51. Unearned Commissions

Case #203 Matter of DOS v. Klar, Consent Order - restitution of unearned fees for rental of apartments; $5,000 fine

141 DOS 92 Matter of Bernier - commissions unlawfully retained if not properly licensed as broker, apartment information vendor, mortgage broker and insurance broker

48 DOS 93 Matter of DOS v. Chetiara Realty [Bonar] - pleadings amended to confer to proof; commission must be relevant to and represent charges for some legitimate services; no proof of relationship to tenant or retainage of unearned commission; no proof of failure to disclose (no live testimony of Consumer)

86 DOS 93 Matter of DOS v. Winograd - undisclosed dual agent for tenant and subtenant; failure to provide copy of sublease violates 19 NYCRR §175.1; no suspension of broker who has no knowledge at time of event or retention of proceeds, but liability for own misconduct; refund unearned commission

Opinion Letter 93-22 (Rosetta Cole) - broker cannot retain portion of tenant's deposit where listed apartment is taken off the market while rental application is pending; unearned commission

102 DOS 93 Matter of Eisenhauer - salesperson transacted business as broker for her own account violates RPL §§440-a and 442-a and forfeits commission collected; subsequent licensure as a broker is immaterial for services were rendered when she was a sales associate; her broker is not entitled to commission either, as her activities as unlicensed broker are illegal, so no commission can be claimed

CRC #226 Matter of Kane, Consent Order - commission received as result of activities of unlicensed salesperson; failure to promptly file change of association application; fine $2,500

CRC #378 Matter of Skydell, Consent Order -excessive rents and fees charged, failure to advise of broker's interest in premises (19 NYCRR §175.6); failure to advise DOS of relocation of office (RPL §441-a[5]); failure to furnish duplicate original of lease (19 NYCRR §175.2); 3-month suspension; see also 13 DOS 95 (below)

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

121 DOS 93 Matter of DOS v. Jacob - DOS fails to prove licensee knew, or failed to take reasonable steps to obtain knowledge regarding the illegality of rentals under the zoning ordinance; where broker is aware that particular area is zoned one-family, must make reasonable inquiry as to what use is being made of other floors; commission is unearned where rental is in fact illegal; ALJ rejects as incredible the broker's self-serving testimony that DSS did not want the commission returned; 2 representative brokers each fined the amount of the unearned commission ($750) for failing to return; ALJ rejects SAPA 301[1] claim of failure to hold a hearing within a reasonable time due to lack of demonstration of prejudice and refuses to consider an affidavit submitted by the licensee's counsel, as leave was not sought at the hearing to submit a response to the affidavit DOS was given permission to submit

128 DOS 93 Matter of DOS v. Vuksanaj - motion to conform pleadings to proof granted where (i) additional evidence wouldn't have been presented if the charge had been stated in the complaint and (ii) issue was actually litigated and was within the "broad framework of the pleadings"; broker's authorization to execute lease on behalf of landlord must be in writing to be valid (G.O.L. §5-703); no commission earned on void lease (due to lack of written authority for broker to sign for landlord); broker is undisclosed "double agent" - thus "fails to make clear" for which party he is acting (175.7); broker is not "managing agent" under NYC Rent Stabilization Code unless (i) broker has ownership or financial interest in property or (ii) performs managerial duties; separate escrow account (§175.1) not required when broker is not holding escrowed funds; holding funds overnight does not trigger requirement for escrow account (returned next day upon demand); unlicensed name used in commission agreement but lack of intent to mislead considered in mitigation; restitution of unearned commission

141 DOS 93 Matter of DOS v. Pozzanghera - salesperson can't own voting stock or be officer of licensed corporation (175.22); separate escrow account required (175.1); unlicensed name; illegal to claim or retain commission for services while not properly licensed; failure to pay judgment; failure to file termination of associate card; representative broker liable for illegal ads; revocation of broker's license discontinues salesperson's association per RPL §441-d

122 DOS 93 Matter of DOS v. Century 21 All the Best - upholds use of MLS form agreement - form not required to fully describe services or advice regarding agency issues and risk of subagency; broker not required to verify property ownership and can enter into valid agreement with one co-owner (where prior to achievement of agency purpose broker lacks knowledge of joint ownership); failure of proof of fraud, breach of fiduciary duties and illegal retention of deposit or unearned commission

5 DOS 94 Matter of DOS v. Gafni - fraudulent practice in retaining $5,000 payment when only obtained consumer credit report; did not obtain appraisal; improper extraction of mortgage brokerage commission when the predicate mortgage commitment was not forthcoming; corporation is vicariously responsible for actions of its representative broker; representative broker and corporation each fined $1,000 plus order of restitution of $17,400 less cost of credit report

CRC #365 Matter of DOS v. Bellezza, Consent Order - failure to use separate escrow account; failure to use RPL §443 disclosure notice; failure to return brokerage commission; 1-month suspension and $975.14 restitution

142 DOS 93 Matter of Tannenbaum - corporation which manages real property, collects rents and cooperative apartment building maintenance charges requires a license; unlicensed salesperson and unlicensed corporation precludes legitimate claim for brokerage fee; settlement of civil suit between tenant and unlicensed corporation is not a defense to charge of unlicensed activity; corporation's failure to pay judgment where individual respondent is not a party is not considered in disciplinary case against said individual; deposit monies should be returned, as no viable lease was entered into and no lawful brokerage commission could be claimed; restitution of entire deposit ordered (civil action settlement provided for return of $600 of $900), as no licensed real estate services were rendered; however, retention of deposit is not conversion or illegal retention of deposit monies, but is unlawful claim for commission by non-licensee; broker's failure to file termination of association notices violates RPL §441-a(5); respondent's cooperation during investigation considered, as is testimony that action resulted from lack of knowledge and negligent, not deliberate attempt to violate licensing law

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

32 DOS 94 Matter of DOS v. Siderakis - Husband GS is owner of two-family rental unit and representative broker of "High Value" and individually licensed broker. Wife HS is representative broker of "High Value." Timely disclosure made of HS' interest in the rental unit; neither individual or the licensee corporation on whose behalf as representative licensee can be broker for that individual as landlord; no valid brokerage service rendered and commission must be repaid to Tenant (see also CRC #304, Matter of DOS v. Gregory, Consent Order - licensee purchase for own account)

CRC #292 Matter of DOS v. Skverchak, Consent Order - unlicensed real estate activities; sales associate receipt of compensation from person other than broker with whom associated; restitution of unearned commission and $3,000 fine

CRC #304 Matter of DOS v. Gregory, Consent Order - dual agency; failure to resign agency when licensee purchased for own account; illegal commission; restitution and two-month suspension

9 DOS 94 Matter of DOS v. Shane - motion for pre-hearing discovery beyond SAPA 401(6) is denied; rules re:subpoenas in administrative proceedings reiterated; proper procedure of reserving right to file post-hearing memorandum of law; MLS form listing agreements are acceptable; individual license not sufficient to allow acting as representative of corporate licensee need affiliated license; agreements procured by individual acting under name of firm but without affiliated license are illegal and unenforceable - no brokerage fee can be claimed; misrepresentation and execution of unauthorized extension; misrepresentation of law (distinction between canceling agency authority and abiding contract rights); RPL §443 control the disclosures required of licensees; subsequently licensed corporation not vicariously liable; failure to provide copy of agreement violates 19 NYCRR §175.12; inadvertence considered in determining penalty

47 DOS 94 Matter of DOS v. Carroll - DOS jurisdiction after expiration of license if applicant for renewal or eligible to automatically renew under two-year provision of RPL §441(2); salesperson who sues client for commission violates RPL §442-a; failure to cooperate with investigator violates RPL §442-e(5)

CRC #441 Matter of DOS v. Sopher, Consent Order - unlicensed salesperson negotiates rental; failure to file change of association card; restitution ($925) and $500 fine

CRC #493 and #497 Matter of DOS v. Siony, Consent Order - illegal retaining of deposit; retaining of unearned commission; failure to make clear for which party acting (19 NYCRR §175.7); unlicensed salesperson; restitution ($2,888 and $663) and $5,000 fine

CRC #308 Matter of DOS v. Gomez, Consent Order - failure to place deposit in escrow account (19 NYCRR §175.1); conversion of rent, security deposit and commission; breach of fiduciary duty; restitution ($1,840) and $500 fine

72 DOS 94 Matter of DOS v. Sampson - failure to prove that licensees neglected to provide RPL §443 disclosure notice or the retention of a fee for renting an illegal apartment

CRC #377 Matter of DOS v. Bell, Consent Order - improperly acting as principal and agent in same transaction; purchasing property listed with principal; retaining of unlawful commission; restitution of $510; two-month suspension

14 DOS 95 Matter of Myers - broker who assists buyer in obtaining mortgage on other property to facilitate down payment is agent of buyer; broker is seller's agent in purchase transaction; as buyer's agent, depositing of down payment in his operating account violates 19 NYCRR §175.1; as seller's agent, depositing in operating account does not violate 19 NYCRR §175.1; conversion of deposits, but no proof of grand larceny as no proof to permanently deprive; fraudulent practices in failing to forward deposit; where only commission is for mortgage, no proof of unearned commission; vicarious liability of corporate licensee for acts of representative broker; restitution of money to which not entitled, with interest

24 DOS 95 Matter of Seplow - disciplinary charge jurisdiction where licensee's renewal has been previously denied; proof of service of process; agency relationship and duties; fraud in sale of cooperative apartment, including false information about particular sale and willful non-disclosure of material information; failure to obey buyer's obvious intent to have deposit treated as funds to be held in escrow as payments to seller; conversion; rules applicable to supplemental pleadings - absent surprise or prejudice, motion to file and serve could be granted on day of hearing, but here respondent doesn't appear, so supplemental complaint dismissed without prejudice; DOS fails its burden of proof as to extortion and retention of unlawful commission and unauthorized practice of law; when respondent became optionee to purchase subject matter, agency relationship ceased to exist; fiduciary duty precludes respondent from acting simultaneously as agent and principal in a transaction; restitution of $35,000 deposit plus interest at legal rate for judgments

35 DOS 95 Matter of Gooding - jurisdiction; amendment of complaint as of right (CPLR 3025[a]); second amendment of complaint by permission; plea of guilty with explanation; commingling of deposits in violation of 19 NYCRR §175.1; conversion of escrow funds; failure to render account is violation of 19 NYCRR §175.2; retention of unearned management fee; restitution of $28,233.85 plus interest at judgment rate

50 DOS 95 Matter of Romano - relocation of principal business address without notice results in automatic suspension; illegal to demand and receive commissions while licensed as salesperson; restitution of illegal commissions; failure to settle, so proper to impose higher fine

130 DOS 95 Matter of DOS v. Hevey - Availing of broker's license; supervision of salesperson; unlicensed activities; commission rate; assignment of cause of action for commission; broker avails broker's license to salesperson where the office in which the salesperson conducted regulated real estate activity was either owned, maintained and operated by salesperson without the direct supervision of the broker or was operated under an arrangement, the purpose, intent or effect of which permitted the salesperson to conduct the business of a real estate broker for the salesperson's own benefit (19 NYCRR §175.20); salesperson obtains all clients and real estate business on behalf of broker; salesperson must give honest and accurate representation of agency, status and associate standing in all advertising; commissions are not regulated by statute nor fixed by custom and usage, are freely negotiable but must be relevant to and represent charges for some legitimate service; broker and salesperson are barred from collecting commission in a transaction in which salesperson acted illegally as broker and broker availed his license; permissible for broker to assign rights to salesperson for purposes of bringing an action to recover a commission; broker and salesperson each fined $1,000.00

CRC #95-0140 Matter of DOS v. Kambanis, Consent Order - broker demanded and retained an unearned commission; six months license suspension; restitution of $6,350.00 to be paid monthly; any monthly payment not received by the 7th day of the month will cause additional suspension for the period in which the payment is delinquent

2 DOS 99 Matter of DOS v. Moore - disclosure of agency relationships; dual agency; fraudulent practice; unearned commission; vicarious liability; broker fails to provide agency relationship disclosure form to prospective buyer at time of first substantive contact; broker fails to make it clear for which party he is acting; broker agrees to provide the prospective buyer with an appraisal thereby becoming buyer’s agent while representing seller; broker uses information received from one client for the benefit of another client to the detriment of the first; failure to deal honesty with the public; claiming and bringing suit for an unearned commission is a demonstration of untrustworthiness; broker knew he was not entitled to commission where offer submitted was never signed by seller and aware of prior full price offer; broker engaged in dual agency without informed consent of the principals; fraudulent practice where broker misused information obtained for the benefit of one client to the other client’s detriment; DOS fails its burden of proof to establish that broker acted improperly by not advising sellers of risks in accepting or failing to accept any competing offers; corporate broker vicariously liable for acts committed by its representative broker within actual or apparent scope of authority; revocation of corporate and representative broker’s licenses

2 DOS APP 99 (2 DOS 99) Matter of Moore v. DOS - administrative appeal; disclosure of agency relationships; unearned commissions; on appeal, the Secretary may review questions of procedure, facts, law and policy, and may choose to expand the record by directing oral argument (19 NYCRR §400.2[k]); broker fails to timely provide agency disclosure form; broker’s argument that it is custom and practice in Rockland County to present the disclosure form at the time a prospective buyer makes an offer on a home (as opposed to prior to entering into a listing agreement as a buyer’s agent or at the time of first substantive contact with the buyer when a seller’s agent) is unavailing where no evidence presented to support this position and, in any event, wide spread non compliance does not justify failure to adhere to clear mandate of statute; broker did not represent buyer in transaction by merely agreeing to provide prospective buyer with appraisal; failure to provide appraisal amounts to breach of contract, not fraud, and constitutes failure to deal honestly with the public; receiving confidential information from prospective buyer while not representing buyer and not disclosing to buyer that broker would use this information constituted untrustworthiness and incompetency, but not fraudulent practice; substantial evidence fails to support determination that broker clearly knew he was not entitled to a commission (broker consulted with attorney), even though commission suit fails; penalty of revocation is lawful sanction, although lesser penalty will be imposed based upon facts in record; determination of license revocation modified, individual and corporate brokers’ licenses suspended for six months

27 DOS 99 Matter of DOS v. Finke - fraudulent practice; dual agency; unearned commission; broker became principal and agent in same transaction when broker agreed to be co-mortgagee on a first mortgage on sale of seller client’s property; broker fails to make proper disclosures regarding implications of his acting as both agent and principal in the same transaction; broker fails to disclose material information to the seller client regarding adverse financial condition of purchaser; broker engaged in fraudulent practice by placing his interests (as first mortgagee) ahead of those of his seller client, when he failed to advise his client that his prior advice that client’s second mortgage could be sold was inaccurate; misconduct so changed the transaction as to eliminate any entitlement to commission; broker’s license is suspended for six months plus further suspension until broker submits proof of refund of $3,500.00 commission plus interest

42 DOS 99 Matter of Smadar - failure to pay judgment; failure to appear at hearing; unearned commission; ex partehearing may proceed upon proof of proper service; denial of renewal of license due to failure to pay judgment; applicant fails to appear and establish that he is qualified to be licensed; application for brokers license denied

79 DOS 99 Matter of DOS v. Pagano - disclosure of agency relationships; failure to appear at hearing; proper business practices; unauthorized practice of law; unearned commissions; vicarious liability; fraudulent practice; jurisdiction; ex parte hearing may proceed upon proof of proper service; DOS has jurisdiction after expiration of respondents’ licenses as acts of misconduct occurred and the proceedings were commenced while the respondents were licensed; licensee fails to timely provide seller client with agency disclosure form prior to entering into listing agreement and fails to timely provide agency disclosure form to buyer upon first substantive contact; broker fails to make it clear for which party he is acting; broker violates 19 NYCRR 175.24 by using exclusive right to sell listing agreement without mandatory definitions of “exclusive right to sell” and “exclusive agency”; broker breaches fiduciary duties to seller clients by misleading them as to buyer’s ability to financially consummate the transaction; broker breaches his fiduciary duty to seller by referring seller to the attorney who represented the buyers when he knew or should have known such attorney could not properly protect seller’s interests; improper for broker to use listing agreements providing for broker to retain one half of any deposit if forfeited by buyer as such forfeiture clause could, by its terms, allow broker to retain part of the deposit when broker did not earn a commission; broker must conduct business under name as it appears on license; broker engaged in the unauthorized practice of law in preparing contracts for purchase and sale of real estate which did not contain a clause making it subject to the approval of the parties’ attorneys and were not a form recommended by a joint bar/real estate board committee; broker demonstrated untrustworthiness and incompetency in using sales contract which purported to change the terms of the listing agreement to include a higher commission; broker demonstrated untrustworthiness and incompetency in using contracts of sale which were unclear, ambiguous, vague and incomplete; broker failed to amend purchase agreement to reflect amendment to increase deposit amount; broker demonstrated untrustworthiness in back-dating purchase agreements; broker demonstrated untrustworthiness in participating in scheme to have seller hold undisclosed second mortgage and to mislead first mortgagee about the purchaser’s financial ability to purchase; broker demonstrated untrustworthiness by claiming unearned commission and filing affidavit of entitlement for unearned commission; DOS fails to establish by substantial evidence that respondent acted as undisclosed dual agent; corporate broker bound by the knowledge acquired by and is responsible for acts committed by its licensees within the actual or apparent scope of their authority; corporate and individual brokers’ licenses revoked, no action taken on application for renewal until proof of payment of sum of $2,000.00 plus interests for deposits unlawfully retained

CRC #98-1336 Matter of DOS v. Curanaj, Consent Order - demanding and retaining an unearned commission; $1,000.00 fine and restitution in the amount of $6,336.97

CRC #98-2011 Matter of DOS v. Leatherman, Consent Order - broker attempts to collect a commission by filing a UCC-1 Financing Statement against property of its principal without legal authority to do so; $1,000.00 fine, restitution in the amount of $3,548.80

145 DOS 99 Matter of DOS v. Reles - jurisdiction; proper business practices; unearned commissions; surrender of license by broker does not divest DOS of jurisdiction; broker pleads no contest to charge that he conducted regulated real estate transactions under an unlicensed name; fees charged while conducting activity under an unlicensed name are unearned; broker fails to execute written Consent Order and make restitution in accordance with no contest plea; license revoked, no action on further licensure until proof submitted of payment of restitution

CRC #98-2659 Matter of DOS v. Brady, Consent Order - retaining unearned commission; restitution of $2,892.50

CRC #99-0514 Matter of DOS v. Robins, Consent Order - broker demands and retains an unearned commission; $250.00 fine and restitution in the amount of $218.00

292 DOS 99 Matter of DOS v. Simmons - bad check; DOS fails its burden of proof; failure to cooperate with DOS investigation; unearned commissions; mistaken issuance of a bad check is incompetency; DOS fails to establish that broker commingled funds or failed to satisfy a judgment; broker fails to cooperate with DOS investigation by misleading its investigators; DOS must show that broker acted in bad faith to establish retention of an unearned commission as untrustworthiness; $750.00 fine

CRC #99-3290 Matter of DOS v. Sanders, Consent Order - failure to return an unearned commission in a timely manner; $500.00 fine and restitution in the amount of $672.00

375 DOS 00 Matter of DOS v. Gorr - disclosure of agency relationship; unearned commissions; agency disclosure pursuant to RPL §443 applies to the listing of farm property upon which there is a 1 to 4 family residential dwelling (farm included two 2 family houses and 1 single family house); failure to make it clear for which party broker is acting; broker may act concurrently as an agent and as a principal in a transaction on disclosing all relevant facts fully and completely to her principal; broker failed to disclose to seller client that she was a 50% shareholder in the corporate purchaser and was an undisclosed principal; claiming an unearned commission is a demonstration of untrustworthiness; license revoked

358 DOS 01 DOS v. Gonzalez - deposits; failure to appear at hearing; ex parte hearing may proceed upon proof of proper service; salesperson demonstrates untrustworthiness by retaining as a commission a deposit which was paid toward the rental of an apartment which was not available upon the premise that the proposed tenant had not accepted another apartment which was purportedly, but not actually, available at terms acceptable to her; apartment application provided that commission is due at lease signing and does not provide that deposits may be forfeited; $500.00 fine and restitution of $800.00 deposit; since salesperson’s license lapsed, re-application for salespersons license or application for brokers license shall not be issued except upon payment of an additional fine of $250.00

481 DOS 01 DOS v. Harris - deposits; failure to appear at hearing; failure to cooperate with DOS investigation; fraudulent business practice; jurisdiction; notary public; unearned commissions; ex parte hearing may proceed against non-appearing respondent upon proof of proper service; in the absence of an agreement to the contrary, rental broker is entitled to compensation only after procuring a rental agreement between tenant and landlord; broker fails to deposit $950.00 lease deposit in special escrow account; broker commingled funds and converted deposit; broker failed to cooperate with DOS investigation by failing to truthfully answer all questions put to him, by providing DOS with misleading statements and by failing to provide requested documents; providing DOS with untrue and misleading statements indicates broker lacks sufficient honesty to be entrusted with duties of a notary public; DOS fails to prove that broker was unauthorized to show apartment; DOS retains jurisdiction after license expires where renewal may be had merely by submitting application and paying applicable fees; the claim of the right to retain and the retention of an unearned commission is a fraudulent business practice; broker receiving money to which he is not entitled may be required to return it; broker fined $1,000.00 and required to refund $950.00 deposit; broker’s commission as a notary public revoked; charges against non-appearing salesperson dismissed for DOS’s failure to provide proof

104 DOS 02 DOS v. Barnett - disclosure of agency relationships; failure to cooperate with DOS investigation; unearned commissions; unlicensed activity; broker failed to provide agency disclosure form to landlord/client and prospective tenant; broker demanded and received a security deposit and a commission contingent upon approval of rental accommodation by HUD and commingled and converted said sums when approval was not obtained; broker makes false statements during DOS investigations; broker engaged in a regulated real estate transaction under an unlicensed name; broker failed to comply with negotiated settlement terms to refund $2,100, pay $500 fine and execute consent order; restitution ordered in the amount of $2,100, $500 fine; brokers license suspended until proof of compliance

972 DOS 02 DOS v. Elstein – deposits; DOS fails its burden of proof; proper business practices; unearned commission; broker refused prospective tenant’s demand for return of $200.00 deposit when repairs were not completed to apartment and a lease was not executed; broker illegally retained and converted deposit monies; DOS fails to establish that broker retained an unearned commission; broker ordered to refund $200.00 deposit and to pay $1,000.00 fine

53 DOS 03 DOS v. Clark – availing of license; disclosure of agency relationships; unearned commission; broker avails his license to salesperson where broker did not maintain, operate or supervise the operations of the office and did not supervise salespersons’ performance of regulated real estate brokerage activities; salesperson violates RPL §443 by failing to provide agency disclosure prior to entering into a listing agreement; broker violates 19 NYCRR §175.24(b) by failing to include explanation of the difference between an exclusive right to sell contract and that of an exclusive agency in the broker’s employment agreement; salespersons breached fiduciary duties of full and fair disclosure and of good faith and undivided loyalty when they intentionally withheld information from the principal of the fact that the potential purchaser was their daughter and when they gave the principal false information about the relationship between the salespersons and their daughter/buyer; breach of fiduciary duty of disclosure and affirmative misrepresentation of fact constitutes a fraudulent practice; salespersons deliberately and knowingly took unfair advantage of seller’s inferior expertise and lack of knowledge of market customs, bargaining power, and or available contractual options where seller, without question, listed the property for $150,000, sold the property for $133,500, and where 28 days thereafter salespersons’ daughter listed the property for $239,900; broker is not entitled to fee obtained as a result of wrongful conduct; restitution of $8,010 ordered; broker’s and salespersons’ licenses revoked

714 DOS 03 DOS v. Podolsky - fraudulent practice; unearned commission; vicarious liability; listing broker breached its fiduciary duties to its client when, in a flip transaction, the listing broker either misrepresented who the purchaser was or, when without clearly disclosing that the original purchasers were out of the picture, that the purchaser was substituted with a non-licensed corporate entity which was solely owned by the representative broker and that the unlicensed entity wished to assume the benefit of the bargain of the original purchaser; after obtaining a contract to purchase the listed property and after having advertised the property for resale, broker advised his client that the property was worth significantly less than its true value and what the broker resold the property for; corporate broker is responsible for the acts committed by its representative broker; corporate broker’s license and representative broker’s license suspended for three months

771 DOS 03 DOS v. Camino - disclosure of agency relationships; unearned commissions; unlicensed activity; vicarious liability; broker violates RPL § 442-c by having unlicensed CEO of corporate broker show and negotiate the rental of real property; failure to provide agency disclosure form; failure to return unearned commission due to the unlicensed activity of corporate officer; corporate broker responsible for the acts committed by its representative broker and its unlicensed chief executive officer; $2,000.00 fine and refund of unearned commission in the amount of $1,000.00

643 DOS 03 DOS v. Camino - failure to appear at hearing; unearned commission; brokers commission was unearned where lease transaction was properly cancelled as no rental had been effectuated; in setting penalty, ALJ considered facts that broker had previously been found to have demonstrated untrustworthiness for, among other things, failing to refund an unearned commission and was previously directed to pay a fine of $2,000.00; broker’s license suspended for one year, broker directed to refund the sum of $800.00

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

521 DOS 05 DOS v. NY Empire Real Estate - unearned commissions; advertising; salesperson breaches his fiduciary duties when, without calling it to the attention of his client, he changed the terms of an advertising expense rider and again when he demanded payment of such expenses upon the expiration of the listing contract; salesperson violates Real Property Law §442–a by directly bringing an action against the seller after the expiration of the listing contract for advertising expenses as such is within the scope of the statute; as a condition of retaining his license, salesperson may be required to grant seller an unconditional release from unlawfully obtained judgment; salesperson fined $2,000.00 and ordered to provide proof of release of judgment

975 DOS 06 DOS v. Ligon - failure to place deposit in escrow, unearned commission, failure to satisfy judgment retention of advance payment on commission not earned, rental never consummate

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

664 DOS 07 Matter of Jenkins- unlicensed brokerage activity; negotiation of rental and collection of rent; wrongful retention of unearned funds; failure to cooperate; referred to Attorney General for prosecution (RPL 441-e[2])

1373 DOS 07 Matter of Owner’s Club Realty Corp.- Broker; apartment rental; entitlement to commission upon bringing about meeting of the minds; improper use of rental agreement which misstates law in some situations; incompetency; $500.00 fine; dismissal of charges of retaining unearned commissions and requiring the signing of a statement allowing an unearned commission

1416 DOS 07 Matter of Dickson- broker; demand for $3,000 “termination fee” is demand for an unearned commission; breach of fiduciary duty; offer of property not authorized 175.10; improper advertising without identifying broker 175.25; $3000 fine and requirement of unconditional release of seller

1625 DOS 07 Matter of Harris- broker; unauthorized practice of law as to provisions of rider requiring legal expertise without attorney approval clause; unearned commission; commingling 175.1; untruthful testimony; $2000 fine and suspension until refunds $2500 deposit with interest

1856 DOS 07 Matter of Hansraj- fraudulent practices; revised contracts without seller consent; failure to disclose payments; unearned commissions; deposits; revocation

1956 DOS 07 Matter of Martinez- broker and attorney; supervision due to escrow violation; unlicensed practice of real estate brokerage; availing notary public commission; unearned commissions; revocation

2050 DOS 07 Matter of Iaboni- erroneous agency disclosure form; unearned commission; $1,000 fine and refund

2237 DOS 07 Matter of Blanchard- broker; improper commission agreement with provided for payment without commission being conditioned upon landlord granting legal possession of leased property; unlicensed activity; incompetency for engaging in management business without license for that entity; unlawful retention of commission by unlicensed entity; failure to cooperate; refusal of opportunity to settle; six month suspension and future suspension until proof of restitution of commission paid to unlicensed entity

2269 DOS 07 Matter of Dillon- broker; interim suspension; opportunity to appear with attorney; fraudulent practices; unauthorized transfer of title; unearned commission; revocation

2263 DOS 07 Matter of Giffin- broker; obligation to refund $7,400 commission when lease not effectuated; failure to provide copy of lease which complainant signed; partial rebate of commission is not improper commission splitting; 6 month suspension and until refund $7,400 plus interest

456 DOS 08 Matter of Slayton – broker; unlicensed activity before renewal; unearned commission; $2,000 fine and release of commission claim

1223 DOS 08 Matter of Scott – broker; failure to provide RPL 443 disclosure; misconduct in delaying possession of apartment constitutes grounds to forfeit commission; improper withholding of deposit refund; 6-month suspension and refund $2,115 deposit plus interest

23 DOS 09 Matter of Haskin – salesperson; unlicensed activity; reprimand and refund commission paid during period of unlicensed activity

143 DOS 09 Matter of Sebastian – broker; dismissal of charge of wrongful procurement of exclusive agency agreement; backdating documents §175.12; duplicate original documents; unearned fee; obligation to confirm whether there was existing buyer representation agreement; $1,000 fine; $2,000 fine for untrustworthy conduct in failing to confirm existence of buyer agency and subjecting client to unearned commission; restitution of judgment by confession

388 DOS 09 Matter of David – salesperson; failure of proof re: charge of failure to make refunds (testimony of cash refunds); improper holding out as licensed with former broker; dismissal of charge of unearned commission; restitution of deposits; $1,000 fine

640 DOS 09 Matter of Landetta – breach of fiduciary duties; unearned commission; failure to provide agency disclosure; unlicensed activity; failure to maintain escrow account; failure to cooperate with DOS; escrow account charge dismissed; $3,000 fine and refund of $300 plus interest

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

958 DOS 09 Matter of Cabrera – agency disclosure; unlicensed name; relocation of office without approval; failure to cooperate; unearned commission; $2,000 fine and refund of $1,800 plus interest

960 DOS 09 Matter of Moore – salesperson; unlicensed activity without knowledge of broker; agency disclosure; unearned commission; failure to satisfy judgment; revocation; no relicensure unless pay $530 judgment with interest

973 DOS 09 Matter of Sroka – unearned commission; failure to pay judgment; $500 fine or 2-month suspension; repay $2,020 judgment with charges against salesperson; dismissed for lack of proof

1027 DOS 09 Matter of Bryant – investigate rental of apartment without C/O; unearned commission; no relicensure without paying $1,872 with interest and fine of $1,000

Featured Content

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