A lawsuit filed this week in U.S. District Court in New Hampshire charges that state real estate law related to the display of property information on a Web site stifles consumer choice and First Amendment rights.
The Massachusetts company that operates ZeroBrokerFees.com, a site that features for-sale-by-owner property ads, alleges that a state law requiring it to obtain a broker’s license is unconstitutional. The company has asked the court to block the state attorney general and the state real estate commission from enforcing the law.
ForSaleByOwner.com, another site that offers for-sale-by-owner property ads, won a similar case in California in 2004.
The New Hampshire lawsuit notes that state law makes it “unlawful for ZeroBrokerFees.com and similar businesses to operate in New Hampshire without first obtaining a real estate broker’s license,” even though the company does not represent individuals in real estate transactions. According to the law, the company is subject to licensing requirements because it “‘lists’ real estate for sale and/or charges an ‘advance fee’ for listing property in a publication or database and ‘assists … in the procuring of prospects, calculated to result in the sale … of real estate,” the lawsuit states.
But, ZeroBrokerFees.com also alleges in the complaint that its “business activities and the information it conveys are fully within the protection of the First Amendment to the U.S. Constitution as it applies to the states through the Fourteenth Amendment and reflect the exercise of fundamental rights of freedom of speech and of the press.”
As with the law that was successfully challenged in California, the New Hampshire law exempts newspapers from the real estate licensing requirement as it relates to the publication of property information. The Institute for Justice, a nonprofit libertarian law firm that represented ForSaleByOwner.com in the California case, is providing legal assistance for the ZeroBrokerFees.com lawsuit.
“Only publishers of real estate information are subject to the licensing requirements; newspapers and other publications of general circulation that publish the same information as the plaintiff are exempted from the licensing requirements,” the lawsuit claims.
Ed Williams, creator and founder of ZeroBrokerFees.com, said the company charges a flat fee that typically ranges from $49 to $79 to display property information. The site, which launched about 16 months ago, has about 14,000 property ads on display.
Williams is also the founder of ISoldMyHouse.com, a company that offers flat-fee property advertising services. He said he left that company last year to start up the new venture. ISoldMyHouse.com is the subject of an unresolved complaint filed with the state real estate commission by the New Hampshire Association of Realtors. The Realtor trade group charged that ISoldMyHouse.com should carry a brokerage license, while the Web site’s parent company, East-West Mortgage, has countered that it is not providing brokerage services and does not need a license.
Williams decided to go forward with the lawsuit before any similar complaints were filed over ZeroBrokerFees.com. “I didn’t want to be the next target,” Williams said. “This all boils down to First Amendment rights. We feel people should have multiple levels of choice when selling their home.”
He said it seems ironic that New Hampshire, with it’s “Live Free or Die” slogan, would require for-sale-by-owner sites to obtain a broker’s license to display property information. “Newspapers are exempt from New Hampshire laws and we feel we’re no different,” he said. “We’re just hoping we can uphold First Amendment rights and … the rights of the citizens of New Hampshire to be able to market their homes the way they choose.”
Representatives for the state attorney general, real estate commission and New Hampshire Association of Realtors were not immediately available to comment on the lawsuit.
Valerie Bayham, an Institute for Justice lawyer that is representing ZeroBrokerFees.com, said the New Hampshire lawsuit is very similar to the case that the institute supported in California. The New Hampshire laws relating to the real estate licensing requirements “are very broadly written. It’s very unclear as to where (the commission) is drawing the line,” she said. Bayham noted that three of five members on the real estate commission are also members of the state Realtor association.
While many people will choose to use a real estate agent in a real estate transaction, “they shouldn’t have to,” she added. Web sites that advertise property information should not be subject to the same licensing requirements as agents because they do not represent consumers as agents do, she said.
There are similar state laws in effect in Missouri and Illinois, Bayham said, though there are not any formal court challenges relating to laws in those states.
