The operators of a rental-search Web site are suing the Missouri Real Estate Commission over its insistence that the site shut down for lack of a real estate brokerage license to display online real estate information.
The state’s Attorney General’s Office stated in a court filing that the company’s business activities “constitute the practice of a real estate broker … and/or as a real estate salesperson” under state law and seeks to dismiss the complaint.
Similar lawsuits by other companies have opposed similar regulations in California and New Hampshire. Property advertising Web site ForSaleByOwner.com won its legal dispute against the California Department of Real Estate when a U.S. District Court ruled in November 2004 that state law violated the First Amendment in requiring Web sites to obtain a broker’s license in order to display for-sale real estate information.
The Institute for Justice, a libertarian public-interest firm, supported that case and a similar lawsuit filed by ZeroBrokerFees.com against the New Hampshire Real Estate Commission and New Hampshire Attorney General’s Office.
Edward F. Walsh IV, a lawyer representing Kansas City Premier Apartments Inc. who has experience in litigation involving regulatory boards, said, “We think this is the latest in a turn of cases that deal with the issue of where you draw the line between the lawful distribution of information and content while balancing public protection interests. We do believe that what we’re doing here is no different in principle from what was being litigated in the ForSaleByOwner.com case.”
While some may take a cynical view about the motivations for the Missouri real estate regulatory agency to insist on licensure to advertise property information online, Walsh said he believes it has more to do with technological innovations outpacing legal changes. “I think clearly this is one of the challenges that all public regulators have — staying current with new developments in technology. The laws on the books are not in line with where the technological realities are today.”
While several other Web sites display rental property information that can be viewed by consumers in Missouri, Walsh said, “We’re aware of no enforcement action” by the state Real Estate Commission against those other sites.
In December 2006, Kansas City Premier Apartments received a cease-and-desist letter because the company does not have a real estate broker’s license, and in March the company received a more formal letter that threatened “both criminal and civil action” against the company if it did not cease operations.
The lawsuit filed against the Missouri Real Estate Commission and its members and executive director charges that the state’s licensure requirements “are in violation of the state and federal constitutional protections,” including free speech rights.
Janet Carder, executive director for the commission, could not be reached for comment Tuesday. The commission consists of seven voting members, six of whom must have at least 10 years of experience as real estate brokers.
Kansas City Premier Apartments contracts with local rental owners and managers to advertise information about available apartment, loft and house rentals on the Web site. The company accepts a fee based on successful rental transactions that are based on users’ use of the Web site, and does not offer to sell, exchange, purchase, rent or lease real estate.
“At no time is a fee paid or conditioned upon (the company) participating in the negotiating of the lease terms or rates,” the lawsuit states.
In its response, the state Attorney General’s Office states that a complaint was filed with the Missouri Real Estate Commission against the rentals Web site on May 25, 2004, alleging that a site operator “was engaged in the unlicensed practice of real estate,” and the office asks the court to find that the company’s practices violate state law and seeks “an injunction, restraining order, and/or other order … to enjoin (the company) from engaging in conduct that constitutes the practice of a real estate broker and/or real estate salesperson, or in the alternative dismiss (the lawsuit).”
Ryan Gran, vice president for Kansas City Premier Apartments, said operating a property rental Web site “is an entirely different level versus a real estate agent,” and some real estate agents actually refer prospective renters to the Web site.
In Missouri it takes two years to qualify to become a broker, so the company would likely need to hire a broker if it is forced to obtain a brokerage license to continue operations, Gran said. “We spent a lot of time and pride in this. We are not willing to just roll over.”
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