A U.S. District Court judge has ordered that a constitutional challenge may proceed against New Hampshire real estate regulations that require a broker’s license for a range of real estate-related services.

The lawsuit was filed last year in federal court against the New Hampshire Real Estate Commission and state Attorney General’s Office by ZeroBrokerFees.com, a company that allows sellers to post information about for-sale properties at its Web site. ZeroBrokerFees.com, which does not have a real estate license, charges that state regulations violate First Amendment freedom of speech rights in requiring that the company obtain a broker’s license to post property advertisements.

A libertarian public-interest law firm, the Institute for Justice, is supporting ZeroBrokerFees.com in the lawsuit. This organization also supported another property-advertising Web site, ForSaleByOwner.com, in a legal dispute that found a similar real estate law in California to be unconstitutional.

Ed Williams, CEO and publisher of the national ZeroBrokerFees.com site, which charges a flat fee for sellers to advertise properties, said the court decision “was really good news for us. We were very pleased that (the judge) decided to let it go forward. If we win, the state of New Hampshire is going to have to change its rules and requirements. Consumers have the right to use for-sale-by-owner avenues and the current law chills my speech.”

While the state law appears to consider the Web site as engaging in real estate brokerage services for displaying for-sale property ads, Williams said, “We consider ourselves the same as a newspaper,” and newspapers that carry property ads are not required to obtain a brokerage license in New Hampshire, he noted. No complaint had been filed against ZeroBrokerFees.com, and Williams said he decided to take legal action to avoid a complaint.

The Real Estate Commission and Attorney General’s Office had attempted to dismiss the lawsuit based on a number of factors, such as a pending action before the state Real Estate Commission on whether or not another property-advertising site, ISoldMyHouse.com, violated state regulations. The New Hampshire Association of Realtors trade group had filed a complaint against that company, charging that it needed a real estate license to operate in the state, and that complaint is pending before the Real Estate Commission’s hearing board.

A representative for the New Hampshire Association of Realtors could not be reached for comment today.

Jim Kennedy, an attorney in the civil division of the New Hampshire Attorney General’s Office, said that the lawsuit filed by ZeroBrokerFees.com will proceed to the evidence-gathering stage based on the judge’s decision.

The ISoldMyHouse.com business model has changed substantially since the complaint was brought against the company, said Owen Gilman, the company’s president. The site has a real estate brokerage license in Massachusetts and no longer has affiliations with a mortgage company, 1-800-East-West Mortgage Co.

“We’ve been bought away from East-West Mortgage and (parent Commerce Bank and Trust Co.), so we’re an independent for-sale-by-owner company,” Gilman said. The company now offers flat-fee MLS services in Massachusetts and is pursuing real estate licenses in Rhode Island, Connecticut, New Hampshire and Florida. The company, he said, is trying to work within state law “for the best interest of the consumer, rather than fight the law and try to do it different. We don’t have any mortgage affiliations at all.”

In November 2005 the U.S. Department of Housing and Urban Development and the Federal Deposit Insurance Corp. announced a $150,000 settlement with East-West Mortgage Co. and for violations of federal real estate law, the Real Estate Settlement Procedures Act. East-West Mortgage Co. had reportedly “solicited and received tickets from certain settlement service providers to Boston Red Sox and New England Patriots events as well as music concerts and restaurant gift certificates in exchange for the referral of business,” HUD reported.

Williams, who operates numerous Web sites including NationalFSBOListingService.com, LowBrokerFees.com, NothingButFSBO.com and RentYourApartment.com, was the original creator of the ISoldMyHouse.com Web site but is no longer associated with that company.

Valerie Bayham, a staff attorney at the Institute for Justice, said that other states also “have very broad definitions of what a real estate broker is,” and that enforcement of those laws could potentially lead to challenges under the First Amendment. The institute has not announced any other actions related to real estate laws in other states, she added.

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