A federal court today will hear motions for summary judgment in a lawsuit challenging California’s licensing of Internet real estate publishers.

The Institute for Justice filed the lawsuit in 2003, claiming the state’s law that requires real estate advertising Web sites to obtain real estate broker’s licenses to legally conduct business in the state is unfair. The Institute represents ForSaleByOwner.com, a Web-based real estate advertising company that refused to go along with the state’s demand that it obtain a realty license.

The court is expected to issue a ruling within a few months.

The Institute for Justice is a non-profit, self-described “libertarian public interest law firm.” It claims California’s real estate law represents an unconstitutional prior restraint on speech and alleges the practice is invalid regulation of commercial speech that discriminates against certain companies based on the type of media they use–in this case, the Internet.

“This is censorship, pure and simple,” the Institute wrote in a statement.

The battle between the California DRE and FSBO Web sites has been brewing since August 2001 when the DRE began sending stop-it-or-else correspondence to operators of Web sites that sell classified advertising of for-sale-by-owner houses. The FSBO Web site operators have been accused of selling real estate without a license and the DRE has demanded that they either get a California broker license or stop soliciting California home sellers and buyers.

ForSaleByOwner charges home sellers a flat fee that varies by location and service and in return provides sellers a national forum to advertise their properties. The comprehensive Web site also provides real estate consumers with a menu of links to affiliated services companies and “how-to” information about mortgages, neighborhoods, credit reports, home buyer and seller check lists, school reports and the like.

But the Web site doesn’t get involved directly with home buyers and sellers.

The suit is “an important test case with broad implications for e-commerce,” according to the Institute.

“Information is more important to the economy than ever before, yet government remains a serious impediment to its free flow and the economic benefits it promises,” the Institute said in a statement. “These laws harm businesses and consumers, stifle innovation, and perpetuate wasteful and antiquated business practices.”


Send tips or a Letter to the Editor to jessica@inman.com or call (510) 658-9252, ext. 133.

Show Comments Hide Comments


Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Thank you for subscribing to Morning Headlines.
Back to top
Only 3 days left to register for Inman Connect Las Vegas before prices go up! Don't miss the premier event for real estate pros.Register Now ×
Limited Time Offer: Get 1 year of Inman Select for $199SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription