Should an Electronic Listing Service Such as Loopnet be Required to Be Licensed as A Broker in Each State that it Lists Properties for Sale?
I recently read an interesting article distributed by the Associated Press and republished by the Silicon Vally, Mercurynews.com about the state of Nebraska’s requirement that the owner of a property-listing website based in California, obtain a license to market homes in the Midwestern state.
Apparently Leslie Young filed a federal lawsuit, seeking a permanent injunction to stop Nebraska from enforcing the law, which she says violates her First Amendment rights, the Lincoln Journal Star (http://bit.ly/Pu0WWf) reported.
We’ll, as you will see, this got me thinking and when I start thinking, I get dangerous and write blog posts.
Ms. Young claims that her website, elistme.com, merely provides a way for sellers to advertise their homes, like a classified ad section in a newspaper. She does not act as a broker and does not receive a commission. This sounds like a pretty good argument to me, if it is true. Now, of course, I don’t know what is actually true but it was reported that in court documents that Young’s Elist.me site has referred to her as “advertising broker.” Now if she is not acting as a broker, then why would the site list her as the advertising broker? Perhaps this was something, nothing more than sloppy copy or an inadvertant statement and in fact, she is not acting as a broker in the state of Nebraska. But I would be so bold to suggest, that when you state that you are acting as the “advertising broker, ” you are not passing the sniff test, which certainly warrants some initial due diligence on the part of the state of Nebraska. My guess is that this is a matter that should be straightened out informaly, rather than by a lawsuit and that Ms. Young should make sure that her website not state or infer that she is acting in the capacity as a broker in the state of Nebraska or for that matter, in any state that she is not licensed to act as a real estate broker. Just as important, she should make absolutely certain that she does not actually act as a broker, notwithstanding how she might refer to herself on her website.
So you ask yourself, what does all of this have to do with Loopnet? While Loopnet does not publish the availability of residential property on its website, (I don’t think so, at least), it does publish listings for commercial property in most, if not all states in the United States. While I am sure that Loopnet has an army of attorneys that spend their entire day to insure that Loopnet fully complies with all state and federal laws, you do wonder, to what extent, there has been a lot of attention paid to the inner workings and agreements of these listing services, how they get paid and to what extent the agreements involve broker or broker like tasks. How close do they skirt the line as a mere advertiser versus broker?
Nebraska Real Estate Commission Director, Greg Lemon declined to specifically comment about Young’s lawsuit. He said, however, that the Nebraska law addresses how property is marketed. He further expressed that if the ads direct potential buyers to the owner who listed it and no broker is involved, the law isn’t breached.
Does that mean that if a commercial property is listed on Loopnet by a listing broker licensed in the state of Nebraska, Loopnet must be licensed as a real estate broker in the state of Nebrask? That doesn’t make any sense to me, if you take the above statement of Director Lemon at face value.
I think this all warrants some investigative reporting on this issue and I will report back in later blog posts.