BARRISTER'S BRIEFING: New Department of State Regulatory Changes Affecting Licensees
Leon Cameron, Esq. | February 9, 2017
The New York Department of State, which promulgates regulations affecting real estate licensees, recently issued several amendments to existing regulations on Jan. 4, 2017. This article will call attention to those recent amendments and the implications on licensees.
To start, there has been a regulatory change to 19 NYCRR §175.1. That particular amendment is italicized and underlined below:
“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. 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.”
Worthy of note is that it is the broker who decides what qualifies as “safeguarding.” Moreover, the new three business day requirement gives greater flexibility for brokers who formerly had to deposit consumer funds as “promptly as possible,” which DOS had interpreted to mean one (1) business day under the prior version of 19 NYCRR § 175.1. This regulation tends to affect upstate New York brokers who as a matter of custom tend to accept buyer funds pursuant to a binder.
Another recent regulatory change that has garnered significant attention from Licensees is the change to 19 NYCRR § 175.7, which now reads as follows:
“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.”
Under the new 19 NYCRR §175.7, buyer’s agents or tenant’s agents now only need the consent of their buyer or tenant to receive dual compensation. The consent of the landlord or seller customer on the other side of the transaction is no longer relevant. However, in the rare instance of a dual agent who also happens to be dually compensated—the consent of both seller and buyer, or landlord or tenant, will be required.
Other regulatory changes include amendments to 19 NYCRR §175.25(d), which now requires license type to be included on business cards. For reference, the three recognized types of licenses are Licensed Real Estate Salesperson, Licensed Real Estate Associate Broker and Licensed Real Estate Broker.
In addition, 19 NYCRR §176.3(g) allows Continuing Education (CE) courses to be just one hour in length. I am pleased to report that HGAR will soon be rolling out DOS-approved 1-hour CE courses as part of its School of Real Estate offerings.
Licensees should be aware of these recent regulatory changes and apply them to their real estate practice whenever applicable. Likewise, they should inform their colleagues in the industry of the same whenever they may be acting in conformity with prior versions of these regulations.
Editor’s Note: The foregoing is for information purposes only and does not confer an attorney/client relationship. For a legal opinion or advice specific to your situation, please consult with a private attorney at law.