A company that accepts fees for online property ads is exempt from real estate licensing requirements in New Hampshire, a U.S. District Court judge has ruled, though the ruling does not address the constitutionality of the state’s law.
Skynet Corp., a Massachusetts-based company that operates ZeroBrokerFees.com, a real estate Web site that advertises for-sale-by-owner properties and services, filed a lawsuit in June 2006 that sought to block the enforcement of a state real estate act related to the publication of real estate information. The company had sought exemption from state real estate licensing requirements as an online publisher of real estate information and alleged in the lawsuit that the state’s law granted exemption to newspapers that may not apply to the company.
In its complaint against the New Hampshire attorney general and the state’s real estate regulatory agency, Skynet argued that its business activities and the information the company provides "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 the press."
Skynet was supported in its legal action by the Institute for Justice, a nonprofit libertarian law firm that represented another company, ForSaleByOwner.com, in a similar legal challenge in California. That case led to the declaration that the California law related to real estate licensing requirements for the display of property information was unconstitutional.
Steve Simpson, a lawyer for the Institute for Justice who represented Skynet, said the judge’s decision is essentially a win-win for both sides in the lawsuit, as it clarifies that ZeroBrokerFees.com does not need to secure a real estate license in order to continue doing business in New Hampshire. The decision also keeps the state’s law in place.
James Kennedy, a New Hampshire assistant attorney general, said, "We’re pleased with the decision and happy that the court found that the statute doesn’t apply to ZeroBrokerFees.com." He said that the state "never was looking or insisting or in any way, shape or form requiring that ZeroBrokerFees had a license to begin with." The state became aware of the company when it sued the state’s real estate regulatory agency, he said.
The commission had made a decision previously and in the case of ZeroBrokerFees that the statute exempting newspapers from real estate licensing requirements in publishing real estate information also applied to the company, Kennedy said.
"ZeroBrokerFees never asked the commission whether or not the statute applied to them — instead they just sued the commission in federal court, and the judge in this case ruled the same way that the commission ruled, and took the same position that the state of New Hampshire took. It does not apply," he said.
Compliance with the state’s licensing law must be assessed on a case-by-case basis because some Web sites may operate in a different way than ZeroBrokerFees, he said. "The state is pleased that the court adopted its reasoning."
Simpson, meanwhile, said that the judge’s ruling should make it clear that companies that accept fees for publishing property information online, but do not represent consumers in real estate transactions, are covered by the licensing exemption that also applies to newspapers in the state.
"It doesn’t strike the law, but it achieves the result we wanted, ultimately," he said. The ZeroBrokerFees and ForSaleByOwner.com rulings will hopefully influence other states not to take action against online sites that publish real estate information, he said.
The judge ruled that ZeroBrokerFees is a "Web-based publisher of real estate advertising and information," and its flat-fee rate for advertising at the Web site falls squarely within state provisions exempting advance fees paid solely for advertising in a publication of general circulation.
"The medium at issue here, like a newspaper or other publication of general circulation, simply provides space for the advertisements to be made publicly available," according to the ruling.
There is no need to render a judgment about the constitutionality of the state’s law, the judge’s ruling states, because it is already apparent that ZeroBrokerFees is not a broker and does not require a real estate license.
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