42. Reliance on Attorney Advice

164 DOS 92 Matter of Christiana & Manor Homes by Blake - action which is clearly in violation of law is not excused by reliance upon advice of an attorney; reliance can negate proof of intent

29 DOS 93 Matter of DOS v. Collins - reasonable reliance on attorney advice can't be found to violate 175.11 (no sign without consent of owner)

80 DOS 93 Matter of Droz d/b/a Adirondack Real Escapes - extensive delay (6 years after event and 5 years after complaint) coupled with prejudice to licensee (witnesses memories faded) and absence of excuse from DOS result in dismissal of one charge (regarding alleged delay in making deposit of buyer's check); unlawful practice of law in use of form contract without attorney approval clause which is not jointly approved by bar association and Board of Realtors (review by two attorneys is insufficient); failure of proof that broker did not make clear for whom he was acting; permissible for broker to modify his commission agreement and accept second mortgage from buyer at suggestion of seller's attorney

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

96 DOS 94 Matter of DOS v. Demasi - failure to use RPL §443 disclosure notice for sales or rentals of 1-4 family house (33 rentals); reliance on MLS form no defense to or excuse for not using form in rental transactions; broker presumed to know the law; lack of knowledge, unlawful motive or fraudulent intent considered in assessing sanction; $500 fine

77 DOS 95 Matter of DOS v. Deppoliti, et al. - auctions; pleadings amended to conform to proof; individual proper party where license under non-corporate assumed name; obligation of honesty before fiduciary obligation upon agency; working farm improved by 1-4 family residence requires disclosure form under RPL §443 but is not governed by 19 NYCRR 175.24; false representation demonstrates untrustworthiness; failure to disclose back taxes demonstrates incompetency; complainant failed to establish unlicensed practice of law; buyers premium earned on acceptance of offer per contract; demand for unearned commission demonstrates untrustworthiness; failure to pay court costs equivalent to failure to pay judgment; failure excused due to reliance on attorney advice; revocation

80 DOS 97 Matter of DOS v. Robin - laches; reliance on attorney advise; mortgage applications; real estate brokers license needed to negotiate loan on unimproved property; mortgage broker license only applies to residential mortgage loans; disclosure of ownership interests; dual agency; disclosure of agency relationships; bankruptcy; to establish defense of laches, respondent must show substantial prejudice arising out of the delay such that the delay significantly and irreparably handicapped it in preparing a defense; reliance on attorney advise is a valid defense and may relieve respondent of liability; DOS has jurisdiction to review licensee’s conduct for untrustworthiness or incompetency even when not acting in licensed capacity; Reg. 175.7 requires a broker to make it clear for which party he is acting; licensee may act as a dual agent only upon full and fair disclosure and with the informed consent of the parties; it is not necessary that there be a showing of injury or actual fraud for a finding of improper conduct regarding dual agency so long as the licensee fails to obtain the principals informed consent; licensee may act as agent and principal in same transaction on disclosing all relevant facts to principal; broker may be required to return monies, with interest, where broker was not entitled thereto; discharge of broker’s debts in bankruptcy prevents DOS from ordering refund, however, DOS may impose other sanctions; corporate broker is responsible for acts of its representative broker within actual or apparent scope of authority; sanctions cannot be applied against entity no longer licensed, which has been unlicensed for more than two years and has no automatic right of renewal; individual broker’s license suspended for 6 months

866 DOS 03 DOS v. Charles H. Greenthal Residential Sales Corp. - reliance on attorney advice; vicarious liability; broker advertises property exclusively for sale through broker and exclusively shown through associate broker when owner disputed the existence of an exclusive contract and representative broker was aware of owner’s dispute of exclusive listing; associate broker, who also is president of cooperative board, withdrew his signature as board president at closing and halted closing because the fee paid by the seller was less than the associate broker believed was due and payable; associate broker claims he acted on the advice of counsel, which he did, however, advice he received was from counsel to co-op board not his own counsel; associate broker violated his fiduciary duty to his client of undivided loyalty by putting his own interests above those of his client; corporate broker vicariously liable for the unlawful acts of its representative broker; representative broker knew of seller’s dispute of authenticity of exclusive right to sell and nevertheless chose not to investigate seller’s challenge and permitted the associate broker to continue to represent the listing as an exclusive right to sell; DOS offers, then withdraws offer, to submit into evidence a tape recording of a telephone conversation between seller and associate broker after questions by ALJ to determine if tape is genuine and unaltered, even though respondents did not object to DOS’s right to offer the evidence because of insufficiency of foundation; broker ordered to refund commission in the amount $16,140.00; corporate broker, representative broker and associate broker each fined $1,000.00

2 DOS 09 Matter of Shane – dismissal of charge of breach of fiduciary duty by misleading as to duration of listing; denial of motion to conform pleading to the proof to change overpricing of listing; doing business under unlicensed name RPL 441(1)(a); no misrepresentation to public; attorney advice in connection with dissolution; reprimand

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Fourth quarter Legal Lines now available

The fourth quarter 2019 edition of NYSAR’s Legal Lines is now available online at This edition covers new DOS proposed regulations, emotional support animals in housing, Landlord discrimination and more. Learn more