8. Bankruptcy

48 DOS 96 Matter of DOS v. May - Administrative hearing may proceed ex parte where there is evidence of proper service of notice of the place, time and purpose of the hearing; automatic stay in Chapter 11 Bankruptcy proceeding precludes imposition of monetary damages and order of restitution but does not preclude suspension or revocation of license; breach of management agreement constituted breach of fiduciary duties of reasonable care and skill and licensee disregard of its obligations and failure to cooperate with principal demonstrated untrustworthiness and incompetence; where DOS fails to establish evidence of allegations in complaint and respondent is not present at hearing, complaint cannot be amended to conform to the proof and charge as to that allegation is dismissed; two month suspension

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

53 DOS 94 Matter of DOS v. Bennett - DOS has jurisdiction to determine charges brought during 2-year period during which licensee may renew; DOS bears burden of proof; failure to establish that monies not paid were required deposit; licensee had right to raise claim of valid reason for not paying promissory note and have bona fideadjudication in court (even if loses in court) licensee not untrustworthy for failure to pay judgment where complainant failed to establish he was able to do so; licensee not untrustworthy because of discharging judgment in bankruptcy

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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