing any of the documents.


Recent Comments
My real estate agent didn't even suggest a homeowner warranty on the house I bought in 2006 - surprising since the house was built in 1897 and the HVAC were installed sometime in the past 20 years. I had to ask her after closing for the brochures of available warranties, and after making excuses, only gave me the brochure of AHS. I bought it, but they denied claim after claim, for specious reasons. I had to find my own electrician who would agree to their contract in order to get a ceiling fan put in when my downstairs AC went out over a long holiday weekend when the temperatures were hitting record highs. AHS didn't consider it an emergency because I had AC working upstairs! And they didn't even have contracted electricians anywhere in my area. But of course, you can't cancel, they make you pay back anything they have paid for during the contract period! I didn't renew, and 5 years later, they are sending mail for me to come back. NO WAY!
Concern about the integrity and quality of AHS services. My request for their list of network contractors with service ratings for my zip code area was denied. I was told, "We don't have one." I also asked for their weights and measures list of what their contractors should monitor during a routine maintenance check inclusive of preventative recommendations. They do not require one nor have they implemented any quality control systems. I have paid my premiums for 8 years. My air conditioner is out. After long phone waits and multiple phone conversations I am now told they will not repair it. I requested to fax them my annual maintenance records but was told they are not able to receive faxes. Bottomline they do not practice legal business standards. I will continue my research on this company and will follow up. However, I STRONGLY recommend others to avoid AHS. From, Master of Business Administration m told that they will not repair it.
Matt Miller
There is another class action brought solely on behalf of California residents that remains pending, and its not presently in settlement talks. In California, there is a longer statute of limitations applicable to such claims, and the class goes back as far as March 2007. If you paid for an AHS home warranty in 2007 or 2008, you may ultimately be able to obtain relief in the action. Contact me if you have any questions. Matt Miller 202-587-5067 [email protected]
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