Licensing Regulatory Changes

Beginning in 2010, NYSAR undertook a review of the regulations contained in Title 19 of the New York Codes, Rules and Regulations (NYCRR).  As a result of the review process, it was determined that a number of amendments were appropriate.  Since that initial review, eleven regulations (including those below) were amended as a result of NYSAR’s efforts.  On January 4, 2017, the last of the proposed amendments to the regulations were published under a “Notice of Adoption” in the NYS Register making them effective immediately. 

The amended regulations can be found in title 19 of the NYCRR and were agreed to by NYSAR, the Real Estate Board of New York (REBNY) and the Department of State (DOS) and approved by the State Board of Real Estate.  Many of the regulations that were amended were somewhat dated as they were initially approved over fifty years ago, during the 1960’s.  The new amended regulations take into account changes in the industry, prior DOS decisions interpreting the regulations as well as general housekeeping.  Below, please find the amended text (bold, underline, italics) and a brief explanation as to the effect of the amendment. 

19 NYCRR §175.1 Commingling money of principal

The original regulation called for the deposit of consumer funds as “promptly as practicable.”  Subsequently, in 1991 the DOS issued a decision (DOS v. Baramonde, 48 DOS 91) where “as promptly as practicable” was interpreted to be the next business day.  This was problematic for many brokerages as depositing such funds by the next business day was logistically impossible.  Under the amended regulations deposits may be made up to three business days following the receipt of the funds by the licensee.  Brokers must be sure the funds are safeguarded in the event they are not deposited immediately upon receipt.  As a best practice, brokers should implement an office policy setting forth what qualifies as ‘safeguarding’.  It is foreseeable that “safeguarding” will be interpreted by the DOS as meaning under “lock and key”.  Stapling or clipping the check inside of the transaction folder does not constitute “safeguarding” unless the folder is then placed under “lock and key”.  There is an exception to the regulation when the escrow agreement requires a longer time period or a condition to occur before the deposit is made.  It should be understood that the exception only applies to those escrow agreements that dictate specific conditions under which an escrow deposit shall be made.  For more information please see New York State REALTOR magazine, September/October 2016 DOS clarifies exception to escrow deposit regulation and decision.  

“A real estate broker shall not commingle the money or other property of his principal with his own and shall at all times maintain a separate, special bank account to be used exclusively for the deposit of said monies and which deposit shall be made within three business days. Until such time as the money is deposited into a separate, special bank account, it shall be safeguarded in a secure location so as to prevent loss or misappropriation. Said monies shall not be placed in any depository, fund or investment other than a federally insured bank account. Accrued interest, if any, shall not be retained by, or for the benefit of, the broker except to the extent that it is applied to, and deducted from, earned commission, with the consent of all parties.”

19 NYCRR §175.7 Compensation

The original regulation required the knowledge and consent of all parties to the transaction if a broker was to be compensated by more than one party.  The regulation was amended and only required such disclosure to the broker’s client.  This requirement coincides with an agent’s fiduciary obligations to make full disclosure to their client.  No such obligation exists for the other parties to the transaction and as such, those requirements were removed.

“A real estate broker shall make it clear for which party he is acting and he shall not receive compensation from more than one party except with the full knowledge and consent of the broker’s client.”

19 NYCRR §175.25(d) Advertising-Business Cards

When the advertising regulations were first approved in 2013, ‘license type’ was inadvertently omitted as a requirement for business cards.  During the drafting phase, it was the intent of all interested parties to have such information included.  This amendment merely adds ‘license type’ as a requirement on business cards.

“(2) Notwithstanding subdivision (c) of this section, business cards must contain the business address of the licensee, license type, and the name of the real estate broker or real estate brokerage with whom the associate real estate broker or real estate salesperson is associated. All business cards must also contain the office telephone number for the associate real estate broker, real estate salesperson or team.”

19 NYCRR §176.3(a) Subjects for study—real estate salespersons

As a result of recent developments affecting the safety of licensees, 1 hour of licensee safety was proposed as part of the initial Real Estate Salesperson course.  The hours required for “Property Insurance” for the initial Real Estate Salesperson Course was reduced from 2 hours to 1 hour and a new topic “Licensee Safety” was added to the curriculum in place of the one hour that was removed.

“Subject Matter: Hours:

Property Insurance ........................................... 1

License Safety ........................................... 1

19 NYCRR §177.3(g) Request for approval of course of study in classroom setting

Pursuant to the amendment, licensees who were required to complete Continuing Education could only select courses that were at least 3 hours in length as that was the minimum length of a CE course.  NYSAR explored the requirements of other professions that required Continuing Education and found that they permitted such courses to be one hour in length (ex: attorneys).  This was advantageous for those professions as they could have a breakfast or lunch of knowledge for one hour awarding continuing education credit to the attendee.  Under the amended regulation, Continuing Education courses can be one hour in length.

“a detailed outline of the subject matter of each course or seminar containing at least 22½ hours of instruction, or of each course module containing at least one hour of instruction, together with the time sequence of each segment thereof, the faculty for each segment, and teaching techniques used in each segment;”


19 NYCRR §177.7 Computation of instruction time

Prior to the amended regulation, Continuing Education courses had a different definition of ‘one hour’ than Real Estate Broker and Salespersons courses.  Now, all courses compute one hour as 50 minutes of instruction time and 10 minutes of a built-in break.  Schools are prohibited from using the 10-minute break(s) to shorten the end time of the course.  In other words, a three hour course has 30 minutes of built in breaks.  The school would be prohibited from having the break time at the end of the course thereby permitting attendees to leave prior to the conclusion of the three hours.

“To meet the minimum statutory requirement, attendance shall be computed on the basis of an hour equaling 50 minutes.”

Brokers should be aware of the amended regulations and the impact they may have on their business as well as associated licensees.  Questions about the amended regulations can be answered by one of the attorneys staffing the NYSAR Legal Hotline.  The Legal Hotline is a free service for NYSAR members and is available Monday-Friday from 9:00am-4:00pm at 518-436-9727.

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