Company: LRHC
Filing Date: 2025-04-15
Form Type: 10-K
Source: 0001213900-25-032211
Chunk: 563

Company: La Rosa Holdings Corp.
Filing Date: 2025-04-15
Form: 10-K
Item: Item 1B
Chunk 563
---
petitive practices associated
with the traditional commission model. Courts and regulatory bodies may be increasingly focused on ensuring transparency in commission
structures, potentially leading to reforms that impact the earnings and business models of real estate professionals. Changes in legislation
or legal precedents could impact the standard practices of commission-sharing between listing agents and buyer’s agents and
may adversely affect our business model and revenues. On October 31, 2023, a federal jury in Missouri found that NAR and certain companies
conspired to artificially inflate brokerage commissions, which violates federal antitrust law. The judgment was appealed on October 31,
2023, while these and other plaintiffs have filed similar lawsuits against a number of other large real estate brokerage companies. We
have not, as of the date hereof, been named as a defendant in any antitrust litigation. On or about March 15, 2024, NAR agreed to settle
these lawsuits, by agreeing to pay $418 million over approximately four years, and changing certain of its rules surrounding agent commissions.
This settlement resolves claims against NAR and nearly every NAR member; all state, territorial and local REALTOR® associations; all
association-owned MLSs; and all brokerages with an NAR member as principal whose residential transaction volume in 2022 was $2 billion
or below and is subject to court approval. Due to this litigation, there will be rule changes for the NAR. In the settlement, effective
mid-July 2024, NAR has agreed to put in place a new rule prohibiting offers of compensation on the MLS, as well as adopt new rules requiring
written agreements between buyers and buyers’ agents. However, the direct and indirect effects, if any, of the judgment upon the
real estate industry are not yet entirely clear.

There could also be further
changes in real estate industry practices. All of this has prompted discussion of changes to rules established by local or state real
estate boards or multiple listing services. All of this may require changes to many brokers’ business models, including changes
in agent and broker compensation. For example, we will likely have to develop mechanisms and a plan that enable buyers and sellers to
negotiate commissions. The Company will continue to monitor ongoing and similar antitrust litigation against our competitors. However,
the litigation and its ramifications could cause unforeseen turmoil in our industry, the impacts of which could have a negative effect
on us as an industry participant.

44

Recent Accounting Pronouncements

See Note 1