Memorandum to Rep. Mari Manoogian: Fees on Furnishing Local Public Records (May 7, 2021)

Summary

A memorandum dated May 7, 2021 from Blake Goodman, Legislative Director for Rep. Mari Manoogian, to Rep. Mari Manoogian, Rep. Julie Calley, Rep. Steve Marino and a fourth representative, with the subject National Push to Standardize or Relax Fees on Furnishing Local Public Records. It describes Zillow Group, Inc. as a national online real estate marketplace that acquires data through third-party vendors and local and county officials, and says Zillow hopes House Bills 4279, 4280, 4281, and 4282 would remove the dataset completion requirement and cap local fees. It notes that county and local officials worry the caps would limit their ability to manage the data. It then recounts Zillow suits over records fees in Kentucky in 2019, Ohio in 2016 and Illinois in 2017.

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Memorandum

To: Rep. Mari Manoogian, Rep. John Cherry Ill, Rep. Julie Calley, Rep. Steve Marino
From: Blake Goodman, Legislative Director for Rep. Mari Manoogian

Date: May 7, 2021

Subject: National Push to Standardize or Relax Fees on Furnishing Local Public Records

Zillow Group, Inc. is a national online real estate marketplace company which allows customers

to research local property listings and to contact relevant reali estate brokers through their portal
Using the iBuyer model, Zillow — along with Redfin and Trulia — control most of this market, and

has become indispensable to Americans looking to buy or sell homes who may not have access
to industry-specific databases and digital tools such as Multiple Listing Services (MLS).

Zillow acquires data for their website through third-party data vendors, including many local and
county officials across the country. States have specific laws regarding the capping of fees that
local officials may charge for furnishing such datasets; Michigan's laws appear to have a
loophole which prevents iBuyer services from acquiring these datasets at a reasonable price
because of the stringency with which local officials are allowed to define a “complete” dataset.

Zillow uses public records not only for its own website, but also aggregates public data into its
ZTRAX database, which it then licenses out — as well as offers to researchers for free.

Through House Bills 4279, 4280, 4281, and 4282, Zillow hopes to remove the dataset
completion requirement and cap local fees at what they believe to be a reasonable price relative
to the other markets in which they operate. County and local officials worry that these caps will
kneecap their ability to collect, manage, and protect this data, which they are legally bound to
manage outside of this context

Zillow and other iBuyer services have been involved in both lawsuits and legislative pushes
around the country to ease their access to this public data:

1. Kentucky

In 2019, Zillow filed suit against the Commonwealth of Kentucky and six county recorders
(equivalent to Michigan Registers of Deeds).' The suit, filed in the U.S. District Court for the
Eastern District of Kentucky, contended that state statute and its implementation by these
recorders was unconstitutional, as it allowed for a distinction in fee structures between the
furnishing of records for commercial and noncommercial use. Zillow claimed that while it would
happily pay the same fees as those using it for noncommercial use — which statutorily was the
cost of reproduction of the records — it was unfair to charge them more for their commercial use.

Zillow also challenged the constitutionality of a separate state law banning the resale or
relicensing of state or county data for commercial purposes.

In May 2020, the Court denied the Commonwealth's motion to dismiss the suit,? and although it
is unclear whether the suit has been resolved, state statute appears to have been updated in

1 https://www.courier-journal.com/story/money/2019/07/16/zitlow-sues-kentucky-over-fees-access-public-real-
estate-records/1742052001/
such a manner as to render the constitutional challenge moot. Whether the Court will issue an
advisory opinion is still unclear.

Kentucky Revised Statute Chapter 64.012 (“Fees of county clerks -- Use of fees for recording
real estate mortgages -- Reimbursement of clerk”) was updated with an effective date of July
15, 2020.5 A similar provision, KMS 64.019 (“Procedures for obtaining copies of records under
control of county clerk -- Per-page fee), has not been updated since April 23, 2012.

2. Ohio

In 2016, Zillow filed suit against the Recorder of Columbiana County, Ohio in the Supreme
Court of that state.* Zillow sought a court order demanding the Recorder comply with its request
for electronic copies of public property records for the prior 16 months. Although claiming that
the request was too broad when first issued in 2013, the Recorder told Zillow that she would
furnish the requested information at $2.00 per page. Zillow was then told in 2015 to scale back
the size of their request, and on Sept. 22 of that year, they did so, requesting only three months
of data. When the Recorder agreed and told ther how to pay the fees, Zillow filed a mandamus
action with the Ohio Supreme Court.

In fighting the action, the Recorder and local Assistance Prosecuting Attorney claimed that the
records requested are not proper public records under Ohio statute. In 2017, the suit was
settled, and the Supreme Court of that state decided to call the matter moot, rather than issue
an opinion on the unresolved legal arguments.®

In 2019, state law on the furnishing of public records for commercial and noncommercial use
(Ohio Revised Code 317.32 — Recording fees) was updated, although what pieces were
updated is still unclear, as it was updated within the F¥2020 budget boilerplate.

In 2017, Zillow filed suit against Harris County, Illinois, claiming that local property tax
assessment records should have been available to them at request through that state’s
Freedom of Information Act (FOIA) statutes.’ Zillow requested that information from Harris
County in May 2016, and the County claims that it was allowed under statute to charge
$2500.00 for that data under local ordinance. Zillow claimed that state law capped FOIA
requests at $100.00. That December, judgement was found in favor of Zillow, and a court
ordered that the County offer the records to Zillow for free under FOIA.®

Just before the lawsuit was enrolled, the lilinois General Assembly passed and enrolled HB
3036, which provided for a predictable fee schedule for the furnishing of such records to third
parties outside of FOIA. The new law took effect on August 17, 2017, but the section relevant to
the lawsuit did not take effect until January 1, 2019, and so the court could not take it into
account.

* https://www.salemnews.net/news/local-news/2016/02/county-recorder-to-fight-records-request/

8 httos://qconline.com/news/local/henco-conflict-settled-in-realtor-zillow-s-favor/article 92daefcc-8b29-5668-


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