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Legal Hotline FAQ

The New York State Association of REALTORS is pleased to provide one of the most beneficial member services within the REALTOR organization - the Legal Hotline.

The NYSAR Legal Hotline is not intended to replace your own legal counsel. The NYSAR Legal Hotline has one purpose: to provide direct access for our members to a qualified attorney who can provide information on real estate matters. The goal is to increase professionalism and decrease your professional liability.

The Legal Hotline is available from 9 a.m. to 4 p.m., Monday through Friday, excluding holidays and during official NYSAR functions. The Legal Hotline number is 518-43-NYSAR (518-436-9727). Before using the hotline, callers should formulate a clear question and gather the relevant facts.  No question will be answered on matters that are unrelated to real estate or that are currently in legal proceedings.  Callers are required to give their name in order to verify membership.  No questions will be answered if an individual refuses to give his/her name. Questions received enable the association to track issues of concern to its members and develop educational programs and services, legislative responses or NYSAR publications to address the issues.

The materials from the Legal Hotline are furnished as a service of the New York State Association of REALTORS to its members, and are for informational purposes only. Answers to questions are not intended to represent legal advice on the topics discussed, and no attorney-client relationship is created or should be implied from the use of these materials. The association and its counsel have taken no independent action to establish that the facts presented in the questions are accurate, and all questions should be presumed to be hypothetical in nature. Answers are based solely on caller information. As in all cases presenting issues of legal importance, the user should seek competent legal advice from his/her attorney when appropriate. The New York State Association of REALTORS assumes no responsibility for the accuracy of the answers given. NYSAR disclaims any and all legal liability whether direct or indirect that may occur from the information provided by the Legal Hotline attorneys.

To read the full disclaimer, click here.

Below are questions and answers from the Legal Hotline:

1. The seller has indicated that he is not going to pay me the commission set forth in the listing agreement. Can I place a lien on the property or stop the closing?

2. I sold an in-house listing and my broker paid me less than the commission offered on the MLS, can I bring him to arbitration to get the full amount offered?

3. I represent the seller in a listing.  There was a purchaser who performed a structural inspection on the property and found a defect that contradicted what the seller stated in the Property Condition Disclosure Statement.  The purchaser decided not to go through with the transaction.  I am now listing the property and the seller refuses to change the PCDS to reflect the defect, what do I do?

4. As a principal broker, am I allowed to be a designated sales agent?

5. I am going to leave my current broker. Am I still entitled to my commission for all listings and in-contract transactions?

6.With the new continuing education law going into effect on July 1, 2008, am I now required to complete continuing education if I was exempt under the previous law?

7. My client wants me to list their property. They want me to indicate that the property is in a racially diverse neighborhood in the advertisement.  Since this would not be a statement meant to deter certain purchasers, is it a fair housing violation?

8. A seller verbally accepted an offer from my client.  My client signed the purchase offer and sent it to the listing agent for the seller to sign.  The next day, the listing agent contacted me and informed me that the seller has accepted another offer.  Isn’t the seller bound by their verbal acceptance of the offer?

9. Am I required to provide cooperating brokers with a copy of my client’s agency disclosure form?

10.If another agent in my office is the listing agent for a specific property, am I a broker’s agent?

11. Is it legal for me to be associated with more than one brokerage or does the state Department of State not allow this?

12. A licensee from a different state contacted me about a referral of one of their former clients who wants to relocate to New York.  Can I pay them a referral fee?

13. If a member of my board violates an article of the National Association of REALTORS® Code of Ethics, can I refuse to pay that member the commission?

14.There was a $1,000 selling bonus offered through the MLS to the selling agent.  At closing, I was informed the bonus would not be paid.  How can I collect the $1,000?

15.As a broker, if I want to hold the license of certain individuals who are not currently active in the real estate practice, are they figured into my dues formula?

16.I want to present my client’s offer to the seller in person.  The listing agent said that he/she is the only person authorized to present offers to the seller and I am not allowed to do this.  Can he/she really do this?

17.There is a new section of the Labor Law that requires commission salespersons to be paid commissions within a certain timeframe and the terms of employment (how wages, salary, drawing account, commissions and all other monies earned and payable shall be calculated) must be reduced to writing.  Why isn’t my broker doing this?

18. I represent a property owner who lives in Massachusetts and wants to rent his home in New York. He/she does not want to rent to a tenant with children because there is a pond on the property and he/she does not want to assume any liability if the child accidentally falls into the pond.  Is this legal?

19. I have an unlicensed personal assistant who assists me with my daily real estate related activities.  Can I have him/her host an open house?

20. If a listing has expired in the MLS, am I allowed to call the owner to relist with my brokerage if they are on the Do-Not-Call list?

21. Must a property manager be licensed as a broker in New York?

22. How long do I have to keep records of a transaction?

23. Can I use the term “licensed sales associate” on my business card?

24. I want to start a new brokerage. Can I offer an ownership interest to my salespersons?

25. I am currently holding a good faith deposit.  The seller’s attorney directed me to turn over the good faith deposit to him.  The purchaser’s attorney is instructing me to return the deposit to the purchaser.  What should I do?

26. At what point in time am I no longer obligated to present offers to a seller?

27. Am I allowed to offer some type of incentive to attract clients and/or customers or is this considered a kickback?


1. There is no provision in law permitting a broker to place a lien on a parcel of real property for an unpaid commission.  There is also no method by which a broker can stop a closing from occurring.  Any broker attempting to file a lien that subsequently causes a delay in the passing of title may be liable for damages to the seller.  A comprehensive article addressing just this issue appears in the second quarter, 2006 issue of NYSAR’s Legal Lines publication.  (Note: The Commission Escrow Act does not permit a broker to place a lien or delay the closing either.)

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2. No.  An offer of compensation made through the MLS is a unilateral offer made to other brokers, not individual licensees of the listing broker.  The listing broker may, if he/she chooses, pay their own agents that amount, but it is ultimately the broker’s decision how in-house listings should be split with licensees of the listing broker.  Licensees should raise this issue with the broker when commission splits are initially discussed.  Furthermore, arbitration through a local board only applies to disputes between brokers, not a broker and a licensee of that broker.

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3. Section 464 of the Real Property Law states:If a seller of residential real property acquires knowledge which renders materially inaccurate a property condition disclosure statement provided previously, the seller shall deliver a revised property condition disclosure statement to the buyer as soon as practicable.”  The seller in this instance must provide a revised PCDS.   If the seller refuses to do so, a licensee cannot continue to represent the seller if they know the seller is providing an inaccurate PCDS.

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4.No, a principal broker cannot act as a designated sales agent in a transaction. A designated sales agent works under the supervision of the principal real estate broker. The principal real estate broker must act as a dual agent in designated agency scenarios. Furthermore, the definition for "designated sales agent" states that the agent must be a licensed real estate salesman or associate broker, working under the supervision of a real estate broker, who has been assigned to represent a client when a different client is also represented by such real estate broker in the same transaction.

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5. This is one of the most common questions asked.  The easiest answer is that if there is an office policy or manual that outlines commissions in the event of a termination of the independent contractor agreement, or the broker utilizes the NYSAR Termination Agreement (available in the Legal Resources section of nysar.com under “sample forms”), the commissions are already agreed to prior to the licensee leaving the broker. Unfortunately, this is usually not the case.  It is recommended that licensees discuss commissions with the broker prior to leaving and negotiate what portion of the commission to which the licensee should be entitled.  It should be noted that the licensee may not be entitled to the full commission split if they leave prior to the closing since the broker has the obligation of assigning another licensee to that transaction.  If the licensee and the broker cannot agree on a commission, the licensee may request mediation or arbitration, but the broker is not obligated to mediate or arbitrate the matter.  If all of the aforementioned options do not resolve the issue, the licensee may sue the broker and leave it up to a judge to determine if there is any entitlement to a commission. 

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6. No. You do not have to complete continuing education now.  The confusion in the new law lies in the fact that it eliminates the exemption for brokers that have been continually licensed for 15 years, but only for those brokers who reach the 15-year mark on or after July 1, 2008. All brokers previously exempt are still exempt. However, licensees should be reminded that if there is ever a lapse in licensing, such as you forget to renew and there is a period where you are unlicensed, then this is not considered continuous licensing and the 15- year clock would start over again upon the issuance of the new license.

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7. Yes.  A general rule is to describe the property, not the tenant, purchaser, seller, owner or neighbor, etc. Wording that describes a person or group of persons, community or neighborhood is likely to express discrimination if reference is made, either directly or indirectly, to the race, color, religion, sex, handicap, familial status, or national origin of that person, group, community or neighborhood.

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8. No.  In New York State, all contracts for the purchase of real property must be in writing to be binding. Verbal acceptances and conditions are not permissible and, therefore, are void and not binding on any party.  Pursuant to General Obligations Law §5-703: “A contract…for the sale, of any real property, or an interest therein, is void unless the contract or some note or memorandum thereof, expressing the consideration, is in writing, subscribed by the party to be charged, or by his lawful agent thereunto authorized by writing.”

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9. There is no requirement that licensees provide each other with their respective clients’ agency disclosure form. This also applies to attaching the agency disclosure forms to a purchase offer or contract of sale. In the past, this was done in order to meet the requirements of Real Property Law §443(3)(d), but since that section has been removed from the statute, the forms are not required to be attached to a purchase offer or contract of sale.  Under Real Property Law §443, licensees are required to provide the form as follows:  (1) a listing agent shall provide the disclosure form…to a seller prior to entering into a listing agreement with the seller and shall obtain a signed acknowledgment from the seller (RPL §443[3][a]); (2) a seller’s agent shall provide the disclosure form to a buyer or buyer’s agent at the time of the first substantive contact with the buyer and shall obtain a signed acknowledgment from the buyer (RPL§443[3][b]);  and  (3) a buyer’s agent shall provide the disclosure form to the buyer prior to entering into an agreement to act as the buyer’s agent and shall obtain a signed acknowledgment from the buyer. A buyer’s agent shall provide the form to the seller or seller’s agent at the time of the first substantive contact with the seller and shall obtain a signed acknowledgment from the seller or the seller’s listing agent, except as provided in paragraph e of this subdivision. (RPL§443[3][c]).  DOS has indicated that these are the only times that signatures will be required on the agency disclosure form unless there is a change in the agency relationship.

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10. No. Since the listing is that of the broker, and the broker is the agent of the seller, all agents whose licenses are held by that broker (whether the listing agent or not) are always going to be a seller’s agent. A licensee acting as a broker’s agent can never be in the same brokerage as the listing itself.  A broker’s agent is always from another broker’s office.

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11. It is permissible for a licensee (salesperson, associate broker or broker) to have their license with more than one brokerage or real estate firm.  The Department of State does not prohibit any such activity.  Licensees must disclose to all brokerages where their licenses are held that the licensee is associated with another brokerage.  Depending on what type of real estate business the licensee is conducting, it is advisable that the licensee make it clear to each brokerage how the licensee will handle referrals and other lead sources obtained from non-broker sources. Otherwise, each brokerage may expect all leads to be processed through their firm.

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12. Yes, pursuant to Real Property Law §442, “No real estate broker shall pay any part of a fee, commission or other compensation received by the broker to any person for any service, help or aid rendered in any place in which this article is applicable, by such person to the broker in buying, selling, exchanging, leasing, renting or negotiating a loan upon any real estate including the resale of a condominium unless such a person be a duly licensed real estate salesperson regularly associated with such broker or a duly licensed real estate broker or a person regularly engaged in the real estate brokerage business in a state outside of New York”

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13. No. When a broker submits a listing to the MLS, it is an unconditional offer of compensation. Refusal to pay a successful selling broker will most likely result in the cooperating broker seeking arbitration. The arbitration hearing panel will look at the transaction from beginning to end and, even if the broker appears to have violated the COE, the panel may not deny the award solely because of an alleged violation of the COE.

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14. Since the offer of the $1,000 was done via the MLS, it would be considered a contractual dispute pursuant to the NAR 2007 Code of Ethics and Arbitration Manual.  Article 17 specifically states: “In the event of contractual disputes or specific non-contractual disputes as defined in Standard of Practice 17-4 between REALTORS (principals) associated with different firms, arising out of their relationship as REALTORS, the REALTORS shall submit the dispute to arbitration in accordance with the regulations of their board or boards rather than litigate the matter.”  In such a case, it would be proper to arbitrate the matter.

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15. Yes. According to the NAR dues formula, a broker is responsible for all individual licensees whose licenses are held by that broker.  In some instances, the broker can open a limited function referral office (LFRO).  The LFRO and its agents must be engaged exclusively in soliciting and/or referring clients and customers to the REALTOR's brokerage firm.   Pursuant to the NAR model dues formula letter: “Your dues obligation as ‘designated’ REALTOR of your firm relates directly to the size of your real estate firm i.e., the number of individuals licensed with your firm. However, your dues obligation is fully credited with respect to any individual licensed with you who holds membership in an association of REALTORS. Consequently, the variable portion of your dues as the ‘designated’ REALTOR is computed only upon the number of individuals licensed with you who do not hold membership.”

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16. Pursuant to the NAR MLS Handbook, cooperating participants or their representatives have the right to participate in the presentation of any offer they secure to purchase or lease to the seller or lessor. They do not have the right to be present at any discussion or evaluation of the offer by the seller or lessor and the listing broker. However, if a seller or lessor gives written instructions to a listing broker that cooperating brokers may not be present when offers they procure are presented, cooperating brokers have the right to a copy of those instructions. This policy is not intended to affect listing brokers’ right to control the establishment of appointments for presentation of offers.

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17. Labor Law § 190(6) defines “Commission Salesperson” as “an employee whose principal activity is the selling of any goods, wares, merchandise, services, real estate, securities, insurance or any article or thing and whose earnings are based in whole or in part on commissions.” Labor Law § 190(2) states "employee" means any person employed for hire by an employer in any employment.” Furthermore, the particular section in question is found under Article 6 of the Labor Law.  In order to state a claim under Article 6, a plaintiff must first demonstrate that he or she is an employee entitled to its protections. Although the definition of employee is broad, independent contractors are not included (see, Labor Law § 190(2); Di Lorenzo v Sbarra, 124 AD2d 446, 1986). Since many brokerages utilize independent contractors as licensees rather than employees, the statute is entirely inapplicable to real estate licensees who are independent contractors.

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18. No, Under the New York State Real Property Law, it is unlawful for building, apartment house and mobile home park owners to refuse to rent, or to discriminate in renting to persons having children, or to incorporate any clause or provision in a lease requiring tenants to remain childless or to not bear children. Exemptions from this antidiscrimination law apply to: federally subsidized, insured or guaranteed housing units for senior citizens; one or two family owner occupied dwelling houses or mobile homes; or mobile home parks exclusively for persons 55 years of age or older. Furthermore, if a client expresses that he intends to discriminate on the basis of a tenant having children, you are obligated to advise him/her that they are in violation of the law, and that if they refuse to stop attempting to discriminate, you must terminate your relationship with him/her. If you fail to terminate your relationship with him/her, and you are knowingly acting as an agent for him/her and they continue to act in a discriminatory behavior, you are also liable in a discrimination lawsuit.

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19. No. A personal assistant is unlicensed. Therefore, they cannot perform any function set forth in New York State Real Property Law, Article 12A, §440.  As a general rule, any office function that is not set forth in §440 can be performed by a personal assistant.  An unlicensed personal assistant cannot perform any of the following activities since they are considered licensed activities: 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; or make phone calls, telemarketior perform other activities to solicit business on behalf of the broker.

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20. No. Only the broker who had the listing with seller is permitted to contact the seller to relist.  The listing contract should qualify as a “transaction” within the last 18 months, so as to establish a “prior business relationship.”  As such, the broker can contact the seller for up to 18 months following the expiration of the listing.  Merely being a member of an MLS does not qualify each member or subscriber to the MLS service as having a “prior business relationship” with every seller who has property listed in the MLS.

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21. Yes. If the property manager (or management company) acting on behalf of the owner and for a fee and/or commission conducts any of those acts listed in Real Property Law §440, which include but are not limited to collecting rents.  Real Property Law §440 specifically states  a license is required when a “person, firm, limited liability company or corporation, who, for another and for a fee, commission or other valuable consideration, 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 who, notwithstanding any other provision of law, performs any of the above stated functions with respect to the resale of condominium property originally sold pursuant to the provisions of the General Business Law governing real estate syndication offerings.”

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22. According to 19 NYCRR §175.23: “Each licensed broker shall keep and maintain for a period of three years, records of each transaction effected through his office concerning the sale or mortgage of one-to-four-family dwellings. Such records shall contain the names and addresses of the seller, the buyer, mortgagee, if any, the purchase price and resale price, if any, amount of deposit paid on contract, amount of commission paid to broker or gross profit realized by the broker if purchased by him for resale, expenses of procuring the mortgage loan, if any, the net commission or net profit realized by the broker showing the disposition of all payments made by the broker. In lieu thereof each broker shall keep and maintain, in connection with each such transaction a copy of (1) contract of sale, (2) commission agreement, (3) closing statement, (4) statement showing disposition of proceeds of mortgage loan.”

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23. No. A business card should include the following information exactly as stated on the license: The individual's first name; type of license held (broker, associate broker, salesperson); licensed name of firm; and the firm's business address.  There is no license issued from New York State for a “sales associate.”  Optional information can also be added to the card such as: business telephone number; residence telephone number; real estate specialization (i.e. specializing in commercial properties); and nickname of licensee (i.e. John (Bud) Doe). Brokers may include any title of office in the business (i.e. partner).

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24. No. Pursuant to New York State Real Property Law (RPL) §441-b[2], “No license as a real estate salesperson shall be issued to any officer of a corporation nor to any manager or member of a limited liability company nor to a member of a co-partnership licensed as a real estate broker.”

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25. As a licensee, a broker is subject to the mandates of Article 12-A of the Real Property Law, which requires that a broker be trustworthy and competent. As an agent, a broker is a fiduciary charged with fidelity and diligence in the conduct of his responsibilities. Brokers are accordingly obligated to exercise due care in the handling of deposits.  In the event of any genuine issue as to entitlement to the deposit, the broker should continue to hold the deposit in escrow while advising the parties that it will be released upon the determination of a court of competent jurisdiction or the mutual agreement and releases of the parties to the contract/binder.

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26. The broker’s fiduciary obligations to his principal require that all offers be transmitted to the seller, no matter how low or how late. Throughout the term of the broker’s listing agreement the broker’s fiduciary obligations abide. In the typical arrangement, the broker continues to be the agent of the seller until the purpose of his agency has been accomplished: the property has been sold. This being the case, even where there is a signed contract for the property, the broker continues to be the fiduciary of the seller and, thus, continues to have the duty to advise the seller of all opportunities in the purchase of his premises. In order to help protect the broker against a charge of inducing a breach of contract, it is recommended that once an offer has been accepted in writing, the broker should advise the client in writing of the fact that the subsequent offer is being presented in order to apprise the client of all pertinent information but with the understanding that there may be contract rights involved in the matter. It is appropriate for the broker to recommend that the seller in such a situation consult an attorney regarding his obligations.

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27. It is permissible to offer an incentive to attract clients and/or customers pursuant to an opinion issued by the New York State Department of State. Real Property Law § 442 prohibits a real estate broker from offering to pay any part of the broker's commission to any party to a real estate transaction if the purpose of the payment is to compensate an unlicensed party for providing services that would otherwise require a real estate broker's license. Generally speaking, Section 442 was intended to discourage unlicensed activity. Section 442 does not, however, prohibit a real estate broker from offering cash, services, or products to attract new clients and customers.

The Department of State has found no violation of Section 442 with regard to promotional offers in which a real estate broker offered the following products and services to attract new clients and customers: free airline tickets; free use of vacation rental property; free termite and mechanical inspection; discounts from local businesses; free home security system; moving expenses; free insurance on major appliances; gift certificates; and cash. Any offer by a broker is clearly promotional in nature and is designed to attract new clients, and, accordingly, the offer is permissible.

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