Weekly Real Estate News
Zillow is asking a federal judge to permanently dismiss renewed claims that its agent programs improperly steered homebuyers toward Zillow Home Loans in violation of the Real Estate Settlement Procedures Act.
The company filed a 33-page motion Sept. 21 in the U.S. District Court for the Western District of Washington seeking dismissal with prejudice of the latest amended complaint in the consolidated Taylor-Armstrong litigation. A dismissal with prejudice would prevent the plaintiffs from simply refiling the same claims.
No ruling has been issued on the new motion. The allegations against Zillow remain contested.
Zillow says plaintiffs still have not fixed the case
Judge James L. Robart dismissed the plaintiffs’ earlier complaint in July but allowed them another opportunity to amend it. The plaintiffs filed a third amended complaint in August, narrowing the litigation and again asserting claims under RESPA and the Washington Consumer Protection Act.
In its latest motion, Zillow argues that the amended complaint still does not correct the deficiencies identified by the court. The company says the plaintiffs have not alleged facts sufficient to establish that Zillow Home Loans preapproval letters constitute a settlement service covered by RESPA or that Zillow’s agent programs amount to prohibited referrals.
Zillow maintains that its mortgage preapproval letters are free, optional and nonbinding and that consumers are not required to obtain financing through Zillow Home Loans. It also says participation by agents in its Preferred program is voluntary.
Those are Zillow’s arguments in the pending litigation. The plaintiffs have alleged that agents participating in Zillow’s Preferred and Flex programs were encouraged to steer buyers toward Zillow Home Loans in exchange for valuable buyer leads, an arrangement they contend violates RESPA.
Case has already survived one dismissal
The Taylor action was initially filed in September 2025 and was later consolidated with a separate Armstrong lawsuit. Earlier versions of the litigation asserted a broader collection of claims against Zillow and other real estate defendants.
Robart dismissed the consolidated case in July, finding the complaint deficient, but he did not then close the door on amendment. The plaintiffs returned in August with another complaint focused largely on alleged RESPA and Washington consumer-protection violations.
Zillow now argues the plaintiffs have had sufficient opportunities to state viable claims and is asking Robart to end the litigation against the company with prejudice.
Why the case matters to mortgage and real estate
The dispute reaches directly into the relationship between real estate lead-generation platforms, agents and affiliated mortgage businesses. RESPA generally prohibits giving or accepting things of value in exchange for referrals of settlement-service business, making the boundaries of referral relationships an important compliance issue across both the mortgage and real estate industries.
A ruling granting dismissal with prejudice would be materially more consequential than the court’s July decision because the plaintiffs would not be permitted to cure the same claims through another amended complaint in this action.
The court has not yet ruled on Zillow’s request.
Sources: Zillow; HousingWire; Real Estate News; U.S. District Court for the Western District of Washington case record.
Photo: Tierra Mallorca/Unsplash.
