18. Duty to Supervise Sales Associates

Cases 253, 293, 286 Matter of DOS v. DiDonato (Cohen), Consent Order - failure to supervise (19 NYCRR 175.21) $1,500 fine

Opinion Letter 92-39 (Mark Roberts) - leasing company can't furnish sales associates

105 DOS 93 Matter of DOS v. Jacob - inadequate "EXPLANATION" violates 175.24(b); insufficient evidence of failure to give list of MLS members 175.24(c)(1); dismissal of charge of false advertising where broker substantially performed obligations and owner did not give reasonable opportunity to cure alleged defaults and suffered no damage; inadequate evidence of failure to supervise (175.21[a]); post-hearing submission not considered as no request for leave was made during the hearing

CRC #301 Matter of Ilie, Consent Order - failure to supervise sales associate and failure to investigate conduct constitute availing of license; $450 fine and testify against sales associate

CRC #400 Matter of Pozzanghera, Consent Order - failure to supervise in permitting use of trade name before being licensed and in permitting use of unlicensed branch office; failure to supervise associate brokers; improper licensure as representative broker when not a corporate officer; failure to execute termination of association cards; $7,000 fine

138 DOS 93 Matter of DOS v. 7119 Real Estate - non-solicitation order violated by free "Harmon Homes" publication; DOS fails to prove "take the oriental express" was violation of 175.17(a) blockbusting or an expression of an ethnic limitation; failure to supervise by representative broker; corporate licensee vicariously liable for acts of representative broker

CRC #413 Matter of DOS v. Devaney, Consent Order - failure to properly supervise

147 DOS 93 Matter of DOS v. Feld - auctions; auctioneer requires real estate license; improper for salesperson to incorporate and act as auctioneer (without a broker's license) and thereby receive commission splits; unintentional violation based upon faulty advice, therefor $500 fine, rather than revocation; lack of proof of failure to supervise

1 DOS 94 Matter of ERA Faza Realty - DOS is not divested of jurisdiction by voluntary surrender of license or expiration of license if action occurred while licensed, while an applicant for a license, or while eligible to automatically renew per RPL §441(2); requirement of informed consent to dual agency; concealment, misrepresentation and failure in seeking to purchase for own account (2 transactions arranged - sale to licensee and resale at profit to customer, who was qualified for mortgage, but who seller was told had failed to qualify); disgorge profit and commission; fee not related to performance of legitimate service; representative broker must be corporate officer and is vicariously liable for wrongful act of associated salesperson under RPL §442-c; restitutionnot attributed to corporate broker where no proof that funds illegally obtained were collected by or in any way benefitted the corporation; DOS has no power to assess damages; representative broker not required to supervise another representative broker and not liable for misconduct of another representative broker who meets test of RPL §442-c; complaint dismissed as to other representative broker

13 DOS 95 Matter of Skydell - jurisdiction to adjudicate after expiration of license where eligible to renew; collateral estoppel as to fact findings by Division of Housing and Community Renewal; liability of broker for actions of partnership in which he was general partner irrespective of actual knowledge of wrongful acts; DOS not empowered to order restitution of illegal rent overcharges; failure to pay a fine may be challenged only in a subsequent disciplinary hearing; no direct liability for non-participation and un-involvement in corporate acts; no vicarious liability of corporate officers, directors or shareholders for wrongful acts of corporation; actual knowledge required for vicarious liability; broker presumed to know the law; failure to establish representative broker was directly responsible or vicariously liable for failure to disclose ownership interest in violation of 19 NYCRR §175.6; failure to deliver duplicate original of lease in violation of 19 NYCRR §175.12; retaining an unearned fee in violation of RPL §441-c; financial inability to pay judgments is good defense to charge of willful failure to satisfy judgment; efforts to meet obligations and refusal to file for bankruptcy demonstrate willingness to attempt to pay debts; pleading notconformed to change availing or failure of supervision, as these charges were not with in the broad composition of complaint and not actually litigated

91 DOS 95 Matter of DOS v. RE MAX West, et al. - due process to assure fair notice; proof of certified mail creates presumption of delivery; duty of representative broker to assure proper licensure of salesperson, duty cannot be delegated, actual knowledge not required; associate broker status as salesperson, cannot serve as representative broker even if manages office; $500 fine

75 DOS 95 Matter of DOS v. Vigilant Capital Corp., et al. - dual agency; vicarious liability; independent contractor; evidence; affirmative duty on broker to supervise associated salesperson - cannot be independent contractor; behavioral nexus between parties established agency relationship - acting as mortgage broker for buyer and real estate broker for seller; failure to disclose dual agency; vicarious liability requires actual knowledge or ratification by either directly or indirectly or retained proceeds; proof of agreements; include DOS investigators reports where no personal knowledge; consumer's complaint is not probative evidence until they testify

96 DOS 96, Matter of DOS v. Metro Federal Realty Corp. - Deliberate mailings of solicitation material to homeowners in a cease and desist zone are tantamount to untrustworthiness and incompetence; representative broker knowingly violated DOS Regulations 175.17 and 175.21 where he knew a cease and desist list existed, failed to obtain a copy of the cease and desist list, deliberately mailed solicitations to homeowners in the cease and desist zone, and did not advise associated salesperson of the existence of the cease and desist zone; respondent superior; vicarious liability; corporate broker liable for representative broker’s violations of licensing regulations where representative broker knowingly committed same within scope of regulated brokerage business; representative broker’s knowledge of the wrongful acts is imputed to the corporate broker; $3,000 fine ($500 for each violation)

55 DOS 96, Matter of DOS v. David - cease and desist; duty to supervise sales associates; solicitation of homeowner on cease and desist list by salesperson demonstrated incompetency; salesperson’s reliance on response of homeowner during prior “cold call” not valid where homeowner then on cease and desist list; representative brokers did not fail to properly supervise salesperson where brokers had distributed cease and desist list to salespersons and instructed them on its use on several occasions; fine imposed after determination of violation may be higher than settlement offer; however, penalty should not be imposed for exercising right to hearing where honest belief of no wrong-doing; charges dismissed against representative brokers; salesperson fined $300.00

CRC #95-0469, Matter of DOS v. Maczko - Consent Order - duty to supervise sales associates; unlicensed activity; unauthorized practice of law; broker allows unlicensed person to participate in a regulated real estate transaction, $377.78 fine, $750.00 restitution plus interest; licensed salesperson engaged in the unauthorized practice of law, sixty-day suspension; broker and salesperson required to attend Law of Agency course

CRC #96-0729 Matter of DOS v. Real Property Enterprises, Inc., Consent Order - corporate broker, by its representative broker, failed to properly supervise sales associates with respect to their negotiation and preparation of contract addendum; sales associates demonstrated incompetence in negotiating and preparing addendum to sales contract; corporate broker reprimanded; each sales associate fined $250.00

151A DOS 97 Matter of DOS v. Vargas - cease and desist; prior dismissal of charge against broker for violation of 19 NYCRR 175.17(c)(1) for solicitation of a listing of a residential home for sale from a homeowner whose name and address appear on the cease and desist list is reversed on appeal by DOS; license of broker may not be suspended or revoked under the holding in Roberts Real Estate v. Dept. of State (80 N.Y.2d, 116 (1992)) where broker did not have actual knowledge of the violation and did not retain some benefit arising out of it; broker is liable for failure to properly supervise salesperson; $300.00 fine

274 DOS 97 Matter of DOS v. Fee - due process; laches; fraudulent practice; duty to supervise sales associates; disclosure of agency relationships; vicarious liability; DOS is not estopped from proceeding with investigation after issuing letter to broker advising that DOS was contemplating no further action and was closing the file; broker’s defense of laches fails where broker fails to establish substantial prejudice arising out of the delay; DOS fails to establish salesperson’s conduct was a fraudulent act where, although salesperson knew representations were false and she intended purchasers to act on the misrepresentation, DOS failed to establish that purchasers detrimentally relied on misrepresentations; salesperson engaged in fraudulent practice by making misrepresentation to purchasers (salesperson misrepresents reasons for previous purchasers not going forward with transaction); DOS fails to establish violation of RPL §443 by failing to establish that disclosure form presented in evidence was the disclosure form related to the sale of the subject property; inconsistency in complaint is immaterial where complaint gives respondent sufficient notice of the charges; corporate broker and representative broker demonstrated incompetency by employing unlicensed associate broker; representative broker’s reliance on unofficial lists of licensees supplied by County Board of Realtors is misplaced and demonstrates incompetency; representative broker and corporate broker are vicariously liability for misconduct of salesperson and associate brokers where they have actual knowledge of the misconduct; commission arising out of unlicensed activity of associate broker is unearned; corporate broker and representative broker fined $1,000.00 and directed to disgorge commission of $6,125.00, plus interest; salesperson fined $1,000.00; unlicensed associate broker fined $500.00 and directed to disgorge unearned commission of $6,125.00, plus interest

CRC #97-1522 Matter of DOS v. Roberts, Consent Order - failure to adequately supervise a salesperson; $778.24 restitution plus interest

328 DOS 97 Matter of DOS v. Marie Ward Realty, Inc. - duty to supervise sales associates; due process; failure to appear at hearing; ex parte hearing is permissible upon proof of proper notice of hearing; representative broker allows salesperson to engage in regulated transactions prior to notifying DOS of salesperson’s association with broker; salesperson was not licensed to engage in regulated transactions; representative real estate broker is liable for participation in or authorization of illegal acts; representative broker’s violations are imputed to corporate broker; lack of knowledge that salesperson was not properly licensed and brokerage office failure do not excuse representative broker; lack of reasonable excuse coupled with failure to appear indicate pattern of neglect; $1,000 fine

241 DOS 98 Matter of DOS v. Himark Realty -- failure to appear at hearing; cease-and-desist; duty to supervise sales associates; vicarious liability; ex parte hearing is permissible upon proof of proper service; salesperson inadvertently calls home listed on cease-and-desist list which demonstrates incompetency; broker is obligated to supervise real estate brokerage activities of its salespersons and is vicariously liable for their misconduct, limited only with regard to penalty in cases where the broker lacked actual knowledge of misconduct or did not retain any benefit derived from that misconduct; corporate broker, representative broker and salesperson each to pay $250 fine

274 DOS 98 Matter of DOS v. Queens Express Realty Co. -- cease-and-desist; duty to supervise sales associates; vicarious liability; telephone call from personal assistant to homeowner on cease-and-desist list violated 19 NYCRR 175.17; subsequent appointment at homeowner’s home by broker at homeowner’s request does not violate 19 NYCRR 175.17; one telephone solicitation inadvertently made to one home on cease-and-desist list is not tantamount to untrustworthiness or incompetence and does not support allegation that broker failed to supervise; corporate broker and representative broker may be held vicariously liable for the violation of regulation by an employee acting within the scope of employment and may be assessed a penalty, excluding a suspension or revocation; broker and salesperson to pay total fine of $500

275 DOS 98 Matter of DOS v. Citylife Realty, Inc. -- deposits; duties to supervise sales associates; vicarious liability; failure to appear at hearing; ex parte hearing may proceed upon proof of proper service; collection of rental commissions from tenants in spite of agreement of landlord that it would pay all commissions demonstrated untrustworthiness and incompetency; refusal to return deposit after landlord rejected tenant’s offer to rent demonstrates untrustworthiness and incompetency; broker may be required to return monies received which it is not entitled; broker has the duty to supervise its sales associates and is vicariously liable for their misconduct in making improper demands, except that unless broker received or retained any money in question or was aware of the wrongdoing at the time of its occurrence may only be penalized by fine and not suspension or revocation; representative broker fined $1,000; corporate broker fined $2,000 and required to refund deposit with interest

CRC #98-0504 Matter of DOS v. Freidman, Consent Order - salesperson ownership and operation of brokerage firm in violation of RPL §441-b(2); ownership of all voting shares of stock in violation of 19 NYCRR 175.22; commingling and converting funds; failure to supervise; voluntary surrender of licenses without right for application renewal for one year; restitution in the amount of $1,946.72 and $7,247.27

332 DOS 00 Matter of DOS v. Joseph - cease and desist; duties to supervise sales associates; vicarious liability; broker cannot be held liable for making of telephone call to person on cease and desist list where no evidence that broker knew that the call was being made or that he retained some benefit therefrom; no allegation broker failed to properly supervise; complaint dismissed

668 DOS 00 Matter of DOS v. Streich - duty to supervise sales associates; unlicensed activity; license required for individual who offered apartment for rent, showed it, collected the deposit and commission and initialed and/or signed certain documents; not required that person engaged in actual negotiations; broker is guilty of a misdemeanor and demonstrates incompetency by having an unlicensed salesperson associated with it; broker’s duty to supervise salespersons associated with firm includes assuring that salespersons are properly licensed; broker may not pay any part of a fee for any regulated service except to a duly licensed real estate salesperson regularly associated with the broker or a duly licensed real estate broker; a broker or salesperson who has received money to which he is not entitled may be required to return the commissions; a corporate real estate broker is vicariously liable and bound by the knowledge acquired by and is responsible for the acts committed by its representative brokers; sales associate fined $250.00 and license suspended until such time as refunds his portion of the commission in the amount of $1,700.00; representative brokers each fined $250.00 and corporate broker’s license suspended until such time as refunds broker’s portion of commission in the amount of $3,300.00

CRC #99-3993 Matter of DOS v. Sheridan, Consent Order - disclosure of agency relationships; duty to supervise sales associates; salesperson fails to provide agency disclosure pursuant to RPL §443; broker failed to supervise salesperson; salesperson’s license suspended for ninety days; broker pays fine of $500.00

238 DOS 01 Matter of DOS v. Empire Home Sales, Inc. - cease and desist; prior violation; duty to supervise sales associates; vicarious liability; salesperson sends two solicitations to homes on cease and desist list; representative broker fails to properly supervise sales associate; representative broker can only be fined for violation by salesperson unless broker knew of the violation at the time of its occurrence or that he profited from it; broker had paid fines ranging from $200 to $600 on six separate complaints over prior three year period; broker’s and salesperson’s license suspended for two months

CRC #00-0795 Matter of DOS v. Levy, Consent Order - broker unlawfully avails his real estate license to salesperson and fails to adequately supervise salesperson, $1,000 fine; salesperson demands and retains unearned commission and unlawfully owns all voting shares of stock in corporate broker; salesperson to pay $1,000 fine, broker and salesperson to pay restitution in the amount of $1,234.69 and salesperson to divest himself of ownership and corporate offices of corporate broker or terminate his salesperson association with corporate broker

448 DOS 01 Matter of DOS v. Reid - duty to supervise sales associates; failure to appear at hearing; jurisdiction; vicarious liability; ex parte hearing may proceed upon proof of proper service; DOS retains jurisdiction even though license has expired since license may be renewed merely by submitting an application and paying the appropriate fees; activities of associate broker are governed exclusively by the provisions of RPL Article 12-A as they pertain to real estate salespersons; associate broker is not responsible for the supervision of other sales associates and may not be held vicariously liable for the acts of other salespersons; charges dismissed

745 DOS 01 Matter of DOS v. Vasquez - jurisdiction; DOS fails its burden of proof; unlicensed activity; duty to supervise sales associates; DOS retains jurisdiction over salesperson during automatic renewal period after salesperson’s license expired; DOS fails its burden of proof where it provides no evidence regarding one count in the complaint and where the evidence is equivocal and unclear with respect to another count; salesperson engages in unlicensed activity after license expired; broker fails to supervise salesperson where he allows the salesperson to engage in regulated real estate activity without a license; broker is not entitled to a commission for any real estate transaction effectuated by a salesperson who is not properly licensed in association with the broker; broker may be required to return commission as a condition of retention of his license where broker receives money to which he is not entitled; salesperson to be fined $250 if he reapplies for a license; broker fined $500 and license suspended until such time as he refunds $1,000 commission

730 DOS 02 DOS v. New World Realty of New York, Inc. – availing of license; deposits; disclosure of agency relationships; duty to supervise sales associates; failure to pay judgment; proper business practices; DOS has jurisdiction where disciplinary action was started while individual was licensed as an associate broker and was eligible to automatically renew at the time of the disciplinary hearing; salesperson owned voting stock in licensed corporate real estate broker, failed to pay judgment and failed to present evidence of inability to do so, and engaged in unlicensed activity after license expired; representative broker availed corporate real estate brokers license to salesperson; representative broker failed to properly supervise salesperson by permitting and authorizing salesperson to act as a real estate broker; broker and salesperson failed to make agency disclosures and failed to deposit funds of principal in a special bank account; real estate transaction conducted was a fraudulent business practice; DOS fails to prove the unauthorized practice of law; salesperson’s license revoked and salesperson ordered to pay refund of $1,406.00 of illegal commission collected; representative broker’s license revoked and broker ordered to refund $74.00 of illegal commission collected; representative broker fined $5,000.00

960 DOS 03 DOS v. Vazquez - deposits; unlicensed activity; duty to supervise sales associate; failure to cooperate with DOS investigation; failure to pay judgment; sanction; broker fails to reply to DOS’s request for information; broker allows two individuals to work in association with brokerage without being properly licensed; broker fails to pay judgment; broker fails to return rental deposits in two transactions where the rental was not consummated; broker fails to supervise sales associate and is accountable for monies received by salesperson and unaccounted for; in setting penalty, it is proper to consider licensees were found to have availed themselves of improper licensed real estate salespersons and to have retained an unearned commission; corporate broker’s license and representative broker’s license revoked and brokers ordered to pay restitution in the amount $7,725.00 and judgment in the amount $740.37

906 DOS 04 DOS v. Andrews - disclosure of agency relationships; duty to supervise sales associates; unearned commission; unlicensed activity; DOS fails its burden of proof; DOS fails to establish that two salespersons acted as salespersons on behalf of broker prior to being so licensed; DOS fails to prove that salespersons demanded an unearned commission where salespersons had an honest and good faith belief that they were entitled to a commission as a result of discussing the purchase of a home on several locations with the buyer and after having been asked by the seller to assist her in selling the house to the buyer; salesperson failed to provide agency disclosure in two rental transactions; charges relating to unlicensed activity and demanding an unearned commission are dismissed; two salespersons and two representative brokers are fined $500.00 each for failure to provide agency disclosure

711 DOS 05 DOS v. All Island Estates Corp. - availing of license; duty to supervise sales associates; fraudulent practice; unlicensed activity; motion to dismiss at conclusion of DOS case; post hearing submissions; DOS charges corporate broker and representative brokers with unlicensed activity, availing of broker’s license to salesperson, employing and authorizing unlicensed persons to engage in regulated real estate activities and failing to properly supervise associated salespersons; broker’s motion to dismiss the proceeding on the close of complainant’s case for failure to prove the essential allegations of the complaint is dismissed and hearing continues; DOS fails to prove by substantial evidence the allegations made in the complaint; complaint dismissed.

1008 DOS 06 Matter of Gold Star Homes – failure to provide agency disclosure, net listing, duty to supervise, allow unlicensed activity, unauthorized alteration of documents, refusal to release client from improper listing, failure to cooperate with DOS, egregious violation, revocation

1 DOS 07 Matter of Ali – appraiser allowing appraiser assistant to affix signature to report which he did not review, settlement offers declined, no fine authorized, 3-month suspension

1793 DOS 07 Matter of Chiu- broker; untrustworthiness in handling checks and stop payment orders; breach of duty of supervision regarding checks; $500 fine or two months suspension

1923 DOS 07 Matter of Razik- broker; failure to supervise; two cease and desist violations; system by which can check c&d list; no advance knowledge of distribution of flyers; prior c&d violations; maximum fine $3,000.

2283 DOS 07 Matter of Gill- broker; unlicensed activity; failure to supervise; failure to refund deposit; failure to notify of change of association; salesperson failure to cooperate; fine of $1,000; broker fine of $300

683 DOS 08 Matter of Yearsley – failure to disclose material defects, failure to supervise; six months suspension for salesperson, $1,000 fine for broker

1411 DOS 08 Matter of MetroWorld Realty – broker; improper internal advertisement as “real estate consultant;” failure to maintain sign RPL 441-a(3); improper advertising of listed with firm that is not listing broker (175.10); failure to supervise (175.21[a]), but absence due to medial reasons is mitigating factor; reprimand of broker; revoke license of associate broker

256 DOS 09 Matter of Levin – broker; cease and desist; isolated incident; duty to supervise; dismissal of charge of unlicensed name due to DOS failure to respond and efforts to process change of name

262 DOS 09 Matter of Galligan – broker; relative of seller; failure to disclose material defects; misleading advertising; agency disclosure; discouraged home inspection charge dismissed; failure to properly supervise; $2,000 fine and license had lapsed; $500 fine re: sales associate

527 DOS 09 Matter of Burshtein – failure to provide agency disclosure; commission from other than broker; failure to cooperate with DOS; failure to supervise; dismissal

619 DOS 09 Matter of Miller – failure to provide agency disclosure; undisclosed dual agency; self-dealing; breach of fiduciary duties; commission claim from other than broker; failure to supervise; complaint dismissed

791 DOS 09 Matter of Pierre-Louis – failure to return deposit; agency disclosure; failure to supervise; dismissal; suspension until refund $10,010 plus interest

792 DOS 09 Matter of Leigh – escrow account; deposit; dismissal; failure to supervise

902 DOS 09 Matter of Novelty Realty – salesperson, agency disclosure, unearned commission; fraudulent short sale; failure to supervise; failure to cooperate; revocation

1026 DOS 09 Matter of Duke—failure of proof of unlicensed activity; fraud and failure to supervise; complaint dismissed

1105 DOS 09 Matter of Metalios – C&D; isolated incident by salesperson in violation of corporate policy; duty of supervision does not require being aware of activities every minute; complaint dismissed

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