Pennsylvania LOCKS OUT Entrepreneurs

Renting a private home on sites like Airbnb for a long vacation, a quick weekend getaway or even a business trip is becoming increasingly popular. And in high-tourism areas where competition is fierce, many homeowners are turning to marketing-savvy entrepreneurs to post and manage their listings. But Pennsylvania makes it a crime to help people post their properties online without first obtaining a burdensome real estate broker’s license. Amid the rise of the sharing economy, this license makes life extremely difficult for entrepreneurs hoping to keep pace with a changing market. Nobody knows this better than Sally Ladd.

Sally is a New Jersey-based entrepreneur who spent a career in the world of digital marketing before deciding to try something new. In 2013, she started managing vacation rentals in Pennsylvania’s Pocono Mountains. Leaning on her Internet savvy, Sally built a small business based on saving property owners needless headaches and hassles by helping them post, market and book their homes online. She was able to do all of this on her laptop, from the comfort of her own home.

The business thrived. At 61 years old, Sally was especially excited that she had carved out a niche for herself in an ever-changing economy as she neared retirement. She was looking forward to working from home and using the business for supplemental income into her golden years.

But the Commonwealth of Pennsylvania stands in her way. In January 2017, Sally received a call from the state’s Bureau of Professional and Occupational Affairs informing her that she was under investigation for the unlicensed practice of real estate—a criminal offense. Some digging revealed that in order to obtain the necessary license, Sally would have to open a physical office in Pennsylvania, pass two exams and spend three years working for an established broker.

Pennsylvania makes it a crime to help people post their properties online without first obtaining a burdensome real estate broker’s license.

Sally was devastated. There was no way she could afford to comply with such a burdensome regime just to continue running her modest business. And even if she could, Sally refused to spend three years of her life working under a broker—most of whom buy and sell properties—merely to continue posting rental properties online. Sally felt she had no choice but to shut down, but she is not giving up. What Sally does is not the same as what a real estate broker does. Real estate brokers devote most of their time to buying and selling houses and engage in months- and sometimes years-long transactions that require handling tens and often hundreds of thousands of dollars. All Sally does is help people post their vacation rentals online.

In late July, Sally teamed up with IJ to file a challenge to Pennsylvania’s real estate licensing laws. The Pennsylvania Constitution provides strong protections for economic liberty, similar to those enjoyed in Texas thanks to IJ’s 2015 victory on behalf of eyebrow threaders. Laws must bear a genuine relationship to public health or safety and cannot impose excessive burdens on the right to earn an honest living. Requiring Sally to obtain Pennsylvania’s onerous real estate broker’s license just to manage vacation rentals fails on both fronts.

As the sharing economy continues to grow, old licensing regimes are becoming increasingly obsolete. Today, approximately 40 states across the country impose restrictions similar to Pennsylvania’s on vacation property managers. A victory in this case will put the rest of the country on notice that IJ is ready and willing to take on outdated real estate laws that make it difficult for entrepreneurs like Sally to innovate and compete.

JOIN THE FIGHT!   Sign up for newsletters:

JOIN THE FIGHT!