The real estate industry is undergoing seismic changes, and the recent NAR Sitzer lawsuit has turned the world of real estate commissions on its head. Whether you’re a broker, an agent, or someone looking to buy or sell a home, understanding these changes is crucial to navigating the new landscape. 

The Landmark Sitzer Settlement: What Happened?

The NAR Sitzer lawsuit has fundamentally altered how real estate commissions are structured and negotiated. In essence, the lawsuit challenged the traditional cooperative compensation rule that caused sellers to pay commissions to both their own broker and the buyer’s broker through required fee sharing. This practice was deemed anti-competitive by a court, leading to a massive settlement and a shift in the industry.

What Does This Mean For Brokers and Agents:

The traditional model of commission splitting is no longer guaranteed. Brokers must now negotiate their compensation separately from the other side of the transaction. This change means that you need to be more strategic in how you structure your agreements and ensure that your clients understand the value you bring to the table.

What Does This Mean For Homebuyers and Sellers:

Navigating the New Rules:

With these changes, staying informed and adaptable is key. Brokers need to understand the new legal requirements and adjust their practices accordingly. Here’s what you need to know:

• Contractual Obligations: Understanding the nuances of buyer brokerage agreements is more important than ever. Ensure that your contracts are clear and that both parties understand their responsibilities.
• Negotiation Strategies: With the industry moving away from the traditional cooperative compensation rule, it’s essential to develop new strategies for negotiating commissions and concessions. This is where your expertise as a broker can really shine.

Dive Deeper with The Lieb Cast Podcast:

For an in-depth breakdown of these changes and how they will impact your business, don’t miss our latest episodes of The Lieb Cast:

•  Big Changes in Real Estate Commissions: What You Need to Know: Real Estate Brokerage Attorney Andrew Lieb discusses the NAR Sitzer lawsuit and its implications for both buying and selling brokers. Find out whether you’ll pay more or less in commissions and how to hire a broker in this new reality.
• The New Reality of Real Estate Negotiations: Factoring in Commissions for Net Numbers and Concessions: Attorney Andrew Lieb and his legal team explore how brokers must adapt to new commission structures and the importance of understanding contractual obligations in today’s market.

Broker Continue Education:

To stay ahead of the curve, we highly recommend enrolling in our Compensation Post-NAR Sitzer Lawsuit: This 2.5 credit CE course satisfies the recent legal matters topical requirement for NY real estate salespersons and brokers.

In this on-demand video course, Attorney Andrew Lieb will guide you through:

• The details of the Sitzer case and its implications for real estate commissions.
• Changes to the NAR Cooperative Compensation Rule.
• Best practices for structuring your client relationships and transactions within the new legal framework.

This Continuing Education course is an essential resource for any real estate professional serious about understanding and profiting from the post-Sitzer commission landscape.

Stay informed, stay compliant, and stay competitive with Lieb School and The Lieb Cast!

In New York all real estate licensees (real estate salespersons, brokers, and associate brokers) must receive 22.5 hours of continuing education every 2 years to stay licensed. Part of the requirement is a 2 hour class on cultural competency. 

Lieb School offers a web-based video (on-demand) class that satisfies the NY continuing education requirement of cultural competency. This course also satisfies the cultural competency requirement to obtain a broker's license. 

To learn more about and register for the Cultural Competency class CLICK HERE. 

For more information on our on-demand real estate continuing education courses and $99 license renewal package CLICK HERE. 

All Lieb School courses are instructed by Attorney Andrew Lieb. 

Recent legislation revising the Real Estate Property Law regarding the qualifying education requirements for real estate brokers was recently adopted.  Effective September 21, 2022, all individuals applying for a real estate broker license must complete two hours of instruction pertaining to cultural competency. 

In order to satisfy the new education requirements, broker applicants will be allowed to submit proof of completing a 2-hour continuing education course on cultural competency.

Please note: Effective December 21 ,2022, the 45-hour broker course will increase to 75 hours and includes cultural competency training.

Lieb School offers the 2 hour cultural competency course. You can register for it here. 

5. CAN A LANDLORD’S AGENT COLLECT A “BROKER FEE” FROM THE PROSPECTIVE TENANT? No, a landlord’s agent cannot be compensated by the prospective tenant for bringing about the meeting of the minds. NY RPL § 238-a(1)(a) provides, in part, “no landlord, lessor, sub-lessor or grantor may demand any payment, fee, or charge for the processing, review or acceptance of an application, or demand any other payment, fee or charge before or at the beginning of the tenancy, except background checks and credit checks….” The fee to bring about the meeting of the minds would be a “payment, fee or charge before or at the beginning of the tenancy” other than a background or credit check as provided in this section. Accordingly, a landlord’s agent that collects a fee for bringing about the meeting of the minds between the landlord and tenant (i.e., the broker fee) from the tenant can be subject to discipline. 

It is well settled that “[a]n agency's interpretation of its own regulation ‘is entitled to deference if that interpretation is not irrational or unreasonable’” &

“the question is one of pure statutory reading and analysis, dependent only on accurate apprehension of legislative intent, there is little basis to rely on any special competence or expertise of the  administrative agency and its interpretive regulations... And, of course, if the regulation runs counter to the clear wording of a statutory provision, it should not be accorded any weight.”

50% in 3 Months 

248 in 3 months

• 121 closed
• 2 withdrawan
• 2 duplicates
• 19 civil matter
• 9 resolved
• 8 no violation
• 24 no jurisdiction
• 11 insufficient evidence
• 43 were holds placed on licensee's record to address brefore renew
• 6 were referred to counsel for a hearing

• Notification of Fair Housing laws: All prospective buyers, renters, sellers, and landlords receive the disclosure on fair housing and New York State Human Rights Law as furnished by the Department of State (similar to agency disclosure form, but with broader application). It must also be available at every open house or real estate showing conducted by a real estate professional. This will be known as 19 NYCRR 175.28.
•  Posting of Fair Housing laws: Real estate brokers must also display and maintain at every office a notice highlighting the Human Rights Law’s protections and how complaints may be filed. It must be visible from the sidewalk or another conspicuous place and must also be displayed on all websites created and maintained by real estate brokers, salespersons and teams. The notice must also be posted at every open house conducted by a real estate professional. This will be known as 19 NYCRR 175.29. 
• Video recording and record preservation: All entities approved to provide fair housing and/or discrimination training must record video and audio of every course in its entirety and must keep the recording for 1 year following the date the course was provided. This will be known as 19 NYCRR 177.9.

• 3 hours on fair housing &/or discrimination
• 2.5 hours on ethical business practices
• 1 hour on recent legal matters governing the practice of real estate brokers and salespersons in New York, which may include statutes, laws, regulations, rules, codes, Department of State Opinions and Decisions, and Court Decisions 
• 1 hour on the law of agency (2 hours in the initial 2-year cycle)

• Step 1 - Ask the homeowner the nature of the lawsuit on the property.
• Step 2 - Inquire if you can talk to the homeowner's attorney to learn whether the lawsuit will be an impediment to selling the property (e.g., a specific performance lawsuit by a prior purchaser can make it impossible to sell the house whereas a foreclosure lawsuit with a house with equity remains a viable sale and a foreclosure lawsuit with a house without equity can be sold as a short sale).
• Step 3 - Assuming the lawsuit is a foreclosure, determine when the lawsuit was filed with the county clerk because if it was years ago its going to be very hard to sell the house before the auction (i.e., you can sell up until the auction as long as the seller can payoff the loan or if the lender takes a short payoff) and the homeowner likely defaulted on the lawsuit (i.e., they lost for inaction).
• Step 4 - If it is a foreclosure, help the homeowner to order payoff letters from their lenders in order to ascertain the precise amount owed (i.e., its not just the loan, but also the penalties, interest and attorneys' fees that are owed when the property is in foreclosure).  
• Step 5 - Workup a brokers' price opinion for the house as a distressed sale.
• Step 6 - Calculate closing costs for your seller.
• Step 7 - Determine if the seller has enough equity to close without dipping into their own pocketbook (i.e., compare the BPO with the payoffs and the closing costs). 
• Step 8 - If there is enough equity, list the house fast; if not, advise the seller that you can only list the property as a short sale (i.e., subject to bank approval with a short payoff).

To learn about foreclosure / short sales / Lis Pendens and more - take our CE course, Foreclosure & Short Sales ONLINE.

• Revocation
• Suspension 
• $1,000 fine PER violation 
• Censure 
• Disgorgement of commission + interest 
• You get charged with untrustworthiness & incompetency in the practice of real estate brokerage in the state of NY. 

Click Here to Register for the $99 Real Estate CE Package