Case of Interest - Douglas Elliman v. Tretter - Agency Disclosure

Summary: Appellate Division, 1st Department Case, discussing whether the absence of an agency disclosure from precludes a real estate agent from receiving her commission. The issue was side-stepped by the Court, which holds that a dual agency relationship didn't exist so we are left to speculate whether a commission could be earned if such a relationship had existed.

Advice: Get your agency disclosure forms signed on the first point of substantive contact because the question remains open whether you can collect a commission if you fail to get the disclosure completed. Additionally, its required by real estate license law to get an agency disclosure form completed; so to keep your license in good standing, you must get this done.

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Case Analysis:

Issue: Did real estate agent act as a dual agent and consequently was she required to disclose her divided loyalties and obtain the sellers' consent thereto on an agency disclosure form?

Claim: Real estate brokerage sought $70K brokerage commission.

Facts: Tretters, Mr. Tretter being an attorney, retained Douglas Elliman to sell their cooperative apartment. Douglas Elliman's agent, Lockwood, met prospective purchaser Zeitzer at an open house and showed approximately 5 other apartments to Zeitzer, her "customers". Zeitzer contracted to purchase Tretter's property. Contract price was $1.4 million with a 5% commission to the brokerage company. Sellers were solely responsible for the brokerage commission pursuant to the contract.

Finding of Fact: Lockwood did not act as a dual agent. While she had a signed exclusive agency agreement with the Tretters, she did not with the purchasers and she received no monies from them.

Dissent: There is an issue of fact whether Lockwood was a dual agent because Lockwood acknowledged in depositions that the was the "buyers' agent" among other facts such as their attorney referring to her as a dual agent.

As the Department of State says: Be Wary of Dual Agency

Thanks to our students for a great CLE in Bridgehampton last evening

I had a great time presenting our CLE Course: Property Wars last evening and wanted to thank all those who attended for being a great audience.

Cooperatives Apartments Be Careful

2 recent decisions speak to the duties Boards have in Cooperative apartments.

Fair Housing Act: Not only can a Cooperative violate the Fair Housing Act regardless of the Business Judgment Rule, but specifically you can't keep the single guys out so says the Federal District Court in Lax v. 29 Woodmere Blvd. Owners, Inc. While the Court did not yet decide for the Plaintiff, the Court did say that the allegations if proven can constitute a cause of action.

Price Floors: While there appears to be a trend that Cooperatives can set floors that apartments cannot be sold under based upon the Business Judgment Rule, be careful that the floor is reasonable (whatever that means) and that the Board has authority to set such a floor in the Cooperatives governing documents.

To be clear, the Business Judgment Rule says that Corporate Officers are not liable for their decisions and actions when they are made under authority and in a good faith furtherance of Corporate purposes.