Sunderland and McFall challenge rules around buyer-brokerage compensation on MLS® Systems. Here is what the plaintiffs allege, what defendants dispute and what could change.
Written by Faiza Ahmed
Last updated on September 23, 2026
Canadian class actions are challenging the rules that govern how buyer brokerages are compensated when a home is sold through an MLS® System.
The lawsuits raise a real competition question. If participation in an MLS® System requires an offer of compensation to a cooperating brokerage, does that structure limit meaningful price negotiation for the service the buyer receives?
That question deserves to be examined.
But it is not the same as saying that Canadian law requires every seller to pay a 2.5% buyer-agent commission. In Ontario, remuneration is something the client and brokerage agree on. CREA’s current MLS® rules address cooperating compensation separately and require a non-zero offer rather than a particular percentage. Changing that rule also would not necessarily mean that every represented buyer must arrive at closing with thousands of dollars in additional cash.
The real issue is more difficult:
Can Canada preserve the benefits of a cooperative listing system while giving buyers and sellers more control over how buyer representation is priced and paid for?
That is the question underneath the litigation, and it matters more than choosing a side based on what happened in the United States.
There are two related proceedings.
The Sunderland action concerns residential properties sold through the Toronto Regional Real Estate Board’s MLS® System. The McFall action advances similar allegations on a broader national basis.
According to the plaintiffs’ description of the McFall proceeding, they allege that the compensation arrangement connected with MLS® listings limits competition among buyer brokerages and causes sellers to pay more than they would in a competitive market. The defendants deny the allegations.
The allegation is not simply that commissions are expensive. The plaintiffs’ theory is that the structure may influence who pays for buyer-brokerage services and weaken the buyer’s incentive or ability to negotiate the price of those services.
That distinction is important.
A court has not ruled that the defendants participated in the alleged unlawful arrangement or that the challenged rules caused commissions to be inflated.
In the 2023 Federal Court decision, defendants asked the court to strike the Sunderland claim before trial. The Court concluded that a claim concerning the alleged control of prices could continue against certain brokerage and association defendants, while allegations concerning fixing, maintaining or increasing prices were struck. Claims against the franchisor defendants were also struck at that stage.
That was a procedural ruling about whether the pleaded claim disclosed a reasonable cause of action. The Court expressly approached the pleadings on the assumption that properly pleaded facts were true for the purpose of the motion. It was not a finding that the alleged conduct actually occurred, caused loss or violated the Competition Act.
There is no Ontario law setting a 2.5% buyer-brokerage commission.
Ontario’s Trust in Real Estate Services Act requires remuneration payable to a brokerage to be an agreed amount, percentage of the sale or rental price, or a combination of the two. RECO also tells agents not to suggest that remuneration is fixed or approved by RECO, government, a real estate board or an association.
That does not mean industry rules have nothing to do with cooperating compensation.
CREA’s April 2026 By-Laws and Rules state that, for a listing to comply with the three pillars of the MLS® mark, the listing REALTOR® member agrees to pay compensation to the cooperating REALTOR® member for the cooperative sale of the property. The rule expressly states that an offer of zero is not acceptable.
Two things can therefore be true:
The existence of choice over the amount does not automatically answer the competition question. A nominal offer can satisfy a non-zero rule, but the market’s response to different compensation amounts can still influence what sellers believe is practical.
When I speak with sellers about buyer-side compensation, they are rarely concerned with whether they can technically offer a token amount. They want to know what a lower contribution will do to the sale.
That is difficult to predict before the property is listed. The seller does not know which future buyers will face a fee shortfall, how large that shortfall might be or how those buyers will respond. Some may have additional cash available. Others may ask the seller to address the shortfall through the offer or adjust what they feel able to pay for the property.
In practice, that uncertainty can make a formally negotiable amount feel less negotiable. Sellers may choose the familiar structure not because a law requires it, but because they are being asked to price a transaction risk they cannot see in advance.
In the traditional cooperative model, the seller receives the sale proceeds, and the listing side has historically been able to address cooperating compensation through the transaction at closing.
That structure also reduces the amount of additional cash a represented buyer may need beyond the down payment and other closing costs.
This is not a minor operational detail.
Seller-funded compensation can serve a liquidity function. It allows the cost of buyer representation to be dealt with through the transaction rather than necessarily requiring the buyer to produce the entire amount separately.
That is a legitimate benefit of the existing structure.
It does not establish that a mandatory non-zero offer is necessary, that any customary commission level is competitive, or that every transaction needs to handle compensation in the same way.
In Ontario, the representation agreement should clearly identify how the remuneration payable to the buyer’s brokerage will be determined and explain circumstances in which that amount may change.
RECO’s guidance says the buyer client is responsible for the fees associated with the representation and services received from the buyer’s brokerage. It also recognizes that a seller may agree to compensate the buyer for some or all of those brokerage fees.
If the seller’s contribution is less than the amount the buyer has agreed to pay, RECO says the representation agreement should address what happens to the shortfall. The buyer might owe it, the brokerage might agree to accept the seller-paid amount, or the parties might have another arrangement.
Ontario also permits a remuneration clause in an agreement of purchase and sale under which the seller agrees to compensate the buyer for some or all of the buyer’s brokerage fees.
This matters because changing an MLS® compensation rule would not necessarily prohibit sellers from helping with buyer-brokerage fees.
It could instead change when compensation is negotiated, how it is disclosed and whether it is offered to cooperating brokerages in advance or negotiated through a particular transaction.
The possible alternatives are wider than a simple choice between “the seller pays” and “the buyer pays cash.”
In my experience with buyers, the brokerage fee can remain theoretical until they become interested in a property where the seller’s contribution is less than the amount in their representation agreement.
That is when an abstract contractual obligation becomes a real purchasing decision. The buyer may need to preserve additional cash, reconsider the price they can comfortably offer, ask the seller to contribute toward the fee or discuss whether their brokerage will accept a different amount.
The compensation structure can therefore affect more than who receives an invoice. It can influence the price, terms and conditions a buyer feels able to put forward. That practical effect is easily missed when the debate is reduced to a simple choice between “seller pays” and “buyer pays.”
The lawsuits challenge compensation rules connected to MLS® Systems. They do not change the fact that cooperation between brokerages can create substantial value for buyers and sellers.
An MLS® System gives participating real estate professionals a structured way to share listings, property information and transaction instructions. Listing information can then be distributed through REALTOR.ca and other authorized websites.
If the distinction between the professional system and the public websites is unfamiliar, it helps to understand what the MLS® is in Canadian real estate before assessing the commission debate.
The value of this network does not depend entirely on one compensation rule. Brokerages have strong reasons to participate because MLS® Systems organize a large amount of professional listing activity and make cooperation more efficient.
That creates a network effect.
But network value and rule design are separate questions. A system can be useful while containing a rule worth examining. Changing one rule also does not necessarily require dismantling the system that carries the listings.
A central criticism of the current structure is not that sellers have no choice whatsoever.
It is that the buyer receives the buyer brokerage’s service while some or all of its cost may be funded through the seller side of the transaction. When a buyer does not expect to pay the fee directly, there may be less incentive to compare buyer-brokerage prices or negotiate a lower fee.
The seller can negotiate the compensation they are prepared to offer, but the seller is not the client receiving the buyer brokerage’s advice, investigation or negotiation services.
That separation between the person receiving the service and the way the service is funded creates a competition question worth examining.
The Competition Bureau began investigating CREA’s commission rules in 2024. In February 2026 it expanded the investigation to include Greater Vancouver REALTORS®. The Bureau said it was examining whether the rules may discourage lower commission rates or alternative pricing models, encourage steering or affect competition in other ways. It also stated expressly that the investigation was ongoing and that there was no conclusion of wrongdoing at that time.
That is the correct level of caution. The structure creates questions worth investigating, but the existence of those questions is not proof that anyone entered into an unlawful arrangement.
One concern raised in commission debates is steering. A buyer representative may have an incentive to favour properties offering more compensation or avoid properties offering less.
In Ontario, RECO says steering a buyer based on compensation breaches TRESA. A registrant representing a buyer must inform the buyer about properties that meet the buyer’s criteria without regard to the remuneration the brokerage might receive. RECO says disciplinary consequences can include fines and, in serious circumstances, loss of registration.
That conduct should not be confused with a different issue that can arise even when the buyer’s representative acts properly.
A buyer may still have a genuine payment obligation under their representation agreement if the seller’s contribution is less than the amount the buyer has agreed to pay.
The buyer may need to understand the shortfall, determine whether the brokerage will accept a different amount, ask the seller to contribute through the offer or reconsider the transaction. RECO specifically requires Ontario representation agreements to address circumstances in which remuneration can change and provides guidance for situations where a seller’s contribution falls short.
That is transaction friction, not steering.
The distinction matters because a compensation system can create practical financing or negotiation issues without making improper conduct by an agent inevitable.
A registrant favouring properties by compensation, rather than the buyer’s criteria, breaches TRESA and can lead to fines or loss of registration.
A buyer may still owe a shortfall when the seller’s contribution falls short of their representation agreement. That is a financing issue, not misconduct.
Removing a mandatory non-zero offer of cooperating compensation would not necessarily produce one uniform buyer-pays model.
Several arrangements could develop. These are possible structures, not predictions about the outcome of the lawsuits or the Competition Bureau investigation.
The current litigation cannot be evaluated honestly without considering both the competitive opportunity and the transaction friction that different reforms might create.
On a $1 million sale, a total commission of 5% equals $50,000 before applicable sales tax. At 4%, it equals $40,000.
Those are material amounts. A seller should understand what is being charged, what the fee covers and how compensation connected with the transaction is structured.
But transaction costs and housing affordability should not be treated as interchangeable.
Reducing commission can preserve more of a seller’s equity. It does not follow automatically that the home will sell for less or become more affordable to the buyer. The sale price is influenced by supply, demand, financing conditions, property characteristics and competition among buyers.
Lower transaction costs can have value on their own. They do not need to be presented as a complete solution to the cost of housing.
A commission bill is easy to calculate. Its effect on the ultimate market price is much harder to isolate.
In October 2025, the Federal Court approved a settlement involving RE/MAX Ontario-Atlantic Canada Inc. in the Sunderland and McFall proceedings.
RE/MAX Holdings’ June 2026 SEC filing states that RE/MAX Ontario-Atlantic Canada paid $7.8 million Canadian, agreed to certain business-practice changes and continued to deny the material allegations. The filing expressly says the settlement was not an admission or concession of liability. The Federal Court approved the agreement on October 8, 2025 and dismissed RE/MAX Ontario-Atlantic Canada from the Canadian competition litigations pursuant to the settlement.
The settlement therefore proves that RE/MAX resolved the claims against it on agreed terms. It does not establish that the allegations against RE/MAX were true, and it does not decide the contested claims against the non-settling defendants.
CREA’s statement about the approved settlement says RE/MAX also agreed not to require its affiliates to belong to CREA or TRREB, while leaving those affiliates free to decide whether to remain members. CREA continued to deny that the underlying compensation rules were unlawful.
The settlement is therefore relevant to the direction of the dispute, but it should not be described as a court finding that the alleged conspiracy occurred.
Sellers can already negotiate listing fees and compare flat-fee, lower-percentage and other service models. Buyers can negotiate remuneration terms in their representation agreements.
That existing choice matters.
It is not a complete answer to the lawsuits.
The existence of a lower-cost option does not establish that the market around it is fully competitive. If a rule, default practice or concern about how a transaction will function discourages consumers from using an alternative, that alternative may exist without exerting as much competitive pressure as expected.
The reverse is also true. Evidence that commissions remain high does not, by itself, establish an illegal agreement. Consumers may choose more expensive services for reasons that include scope, experience, convenience, brand familiarity or risk tolerance.
Operating a lower-fee listing model has made one distinction particularly clear to me. A seller can save substantially because the listing-side fee is lower while the amount offered toward the buyer’s brokerage fees remains unchanged.
That is genuine competition and genuine savings, but it is competition on only one part of the transaction. It does not tell us whether the buyer compared brokerage fees, negotiated the price of their own representation or even understood what that service would cost if the seller’s contribution fell short.
The existence of discount listing models proves that sellers have alternatives on the listing side. It does not, by itself, answer whether buyer-brokerage pricing is exposed to the same competitive pressure.
The litigation may take time, and consumers still need to understand the agreements they are signing today.
These questions are useful regardless of how the lawsuits or the Competition Bureau investigation end.
The cooperative listing network has real value. Seller-funded buyer compensation can reduce cash friction and help buyers access representation. Those benefits deserve to be considered before compensation rules are changed.
The plaintiffs are also raising a serious structural concern. When the recipient of a service is separated from the negotiation and funding of its price, competition may not operate in the usual way. A mandatory non-zero compensation rule can matter even when the amount remains negotiable.
What is established today is narrower than either side’s strongest rhetoric. The lawsuits and the Competition Bureau investigation raise questions about how buyer-brokerage compensation affects competition. They have not established wrongdoing by the remaining defendants.
Compare flat-fee, lower-percentage and traditional listing models, and see what buyer representation and agent costs can include, before signing an agreement.
About the author:
Faiza Ahmed
As the founder of PropertyMesh, Faiza Ahmed is dedicated to making real estate more transparent and cost-effective. While she advocates for more transparent, flexible fee structures so sellers can keep more of their equity, her core focus is empowering buyers and sellers to make informed decisions. Faiza is a licensed real estate broker registered with the Real Estate Council of Ontario (RECO Registration #4791581) and an active member of the Toronto Regional Real Estate Board (TRREB).
| Total commission rate | Cost on a $1M sale before tax | Difference from 5% |
|---|---|---|
| 5% | $50,000 | $0 |
| 4% | $40,000 | $10,000 |
| 3.5% | $35,000 | $15,000 |
