A California real estate broker who has advertised for-sale-by-owner properties from other states on Realtor.com by placing them in a multiple listing service in California has amended a lawsuit she filed two years ago against Nebraska regulators, claiming their attempts to put a halt to the practice have violated her civil rights to free speech and to pursue a trade.
The Nebraska Real Estate Commission sent California broker Leslie Rae Young a cease and desist order in July 2010, maintaining that only Nebraska licensees are permitted to negotiate the listing, sale or purchase of property in the state, or assist in procuring prospects.
Young then sued the state of Nebraska and the commission in federal court, claiming changes to Nebraska’s licensing laws were unconstitutional, and that the state had no jurisdiction over her.
In March, the court denied Young’s request for preliminary injunction that would have prevented the commission from enforcing the cease and desist order. The court also dissolved a temporary restraining order that had prevented the enforcement of the cease and desist order, and restricted Young from acquiring any new clients in Nebraska.
Now the Pacific Legal Foundation, which describes itself as a nonprofit legal watchdog organization that litigates for limited government and free enterprise, has taken up Young’s cause, agreeing to represent her at no charge.
The Pacific Legal Foundation filed an amended complaint Aug. 30 on Young’s behalf, arguing that Nebraska’s requirement that she obtain a Nebraska real estate broker’s license in order to advertise homes in the state violated her First and Fourteenth Amendment rights to free speech and to earn a living.
In a video about Young’s case, Tim Sandefur, the foundation’s principal attorney, said the foundation often files lawsuits challenging the constitutionality of occupational licensing laws that impose training or educational requirements before someone is allowed to do business.
In a statement, Sandefur said obtaining a real estate broker license in Nebraska is "expensive and time-consuming" because it requires between 60 and 180 hours of state-approved classes and passing a licensing exam.
"The state of Nebraska is foreclosing on First Amendment rights by imposing burdensome licensing requirements on Leslie Young’s online home sale ad business," Sandefur said.
"Ms. Young is not acting as a broker. She doesn’t represent people in real estate transactions. Nobody pays her a commission, and she doesn’t negotiate sale prices. All she does is provide a way for sellers to advertise their homes, like a classified ad section in a newspaper. To demand that she get the state’s permission first is unconstitutional. It’s a classic example of how overbearing regulations infringe on core constitutional rights."
Licensing requirements are fine as a way of protecting the general public, he said, "so long as the requirements the government imposes on you actually have to do with the business and aren’t abused as ways of restricting economic opportunity and giving a monopoly to established companies."
Sandefur told Inman News that he was unaware if Young is currently advertising for-sale-by-owner properties in Nebraska or any states other than California, but said, "she has in the recent past, and would like to."
The Nebraska Real Estate Commission has 21 days to respond after being served with the complaint. Greg Lemon, the commission’s director, declined to comment specifically on Young’s suit other than saying, "We are confident in our position going forward."
In general, however, Lemon said there is no license required to advertise Nebraska properties, but "if a third party’s name and contact information appear on the advertisement as a contact regarding the sale or leasing of the property it goes beyond advertising and appears on its face to be third party representation, or brokerage activity."
He added that the commission does not discourage out of state individuals from conducting real estate business in Nebraska, "we merely ask that they obtain a Nebraska license before doing so."
Nebraska was not the only state to issue a cease and desist order against Young in 2010. In Alaska, an administrative law judge ruled that Young had violated Alaska’s licensing laws, because the advertisements for Alaska properties she placed on Realtor.com via an out-of-state MLS identified her as a "broker" and "agent."
Realtor.com uses templates that include language for each property such as "This listing brokered by," "agent’s other listings," and "e-mail agent." Young maintained she had no control over whether she was identified on Realtor.com as a property’s broker or agent when she was providing only advertising services.
Nonetheless, Administrative Law Judge Christopher Kennedy ruled that "there is no question that the ads hold her out to be a broker of real estate, and to be brokering the property featured in the ad."
"Young gets her clients onto a Realtor-only database by, in essence, pretending to be their Realtor. In nearly all respects she is not, in fact, their Realtor: The references in the advertisement to her as ‘broker’ and ‘agent’ for the properties concerned are not accurate," Kennedy wrote in his decision.
"But by assuming the mantle of a broker and agent in the advertising she places, Young violates the Alaska prohibition on holding herself out to be in the business of doing activities requiring an Alaska license when she does not in fact hold one."
Because of the way Realtor.com and other similar websites operate, Kennedy said, "There does not appear to be a way around this problem. It seems unlikely that she can pursue her business model with respect to Alaska properties without becoming licensed here."
Young’s attorneys appealed the decision in Alaska Superior Court. According to the Alaska Real Estate Commission, the appeal was inconclusive and sent back to the lower court at the end of 2011. Sandefur said he did not currently have access to records for the Alaska case and would not be able to provide an update by publication time.