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Key Legal Issues

DOS clarifies a licensee's duty to verify the legal status of properties
On April 19, 2016, the New York State Department of State (DOS) issued an opinion addressing what responsibility a licensee has for verifying the status of a property when taking a listing for sale or rent.  

NYSAR General Counsel S. Anthony Gatto, Esq. explains how to properly operate a real estate team
Filmed during the NYSAR 2016 Business Meetings Legal Update session, NYSAR General Counsel S. Anthony Gatto, Esq. explains the proper operation of a real estate team.

Sprinkler disclosure for residential leases effective December 3, 2014
Effective December 3, 2014, a new law requires that the presence of, and maintenance of, residential sprinkler systems be disclosed on all residential leases in New York. The text of the new law can be found in Real Property Law §231-A. Section 1 of the law requires every residential lease to contain a “conspicuous notice in bold face type as to the existence or non-existence of a maintained and operative sprinkler system in the leased premises.” Section 3 of the law further requires that “if there is a maintained and operative sprinkler system in the leased premises, the residential lease agreement shall provide further notice as to the last date of maintenance and inspection." Since there is no exception for proprietary leases in a cooperative, they, too, fall under the requirement.

New Document Retention Regulation effective October 13, 2014
As part of NYSAR’s effort to amend outdated New York State Department of State (DOS) regulations, a proposed amendment was made to 19 NYCRR §175.23 addressing the broker requirement to retain certain transaction related documents for a period of three years.  This amendment was voted on by the New York State Board of Real Estate and appeared in the New York Register on July 15, 2014. The new regulation goes went into effect on October 13, 2014. It is NYSAR’s hope that the amended regulation will make the requirements of document retention clearer and easier for brokerages.

Advertising Under the New Regulations - effective January 2, 2014
As of January 2, 2014, new advertising regulations have taken effect for real estate brokers and those licensees associated with the broker.  Licensees should be aware that the new regulations do not differ that much from the regulations and guidelines previously in place.  New items such as teams, logos and Internet advertising were included in the new regulations since such items were not previously addressed.

Commission Escrow Act- effective January 1, 2009

As of January 1, 2009, brokers in New York have a law protecting their earned commissions. The Commission Escrow Act is a legal provision requiring sellers to deposit disputed commissions into an escrow account maintained by the county clerk. Brokers must meet a number of requirements in order for the act to apply. NYSAR has developed several educational tools and forms to assist brokers in complying with the act.

Agency Disclosure - effective January 1, 2011
On August 30, 2010, the most recent revisions to the agency disclosure law were signed by Gov. David Paterson. This amendment includes changes to the agency disclosure form as it relates to dual agency and designated agency as well as requiring the agency disclosure form to be used for all condominiums and cooperative apartments as well. As such all licensees will be required to use the new form starting January 1, 2011. This guide 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.

Legal Action Committee decisions
The purpose of the New York State Association of REALTORS Legal Action Program is to provide financial assistance to support litigation, which is precedent setting and has statewide impact, including matters relevant to the practice of real estate, the operation of real estate associations, ownership and use of real estate, and private property rights.

Independent contractor 
Over the past year, NYSAR has successfully supported numerous legal actions brought by real estate sales agents claiming status as an employee in order to obtain unemployment benefits when those individuals were independent contractors. Brokerages must be aware of the requirements of New York State Labor Law §511(19) when utilizing independent contractors as real estate agents within their office. NYSAR has provided a brief review of the requirements brokerages are recommended to follow when utilizing independent contractors.

IRS form 990 policies
Not-for-profit corporations required to file the IRS form 990 are asked numerous questions whether the corporation has a whistleblower policy, document retention policy, conflict of interest policy or a key employee compensation policy. NYSAR is supplying these sample policies that local associations can adopt to be in compliance. NYSAR thanks the Westchester County Board of REALTORS for supplying copies of the forms to benefit the entire NYSAR membership.

Standards of Practice 3-4 and 16-16 still not enforceable in New York
Recently, the NYSAR Legal Hotline has seen an increased number of callers inquiring about the enforcement of Standards of Practice (SOP) 3-4 (formerly 9-9) and 16-16 (formerly 21-16) in the REALTOR Code of Ethics. Be aware that real estate licensees who attempt to enforce either SOP 3-4 and/or SOP 16-16 in New York may be subject to disciplinary action by the Department of State (DOS).

Tenant Screening Law
In 2010, New York City passed a local law titled "Tenant Screening Report Disclosure." This law only affects NYSAR members practicing in New York City. The law sets forth certain requirements of any person, including real estate brokers, who screen prospective tenants on behalf of a landlord. Essentially, any brokerage acting as an agent of the landlord, either through an agreement or as a property manager, that requests application information from a prospective tenant or tenant's agent must provide certain disclosures to the tenant.

Other legal information

Featured Content

First quarter Legal Lines now available

The first quarter 2018 edition of NYSAR’s Legal Lines is now available online at NYSAR.com. This edition covers commission issues, a New York State Supreme Court ruling on unsigned letters not creating a contract, support animals and more. Learn more

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