Pennsylvania Judge Stacy Wallace ruled on October 31, 2022 (Permanent-Injunction-Granted.pdf (ij.org) that state real estate licensing requirements were unconstitutional when applied to Petitioner, Sally Ladd, who manages short-term rentals in the Poconos.
Sally Ladd was forced to shut down her short-term rental business in 2017 after the state department began investigating her for practicing real estate without a license. Ladd has been renting out her properties for the last decade. Not only does she rent out her own properties, but she would manage short term rentals for properties of other homeowners in the area. Property owners would pay her commissions on the rentals she managed for them.
The Commonwealth claimed that their regulations prevented someone like Ladd from managing Airbnbs without a real estate license. The requirements that were placed onto Ladd were extremely burdensome. She would have needed to devote numerous hours to learning unnecessary (to her) real estate material and (more inconveniently) set up a physical office in Pennsylvania, instead of operating out of her home in New Jersey. Sally Ladd never had an interest in buying or selling properties but found a niche in assisting property owners with managing their short-term rentals. She practiced no other real estate related business.
Ms. Ladd sued multiple state agencies claiming she was being denied the right to make a living in her chosen occupation.
After looking at the facts and hearing the arguments, the Court determined that the Pennsylvania Real-Estate license requirements had little effect on short-term rentals like Sally Ladd’s. Judge Stacy Wallace claimed that the regulations were “unreasonable” and “unduly oppressive” in this particular case. The Judge continued by explaining that the licensing requirement was an unconstitutional infringement on Sally Ladd’s pursuit of her profession. The court order in this case prohibited the Commonwealth from requiring that Sally Ladd obtain a real estate license in order to operate her short-term rental business.
While this court order only applies to Sally Ladd, many other people throughout Pennsylvania have been adversely affected by Pennsylvania’s licensing regulations for short-term rentals. The results of this case set a precedent that could help other property owners bypass the licensing regulations.
Pennsylvania’s Real Estate Commission has the ability to appeal the court’s ruling but has decided to take no action on the matter. Business owners who operate businesses similar to Sally Ladd’s can now feel a bit more confident about continuing their business without getting a real estate license.
If you are experiencing any issues with licensing or zoning requirements for your short-term rentals or other properties, reach out to our full service Pennsylvania / New Jersey real estate firm Philadelphia Zoning / Console Matison at Info@PhiladelphiaZoning.com.
