NYSAR LEGAL UPDATE FOR 1/4/2017

Per NYSAR LEGAL UPDATE

On Jan. 4, 2017, a number of amended regulations were published under a “Notice of Adoption” in the New York State Register. These amendments are effective now. The amended regulations can be found in title 19 of the NYCRR and were agreed to by NYSAR, REBNY and the Department of State (DOS), and approved by the New York State Board of Real Estate. Many of the regulations were outdated as they were first approved sometime in the 1970s. These amended regulations take into account changes in the industry, prior DOS decisions interpreting the regulations as well as general housekeeping. Below, please find the amended text and a brief explanation as to the effect of the amendment.

19 NYCRR §175.1

The original regulation called for the deposit of consumer funds as “promptly as practicable.” Subsequently, the DOS issued a decision (DOS v. Baramonde) where “as promptly as practicable” was interpreted to be the next business day. This was problematic for many brokerages. Under the amended regulations, deposits may be made up to three business days following the receipt of the funds. Brokers must be sure the funds are safeguarded in the event they are not deposited immediately. It shall be the broker that decides what qualifies as "safeguarding." For more information, read “DOS clarifies exception to escrow deposit regulation and decision” in the September/October 2016 issue of New York State REALTOR Magazine.
A real estate broker shall not commingle the money or other property of his principal with his own and shall at all times maintain a separate, special bank account to be used exclusively for the deposit of said monies and which deposit shall be made within three business days. Until such time as the money is deposited into a separate, special bank account, it shall be safeguarded in a secure location so as to prevent loss or misappropriation. (Per Anthony Gatto - There may be some questions as to the “safeguarding” of escrow funds (19 NYCRR 175.1) and there has been no guidance provided by DOS as to what qualifies as “safeguarding”.  At the very least, best practices would require the escrow monies (including checks) to be placed under lock and key (or combination, biometric scanner etc…).  Merely clipping or stapling the monies to the inside of the folder would not qualify unless the folder is then placed under “lock and key”.  For now, this is the best advice we can provide.) Said monies shall not be placed in any depository, fund or investment other than a federally insured bank account. Accrued interest, if any, shall not be retained by, or for the benefit of, the broker except to the extent that it is applied to, and deducted from, earned commission, with the consent of all parties.


19 NYCRR §175.7

The original regulation required the knowledge and consent of all parties to the transaction if a broker was to be compensated by more than one party. The regulation was amended and only required such disclosure to the broker’s client. This requirement coincides with an agent’s fiduciary obligations to make full disclosure to their client. No such obligation exists for other parties in the transaction and as such, those requirements were removed.
“A real estate broker shall make it clear for which party he is acting and he shall not receive compensation from more than one party except with the full knowledge and consent of the broker’s client.”


19 NYCRR §175.25(d)

When the advertising regulations were first approved in 2013, "license type" was inadvertently omitted as a requirement for business cards when it was the intent of all interested parties to have such information included. This amendment merely adds "license type" as a requirement on business cards.
“(2) Notwithstanding subdivision (c) of this section, business cards must contain the business address of the licensee, license type, and the name of the real estate broker or real estate brokerage with whom the associate real estate broker or real estate salesperson is associated. All business cards must also contain the office telephone number for the associate real estate broker, real estate salesperson or team.”


19 NYCRR §176.3(a)

The hours required for “Property Insurance” for the initial real estate salesperson course was reduced from two hours to one hour, and the new topic of “Licensee Safety” was added to the curriculum in place of the one hour that was removed.
Subject Matter: Hours:
Property Insurance...........................1
License Safety.................................1


19 NYCRR §177.3(g)

Prior to this amendment, all continuing education courses had to be a minimum of three hours. Under the amended regulation, continuing education courses can be one hour in length.
“a detailed outline of the subject matter of each course or seminar containing at least 22½ hours of instruction, or of each course module containing at least one hour of instruction, together with the time sequence of each segment thereof, the faculty for each segment, and teaching techniques used in each segment;”


19 NYCRR §177.7

Prior to the amended regulation, continuing education courses had a different definition of "one hour" than real estate broker and salespersons courses. Now, all courses compute one hour as 50 minutes of instruction time and 10 minutes of a built-in break. Schools are prohibited from using the 10-minute break(s) to shorten the end time of the course. In other words, a three-hour course has 30 minutes of built-in breaks. The school is prohibited from having the break time at the end of the course thereby permitting attendees to leave prior to the conclusion of the three hours.
“To meet the minimum statutory requirement, attendance shall be computed on the basis of an hour equaling 50 minutes.”