Constitutional Challenge to Real Estate Rules

BOISE (CN) - It's unconstitutional, but the Idaho Real Estate Commission prohibits out-of-state agents from "almost any involvement" in Idaho properties, even with licensed Idaho brokers, real estate brokers claim in Federal Court.

Marcus & Millichap Real Estate Investment Services of Seattle sued the commission on June 19, claiming its "protectionist" policy violates the Commerce Clause of the Constitution.

Plaintiffs include the company's "designated Idaho broker" Paul Ryan, who has an Idaho broker's license and works in the company's Boise office, and two vice president who work in San Francisco, with California licenses.

Marcus & Millichap says that since 2007, Idaho "has elected to ban out-of-state real estate agents from almost any involvement in transactions involving Idaho property, even when they associate with a licensed Idaho broker."

"The last state to attempt to defend such a scheme was Kentucky, and its former policy - which was very similar to IREC's in this case - was twice held to be an unconstitutional violation of the Commerce Clause of the U.S. Constitution."

The office cites the Kentucky cases Marcus & Millichap Real Estate Inv. v. Skeeters (2005), River Oaks Management v. Brown (2007) and LexCin Partners Ltd v. Newmark S. Region LLC (2009).

Marcus & Millichap says it has repeatedly warned the commission that it is unconstitutionally interfering with interstate commerce, but it refuses to budge, and "threatens those who engage in such commerce with administrative actions and civil penalties."

IREC Executive Director Jeannie Jackson-Heim and Marcus & Millichap attorney Daniel Glynn are on vacation and were not available for comment this week.

Marcus & Millichap claims Idaho's "protectionist, discriminatory and unnecessarily burdensome state economic restraints" also violate state law.

They seek an injunction preventing IREC from enforcing its unconstitutional policy; its ban on cooperation between Idaho brokers and out-of-state agents; its ban on out-of-state broker advertising; its ban on communications "that may be construed as negotiation" with non-Idaho brokers; from conducting any more disciplinary investigations; and wants all such pending investigations dismissed.

Marcus & Millichap's lead counsel is Richard Greener, with Greener Burke Shoemaker & Oberrecht.

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