CHARLESTON – A real estate entrepreneur is challenging a West Virginia law requiring out-of-state brokers to maintain a physical office in West Virginia.
Derek Eisenberg calls the law protectionist and says it restricts economic opportunity and “stifles competition, burdens innovation and prevents West Virginia residents from accessing services.”
Eisenberg, who lives in New Jersey, filed his complaint December 19 in federal court against West Virginia Real Estate Commission Executive Director Keri Ferro, Chairman Robert D. Kennen, Vice President James S. Walker, Secretary Margie Bartles, Commissioner Joseph Bevil and Commissioner Pamela Hylbert-Eder.
Eisenberg says he seeks to introduce a new way of buying and selling homes to the real estate market.
“Thanks to advancements in technology, real estate brokers can offer their services virtually and à la carte rather than traditional, full-scale in-person representation,” the complaint states. “But West Virginia’s newly enacted antiquated, arbitrary, and anticompetitive in-state office requirements prevent Mr. Eisenberg from conducting his business virtually in the state in violation of the United States Constitution.”
Despite running a successful online brokerage, Eisenberg says he must pay thousands of dollars each year for an unnecessary in-state office. He says entrepreneurship, innovation and real estate are a part of his DNA.
“He grew up in a family of homebuilders and entered the real estate industry straight out of grad school,” a press release from Pacific Legal Foundation says. “He began appraising in the 1990s and later joined several private property sale databases known as the Multiple Listing Service, or MLS, in Mid-Atlantic and New England states.”
Eisenberg launched Continental Real Estate, an online brokerage offering flexible, cost-effective services where customers can choose entire full-service packages or choose only the specific services they need.
“A traditional broker might only sell a Cadillac, whereas we sell a stripped-down Chevy with crank windows, no AC and only an AM radio and let customers add the options they want,” Eisenberg says.
The complaint explains it further.
“For example, buyers can choose between listing their home in the Multiple Listing Service (MLS), downloading digital forms, purchasing brochure tubes or lawn signs, renting lockboxes, using computer telephony to route calls from interested parties to sellers, setting up lockbox monitoring with text notification, and having Continental agents engage in different levels of closing assistance on a fee-for-service basis,” the complaint states. “Like many discount brokerage firms, Continental leverages technology to lower its expenses.
“It then passes those savings to its clients. And like many businesses across all industries, Continental uses the internet and other technologies to operate online and across state lines.”
Eisenberg wants to expand his business to all 50 states, but he says several states – including West Virginia – have requirements that brokers maintain physical offices within their borders.
PLF says such a rule is “a completely antiquated condition as modern technology makes local offices unnecessary.”
“These laws are mere protectionism, meant to protect in-state incumbents by discouraging market entry and blocking intrastate online services by out-of-state competitors,” PLF says in a press release. “The result is fewer realtors and higher consumer prices.
“In West Virginia alone, Derek must pay about $2,000 a year for an in-state presence, and the cost only compounds with each state he adds to Continental’s reach.”
It also says the requirement is unconstitutional.
Eisenberg has a West Virginia broker’s license (as well as one in 25 other states and the District of Columbia), but he says the in-state office requirements make it difficult, if not impossible, for him to pursue his online business model in the state. He says the lawsuit was filed to vindicate his rights under the U.S. Constitution’s Interstate Commerce Clause, Privileges & Immunities Clause of Article IV, and the Equal Protection, Due Process, and Privileges or Immunities Clauses of the 14th Amendment.
“It (the in-state office requirement) denies both Derek’s opportunity to do business and West Virginians’ opportunity to access innovative, cost-saving services,” PLF says.
Eisenberg seeks declarations that the rules violate the U.S. Constitution, an injunction preventing the defendants from enforcing the rules, court costs, attorney fees, expenses and other relief.
He also is challenging a similar requirement in Nevada and is prepared to contest similar law in other states.
In the West Virginia case, Eisenberg is being represented by Anastasia Boden and Brandon Beyer of PLF and by J. Zak Ritchie of Hissam Forman Donovan Ritchie in Charleston.
U.S. District Court for the Southern District of West Virginia case number 2:24-cv-00729