Real Property Special Edition- The Suffolk Lawyer 2017

2017 is all about change. With a new Republican administration in the White House and a Republican Congress we will experience many changes in statutes, regulations and public policy throughout 2017, which will affect real estate transactions, litigation and our counsel to our clients related thereto. Our clients will have changed perspective and ever-changing needs. While not all change is good, it’s healthy to accept change and embrace it, regardless of one’s personal politics.

As an attorney, change is an opportunity, and those of us who best navigate change will emerge as the leaders of our profession as new laws require new legal leaders. Yet, to leverage change we must first have a firm grasp of the current state of the law. This special section in The Suffolk Lawyer delves into what is, to what will be in real estate law. We address client management, complex niche transactions, litigation incident to transactions, solutions to the foreclosure crisis and we even shed some light on the new administration as it relates to housing.

In this edition Kenneth J. Landau, Esq. sets the tone by giving us a new take on the KISS Principle as it relates to real estate transactions in his article “Give Your Real Estate Clients (A) K.I.S.S.” Then, the team of Jordan Fensterman, Esq., Howard Fensterman, Esq., and Andrew Kasman, Esq. provides instruction to the practitioner on the crossroads of health law and real estate in “Nursing Home Transactions.” Thereafter, Dennis Valet, Esq. sheds some light on claims against real estate brokers that typically result from a case of buyer’s remorse in “Caveat Emptor and Why You Shouldn’t Sue That Real Estate Broker.” Next, past Real Property Committee Chair Irwin Izen, Esq. educates the bar on a recently enacted statute that charges the New York Mortgage Agency to both create and administer the New York Community Restoration Fund in “More Help for Distressed Homeowners.” Lastly, Sabine Franco, Esq. sheds some light on the nominated HUD Secretary, Ben Carson, in “Expectations for HUD.”

These articles are designed to ground us, educate us and inspire us. They are the foundation of what is today because without learning about today we cannot be prepared to leverage tomorrow. In my fifth year as the Special Section Editor for Real Property, I need to thank our Editor-in-Chief, Laura Lane, who has made this all possible. Thank you to Ms. Lane and to all our writers. I hope that you enjoy this edition.   Andrew Lieb, Esq. 

Click here for the full edition in The Suffolk Lawyer 

Caveat Emptor and Why You Shouldn't Sue That Real Estate Broker

When the discovery of a latent defect in a newly purchased home triggers a severe case of buyer’s remorse, the real estate brokers involved in the transaction often find themselves in the crosshairs. The erroneous expectation is that these licensed professionals hired for the purpose of bringing two parties together in a meeting of the minds are the guarantors of a problem-free transaction. In reality, a real estate broker’s liability is limited to the duties owed to the complaining party. Some of these duties are derived from general common law negligence and agency principles, while others are specific to real estate brokers by way of statutes, regulations and administrative decisions. Because consumers tend to purchase or rent a home only a handful of times in their life, their familiarity with the rules governing these agency relationships is often lacking. 

So, when is it really your real estate broker’s fault? 

Read the full article by Dennis Valet, Esq. in published in The Suffolk Lawyer Here. 

Lieb School Facts: Exclusive Right To Sell Agreement

To learn more, Lieb School offers online continuing education classes that are comprised of video's from a live classroom setting that was instructed by premiere lecturer Andrew Lieb, Esq. Content is thereafter broken down in order to simplify the learning experience so that students can absorb our field's complex materials without being overwhelmed.

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.

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.

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.