Supreme Court Asked to Decide Fate of “Floor Plans”

The National Association of Realtors is hoping to bring a case before the Supreme Court on the use of “floor plans” for real estate deals. NAR and a coalition of real estate groups want the high court to overturn an appeals court ruling that claims the creation of a floor plan is a copyright violation, by anyone, including the homeowner who might want to post a floor plan online to help sell the home. (1) Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review. The lawsuit was filed last year by Missouri-based Designworks Homes, and the company’s owner, Charles James. They claim that two real estate companies violated copyright laws by creating floor plans to help with the sale of homes that James had built. Designworks lost the first case, but the Eighth Circuit Court of Appeals overturned that ruling saying that copyright law also applied to floor plans. Ruling Has Wide-Reaching Implications The ruling has wide-reaching implications for all sorts of real-estate related purposes. In a brief to the U.S. Supreme Court by NAR and other real estate groups, they claim that Congress specifically allowed for pictorial representations of homes by their owners when it created the Copyright Act of 1976. They also argue that: "Many home buyers rely on floor plans in real estate listings to decide whether to purchase a residence, and their ability to secure financing for that transaction is often contingent on an appraisal that requires the creation of a floor plan." The brief also describes other reasons a homeowner might need a floor plan, for things like renovations, installations, and the arranging of furniture. They are also useful for mortgages, tax assessments, property valuations and insurance coverage. Real Estate Coalition Appeal to Supreme Court The brief was submitted by NAR and a coalition of 18 other groups including Redfin, Zillow, the American Property Owners Alliance, and CoreLogic. They said in the brief that most Americans would be “startled” to hear they can’t make a floor plan of their own home without violating copyright law. They say the ruling severely limits property rights and creates a scenario that invites frivolous lawsuits. It would also be a big disappointment to buyers and sellers. In NAR’s recent 2021 Generational Trends Report, floor plans were third on the list of important website features for online homebuyers. Photos and listing details are the only two features listed higher than floor plans. (2) Floor Plan Popularity Among Buyers & Sellers The American Property Owners Alliance also cited its own research on the topic. In a survey conducted last month, it found that almost 90% of the respondents strongly agreed with the idea that homeowners should be able to create a floor plan of their home anytime they want. The case will go before the Supreme Court if four of the nine justices vote in favor of hearing the case and that won't happen until later this year. In the meantime, is it an issue to create and post floor plans right now? NAR’s General Counsel Katie Johnson acknowledges the risk in the brief: She says: “Homeowners should be able to create and use floor plans without fear of litigation throughout the ownership and sale of their homes.” If you’d like to read more on this topic, you’ll find links in the show notes at newsforinvestors.com. Also, please remember to hit the subscribe button, and leave a review! You can also join our real estate investor network for free at newsforinvestors.com. That gives you access to the Investor Portal where you’ll find information on rental markets and sample property pro-formas. You can also connect with our experienced investment counselors, property teams, lenders, 1031 exchange facilitators, attorneys, CPAs and more. Thanks for listening. I'm Kathy Fettke. Links: 1 -https://www.nar.realtor/newsroom/nar-asks-supreme-court-to-protect-consumers-from-lawsuits-when-making-floor-plans-of-their-homes 2 -https://www.nar.realtor/sites/default/files/documents/2021-home-buyers-and-sellers-generational-trends-03-16-2021.pdf 3 -https://propertyownersalliance.org/article/american-property-owners-alliance-supports-appeal-of-ruling-on-homeowners-use-of-floor-plans/