Key Requirements Under the Bill
Under the Bill, a Buyer's Broker Agreement (BBA) must contain the following:
(a) Clearly and conspicuously contain the following disclosure: "Compensation is not set by law and is fully negotiable."
(b) The name, address and contact information for all parties to the agreement;
(c) The length of the agreement including the length of any condition under which the real estate broker may still have a claim for compensation after the agreement expires;
(d) The type of agency relationship between the buyer and the real estate broker; and
(e) The terms of compensation, including:
(i) The amount the buyer agrees to compensate the real estate broker;
(ii) How the amount of compensation will be determined;
(iii) When compensation is earned by the real estate broker;
(iv) When compensation is due to the real estate broker;
(v) The consent of the buyer if the real estate broker will share any compensation with another broker;
(vi) The consent of the buyer if the broker will be requesting any compensation from another party; and
(vii) The consent of the buyer if the broker will be compensated by more than one party.
Potential Legal Conflict: Statute of Frauds
Although transparency is a worthy goal, this bill raises legal questions. Notably, it may conflict with the Statute of Frauds under GOL § 5-701(a)(10), which exempts licensed real estate brokers and salespersons from the written contract requirement. Additionally, duplicating agency disclosures, first in the statutory disclosure form and again in the BBA - could be viewed as superfluous and if they conflict, real issues could emerge.Why Brokers Should Pay Attention
While this bill hasn't advanced in the legislature and is not law yet, it's a clear signal of where things may be headed in response to commission related scrutiny across the industry. Smart brokers can use this bill as a template to proactively strengthen their buyer's brokerage agreements, improve transparency, and minimize legal risk.📞 Need Help Drafting or Reviewing Your Buyer Broker Agreement?
The proposed legislation may not be law yet - but smart brokers get ahead of compliance.
Contact Lieb at Law, P.C. to review your current agreements or create custom templates that protect your commissions and meet evolving legal standards.
