A brief filed by the National Association of REALTORS® (NAR) with the Supreme Court and co-signed by a variety of other housing industry heavyweights is warning that a recent decision by a federal circuit court could have dire ramifications for both consumers and anyone involved in listing or appraising homes.
The court case in question involves the copyright of floor plans, with 8th Circuit Judge Morris Arnold ruling last August that drawings or representations—even those created by a homeowner—are not necessarily exempt from U.S. copyright laws, instead belonging to the home’s original designer.
Housing industry advocates are warning that the ruling creates a potential minefield of frivolous lawsuits and deprives consumers of a vital tool for both marketing their home or shopping for a home.
“The Eighth Circuit’s decision not only puts countless consumers at risk of costly, burdensome litigation for making a floor plan of their own home, but it also strains a key sector of America’s economy and threatens a critical tool of transparency for potential homebuyers,” said NAR general counsel, Katie Johnson, in a statement.
The decision stems from a lawsuit filed in 2018 by Missouri-based home designer Charles James, who sued local real estate brokerage Colombia House of Brokers Realty for independently creating floor plans of homes he designed. After a district judge ruled in favor of the brokerage, James appealed to the 8th Circuit, where Arnold reversed the earlier decision last summer, saying that the relevant statute could not be reasonably applied to floor plans.
NAR also filed an amicus brief in that case.
The statute in question waives copyright claims in architectural works in the case of “pictures, paintings, photographs, or other pictorial representations” of the design. The earlier court decision had ruled floor plans fell under the umbrella of “pictorial representations,” an interpretation that Arnold and the 8th Circuit disagreed with.
“When we consider the broader statutory context, Congress could have easily resorted to other terms that it used elsewhere in the copyright statutes to ensure that included floor plans,” he wrote.
Mitch Skinner is a lawyer who represents the Council of Multiple Listing Services (CMLS), an association which advocates and educates on MLS issues, which also filed a separate amicus brief alongside NAR. He told RISMedia that if floor plans are considered under “Fair Use” copyright statutes (something Arnold suggested) anyone relying on that fair use defense could encounter lengthy, expensive discovery and court proceedings as opposed to the “pictorial representations” defense, which could avoid that.
“Fair use is a fact-intensive inquiry,” he explains. “Fair use is usually only available after discovery, and sometimes even only at trial.”
NAR’s brief, which was submitted to the Supreme Court on April 7, argued that the ruling could potentially disrupt or interfere with a huge swath of housing activity, from homeowner DIY projects to the loan approval process.
Denèe Evans is the CEO of CMLS. She tells RISMedia that while floor plans are not yet ubiquitous in real estate listings, the copyright ruling has broad implications for the industry.
“Is the REALTOR® just not going to load anything?” she asked. “Which is going to increase your time to close, increase your cost.”
CMLS is urging the over 200 individual MLSs associated with her organization to lobby for the ability of consumers and real estate professionals to freely use floor plans, while also still encouraging them to utilize floor plans in various capacities.
“This is very impactful, it’s a significant issue for the industry,” Evans says. “We are being proactive, going to the Supreme Court to say, ‘Please pick this up and look at it,’ because it is not good for consumers.”
Skinner says that the Supreme Court would likely respond to the petition in the “next couple months.”
Even though there has not yet been a flood of lawsuits related to the floor plan ruling, (Skinner says that he surveyed recent federal and circuit cases that cited the relevant statute and the words “floor plan” and did not find anything) Evans claims things could easily “snowball” without an intervention. She references a torrent of ADA-related lawsuits last year targeting real estate companies following fractured and conflicting interpretations of that law by federal courts.
“It opens up more and more and more, it causes lots of headaches for the industry,” she says. “It just gets really messy…I think agents and brokers need to know a little bit more.”
This is a developing story. Stay tuned to RISMedia for updates.
Jesse Williams is RISMedia’s associate online editor. Email him your real estate news ideas, firstname.lastname@example.org.