RE Salesmen use legislation to restrict their competition, too!

[James H. Bushart]

How are the consumer's interests being served when used house salesmen use legislation to restrict their competition?

Posted on Mon, May. 21, 2007
Web site raises a rights issue



By DAN MARGOLIES

Columnist

A Web site that provides information on local rental properties says the Missouri Real Estate Commission is violating its free-speech rights by ordering it to desist.

Kansas City Premier Apartments Inc., a venture begun by Tiffany Lewis in 2004, says that the commission sent it a letter in December stating that KCPA was conducting “real estate activity without a Missouri real estate license” and demanding that it “cease immediately.”

Three months later, the commission issued a formal cease-and-desist letter alleging that KCPA was acting as an unlicensed real estate broker in violation of Missouri law.

Among other things, the law defines a real estate broker as anyone who lists or offers to list real estate for sale or rent, or anyone who aids in the procuring of prospects “calculated to result” in the sale or rental of real estate.

KCPA maintains that it merely enters into contracts with property owners to run ads on its Web site. The ads are searchable by location, cost and other criteria.

KCPA insists it doesn’t negotiate leases or collect rent. Rather, it gets paid by property owners only when someone rents a property after having learned of it on KCPA’s Web site.

Last month, KCPA sued the real estate commission, asking a Platte County Circuit Court judge to determine that it is not violating Missouri law. Its attorney, Chip Walsh, says that KCPA’s business model is no different from that of Google, Yahoo, Apartments.com or, for that matter, The Kansas City Star’s online apartment/home rental service.

“To the best of our knowledge, none of them are required to obtain licenses,” he said.
The suit alleges that the commission’s attempt to clamp down on KCPA for merely advertising rental information is “an unwarranted restriction of speech based on content, viewpoint and/or choice of media” and violates its commercial free-speech rights.

KCPA’s position finds some support in a similar case in which a federal judge in Sacramento, Calif., decided that ForSaleByOwner.com didn’t need a California license to publish paid ads listing properties for sale. As is the case in Missouri, newspapers in California are exempt from the requirement that only licensed real estate brokers can charge fees for listing sales and rental data.

In November 2004, U.S. District Judge Morrison England Jr. ruled that the exemption appeared to be wholly arbitrary.

“California cannot make arbitrary distinctions based on the manner of speech or the media used for publication,” he wrote.

Walsh said the Missouri commission likewise was trying to impose arbitrary restrictions on his client’s right to free speech.

The commission is “expanding its authority in a manner not originally envisioned by the legislature,” he said.
Janet Carder, executive director of the commission, said that newspapers are exempt in Missouri because the provision of apartment information is incidental to their core business.

“Every state statute is different, so the nuances of what you can practice in one state from what you can practice in another are going to be different,” she said. “The courts are going to have to make that decision.”

To reach Dan Margolies, call 816-234-4481 or send e-mail to dmargolies@kcstar.com.