News

This is your opportunity to participate in NYSAR’s Trade Mission to Italy!

October 18 – 28, 2018, NYSAR members will travel to Rome and Sicily to meet with members of the Italian Federation of Real Estate Professionals. The goals are to: learn how real estate transactions are conducted in Italy; get to know about real estate opportunities in the areas visited; and build relationships with members of our cooperating association for future referral purposes. 

The preliminary itinerary (subject to minor modifications) can be found here. The cost is $3,490 per person, based on double occupancy, with a $2,000 deposit due now and the balance due by August 15. If you have any questions, please contact Priscilla Toth, NYS Association of REALTORS®, 130 Washington Ave., Albany, NY 12210, by June 28. Only 28 seats are available and will be filled on a first come; first served basis, upon receipt of your registration form and deposit.

Tax Deductibility: it is likely this mission will qualify as a deductible expense for your business but you should check with your tax advisor for complete details.

Thanks for your interest!

“Prevailing Wage” construction mandate – Oppose today! 
 
Please answer this important Call for Action to OPPOSE a requirement to provide prevailing wage standards on any private construction project that receives any form of public funding or support.
 
Construction costs in New York are already among the highest in the nation. A report by the Empire Center estimated that prevailing wage standards drive up total construction costs by 13 to 25 percent, depending on the region of the state.  

The New York State Senate is considering a vote soon on S.2975-A/A.5498-A by Sen. Murphy (R-Hudson Valley) and Assemblymember Bronson (D-Rochester), which would redefine the term “public works,” thereby requiring prevailing wage standards on all private construction projects that receive any financial support from state or local entities, including loans, bonds, grants, tax abatements from local IDAs and other forms of value.

If enacted, this bill would result in significant increases in labor and construction costs for private construction projects across the state by imposing a prevailing wage and benefit structure that exceeds market compensation rates. This will ultimately drive businesses out of the state or force them to lose workers, lose business opportunities, or close altogether.

We need you to answer the Call for Action today and make your voice heard on this important issue!

Use of Corporate Titles in Commercial Real Estate
Anthony Gatto, Esq., NYSAR General Counsel
 
On April 26, 2013, the New York State Department of State Division of Licensing Services (DOS) issued an opinion on the use of corporate titles by associate brokers and/or salespersons who are not licensed as a real estate broker.  While this area of law is well settled for brokers, some are of the opinion that it does not apply to commercial practitioners.  Some commercial brokers are assigning or permitting an associate broker or salesperson corporate titles that are prohibited pursuant to the DOS opinion.  Brokers that permit such usage of corporate titles would be subjecting themselves to liability for violating the Real Property Law.  There is no exception merely because the licensee practices commercial real estate. 
 
Below, please find the text of the opinion from the Department of State addressing corporate titles as it applies to all licensees. 
 
I am in receipt of your electronic correspondence…regarding the use of titles by licensed associate real estate brokers and real estate salespersons (referred to collectively as “agents.”) Specifically, you have asked if a brokerage may provide a title such as “President”, “Vice President”, “Senior Vice President”, “Executive Vice President” and “Managing Director” (“corporate titles”) to an agent for marketing purposes.
 
Section 441-c(1)(a) of the Real Property Law prohibits “dishonest or misleading advertising.” This phrase is not defined by statute or regulation. When interpreting the scope of a statute: “It is well settled that …, a court [or administrative agency] should attempt to effectuate the intent of the Legislature (citation omitted), and “not sit in review of the discretion of the Legislature, or determine the expediency, wisdom or propriety of its action on matters within its powers” (citations omitted). The clearest indicator of legislative intent is the plain meaning of the statutory text (citation omitted). The words employed by the Legislature must be given their natural, ordinary and obvious meanings (citation omitted), and if the words of a statute have a definite meaning which involved no absurdity or contradiction, the court [or agency] has no right to add or take away from that meaning (citation omitted).” People v. Dorilas, 2008 WL 1902443 (N.Y.Sup.App.Term, April 21, 2008), 2008 N.Y. Slip Op. 28162 at 3.
 
Because “dishonest” and “misleading” are not statutorily defined, common meaning must be applied. “Dishonest” is defined as, “characterized by lack of truth, honesty, or trustworthiness.” (Merriam-Webster.com). “Mislead” is similarly defined as, “to lead astray” or “give a wrong impression.” (Id.) When business entities take official action, including electing or appointing officers, they are required to do so in accordance with the law. (See, for example, Business Corporation Law Section 715). Use of a corporate title indicates that the entity has taken such action. If an agent advertises falsely that he or she holds a corporate title, it would be considered “dishonest” and “misleading” because doing so would lead the public to believe that the brokerage entity has appointed or elected the agent as an officer or to a comparable management position.
If a brokerage has taken action to officially appoint or elect an agent as a corporate officer, said action must comply with 19 NYCRR 175.22, which prohibits the ownership of voting stock by real estate salespersons. The regulation implements Real Property Law section 441-b(2) which proscribes that a real estate salesperson’s license shall not be issued to any officer of a licensed, corporate real estate broker, a manager or member of a limited liability company or to a member of a co-partnership licensed as a real estate broker. Taken together, these provisions prohibit a real estate salesperson from holding voting stock or being appointed as an officer in a corporate brokerage, a manager or membership of a limited liability company or a member of a partnership.
 
Although the statute and regulation refer to ‘real estate salesperson,’ they apply equally to associate brokers. Real Property Law section 440(2) defines an associate real estate broker as, ‘a licensed real estate broker who shall by choice elect to work under the name and supervision of another broker…’ The statute also provides that while, ‘[S]such individual shall retain his or her license as a real estate broker… the practice of real estate sales and brokerage by such individual as an associate broker shall be governed exclusively by the provisions of this article as they pertain to real estate salespersons.’ Because the regulations found in Title 19 NYCRR Part 175 were enacted to implement the statutory requirements of Article 12-A of the Real Property Law, references to salesperson, such as that found in 19 NYCRR 175.22, include by extension associate brokers who, in accordance with Real Property Law section 440(2), have elected to work under another broker’s name and supervision.
 
I am, therefore, of the opinion that brokerages may not provide corporate titles to agents for marketing or other purposes. Agents would similarly be prohibited from falsely advertising that they hold such a position within the brokerage.
 
Many brokers and their associated licensees were not happy with the DOS opinion so a follow up request was made to consider other alternatives.  The DOS responded with an opinion directly in line with the first opinion and further clarifying the restrictions on corporate titles. 
 
You have first asked if a mechanism exists whereby an associate broker can become an officer in a corporate brokerage, a manager or member of a limited liability company, or a member of a partnership. As explained in my correspondence to Mr. Meisel, because Real Property Law §440(2) requires that associate brokers be treated as real estate salespeople, the statutory prohibition against real estate salespeople being appointed as an officer in a corporate brokerage, a manager or member of a limited liability company, or a member of a partnership extends to associate brokers. Briefly, the statutory prohibition against subordinate licensees holding voting stock in or being appointed as an officer of a corporate brokerage stems from the vesting of responsibility for the conduct of the corporate brokerage in its broker or brokers. The statute and implementing regulations require brokers to guide, instruct, oversee, and supervise the actions of associated salespeople and associate brokers (19 NYCRR 175.21). Thus, a subordinate licensee is not permitted to run the daily operations of the brokerage or to hold shares of voting stock.
 
That being said, an associate real estate broker is a real estate broker who has chosen to work under another broker’s name and supervision. (Real Property Law §440(2)). Insofar as an associate broker possesses the same education and experience as a real estate broker, the statute permits an associate broker to “upgrade” his or her license and become licensed as a real estate broker. The statute also does not limit the number of real estate brokers who may be licensed to represent a particular real estate brokerage. As a practical matter, an associate broker could become licensed as a real estate broker representing the brokerage and would then be permitted to hold voting stock in the brokerage and be appointed as an officer, manager, or member of the brokerage company.
 
You have next asked if an associate broker or real estate salesperson may be appointed as a director of a brokerage corporation. Although the term “director” is not specified in Real Property Law §441-b(2), the term “director” is well understood in corporate law. Corporate officers are elected or appointed to office by either the corporate board of directors or shareholders and have such authority as provided in the corporate by-laws or by the board of directors. (Business Corporation Law §715). A director is defined as “any member of the governing board of a corporation, whether designated as director, trustee, manager, governor, or by any other title.” (Business Corporation Law §102(a)(5)). As a member of a corporate board of directors, a director assists in the business of managing the corporation. (Business Corporation Law §701; In re Shupack’s Will, 1 AD 2d 841, (2nd Dept., 1956), modified on other grounds, 1 NY2d 482). As discussed above, a subordinate licensee is not permitted to participate in the management of a corporate brokerage. Thus, a subordinate licensee may not serve as a director
 
You have also asked if an associate broker may hold a corporate officer position if he or she is an employee of the brokerage, as opposed to an independent contractor. I recognize that, as a matter of industry practice and for taxation purposes, many subordinate licensees are classified as “independent contractors.” However, Article 12-A of the Real Property Law does not recognize this distinction. As the Department of State has advised in a prior legal opinion, this industry practice does not alter or supersede the provisions of Article 12-A of the Real Property Law:
 
“While a salesperson [inclusive of associate brokers] may, for tax purposes only, have been labeled an ‘independent contractor’ rather than an ‘employee’ by a taxing authority the legal relationship between a broker and salesperson is that of principal and agent, and the broker has legal accountability for the acts of the salesperson that flow from that agency relationship regardless of whether those legal consequences were intended, understood or affirmatively disavowed. The legal accountability arising from the agency relationship under common law overlaps the legal accountability arising from duties imposed by statute upon holders of real estate licensees.” (Department of State Legal Opinion #88-7).
 
Accordingly and as noted above, an associate broker, irrespective of his or her status as an employee or independent contractor, may not hold a corporate officer position.
 
Your final question is whether Article 12-A of the Real Property Law prohibits the issuance of all titles to associate brokers and real estate salespeople…Article 12-A of the Real Property Law prohibits false and misleading advertising. Article 12-A also prohibits subordinate licensees from holding voting stock in a corporate brokerage and from being appointed as an officer in a corporate brokerage, a manager or member of a limited liability company, or a member of a partnership. As such, a licensee cannot use any title that is false or misleading, such as one that would indicate falsely that the licensee is a corporate officer with the brokerage company. The statute and implementing regulations require brokers to guide, instruct, oversee and supervise the actions of associated salespeople and associate brokers (19 NYCRR 175.21). Consistent with this principle, any title which implies that an associate broker or real estate salesperson in involved in the management, supervision and control of the brokerage company would be prohibited.
 
As can be seen from both DOS opinions, no licensee other than an individual licensed as a Real Estate Broker may use a corporate title in any manner.  The Department of State, Division of Licensing Services issues licenses to brokers, associate brokers and salespersons and there is no differentiation between residential and commercial practitioners.  As such, all real estate licensees are subject to the same laws, rules and regulations.