Gov. Eliot Spitzer signed into law an amendment to the agency disclosure law on August 15, 2007. This NYSAR-supported amendment changed the agency disclosure form and as such all licensees are required to use the new form.
At the beginning of 2007, real estate licensees throughout New York State were required to utilize the amended agency disclosure form pursuant to Real Property Law §443. Between December of 2006 and February of 2007, the New York State Department of State (DOS) released numerous directives in an attempt to clarify certain portions of the agency disclosure form. The new amended agency disclosure law incorporated many of DOS’s clarifications as well as a few other items aimed at further simplifying the agency disclosure process. This article will highlight the new changes and help to better clarify the role of a licensee in complying with the requirements of Real Property Law §443.
The first item that many licensees will be glad to see go is the requirement that the agency disclosure form be a one-page, two-sided document. NYSAR membership was extremely vocal concerning this issue and as a result, the amended law removes this requirement. The new agency disclosure form has no requirement as to number of pages or being a single-sided document.
The next item included in the amendment is a more concise definition of “broker’s agent.” The definition used in the amendment is the same definition that NYSAR has published during the past year. The definition is as follows: “A broker’s agent is an agent that cooperates or is engaged by a listing agent or a buyer’s agent (but does not work for the same firm as the listing agent or buyer’s agent) to assist the listing agent or buyer’s agent in locating a property to sell or buy, respectively, for the listing agent’s seller or the buyer agent’s buyer. The broker’s agent does not have a direct relationship with the buyer or seller, and the buyer or seller cannot provide instructions or direction directly to the broker’s agent. The buyer and the seller therefore do not have vicarious liability for the acts of the broker’s agent. The listing agent or buyer’s agent do provide direction and instruction to the broker’s agent and, therefore, the listing agent or buyer’s agent will have liability for the acts of the broker’s agent.” This definition is much more detailed than the definition previously provided on the agency disclosure form.
Another item that was amended was the term “dual agency with designated sales associates.” The amended agency disclosure law changes the term to “dual agent with designated sales agents,” which is the term licensees in New York have been using for more than a decade. More importantly, the phrase “and advocating on behalf of” was added to the explanation of dual agent with designated sales agents to indicate that a designated sales agent can advocate on behalf of the party to which the agent has been assigned. This was included in order to clarify the misconception that just because a designated sales agent cannot provide undivided loyalty, they are not able to advocate on behalf of their seller/buyer.
The most significant change to the agency disclosure form occurs in the area where the licensee is required to identify him/herself, indicate the name of their brokerage and indicate what type of agency relationship the licensee is currently acting under. The licensee is no longer required to provide his/her signature on the form, but is required to print his/her name. Another important change to the form is the manner in which the licensee indicates their agency relationship. Previously, the form lacked specific categories of agency and listed the types of agency in no specific order. The new form divides the types of agency relationships into seller and buyer agency with dual agent and dual agent with designated sales agents separate.
A licensee is now required to indicate whether he/she is acting in the interest of the seller or buyer, and then indicate the type of agency itself. For instance, a licensee acting as a sub-agent of the seller would check “seller as a (check relationship below)” and then “seller’s agent.” By categorizing the types of agency, a licensee is now able to clearly indicate that he/she is acting in the best interest of the seller or buyer without the need for additional annotation of the agency disclosure form.
It should be noted that the same changes were made to the landlord/tenant form and for the sake of simplicity, the same holds true for landlord/tenant agency relationships.
NYSAR has developed several tools to assist members in compliance with the new agency disclosure requirements including: