BARRISTER'S BRIEFING: Falling Through the Cracks: Advertising Regulations, Rent Regulations and OneKey Rules

Brian Levine | October 2020

So much is happening today. We’re all riding a big surge in real estate activity and we’re all surprisingly busy this fall. There are all sorts of new COVID-19 protocols, Executive Orders and recent rollbacks of permissible real estate activity in various regions and new fair housing requirements. As a result, it’s easy for some things to fall through the cracks and be overlooked. That’s why this month’s article will update everyone on a few things that otherwise might have gone overlooked.

Changes to Advertising Guidelines

Previously adopted by the Department of State, the changes to the advertising guidelines will take effect on November 2, 2020. The following is a link to the DOS website that provides the full regulations, guidance, and checklist: https://www.dos.ny.gov/licensing/re_advertising/re_advertising.html.

The new changes focus primarily on properly identifying listing brokers and their listings. The new regulations also expand the scope of application. For starters, Section 175.25(d)(3)(ii) of the regulations was revised to require the new rules and regulations to apply to every page of a website, including any page that displays multiple properties or property search results. This means that proper disclosures must be provided on any page that displays properties or search results, including all IDX feeds. In addition, a link to the broker or brokerage website with whom the licensee or team is associated will be required to be on the homepage of the website, unless the broker or brokerage does not have a website.

However, the most significant changes to the advertising regulations included the addition of subsections (i) and (ii) to Section 175.25(d)(6). Section (i) states:

No real estate broker, associate real estate broker, or real estate salesperson shall advertise in any manner or make reference to in any advertisement property that is subject to an exclusive listing agreement of another broker, without authorization from the exclusive listing broker. Such advertisements must clearly and conspicuously disclose the name of the exclusive listing broker immediately after one of the following phrases:

“Listing Provided by [insert name of the exclusive listing broker],”
“Listing by [insert name of exclusive listing broker],”
“Listing Broker Contact [insert name of exclusive listing broker],”
“Listing of [insert name of exclusive listing broker],”
“Listing Provided Courtesy of [insert name of exclusive listing broker],”
“Listing Courtesy of [insert name of exclusive listing broker],” or
“Listing Agent Contact [insert name of exclusive listing broker].”

The purpose of this provision is to ensure that the listing broker is clearly identified and consumers are directed to the broker who actually has the listing. NYSAR has indicated that “clearly and conspicuously” means “above the fold,” so if you have to scroll down to find the information, it is not clear and conspicuous. This provision applies to all websites, social media posts, print ads, etc.

Subsection (ii) of the regulations further provides that:

Any real estate broker, associate real estate broker, or real estate salesperson that pays a third-party for advertising involving a property that is subject to an exclusive listing agreement of another broker must, in addition to the requirements in subparagraph (i), include in any advertisement that provides the advertising broker’s name words to disclose that the advertisement is a paid advertisement using at a minimum the word “advertisement” immediately following the real estate broker, associate real estate broker, or real estate salesperson’s name.

This provision requires that licensees are responsible to ensure that properties that are advertised on third-party websites or portals (i.e. Zillow, StreetEasy, etc.) comply with this rule. Failure to ensure that these rules are followed can subject the licensee to discipline. Again, the “clear and conspicuous” requirement applies to these types of advertisements, and in addition to complying with disclosure of the listing broker information as provided for in subsection (i), a broker must also include words that indicate it is a paid “advertisement.”

Landlord Rent Regulation Litigation

In January 2020, the Department of State provided guidance relating to the Statewide Housing Security & Tenant Protection Act of 2019 and the Housing Stability & Tenant Protection Act of 2019. (most Realtors refer to these acts as the new “Rent Regulations” or “Rent Guidelines”). The DOS guidance indicated that landlords could not seek to collect a “Broker Fee” from a prospective tenant, which ran contrary to many real estate practices, especially in New York City. As a result, NYSAR, REBNY and other brokerages filed a lawsuit and obtained a temporary restraining order. After numerous extensions by the state, Respondents submitted opposition papers on Sept. 11, 2020. Oral arguments have yet to be scheduled. Until such time that the court hears and rules on this matter, the temporary restraining order shall remain in effect and a landlord may still require prospective tenants to pay a “Broker Fee” for renting a property.

OneKey Amends Clear Cooperation Rule

Recently, the Board of Managers for OneKey MLS met and a modification to the Clear Cooperation rule was made. Below is the rule with the noted changes in italics:

302.2 NAR Clear Cooperation Policy –Effective May 1, 2020
a. Within one (1) business day of marketing a property to the public, the listing broker must submit the listing to the MLS for cooperation with other MLS participants. Public marketing includes, but is not limited to, flyers displayed in windows, yard signs, digital marketing on public facing websites, brokerage website displays (including IDX and VOW), digital communications marketing (email blasts), multi-brokerage listing sharing networks, and applications available to the general public.

(NAR Mandatory Statement 8, Updated 11/11/19).

b. Commercial, nonresidential, properties are not subject to this rule.
c. All residential property classes are subject to this rule, including the following:
(1) residential 1-4 family homes (but not residential properties with 5 or more units),
(2) residential cooperative apartments, condominiums, units in a home owner’s association (HOA), townhouses, and mobile homes,
(3) residential rentals, and
(4) vacant land that is zoned only for residential development.

It is important to note that commercial/nonresidential properties and residential properties with five or more units are not subject to the Clear Cooperation rule; however, all other land uses, including co-ops, condos, HOAs, residential vacant land and rentals are subject to the rule.

Conclusion

Realtors, like jugglers, need to keep a lot of balls in the air. One slip in concentration and all the balls fall to the ground. In addition to your brokerage and colleagues, you have at your fingertips many sources for keeping track of news and information. These include articles and updates from NYSAR, NAR, HGAR, Real Estate In-Depth reporting, OneKey and myself. All of these resources can and should be used to help you keep juggling. Make sure you avail yourself of all of these resources to keep you up to date and in compliance with all the new rules, regulations and laws.

Brian Levine
Brian S. Levine, Esq. is In-House Counsel/Director of Legal Services & Professional Standards Administrator for the Hudson Gateway Association of Realtors.