Real Estate Web Site Sues State Over Licensing Requirements

A real estate Web site that has been ordered by state regulators to obtain a broker license sued the state Wednesday, claiming the licensing requirements are vague and unconstitutional.

New York-based ForSaleByOwner.com Corp. -- which caters to home sellers working without a licensed broker -- and an affiliate in Sacramento say they do not engage in buying and selling real estate, an activity that would require a state license.

Instead, the company says the online for-sale ads that it carries are similar to classified ads that are found in newspapers and on their Internet sites, which are not considered brokerages.

“If California can require Internet advertisers to become licensed real estate brokers, other states can as well,” the company’s attorney, Steve Simpson, said in a statement. “If all states did so, businesses like ForSaleByOwner.com, which depend on the ability to serve customers in many states, would become extinct.”

The lawsuit filed in federal court in Sacramento claims that the state’s real estate licensing law is an unconstitutional prior restraint on speech, is an invalid regulation of commercial speech and unfairly discriminates against the plaintiffs based on the type of medium they’re using “to disseminate their views and information, or their viewpoints.”

The lawsuit seeks to have portions of California’s real estate law declared unconstitutional.

A spokesman for the state’s Department of Real Estate, which regulates and licenses real estate brokers, said officials there had not seen the lawsuit and would not comment on the litigation.