The Southern District of New York reminded purchasers of real estate in Coppelson v. Serhant that real estate agents are, in fact, trying to sell real estate so they can earn a commission and will make statements to buyers intended to accomplish that goal. 

The plaintiffs, purchasers of an investment property in Manhattan, complained that Ryan Serhant misrepresented that the property would be worth over $5M in a short period of time and that that it was priced 20% lower than comparable properties. The court, in dismissing the case, reminded buyers that they can, and must, perform their own due diligence because sellers of real estate will always talk up how great their property is and because "few sellers will state that the property is priced at an unfavorable level and that it will decrease in value or has no real investment potential." This conclusion is obvious - brokers will engage in puffery to sell real estate and earn a commission, and the courts won't protect your naivete. Whether that is good for business or good for building relationships of trust is another question for another day. 

Another important takeaway from this case is the reminder that a broker's failure to follow the requirements of RPL §443 (e.g. improperly filling out an agency disclosure form) is not the basis for a lawsuit. This is something I encounter nearly every day - buyers discovering something unpleasant about their property after they close and then suing the broker for not telling them about it and for not disclosing that they represented the seller too ("the broker didn't tell me about the oil leak in the basement because they wanted their commission!"). Often there is not actually a dual agency relationship because it is perfectly fine for a broker to only represent the seller with the buyer remaining unrepresented, but many buyers believe the listing broker they met at the open house or showing represents their interests too (hence the intended purpose of the RPL §443 agency disclosure requirement). Regardless, the sole remedy for agency disclosure violations is regulatory action by the Department of State, not a lawsuit.

All of this begs the question, is the current state of regulatory enforcement sufficient to protect consumers from what they perceive as wrongful salesmanship and flat-out incorrect agency disclosures? If not, what would you change? 

The EEOC just released its Compliance Manual on Religious Discrimination and lack of religious faith is protected from discrimination at the workplace.

You hear that? Atheists & agnostics - you matter too!

Here is what the manual states:

Definition of Religion

Comment: Some commenters expressed concern that the draft did not make sufficiently clear that Title VII protects against discrimination based on a lack of religious faith.

Response: The Commission has made additions to reference repeatedly that discrimination based on a lack of religious faith is prohibited.

A 97 page report was just issued by the NYS Senate on persistent racial and ethnicity-related housing discrimination and this report is going to change the real estate brokerage industry in NYS forever. 

Are you ready? 

According to the report, housing discrimination has changed over the last hundred years from being overt to subvert. However, housing discrimination clearly still exists and something has to be done about it now. 

Would it surprise you to learn that in 2019 there were 28,880 reported complaints of housing discrimination in the USA? Again, twenty-eight thousand complaints!!!

Did you know that the precursor to the National Association of Realtors (NAR) required its members to discriminate as follows:

A Realtor should never be instrumental in introducing into a neighborhood a character of property or occupancy, members of any race or nationality or individuals whose presence will clearly be detrimental to property values in that neighborhood. 

While this overt discrimination is less prevalent today, the report explains that: 

Today, bad actors often use subtler forms of discrimination; they direct homebuyers of different apparent backgrounds toward different communities, impose more stringent financial requirements on people of color, and provide unequal services to clients based upon their race or ethnicity.

[S]ome real estate agents utilize subtle ways to discriminate, like racially coded guidance and disparate treatment in services offered.

In acknowledging that real estate brokers and agents are the gatekeepers for neighborhoods, the report makes the following categories of recommendations:

1. Develop a NYS Fair Housing Strategy
2. More Proactive Enforcement of Fair Housing Laws (i.e., testing, more funding, & data collection)
3. Licensing & Renewal Training Requirements (i.e., more training from better instructors for licensing & continuing education with a focus on implicit bias trainings)
4. Increased Penalties & Broader Accountability (i.e., $2K fines increased from $1K & managers responsible like brokers with increased experience requirements to qualify)
5. Standardized Broker Policies with Public (i.e., prospect identification, exclusive broker agreement requirements, & pre-approval for mortgages)
6. Internal Brokerage Policies (i.e., brokerages need updated policy manuals with fair housing statements & explanations of the consequences for violations)
7. State & Local Governments to Affirmatively Further Fair Housing (i.e., enforcement is everyone's responsibility) 
8. Brokers Must Open Offices in Communities of Color (i.e., 12 firms control 50% of listings, but only about 20% to 33% of the listings in minority communities)
9. More Diverse Brokerage Workforce (i.e., NAR's members are 80% white; need Diversity, Equity, & Inclusion initiatives to attract talent to the industry) 

There is very little truth in the old refrain that one cannot legislate equality. Laws not only provide concrete benefits, they can even change the hearts of men some men, anyhow for good or evil.

It's time to change from being part of the problem to being part of the solution. Are you ready?

In housing discrimination, you can't treat people differently in the terms, conditions, privileges, and/or availability of housing. 

Yet, you aren't just responsible for your intended acts of discrimination, known as disparate treatment discrimination. Instead, you are also responsible for your unintended acts that impact groups of people as a secondary effect, which is known as disparate impact discrimination.

Think about it this way, if you don't rent to women, as a policy, that is clearly an act of disparate treatment sex discrimination. However, if you don't rent to long-haired people, aren't you still impacting women in sex discrimination under a different name? That is called disparate impact discrimination.

As to disparate impact discrimination, President Biden just ordered HUD to make sure that the regulations on disparate impact discrimination is preventing practices with an unjustified discriminatory effect. 

Do you think that there should be disparate impact discrimination laws? If so, what do you think they should be? 

On Day 1 of President Biden's Term, he expanded our understanding of the Fair Housing Act by making clear that it includes protections against discrimination on the basis of gender identity & sexual orientation. 

See his Executive Order on Preventing and Combating Discrimination on the Basis of Gender Identity or Sexual Orientation for your full understanding.

As explained by the President, the US Supreme Court ruled in 2020 that employment discrimination laws, which expressly prohibit sex discrimination, also prohibit discrimination on the basis of gender identity and sexual orientation; and that the same reasoning behind the Supreme Court's ruling will now be applied to the Fair Housing Act's prohibition of discrimination in the sale and rental of housing across our nation. 

In fact, the Executive Order put all perpetrators on notice by stating that the government will issue plans, within 100 days, to effectuate its policy of enforcing these prohibitions against discrimination on the basis of gender identity or sexual orientation.

While many states, such as NY, and other locales, already prohibit gender identity and sexual orientation discrimination in housing, the Federal Government stepping in to enforce violations can change the game.

How will you change your business because of this Order?  

A homosexual detective was just given his chance to prove that he experienced workplace discrimination at a trial and recoup damages.

Here are his facts:

• His homophobic colleagues vindictively called other officers wherever he was stationed & told them to harass plaintiff because he was gay;
• 2 Sergeants constantly made homophobic slurs at civilians & gay officers in his presence; 
• He endured over a year of homophobic derision, harassment, and verbal abuse;
• He was singled out to do tasks, which his peers were not required to do, such as:
• He was repeatedly required to enter a holding cell, by himself, with prisoners still inside, while plaintiff carried metal and wooden cleaning implements. This was potentially dangerous, as plaintiff could have been overwhelmed & attacked by the prisoners. Other officers were not required to do it, as it was usually a task for the maintenance crew; 
• He was required to go on foot patrol alone during the midnight shift in dangerous areas at the 77th Precinct while other officers patrolled with partners;
• He was given extra work when he arrived on the job; and
• He experienced some new or escalated conduct after he started to fight the discrimination, which could be deemed retaliatory.

According to Business Insider, Dollar General is paying their employees to get the COVID vaccine, but is that legal? 

Back in 2017, the federal courts, in AARP v. EEOC, addressed the issue of paying employees for participation in wellness programs and found that both the Americans with Disabilities Act and the Genetic Information Nondiscrimination Act were violated because the incentives permitted rendered the programs not voluntary, as required by law. The incentive, at issue in the case, was "up to 30% of the cost of self-only coverage." 

How does that comport with what Dollar General is now doing? 

They are offering four hours of pay to their employees. 

Is that too much to make participation voluntary? 

Ironically, the Equal Employment Opportunity Commission is proposing a new regulation about this voluntary standard in the Federal Register for public comment. This new regulation proposes to change the 30% incentive limit (as addressed in the federal case above) to a de minimis incentive limit. In fact, the regulation gives examples of a permitted de minimis incentive, like a water bottle or modest gift card.

Isn't four hours of pay worth a lot more than a water bottle? Is Dollar General going to get sued for this program. What do you think? 

How do you get your Paycheck Protection Program Second Draw Loan? 

The rules are out now and here are the top 10 rules that you should know:

1. Last day to apply & receive a new PPP is March 31, 2021;
2. To qualify, you must use or will use full amount of your First Draw PPP loan on or before disbursement of second loan; 
3. SBA may forgive up to the full principal loan amount; 
4. Interest rate is 1%; 
5. Maturity is 5 years; 
6. Borrower must have 300 or fewer employees;
7. Borrower must have experienced a revenue reduction of 25% or greater in 2020 relative to 2019 (quarterly comparison); 
8. When comparing 2020 relative to 2019, any forgiveness amount of a First Draw PPP Loan that a borrower received in calendar year 2020 is excluded from a borrower's gross receipts (not disqualified from the second loan because of the first one);
9. Each hotel, restaurant, or news organization with a location owned by a parent business in a separate legal business entity and employing not more than 300 employees is permitted to apply for a separate PPP loan; and
10. Maximum loan amount = 2.5 months of the borrower's average monthly payroll costs.

• You can get a second loan
• What the qualifications are to apply
• What size businesses can apply
• How this works with taxes
• If the first loan needs to be forgiven to get the second loan

During the last two weeks of his Presidency, Trump's Department of Labor just revised the test for whether an individual is an independent contractor or employee under the Fair Labor Standards Act. 

This is significant because employees are entitled to minimum wage and overtime whereas independent contractors are not. 

If an employer misclassifies a staff member as an independent contractor when such staff member should be classified an employee, it can result in a devastating blow to the employer who will be exposed to statutory penalties, back pay, attorneys' fees and more. 

Now, Trump's government is using the "economic reality" test to determine employee status. 

According to the government, "the ultimate inquiry is whether, as a matter of economic reality, the worker is dependent on a particular individual, business, or organization for work (and is thus and employee) or is in business for him- or herself (and is thus an an independent contractor)." 

Under this test, the Department of Labor or a Court hearing the case will look to five distinct factors to answer the test. However, two of those factors now have more probative value in answering the question than the rest. These two key factors are:

1. The nature and degree of the worker's control over the work; and
2. The worker's opportunity for profit or loss. 

We are updating our platforms for 2021 and are now encouraging unrestricted commenting. 

Say what you want and share as you feel comfortable. This platform is for you - the business community. 

We promise to do our best to answer your questions and participate in the discussion.

Please know that there is no attorney / client relationship established by participating in this blog and it is a public, non-confidential, forum. So, watch what you say because the world will know. No spam, discrimination, or harassment will be tolerated and all are welcome.

Together, we are going to reemerge as a stronger business community in 2021. 

Here is to a great year!

Does it shock you to learn that from January through October 2020, of the 13,527 examinees, only 59% passed the Real Estate Salesperson exam?

Brokers did a little better - of the 1,098, 66% passed.

Isn't that low? 

How do we get brokers to pass at a higher rate?

Would it help if the state released past exams? That makes sense, doesn't it? How can you study otherwise?

On December 28, 2020, Governor Cuomo signed the COVID-19 Emergency Eviction and Foreclosure Prevention Act of 2020 (“Act”). Essentially, the Act provides tenants with an opportunity to submit a Hardship Declaration, which stays most evictions until May 1, 2021. The second part of the Act which provides for mortgage foreclosure relief is discussed in a separate blog HERE.

The Details:

• Essentially, once a tenant provides a Hardship Declaration, the eviction is stayed until May 1, 2020.
• The Act applies to residential nonpayment AND holdover eviction proceedings.
• The Act does not apply to tenants of seasonal rentals with a primary residence to return to and tenants who infringe on other tenants' use and enjoyment of the premises or pose a substantial safety hazard to others, but only upon the landlord proving same.
• To qualify, a tenant must provide the Hardship Declaration and must declare that they are suffering a financial hardship, such as:
• Significant loss of income
• Increase in necessary out-of-pocket expenses due to COVID-19
• Childcare responsibilities or care for the elderly, disabled, or sick family member
• Moving expenses and difficult relocating
• Other circumstances negatively affecting the ability to find meaningful employment
• Vacating the premises and moving into new permanent housing poses a significant health risk
• Sample hardship declarations will be available on the Office of Court Administration website.
• New Eviction Proceedings - upon a Tenant's submission to the landlord of the Hardship Declaration, the landlord is prohibited from commencing any eviction proceeding until May 1, 2021. The landlord can commence an eviction proceeding if the landlord files the following:

On 12/28/2020, the COVID-19 Emergency Eviction and Foreclosure Prevention Act of 2020 became law. 

This law effectively stops all residential foreclosures in NYS until May 1, 2021, but it does nothing about the borrower's obligation to repay their loan.  

Do you think that makes sense?

Isn’t that just delaying the inevitable foreclosure crisis?

Shouldn't something be done about the loan too? 

Here is how the law works – a homeowner needs to submit a hardship declaration to their lender and magic, no more foreclosure until May.

The Details:

o   Either the court or lender (depending on foreclosure status) must provide the borrower with a statement explaining the law.

o   To qualify, a borrower must be suffering a financial hardship including, such as

§  A significant loss of household income;

§  Increase in necessary expenses;

§  Childcare responsibilities;

§  Moving expenses; and/or

§  Other circumstances negatively affecting the borrower’s ability to find meaningful employment.

o   Sample hardship declarations will be available on the Office of Court Administration website.

o   New Foreclosures – If the borrower does not provide the declaration, the lender is required to file all sorts of documents to commence a foreclosure proceeding, including:

§  Affidavit of Service of the Hardship Declaration in English and in the borrower’s primary language.

§  Affidavit of Service of RPAPL 1303 and 1304 notices; and

§  Affidavit of the Petitioner/Petitioner’s agent attesting that the Petitioner or his agent did not receive a Hardship Declaration from the Borrower.

o   Existing Foreclosures – Paused (stayed) for at least 60 days to provide the borrower time to complete and submit the hardship declaration.

o   This also stops foreclosure sales if the case already was decided by the court in a judgment.

Make no mistake, this new law does NOT excuse borrowers from paying the mortgage. 

So, what is the point? 

Isn’t it misleading borrowers into digging an even bigger financial hole?

What do you think? 

The New York City Council recently passed two (2) bills which, once enacted, will end "at will" employment (employees can be fired for any reason with or without cause) for employees in the NYC fast food industry. Rather, employers in the fast food industry may only lawfully terminate employees for "Just Cause" or for "Bona Fide Economic Reasons" as explained below:

1)  "Just Cause": New York City Council Bill,  Int. No. 1415-A  prohibits fast food industry employers in NYC from terminating an employee's employment, who has been employed longer than thirty (30) days, or reduce their weekly hours by more than 15% without "Just Cause" which is defined as: "failure to satisfactorily perform job duties or misconduct that is demonstrably and materially harmful to the fast food employer’s legitimate business interests." 

Factors used to determine whether an employee was terminated for Just Cause include: whether the employee violated the employer's policy, the employee's knowledge of the applicable rule/policy, training provided to the employee, whether an adequate investigation was conducted and whether progressive discipline was reasonably applied. Notably, absent egregious conduct by the employee, a termination will not considered to be for Just Cause unless the employer has a pre-established written policy on progressive discipline and can demonstrate that it is reasonable and was properly applied with respect to the terminated employee (employers may not rely upon discipline issued more than a year before the termination). Employers must provide the employee, within five (5) days of termination, with a written explanation of all the reasons for termination of employment.

2) "Bona Fide Economic Reasons": New York City Council Bill, Int. No. 1396-A permits fast food industry employers to terminate an employee or reduce their weekly hours by more than 15% for "Bona Fide Economic Reasons" which is defined as "the full or partial closing of operations or technological or organizational changes to the business in response to the reduction in volume of production, sales or profit." An employer's decision to terminate an employee based on Bona Fide Economic Reasons must be supported by the employer's business records. If the employer does possess a Bona Fide Economic Reason for terminating employees, employees must be terminated "in reverse order of seniority." In addition, an employer may not hire a new employee or increase a current employee's hours unless the employer first makes a reasonable effort to reinstate any employees terminated for economic reasons within the prior twelve (12) month period. 

Aggrieved employees may bring a civil action for discharges in violation of these bills or, after January 1, 2022, may bring an arbitration proceeding. Employers bare the burden of proving that the termination was for Just Cause or for Bona Fide Economic Reasons. If the employer fails to meet its burden, the employee may be reinstated, awarded backpay, reasonable attorneys fees and punitive damages. The employer may also be assessed civil penalties. 

It is imperative that fast food industry employers consult with counsel and create/modify applicable polices to ensure they are in compliance with these new bills prior to the effective date (180 days after enacted). 

Back on October 11, 2019, the NYS Human Rights Law was modified with a new standard for actionable employment sex discrimination. The new standard was intended to align NYS more closely with the NYC Human Rights Law. 

The new standard is that conduct that exceeds "petty slights or trivial inconveniences" is actionable. 

As to what that means, the NYC law was interpreted by the Second Circuit Court of Appeals (Federal Court) in Mihalik v. Credit Agricole Cheuvreux North America, Inc., which is the leading case. 

Now, we have a leading case interpreting the NYS law as well by a State Court. 

On December 15, 2020, the NYS Appellate Division decided Franco v Hyatt Corp. and found the following allegations to constitute conduct that exceeds petty slights or trivial inconveniences:

1. Supervisor made repeated sexual advances towards him, including reaching out to touch his face and holding his hand in an elevator while they were alone.
2. Supervisor also initiated conversations that made him uncomfortable, telling him she had a "crush" on him, telling him she was single and twice inviting him to her home to repair "a hole" in her apartment. 
3. Supervisor said she had a tattoo, adding that "You have to undress me to see it." 
4. After victim rebuffed advances, supervisor brought him to the Human Resources manager's office to complain about his work product and that she solicited complaints about him from other coworkers.

On 12/23/2020, the NYS Department of State proposed mandating fair housing education as a condition of license renewal for appraisers and assistant appraisers.  

The proposed regulations would be at 19 NYCRR 1107.2(b), 19 NYCRR 1107.33(a), (b), and (c), and 19 NYCRR 1107.34. 

In substance, the regulations would require that every licensed or certified appraiser complete an approved course of study in Fair Housing and Fair Lending every two years with the following course topics: 

a) 7 Hour Introduction to Fair Housing and Fair Lending Instruction

b) 4 Hour Update on Fair Housing and Fair Lending Instruction

Now, we are in the public comment period until 02/21/2021. To make your comments, email the regulator at david.mossberg@dos.ny.gov

While we are very encouraged by increased fair housing and anti-discrimination trainings being required in NYS, we are concerned with how specific the subtopics of education are and how they offer no explanation as to what exactly the government is looking for within each subtopic. We are also concerned about how this requirement will impact federal government contractor appraisers who must follow Executive Order 13950 on Combating Race and Sex Stereotyping and are therefore restricted on engaging in trainings on unconscious bias or implicit bias to the extent that "it teaches or implies that an individual, by virtue of his or her race, sex, and/or national origin, is racist, sexist, oppressive, or biased, whether consciously or unconsciously," per the US Department of Labor. We hope that these issues will be addressed before this regulation is finalized. 

To the specific subtopic requirements, under topic a), the subtopics are as follows:

(1) Fair housing, fair lending requirements, and the history of lending 2 hours

(a) What is fair housing?

(b) What is fair lending?

(c) Roadblocks to fair housing/lending

(d) Federal laws Civil Rights Act of 1866

Civil Rights Act of 1964 Fair Housing Act of 1968

Supreme Court

The Housing and Community Development Act of 1974

The Fair Housing Amendment Act of 1988

Other legislation

- Community Reinvestment Act

- Equal Credit Opportunity Act

- Home Mortgage Disclosure Act

- Real Estate Settlement Procedures Act American Disabilities Act

(ADA)

(e) New York State Law - Executive Law includes the Civil Rights

Law of the State (NY Human Rights Law - Article 15)

- Additional protected classes; age and marital status

- Includes residential property, land commercial property and credit

transactions

(f) Local Regulations

(g) Exemptions and Exceptions

- Senior Citizen Housing

- Drug users and alcohol abusers

- Two family exemption

(h) USPAP/FIRREA

(i) Enforcement and Duties

-U.S. Department of Justice

-Department of Housing and Urban Development (HUD)

-New York State Department of State, Division of Licensing

-New York State Division of Human Rights

-Administrative Law Judges

-Federal and State Courts

-Responsibilities of individual appraisers

(j) Penalties New York State Federal Government

(2) Development of appraisal (Standard 1 USPAP) 1.5 hours

(a) Bias and discrimination in the analysis in development

(b) Documentation of sources

(c) Secondary market guidelines Fannie Mae, Freddie Mac, HUD,

VA

(3) Reporting of appraisal results (Standard 2 USAP) 1.5 hour

(a) Bias and discrimination in the report

(b) Documentation of sources

(c) Secondary market guidelines Fannie Mae, Freddie Mac, HUD,

VA

(4) Case studies 2 hours

(a) Neighborhood issues

(b) Improvement issues

(c) External obsolescence

(d) Conscious and Unconscious bias

Under topic b), the subtopics are as follows:

(1) Fair housing, fair lending requirements, and the history of lending 1 hour

(a) What is fair housing?

(b) What is fair lending?

(c) Roadblocks to fair housing/lending

(d) Federal laws Civil Rights Act of 1866

Civil Rights Act of 1964 Fair Housing Act of 1968

Supreme Court

The Housing and Community Development Act of 1974

The Fair Housing Amendment Act of 1988

Other legislation

- Community Reinvestment Act

- Equal Credit Opportunity Act

- Home Mortgage Disclosure Act

- Real Estate Settlement Procedures Act American Disabilities Act

(ADA)

(e) New York State Law - Executive Law includes the Civil Rights

Law of the State (NY Human Rights Law - Article 15)

- Additional protected classes; age and marital status

- Includes residential property, land commercial property and credit

transactions

(f) Local Regulations

(g) Exemptions and Exceptions

Senior Citizen Housing

Drug users and alcohol abusers

Two family exemption

(h) USPAP/FIRREA

(i) Enforcement and Duties

-U.S. Department of Justice

-Department of Housing and Urban Development (HUD)

-New York State Department of State, Division of Licensing

-New York State Division of Human Rights

-Administrative Law Judges

-Federal and State Courts

-Responsibilities of individual appraisers

(j) Penalties New York State Federal Government

(2) Development of appraisal (Standard 1 USPAP) 1 hour

(a) Bias and discrimination in the analysis

(b) Documentation of sources

(c) Secondary market guidelines Fannie Mae, Freddie Mac, HUD,

VA

(3) Reporting of appraisal results (Standard 2 USAP) 1 hour

(a) Bias and discrimination in the report

(b) Documentation of sources

(c) Secondary market guidelines Fannie Mae, Freddie Mac, HUD,

VA

(4) Case studies 1 hour

(a) Neighborhood issues

(b) Improvement issues

(c) External obsolescence

(d) Conscious and Unconscious bias