Illinois district court finds that Zillow’s “Zestimates” are not appraisals and do not invade owner’s privacy

In Patel v.Zillow, Inc.,No. 17-CV-4008 (N.D. Ill. Aug. 23, 2017) a U.S. District Court found that Zillow’s property valuations are not appraisals, and therefore it does not have to be licensed under Illinois law, and the valuations do not support a trespass claim because they do not invade their privacy.

Illinois property owners filed suit against Zillow under the Illinois Real Estate Appraiser Licensing Act (“IREALA”) contending that Zillow’s Zestimate property valuations (“Zestimates”) were real estate appraisals. The owners contend that Zillow was therefore preparing appraisals without a license in violation of the IREALA. The owners also alleged that Zillow invaded their privacy by publicizing financial information regarding their property without permission. Zillow moved to dismiss contending that 1) it was exempted from licensing because their Zestimates were automated valuations, not real estate appraisals; 2) there was no private right of action; and 3) that the owners could not show that Zillow committed an offensive intrusion entitling them to damages under an invasion of privacy theory. The district court granted the motion.

Pursuant to the IREALA, it is unlawful for any person to prepare a real estate appraisal without a license. There are two exceptions: 1) employees of financial institutions are exempt when preforming the evaluation for use by the financial institution for internal underwriting; and 2) the procurement of an automated valuation model.

Plaintiffs argued that the plain reading of the statue meant that only financial institutions were exempt from the IREALA when procuring an automated valuation model. The court disagreed, instead the court interpreted the section of the IREALA which addresses the valuation model exemption as an independent clause. Therefore, the court read the IREALA as unambiguously exempting the procurement of automated valuation models without limitation, by any party.

The owners did not dispute that IREALA does not provide an express private right of action, but argued, “private persons may directly invoke the IREALA in order to protect their property right interests.” The court found that no private right of action existed because the IREALA provided a robust enforcement scheme and as such there was no implied private right of action.

As for the tort claim, the court determined that the owners could not show any that any possible intrusion by Zillow was offensive. It was not enough to merely argue that the Zestimates were offensive because they were unlawful under IREALA. The owners had to show “(1) an unauthorized intrusion or prying into the plaintiff’s seclusion; (2) an intrusion that is highly offensive or objectionable to a reasonable person; (3) that the matter upon which the intrusion occurs is private; and (4) the intrusion causes anguish and suffering, which Plaintiffs failed to do. Because the Zestimates are based on information which is public or submitted by users, they are not based on private information. There was therefore no intrusion into private matters. In addition, Plaintiffs failed to plead that the intrusion was highly offensive or that it caused anguish and suffering.

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