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While his lawsuit against the West Virginia Real Estate Commission is on hold, online discount broker Derek Eisenberg is charging forward with his lawsuit against the Nevada Real Estate Commission and the Nevada Department of Business over a rule that requires brokers to have in-state brick-and-mortar office to do business.
The defendants’ attorneys filed a motion to dismiss Eisenberg’s complaint on March 6, noting that Nevada’s real estate broker license requirements, which include having a brick-and-mortar office, aren’t anti-competitive as they apply to resident and nonresident brokers alike. The defendants also said brokers have multiple options to meet the in-state office requirement, as evidenced by Eisenberg sharing a Las Vegas suite with 56 other Nevada broker license holders.
The Nevada Real Estate Commission and Nevada Department of Business’ attorneys said any monetary or logistical incidental burdens Eisenberg has faced — such as securing staff and paying rent and mail costs — are the same burdens faced by resident brokers.
Since resident and nonresident brokers face the same challenges, the attorneys said Eisenberg’s argument the in-state office requirement violates several federal clauses, including the U.S. Interstate Commerce Clause, falls flat. The requirement, they said, is key to regulating brokers and investigating potential violations, such as fraud.
“Mr. Eisenberg does not plausibly allege a cause of action under the Dormant Commerce Clause because his complaints of incidental expenses cannot survive scrutiny under [Pike v. Bruce Church interstate commerce ruling],” the filing read. “Plaintiff complains of merely incidental burdens such as costs of staffing, rent, and mail. These burdens are not a result of his out-of-state status.”
“Rather, they are burdens faced by virtually all real estate brokers. This is insufficient under Pike,” it added. “Nevada’s interest in regulating real estate professionals to serve those involved in real estate transactions of property in Nevada, prevent fraud, and have availability to regulators and clients easily outweighs Mr. Eisenberg’s desire to limit business expenses.”
Derek Eisenberg
Eisenberg’s attorneys filed an opposition to the defendant’s motion to dismiss on March 19 and said the motion was based on speculation rather than concrete facts about the different incidental burdens for resident and nonresident brokers and whether the in-state office requirement gives the commission a greater advantage in investigating brokers and protecting consumers than other options, such as remote recordkeeping.
“This case does not challenge the state’s authority to regulate real estate brokers, nor does it seek to eliminate licensure standards that actually ensure brokers are competent or qualified,” the filing read. “Rather, it challenges the constitutionality of specific laws that discriminate against out-of-state brokers and impose irrational requirements on the industry.”
“Even if Plaintiff is successful, the state could still require brokers to be licensed, require them to be competent, and discipline them if they are not,” it added. “But the challenged laws discriminate against out-of-state brokers by forcing them to maintain and operate from a physical office in Nevada even though they can provide the same services as in-state brokers without one.”
Eisenberg is president of Continental Real Estate Group, which operates entirely online under a fee-for-service business model in 45 states and Washington, D.C. He has a broker’s license in 26 states, including West Virginia and Nevada. His goal is to expand nationwide to all 50 states by the end of 2025, but he contends that the thousands of dollars to comply with states’ brick-and-mortar requirements threatens those plans.
“States shouldn’t stifle innovative business models that make everyone better off,” Anastasia Boden, senior attorney at Pacific Legal Foundation, which is representing Eisenberg, said in a previous Inman article. “In-state office requirements are antiquated and anti-competitive. Because they no longer serve any legitimate purpose, they deprive people of their constitutional right to earn a living.”
In an emailed statement to Inman, Eisenberg said several previous cases in the real estate, insurance and finance industries (FIRE) support his argument, namely Georgia Association of Realtors, Inc. v. Alabama Real Estate Commission.
In the 1990 case, the Georgia Association of Realtors argued against an Alabama Real Estate Commission rule that required Georgia brokers seeking an Alabama license to also maintain an office in Alabama to sell homes. The court decided the Alabama Real Estate Commission’s in-state office rule violated the U.S. Interstate Commerce Clause; however, it did not violate the U.S. Privileges and Immunities Clause.
“There is a plethora of favorable case law on this topic in the FIRE arena. We’ve cited several,” he said. “Codar, Inc. v. Arizona is a case about a debt collector who was required to have an office in Arizona to collect debts there. Underhill v. Coleman is about a securities broker-dealer who sued Virginia over the requirement to have an office in Virginia. In all of these cases, the Plaintiffs prevailed.”
These cases may also aid Eisenberg’s suit against the West Virginia Real Estate Commission, which was paused on March 17 due to state legislation that may do away with the commission’s in-state office requirement. West Virginia Delegates Roger Hanshaw (Republican) and Sean Hornbuckle (Democrat) introduced HB 2010, which would create “an exception to the requirement that a real estate broker maintain a definite place of business within the state for non-residents who maintain a definite place of business in their jurisdiction of residence.”
Eisenberg and the West Virginia Real Estate Commission filed a joint motion to stay the case until the end of the West Virginia state legislative session on April 12. Both parties agreed to file an updated motion on April 30 to notify the court of the next steps, whether it be resuming the case or voluntarily dismissing it based on the progress of HB 2010.
As for the Nevada suit, the defendants have a week to reply to Eisenberg’s motion to dismiss, according to court documents.
Read the plaintiff’s and defendant’s motions below:
Email Marian McPherson
