advertising & social media · 2017. 2. 3. · social media advertising cont. home page of each...

LEGAL UPDATE

2017Presented by:

Anthony Gatto, Esq.

NYSAR General Counsel

Topics• Advertising & Social Media

• Teams

• Illegal Property-DOS Decision

• Agency

2

ADVERTISING

&

SOCIAL MEDIA

What is an advertisement• Promotion and solicitation related to licensed real

estate activity, including but not limited to advertising via:

• websites

• e-mail

• electronic bulletin boards

• social media

4

What is an advertisement???

Anything done by a licensee where the intent is to promote your ability to provide licensed services as a means to solicit consumers to utilize your services

5

What is not an advertisement

Commentary made by a duly licensed real estate salesperson, real estate associate broker or real estate broker that is not related to promoting licensed real estate activity. 175.25(a)(1)

If you are talking about real property to a consumer utilizing the expertise you acquired as a licensee, it is most likely going to be classified as a licensed activity

6

Advertising - generally• Only a real estate broker is permitted to place, or cause to be placed,

advertisements.

• Advertisements shall indicate that the advertiser is a real estate broker or provide the name of the real estate broker or real estate brokerage and either:

• (i) the full address of the real estate broker or real estate brokerage or, the telephone number of the real estate broker or brokerage.

• 19 NYCRR§175.25(c)(1)

7

Nicknames

Real estate brokers, associate real estate brokers, and real estate salespersons shall advertise using the name under which said real estate broker, associate real estate broker or real estate salesperson is licensed with the Department of State. A nickname may be used in an advertisement provided that the full licensed name is listed clearly and conspicuously.

19 NYCRR§175.25(c)(3)

THIS INCLUDES YOUR NAME ON SOCIAL MEDIA!!

8

License type

Advertisements shall correctly and accurately state the type of license held by the real estate broker, associate real estate broker or real estate salesperson named in the advertisement. Licensees may abbreviate the type of license held, provided that such abbreviation is not misleading. The use of the titles, “sales associate”, “licensed sales agent” or simply “broker” is prohibited. Real estate brokers, associate real estate brokers or real estate salespersons who have additional titles or designations are permitted to advertise such titles or designations.

19 NYCRR§175.25(c)(4)

9

License type continued

• DOS has issued opinion that the term ‘Licensed’ is not required before the type of license so long as it is clear the individual is a licensed real estate broker, associate broker or salesperson.

• Required on home page of social media site.

10

Web based advertising

• Broker is responsible for the approval and supervision of all websites created and maintained by associated licensees where the purpose of the website is to promote a licensed activity in whole or in part.

• Website also includes social media accounts used by associated licensees for the promotion of any licensed activity

11

Advertisements referencing property not

listed with broker

Any advertisement that references or includes information about a property that is not listed with the advertising broker or was not sold by the advertising broker shall prominently display the following disclaimer: “This advertisement does not suggest that the broker has a listing in this property or properties or that any property is currently available.”

12

Advertisements referencing property not

listed with broker

Such advertisement: (i) shall not suggest, directly or indirectly, that the advertising broker was involved in the transaction and (ii) shall not refer to property currently listed with another broker absent consent provided pursuant to subdivision (b)(2)(b).

19 NYCRR§175.25(d)(6)

13

How can I advertise property not listed

with me?

The title of this section is not what it appears to be!!

• Refers to the ability of a licensee to advertise a condo or coop building or a planned unit development only!!

• This does not permit a licensee to advertise a specific property without consent.

• Licensees are prohibited from advertising individual or compilations of listings from other brokers

14

No Sharing Without Permission

15

How can I advertise property not listed

with me?• You are prohibited from “sharing” other brokers listings

• Sharing a link is the same as cutting and pasting the listing

• Social media is the same as any print advertisement

• IDX can only be used when a consumer inputs search parameters

• You are prohibited from posting an IDX link to another brokers listing

• GET PERMISSION!!!!!

16

Code of Ethics Article 12

REALTORS® shall be honest and truthful in their real estate communications and shall present a true picture in their advertising, marketing, and other representations. REALTORS® shall ensure that their status as real estate professionals is readily apparentin their advertising, marketing, and other representations, and that the recipients of all real estate communications are, or have been, notified that those communications are from a real estate professional.

17

Standard of Practice 12-4

REALTORS® shall not offer for sale/lease or advertise property without authority.

When acting as listing brokers or as subagents, REALTORS® shall not quote a price different from that agreed upon with the seller/landlord. (Amended 1/93)

18


Realtors® shall not advertise nor permit any person employed by or affiliated with them to advertise real estate services or listed property in any medium (e.g., electronically, print, radio, television, etc.) without disclosing the name of that Realtor®’s firm in a reasonable and readily apparent manner either in the advertisement or in electronic advertising via a link to a display with all required disclosures. (Adopted 11/86, Amended 1/16)

19

Use of the term REALTOR®First and foremost, use of a REALTOR® mark can only be acceptable if it is authorized. Members or member boards of the National Association of REALTORS® are authorized to use the REALTOR® marks only in connection with their real estate business. Individuals or entities that are not members of NAR are prohibited from using the REALTOR® marks in their domain names or usernames.

20

Use of the Term REALTOR®

• Authorized uses of REALTOR® Marks in usernames of members are acceptable only

• if used with the member’s name or firm name; and

• if not used with descriptive words or phrases.

21

Permissible use of REALTOR®

• The use of the term REALTOR® should ONLY be used to indicate membership in the REALTOR® association

• Jonathon Galt, REALTOR®

• Spindrift Realty, REALTOR®

22


The term REALTOR® was created by a member to identify members and distinguish them from non-members. When the REALTOR® marks are used with a descriptive word or phrase it does not identify a person as a member but is most likely to be understood to be referring to a type or service that might be provided.

23


TEST: If you replace “REALTOR” with “Member”, does it still make sense?

If not, the use is not in compliance with NAR Marks Manual

24

Prohibited use of REALTOR®

• You may not include geographical term modifying the term REALTOR®

• “Binghamton-area REALTOR®”

• “Southern Tier REALTOR®”

• “Delaware River REALTOR®”

25

Prohibited use of REALTOR®

• You may not contain descriptive terms that modify the REALTOR® mark

• “Number One REALTOR®”

• “Top REALTOR®”

• “Your REALTOR®” or “Your ______ REALTOR®”

26

Usernames and REALTOR®

• Usernames may not contain descriptive terms that modify the REALTOR® mark

• Realtorsellshomes

• No_fee_realtor

• Use_a_realtor

• Worlds_greatest_realtor

27


• Usernames may not include geographical term modifying the term REALTOR®

• Broomerealtor

• SUNYBrealtor

• realtor_ny

• Downtown_realtor

28


• For more information on the use of the term “REALTOR” please see:

• https://www.nar.realtor/membership-marks-manual/limitations-on-license-to-use-the-marks

29

https://www.nar.realtor/membership-marks-manual/limitations-on-license-to-use-the-marks

Usernames

• Usernames should not be misleading to the public

• Usernames that appear to project a brokerage may be contrary to Article 12-A

• Gattorealestateco

• Nofeebroker (when there is a fee)

• 3percentcommission (I don’t know where to start!!)

• Try to use a name that is as close to your licensed name if using it for advertising.

30

Social Media-Personal page

31

Social Media-Business Page

32

Social Media

33

(4) Registration and Account Security

(4) You will not use your personal timeline primarily for your own commercial gain, and will use a Facebook Page for such purposes.

https://www.facebook.com/legal/terms

2/3/2017

Social media advertising cont.

Home page of each social media account shall include the information required by the rules and regulations (Brokerage name and address or phone #).

In addition, a link to the broker or brokerage website with whom the associate broker, salesperson or team is associated is required on the homepage of the associate broker, salesperson or team social media account unless the broker or brokerage does not have a website.

34

Social media advertising cont.


REALTORS®’ obligation to present a true picture in their advertising and representations to the public includes the URLs and domain names they use, and prohibits REALTORS® from: 1)engaging in deceptive or unauthorized framing of real estate brokerage websites; 2)manipulating (e.g., presenting content developed by others) listing content in any way that produces a deceptive or misleading result; or 3) deceptively using metatags, keywords or other devices/methods to direct, drive, or divert Internet traffic, or to otherwise mislead consumers.

35

Copyright

• Licensees are prohibited from using a copyrighted work without permission from the copyright holder

• This includes photographs

• If you didn’t take it, you need permission to use it

• Presumptively the photographer owns the copyright

• Seller’s do not own the photographs absent an agreement

• Broker’s do not own the photographs absent an agreement

36

Copyright

• 19 NYCRR §175.25(b)(2)(c)

• Photographs of property that are posted on a real estate broker’s website shall not be used or reproduced without written permission from the copyright holder of such photographs.

• Website also applies to social media account

37

Troublesome posts

• Should not attack or threaten other people/entities

• False statements about people or their businesses

• Information about a transaction that are protected by fiduciary duties or Article 12-A

• Discussions of commissions and splits or business models (UGH!!!!!!!)

• Mixing personal and business posts

• Providing information to a consumer represented

38

Troublesome posts

• Blind or stealth advertisements (sponsored or click through)

• “Binghamton area real estate deals”

• “Broome County Real Estate Resource”

• “What’s your home worth in Binghamton?”

• It doesn’t matter if it’s a personal, business, group, community or other type of page.

39

Troublesome posts

• Limited character social media sites

• NAR provides exception in SoP 12-5

• DOS may not agree with DOS exception

• DOS may look at Twitter as being similar to a classified advertisement

• 19 NYCRR §175.25(d)(1) indicate that the advertiser is a real estate broker or brokerage; or provide the name of the real estate broker or real estate brokerage…may omit the license type.

40

Be careful what you share with consumers

If they weren’t your “friend” before the transaction, they

shouldn’t become your “friend” during the transaction

41

Teams “Quick Look”

• Teams are not a licensed entity

• Teams are not permitted to conduct licensed activities

• Teams are prohibited from setting policy

• Teams are prohibited from having commission agreements

• Teams are prohibited from taking a listing

43

Team “Quick Look”

• All licensed related activities must be done by individual licensee, not team

• Broker must approve all team activities

• A team is not a ‘mini-brokerage’

• Teams have no additional rights etc…

• LLC only for commissions, not conducting business

44

Teams

Two or more persons, one of whom must be an associate real estate broker or real estate salesperson, associated with the same real estate brokerage who hold themselves out or operate as a team.

45

Team names

Team names shall either: (i) include the full licensed name of the real estate brokers, associate brokers or real estate salespersons who are part of said team, or (ii) if the names are not included, the team name must be immediately followed by “at/of [full name of the broker/brokerage].” Team names shall use the term “team.” The use of any other terms besides “team,” such as “associate,” “realty” or “group” is prohibited. The use of the name of a non-licensed individual in a team name is prohibited.

46

Team names to avoid

• Names that sound like a stand alone brokerage

• use of any other terms besides “team,” such as “associate,” “realty” or “group” is prohibited.

• Although not specifically mentioned, the following terms would also violate the requirements of 19 NYCRR §175.25(e)(1):

• partners, colleagues, affiliates etc…

• No corporate identity in Team name. “Inc”, “LLC”

47

Unlicensed team members

If any unlicensed individuals are named in advertising for a team, the advertisement must clearly and conspicuously state which individuals are real estate licensees and which ones are not

48

What is a Team in New York?

• Industry: A business model to benefit consumers through “service in numbers”

• Legally: “Two or more persons, one of whom must be an associate real estate broker or real estate salesperson, associated with the same real estate brokerage who hold themselves out or operate as a team.” 19 NYCRR§175.25(a)(2)

• MUST BE APPROVED BY BROKER

49

Team structure

• A team is not a licensed entity

• Teams have no additional rights etc…

• LLC only for commissions, not conducting business

50

Team prohibitions

• A team may not:

•Enter into agreements with consumers (agency, listing agreement)

•Have their name appear on documents (not advertisements) given to consumers

•Refer to any member as a corporate officer unless referring to an officer of the brokerage

51

Team prohibitions

• A team may not:

•Collect fees/commissions from anyone but broker

•Maintain any action against any individual/entity

•Provide team specific affiliated business disclosures

•Maintain an escrow account

•Have all transactions appear in the Team leaders name

52

Team permissive

• A team may:

•Form a corporate entity only to collect commissions from their associated broker in compliance with Real Property Law §442

•Solely occupy a branch office

53

Team LLC

• Real Property Law§442 “it shall be permissible for a real estate broker to pay any part of a fee, commission, or other compensation received to an unlicensed corporation or an unlicensed limited liability company if each of its shareholders or members, respectively, is associated as an individual with the broker as a duly licensed associate broker or salesman.”

• LLC or corporate status per DOS, Division of Corporations does not make the team a stand alone entity!!!

54

Team LLC-Sponsor memo

“Payment of a commission by a real estate broker to an unlicensed limited liability company or corporation owned by a real estate salesman or associate real estate broker would be a violation of Real Property Law § 442. Allowing real estate salesmen and associate real estate brokers to be licensed as a single member limited liability company or as a sole shareholder corporation would allow them to take full advantage of the tax laws without having an adverse effect upon the public.”

55

Team LLC-DOS

Section 442 of the Real Property Law currently prohibits a real estate broker from paying any part of a commission to an unlicensed person, firm, corporation or LLC if the payment is intended as compensation for a service that would require a real estate license…Accordingly, this bill amends § 442 to permit the real estate broker to by-pass the agent and to pay the agent's commission directly to the agent's unlicensed corporation or unlicensed LLC.

56

Team LLC-CPB

• The purpose of allowing real estate salespersons and associate real estate brokers to be licensed as a single member limited liability corporation or as a shareholder is to allow them to take full advantage of the tax laws.

• The CPB has no objection to this bill, but suggest that this amendment would be more appropriate as an amendment to the tax law instead of the real property law.

57

Teams-Branch Office

• A Team may occupy a branch office of the brokerage exclusively.

• Sign may reflect Team name so long as in compliance with Real Property Law §441(a)-3

• Broker is prohibited from charging the team for branch office overhead.

• Broker must charge same rate to all associated licensees.

58

Teams-Branch Office

19 NYCRR§175.20(a) “Every branch office shall be owned, maintained and operated only by the licensed broker to whom the license for such office is issued. A branch office shall not be conducted, maintained and operated under an arrangement whereby a licensed salesperson or employee of the broker shall pay, or be responsible for, any expense or obligation created or incurred in its conduct, maintenance or operation, or under any other arrangement, the purpose, intent or effect of which shall permit a licensed salesperson or employee to carry on the business of real estate broker for his own benefit, directly, or indirectly, in whole or in part.

59

Teams-Branch Office

• Team name may appear on signage in addition to brokerage name and other advertising requirements

• Phone and messages must identify brokerage

• Even in this scenario, team should not be operating as a mini-brokerage

• Broker still has duty of supervision etc…

60

Team Corporate Titles

• Real Property Law §441-b(2) prohibits associate brokers and salespersons from being a corporate officer

• DOS opinions 4/26/13 and 8/20/2013 clarify prohibition

61


• Unless you are a principal broker of the firm, you are unable to use the following titles: President, Vice President, Treasurer, Secretary, Director, Manager (unless Office Manager pursuant to Real Property Law §440(6)

• “Any title which implies that an associate broker or real estate salesperson in involved in the management, supervision and control of the brokerage company would be prohibited.” (DOS opinion 8/20/13)

62


• A Team is not a licensed entity and is prohibited from advertising or acting as such

• A Team is prohibited from advertising itself as such including but not limited Corporate titles.

• Examples: Team President, Team Manager, Vice President of Team Marketing etc…

63

Team Agency Issues

• The Team concept promotes strength in numbers

• Consumers believe all team members are their agents

• Team expectation different from brpokerage

• Do not rely on Sonnenschein or C21 Teran

• Designated agency should not practiced within a team

• If you practice designated agency, Team “leader” should never be a designated agent and is not automatically a dual agent because of being team leader (team is not a mini-brokerage)

• (Dual is acceptable)

64

Team Agency Issues

• Remember consumers believe the entire team is acting in their best interest..why else would you form and promote a team?

• The Anthony Gatto Team consists of 20 licensees and we will work to sell your home*

*The Anthony Gatto Team does not work in your best interest if we have another client that wants to buy your property so not all of the team members will be working in your best interest even though you thought they were. This fine print absolves the Anthony Gatto Team of all liability associated with perceptions of representation.

65

Teams-Independent Contractor

• Team “leaders” should not be issuing independent contractor agreements to team members

• Independent contractor agreements are between the broker and associated licensees only

66

Team Agreements

• Teams are prohibited from paying members directly unless all members or shareholders of LLC or Corp

• If not a member or shareholder, compensation must come from broker

• Teams are prohibited from paying unlicensed personal assistants based on commissions or success of transaction

67

Team Broker Liability

• Team structure does not nullify or otherwise negate the obligations of a broker to comply with all applicable laws, rules, regulations etc…

• If the team or a member of team did it…so did the broker

68

Team Policies-Broker Liability

• If team has policies, procedures etc… they must be approved by the broker!

• Policies, procedures etc…that misclassify independent contractor status will expose broker to:

• Unemployment Insurance payments

• Workers Compensation payments

• Back payroll taxes

• Fees, Fines and Financial Ruin

69

Personal Assistants

• Should not perform any licensed activities

• Must not be paid contingent on transaction

• Payment as an employee, hourly, salary etc…

• Do not give creative title “Contract Reviewer”

• If identified as part of “Team” must indicate unlicensed

• Conform to broker policy/procedure

70

Personal Assistants-Prohibitions

• “Host” open houses

• Show property

• Explain or interpret information on listings, contracts or other information relating to a transaction

• Negotiate or agree to a commission or commission split with any individual

• Making cold calls, phone calls, soliciting, telemarketing or performing other activities to solicit business on behalf of the broker

• Any other activity not set forth above for which a license is required

71


“lists for sale, sells, at auction or otherwise, exchanges, buys or rents, or offers or attempts to negotiate a sale, at auction or otherwise, exchange, purchase or rental of an estate or interest in real estate, or collects or offers or attempts to collect rent for the use of real estate, or negotiates or offers or attempts to negotiate, a loan secured or to be secured by a mortgage, other than a residential mortgage loan, as defined in §590 of the Banking Law, or other incumbrance upon or transfer of real estate, or is engaged in the business of a tenant relocator, or …resale of condominium property.”

72


A personal assistant is prohibited from soliciting members of the public in any way, shape or form!!

73

Licensed Personal Assistants

• What is a ‘licensed’ personal assistant?

• How is a ‘licensed’ personal assistant paid?

• Who is the ‘licensed’ personal assistant associated with?

• What is the ‘licensed’ personal assistant doing?

• Who are they doing it for?

74

Personal Assistants-Permissive

• Answer the phone, forward calls, and take messages.

• Arrange appointments by telephone for the licensee.

• Follow up on loan commitments after a contract has been negotiated and generally secure status reports on the loan progress.

• Assemble documents for closing.

• Write ads for approval of broker and place approved classified advertising.

• Type contract forms for approval by broker.

• Submit approved listings and changes to Multiple Listing Service (MLS).

75

Personal Assistants-Permissive

• Compute commission checks.

• Place or remove signs from property.

• Order items of repair as directed by the broker.

• Secure public documents from public repository.

• Prepare flyers and information for approval by broker.

• Schedule appts for licensees to show listed property.

• Gather information for a comparative market analysis.

• Gather information for an appraisal.

• Monitor licenses and personnel files.

• Perform secretarial and clerical duties (typing, filing)

76

Personal Assistants-LFRO

• A LFRO agent is prohibited from being a personal assistant

• According to verbiage required to be in the LFRO agreement:

• “This will also certify that all of the licensees affiliated with that entity (list provided below) are solely engaged in referring clients and customers and are not engaged in listing, selling, leasing, managing, counseling or appraising real property.”

77

Personal Assistants-LFRO

• A LFRO is prohibited from being a “licensed” assistant as they are not affiliated with the broker

• The reason behind hiring a LFRO agent is their real estate knowledge & background

• LFRO agents put their license in a LFRO office because they are not practicing real estate and can only provide referrals

• If it were permitted, payment must be made to LFRO personal assistant as an employee since personal assistants are not independent contractors

• Prohibited from using education and experience gaind as licensee to personal assistant

78

Teams-Conclusion

IF YOU WANT

TO ACT LIKE A

BROKER, GET

A BROKER’S

LICENSE!!

79

ILLEGAL PROPERTY

DOS OPINION

UPDATE

Illegal property-DOS opinion

• A real estate broker should have a working knowledge of the legal status of the property he is marketing.

• Licensees should have a working knowledge of the areas in which they practice.

81


When a broker has actual knowledge that a property lacks a permit or is otherwise illegal (i.e., illegal conversion by adding bedroom, bathroom or other space), such information must be affirmatively disclosed to potential purchasers without exception

82


When a licensed professional markets a property, and fails to include information which s/he has actual knowledge of which would impair a prospective tenant’s/purchaser’s right to enjoy the property (i.e., possession itself is unlawful), this action is a breach of the “confidence or reasonable expectation of fair dealing” required to transact business.

83


Accordingly, a licensee who fails to include in an advertisement or otherwise disclose that a property is defective also commits an error of omission and fails to deal equitably and competently with the public.

84


Advertising a property that is not in compliance would be misleading under section 441-c(1)(a) “dishonest or misleading advertising, or has demonstrated untrustworthiness or incompetency to act as a real estate broker or salesperson.”

85


• The DOS recommends that the best practice for all licensees is to make a reasonable good faith effort to verify the legal status of the properties they are offering.

• Information by a 3rd party is deemed to be reliable (MLS)

86


• Failure to verify the legal status of a property may subject the licensee and their broker to discipline by the DOS as well as the return of any commissions earned in such a transaction.

• The DOS standard is “known or should have known”

87


“Known or should have known/Actual or constructive knowledge”-

By application of reasonable care or diligence if a person should have known a fact, he or she is deemed to have constructive knowledge of that fact. Generally, a person is presumed by law to have constructive knowledge about specific fact or condition

88


• Ongoing discussions with DOS

• Most licensees should be able to identify issues

• If you believe there is an issue you should act

• Verification of legal status is first step

• If difficult, make a reasonable good faith effort

89


• You can take listing while verifying

• Major issues are within scope of licensure (bedrooms, bathrooms, deck)

• Minor issues are not within scope (window/door permits)

90

AGENCY

Legal Obligations of Licensee

• License Law (RPL, Article 12-A)

• Regulations (19 NYCRR)

• Common Law of Agency

• Tort Law (misrepresentation and negligence)

• NAR Code of Ethics

92

The Law of Agency

• Study of Relationships

• Authorized to act

• Entrusted with another’s business

• Owe fiduciary duties

• Real estate agent in NY must be licensed under 12-A

• Can be created by two methods

93

Express Agency

• Can be created by oral or written agreement

• Principal authorizes agent to act on his/her behalf

• Agent consents to act on behalf of principal

• Disclosure requirements differ based on property type

• RPL 443 is an example of express agency

94

Implied Agency

• Created by conduct of licensee not by agreement

• Misunderstanding by consumer

• Do not provide service to consumer normally reserved for client

• Risk of undisclosed agency

• Even worse, risk of undisclosed dual agency (FORFEIT COMMISSIONS)

• Contrary to requirements of Article 12-A and NYCRR

95

Fiduciary Duties

• Obedience

• Loyalty

• Disclosure

• Confidentiality

• Accounting

• Reasonable Care

96

Obedience

• Obey principal’s instructions if not illegal

• Cannot be contrary to Art 12-A, DOS regulations or Code of Ethics

• If you don’t like principal’s instructions obey them regardless

97

Loyalty

• Keep principal’s best interest first

• Keep above interest of licensee (otherwise self dealing)

• Commission of licensee should not be considered

• Confidentiality is intertwined with loyalty

98

Disclosure

• Applies to material facts

• If known by client may cause them to reconsider

• Any knowledge agent has that may benefit client must be disclosed

• Even if to detriment of other side

99

Confidentiality

• Do not disclose anything you learn from client

• Relates to business, financial, personal or motivational issues

• Survives the closing

• Lasts forever

• Only client or court can relieve agent of such duty

100

Accounting

• Relates to accounting of documents and funds

• Whereabouts of all monies pertaining to transaction

• Ultimate disposition of funds

• Clients needs above agents

101

Reasonable Care

• No clear definition

• Agent is professional and has higher level of knowledge

• Must advise client through transaction without harm

• Advise on price, inspections, negotiations, repairs etc…

• If you don’t know, must tell client how to get information

102

Breach of Fiduciary Duty

• Rescission

• Loss of Compensation/Commission

• Fees and Costs

• Punitive Damages

• Code of Ethics Discipline

• NYS DOS Discipline- fine or license

103

Legal Status of Parties

• Licensee has two methods requiring disclosure

• Consumer must be advised status of agency relationship

• Must occur at first substantive contact

• Regulatory requirement (19 NYCRR §175.7)

• Statutory requirement (Article 12-A §443)

104

Regulatory Requirement

• 19 NYCRR §175.7 requires licensees to make it clear who they represent

• At time of disclosure, consumer becomes client

• Clearly establishes who is owed fiduciary duties

• Must be clear to all parties who agent is acting for

105

Statutory Requirements

• Article 12-A, §443

• Required for residential real property including condos/coops

• All licensees must comply with requirement

• Must occur at first substantive contact

106

First Substantive Contact

• No “bright line” definition

• Historical warm body approach

• Open houses

• Telephone contact

• Email, internet, etc…

107

Substantive Contact

• Warm body approach not only method

• Phone, internet, fax, email

• “Beyond the four corners of the listing sheet”

• New DOS exception

108

New DOS Opinion

• “a broker does not have substantive contact with a party when that party is in the presence of his or her own broker”

• “any considerable discussions or discussions involving matters of “major or practical importance”, will take place between the brokers”

109

New DOS Opinion (cont)

• “a broker does not have to provide an Agency Disclosure Form to a consumer if the broker has substantive contact that occurs in the presence of a consumer who is accompanied by his or her own real estate broker”

• “If the party is unrepresented by a broker, is represented but unaccompanied, or is accompanied by a broker who is acting as a landlord/seller or dual agent, the disclosure form must be provided”

110

Types of Agency

• Seller’s Agent

• Buyer’s Agent

• Broker’s Agent

• Dual Agent

• Dual Agent with Designated Sales Agents

111

Seller’s Agent

• Listing agent

• Sub-agent

• Acts in best interest of Seller

• When dealing with buyer must be honest and fair

112

Broker’s Agent

• Can be agent of Listing Broker or Buyer’s Broker

• Still acts in best interest of client through other broker although indirectly

• Cannot take direction directly from seller or buyer

• Only takes direction from listing broker or buyer’s broker

• Theoretically shields seller or buyer from vicarious liability

113

When Do I Have to Give the Form?

• Real Property Law §443 sets forth “triggers”

• Residential real property

• First substantive contact with consumer

• Seller’s Agent-client/consumer

114

Giving Form to Seller

• Listing agent must give form prior to entering into listing agreement

• Form must be signed by seller

• Not required from licensees in same brokerage as listing agent

• Seller’s agent can sign on behalf of seller (not recommended)

115

Listing Agent( X) Seller as a (check relationship below) ( ) Buyer as a (check relationship below)

( X) Seller's agent ( ) Buyer's agent

( ) Broker's agent ( ) Broker's agent

( ) Dual agent

( ) Dual agent with designated sales agents

For advance informed consent to either dual agency or dual agency with designated sales agents complete section below:

( ) Advance informed consent dual agency

( ) Advance informed consent to dual agency with designated sales agents

If dual agent with designated sales agents is indicated above:

_________________________________ is appointed to represent the buyer; and

_________________________________ is appointed to represent the seller in this transaction.

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Giving Form to Buyer

• Seller’s agent must give form if substantive contact with buyer

• Unlike Seller, Buyer’s agent cannot sign on behalf of buyer

117

Brokers Agent (Seller)( X) Seller as a (check relationship below) ( ) Buyer as a (check relationship below)

( ) Seller's agent ( ) Buyer's agent

( X) Broker's agent ( ) Broker's agent

( ) Dual agent


For advance informed consent to either dual agency or dual agency with designated sales agents complete section below:






118

Buyer’s Agent

• Acts in best interest of purchaser

• Locates property for purchase

• Negotiates on behalf of purchaser

• Must deal honestly and fairly with seller

119

RPL §441(1)(c)

• “Buyer’s agent” means an agent who contracts to locate residential real property for a buyer or who finds a buyer for a property and presents an offer to purchase to the seller or seller’s agent and negotiates on behalf of the buyer.

• “Contracts” is not referring to a buyer/broker agreement

120

RPL §441(3)(c)

A buyer’s agent or tenant’s agent shall provide the disclosure form to the buyer or tenant prior to entering into an agreement to act as the buyer’s agent or tenant’s agent and shall obtain a signed acknowledgment from the buyer or tenant, except as provided in paragraph e of this subdivision. A buyer’s agent or tenant’s agent shall provide the form to the seller, seller’s agent, landlord or landlord’s agent at the time of the first substantive contact with the seller or landlord and shall obtain a signed acknowledgment from the seller, landlord or the listing agent, except as provided in paragraph e of this subdivision.

121

Buyer’s Agent( ) Seller as a (check relationship below) (X) Buyer as a (check relationship

below)

( ) Seller's agent (X) Buyer's agent


( ) Dual agent


For advance informed consent to either dual agency or dual agency with designated sales agents complete section

below:





________ _________________________ is appointed to represent the seller in this transaction.

122

Do Not Do This…( ) Seller as a (check relationship below) (X) Buyer as a (check relationship

below)

(X ) Seller's agent ( ) Buyer's agent


( ) Dual agent



below:






123

Do Not Do This Either…(X) Seller as a (check relationship below) ( ) Buyer as a (check relationship

below)

( ) Seller's agent (X) Buyer's agent


( ) Dual agent



below:






124

Buyer-Broker Agreements

• Sometimes called “Exclusive Right to Represent”

• This is a separate agreement

• An agency disclosure form does not “guarantee” a commission

• Does not make you the buyer’s agent

• Does not entitle you to cooperating compensation

• Agency disclosure form makes you buyer’s agent, not this!!!

• This agreement is void in a dual agency scenario

125

Giving Form in Dual/Designated Agency

• Both parties must consent and sign form

• Otherwise undisclosed Dual Agency

• Only situation where having both parties signature on same form is appropriate but not required

• Dual and designated agency can be agreed to in advance

126

Dual Agency( ) Seller as a (check relationship below) ( X) Buyer as a (check relationship below)

( ) Seller's agent ( ) Buyer's agent( ) Broker's agent ( X) Broker's agent

( X) Dual agent( ) Dual agent with designated sales agents

For advance informed consent to either dual agency or dual agency with designated sales agents complete section below:( ) Advance informed consent dual agency( ) Advance informed consent to dual agency with designated sales agentsIf dual agent with designated sales agents is indicated above:



127

Dual Agency with Designated Agents( ) Seller as a (check relationship below) ( X) Buyer as a (check relationship below)

( ) Seller's agent (X) Buyer's agent( ) Broker's agent ( ) Broker's agent

( X) Dual agent( X) Dual agent with designated sales agents

For advance informed consent to either dual agency or dual agency with designated sales agents complete section below:( ) Advance informed consent dual agency( ) Advance informed consent to dual agency with designated sales agentsIf dual agent with designated sales agents is indicated above:

John Doe_________________________ is appointed to represent the buyer; and

Mary Smith_______________________ is appointed to represent the seller in this transaction.

128

Advanced Consent to Dual Agency

• Must explain dual agency to consumer

• Client will provide informed consent to dual agency in advance

• Client will consent by checking the appropriate box on the form

• Licensee responsible for notifying client when dual agency arises in cases where negotiations have begun

• Licensee may advise client of dual agency after a simple showing (although not required)

129

Advanced Consent to Designated Agency

• Must explain and consent to dual agency first (best practice)

• Client will provide informed consent to designated agency in advance

• Client will consent by checking the appropriate box on the form

• Licensee responsible for notifying client when designated agency arises

• Only need to indicate clients designated agent on form

• Only required in cases where negotiations have begun

• Licensee may advise client of designated agency after a simple showing (although not required) and name of designated agents

130

Indicating Advanced Consent to Dual Agency

( X) Seller as a (check relationship below) ( ) Buyer as a (check relationship below)

( X) Seller's agent ( ) Buyer's agent( ) Broker's agent ( ) Broker's agent

( ) Dual agent( ) Dual agent with designated sales agents

For advance informed consent to either dual agency or dual agency with designated sales agents complete section below:( X) Advance informed consent dual agency( ) Advance informed consent to dual agency with designated sales agentsIf dual agent with designated sales agents is indicated above:



131

Indicating Advanced Consent to Dual & Designated Agency

( X) Seller as a (check relationship below) ( ) Buyer as a (check relationship below)

( X) Seller's agent ( ) Buyer's agent( ) Broker's agent ( ) Broker's agent

( ) Dual agent( ) Dual agent with designated sales agents

For advance informed consent to either dual agency or dual agency with designated sales agents complete section below:( X) Advance informed consent dual agency( X) Advance informed consent to dual agency with designated sales agentsIf dual agent with designated sales agents is indicated above:


John Doe_________________________ is appointed to represent the seller in this transaction.

132

NYSAR.com

• For answers to many legal questions, please visit the Legal section of NYSAR.com

• Podcasts of NYSAR Radio available in media section

• Legal Lines archive in publications

• Webinar archive in media section

• NEW-Legal update from NYSAR Business Meetings in media section divided by topic

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