A Pennsylvania judge has ruled that state real estate licensing requirements violated the Pennsylvania Constitution when they applied to a North Jersey woman who managed short-term vacation rental properties in the Poconos .
Commonwealth Court Judge Stacy Wallace said in a ruling on Monday that licensing requirements for salespeople and property brokers are ‘unreasonable’, ‘unduly oppressive’ and unnecessary in the case of Sally Ladd, who managed vacation properties for a handful of owners in the Poconos. and houses for rent listed on platforms such as Airbnb and its own website.
Wallace said the Real Estate Licensing and Registration Act licensing requirement is an unconstitutional violation of Ladd’s right to pursue her chosen occupation. She said that in Ladd’s case, the requirements are an unreasonable way to achieve the law’s goal of protecting consumers from fraudulent real estate practices.
Wallace’s court order prohibits the state from requiring Ladd to obtain a real estate license if it handles rentals of less than 30 days. The order only applies to Ladd, though many other people throughout Pennsylvania operate similar businesses handling short-term vacation rentals. Wallace said whether and how these hire managers should be regulated is up to lawmakers.
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Monday’s ruling “is a victory for entrepreneurs and common sense,” said Josh Windham, an attorney at the Institute for Justice, a Virginia-based libertarian public interest law firm that represents Ladd.
Now, “other people who run a business substantially similar to Sally’s should be sure they can run those businesses without having to get a full real estate license,” Windham said. “We’re talking about people helping other people use platforms like Airbnb and Vrbo to rent properties to vacationers.”
The State Department and the Pennsylvania Real Estate Commission, which could appeal the judge’s decision, did not comment on the decision.
Ladd, a Somerset County resident in her late 60s, shut down her online vacation property management business in 2017 after the Pennsylvania State Department said she was the subject of a investigation for having practiced real estate without a license. At the time, she made the vast majority of her income from her business, which she grew after being laid off from a full-time job in digital marketing.
She sued several State Department agencies, including the Pennsylvania Real Estate Commission, claiming she was being denied the opportunity to earn a living in her chosen profession. Under land licensing and registration law, Ladd would have had to spend hundreds of hours learning material that doesn’t apply to his business, complete an apprenticeship, pass exams, pay thousands of dollars and open a physical office in Pennsylvania instead of operating from its home in New Jersey.
“I have never had any interest in buying or selling property or managing long-term leases,” Ladd said in a statement following Monday’s decision. “But I saw a need in the market for someone who could help owners manage their vacation rentals. I liked the job, I was good at it and I’m glad this decision allowed me to do it again.
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About a decade ago, Ladd began renting properties she owned on Arrowhead Lake in Monroe County. In 2014, his company, Pocono Mountain Vacation Properties, began managing rental properties for other landlords.
She typically handled rentals lasting from a few days to a few weeks, according to court documents. The owners paid him a commission, which was about $30 to $50 per night per booking, according to court documents.
She has since sold the two Poconos properties she owned.
A 2020 opinion from the Pennsylvania Supreme Court said the law governing the licensing and registration of real estate agents appeared to be “unduly oppressive” and unnecessary when applied to someone in Ladd’s position. The court overturned a previous Commonwealth Court order dismissing Ladd’s lawsuit and returning the case to the lower court for review.
After the state Supreme Court’s decision, the Commonwealth Court ordered a hearing, which took place in July.
“As the court reviewed the facts,” Windham, Ladd’s attorney, said in a statement, “it became clear that Pennsylvania’s real estate licensing system had nothing to do with the type of vacation rentals short-term contracts managed by Sally and that the state had many ways to protect consumers that were less restrictive than a full-fledged license.