Selling and Advertising Across State Lines

In an interesting case in Nebraska, a real estate agent was issued a cease and desist order over selling homes located in Nebraska.  The order came because she was licensed in another state.

The cease and desist was issued by the Nebraska Real Estate Commission and told Leslie Young, a California Realtor, to stop listing properties located in Nebraska.  Young was running a website which solicited home sellers to input their home’s information into her website.  She would then place the home for sale on various other “for sale by owner” websites and  Young argued that she was preparing advertising for a fee and did not perform any duties of a real estate agent.  She ended up suing the Nebraska Commission on the matter.

However, after a number of legal maneuvers and appeals, a Federal Judge has thrown out Young’s lawsuit, explaining that she advertised herself as a real estate agent and the Nebraska real estate code prohibited anyone from performing the functions of a real estate agent without having a license in that state.

While Young may still decide to appeal the decision, this matter contains important implications for real estate firms today.  Many firms do business across state lines and some large firms have clients across the country.  However, those firms tend to be licensed in those states already.  This case highlights that even advertising for a property in a state the firm is not licensed in could expose the firm to legal ramifications.

Another aspect of this is the regulatory aspect.  This case was not strictly speaking a real estate malpractice claim.  It was a regulatory matter.  All Realtor professional liability policies cover lawsuits alleging malpractice, but not all cover regulatory actions or investigations.  Many firms face instances where clients are upset at their services.  Some will choose to sue while others will report the matter to the state’s real estate commission.  Having insurance to cover both types of matters is important for any firm’s risk management.

Real Estate Regulatory Insurance to discuss ways to protect your firm from real estate lawsuits and for a complimentary review of your current insurance plan.