LIEB BLOG

Legal Analysts

Thursday, February 02, 2017

Retired Attorneys can engage in real estate brokerage without a brokerage license

Retired Attorneys can engage in real estate brokerage without a brokerage license
On May 5, 2016, the Department of State was asked:

"[W]hether a 'retired' attorney is exempt from the licensing requirements imposed by the NY RPL."

The DOS opined that "licensure as a real estate broker or salesperson is not required if practicing as a 'retired' attorney because there is oversight by the Appellate Division for breaches of trust and confidence."

 The takeaway is that attorneys, even retired attorneys, need not be licensed by the DOS to broker transactions for compensation.
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Real Estate Salespersons MUST comply with zoning laws on their own property

Real Estate Salespersons MUST comply with zoning laws on their own property
On April 12, 2016, the Department of State was asked:

"As the law states a real estate professional must abide by all laws in the State of New York when a Real Estate Broker is conducting a real estate brokerage at a residential residence, zoned residential and in violation of building codes. In this situation, it is considered breaking the law under Article 12A?"

The Department of State opined that "a broker who violates a local zoning law in relation to his or her own property and transactions demonstrates untrustworthiness pursuant to Section 441-c of the New York Real Property Law ("NY RPL")."

As a takeaway, if you are licensed as a Real Estate Salesperson or Associate Real Estate Broker make sure your home is completely in compliance with local zoning (and your rental properties). By failing to comply with zoning laws, not only can you receive a citation from your City, Town or Village, but you can jeopardize your livelihood. 

Moving forward, all agents should hire land use counsel or an expeditor immediately to legalize those basements, dormers and pools. Don't risk your license to save some tax dollars.
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Real Estate Broker paying commission to Real Estate Salesperson's corporation

Real Estate Broker paying commission to Real Estate Salesperson's corporation
On March 10, 2016, the Department of State was asked:

"[what is] the procedure for a broker's payment to a salesperson or associate broker's corporation rather than to the salesperson or associate broker individually?  

 In addition, could you tell me whether said corporation can only be in the name of the salesperson or associate broker? 

 Finally, must the salesperson or associate broker be the only shareholder in the corporation or can several salespersons and/or brokers have a corporation together when, for instance, they are working as a team?”

 In reading Real Property Law §442, the DOS opined that it is permissible for a Real Estate Broker to pay commission directly to a Real Estate Salesperson's corporation, but ONLY where all shareholders of the corporation or members of the limited liability company are duly licensed and associated with the paying Real Estate Broker.

The takeaway is Real Estate Brokers are charged with confirming that associated Real Estate Salesperson's entities are solely owned by the Real Estate Salesperson(s) associated with the Real Estate Broker.

Moving forward, Real Estate Brokers should require an ownership affidavit setting forth all owners of the entity from any Real Estate Salesperson who requests direct payment to an entity where such affidavit should also provide an indemnification and hold-harmless coupled with the payment of legal fees and costs to the Real Estate Broker should the information be false and lead to damage to the Real Estate Broker.
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