Presented by: Anthony Gatto, Esq. General Counsel LEGAL LEFTOVERS October 15, 2015 Presented by: Anthony Gatto, Esq. General Counsel

Legal Issues For information on thje following, please go to NYSAR.com to watch the October 2015 Legal Update from the NYSAR Business Meetings: Court/DOS decisions of interest Regulatory Update Points towards brokers license Service animals Senior Housing Buyer-broker agreements and designated agency Raffles/Contests

Legal Issues Mold Non-broker document retention Use of LLC for commissions Broker Agency Cease & Desist

Mold On January 29, 2015, Governor Andrew M. Cuomo signed a bill requiring that assessors and contractors in the mold remediation industry and their workers are properly trained and licensed. Accordingly, the licensing requirements for mold contractors, assessors, and workers take effect on January 1, 2016.

Mold The law requires the following to ensure the proper remediation of mold: Licensing of assessors, contractors and workers A written mold remediation plan, prepared by a licensed mold assessment contractor

Mold In most cases, air sampling and mold testing is unnecessary. There are currently no EPA or Federal standards for mold, so any interpretation of sampling results would not be based on any established health or environmental standard. If the total mold affected area is less than 10 square feet (approximately 3' by 3' square) and homeowner does not have any sensitivity towards mold, mold removal may be done by homeowner. Biocide is not recommended as a routine cleanup for mold as it may cause sensitivity in somepeople. Ventilate the room if a biocide is used. Observe and follow the manufacturer's labeling instructions.

Mold Mold Assessment Licensee Tests and prepares a mold remediation plan Prohibited from acting as mold remediator

Mold Mold Remediation Licensee Prepare a mold remediation work plan that is specific to each project Fulfills all the requirements of the mold remediation plan developed by the mold assessment licensee Provides specific instructions and/or standard operating procedures for how a mold remediation project will be performed. Prohibited from performing Mold Assessment

Mold For a remediated project to achieve clearance, a mold assessment licensee shall conduct a post-remediation assessment. The post-remediation assessment shall determine whether: the work area is free from all visible mold; and all work has been completed in compliance with the remediation plan and remediation work plan and meets clearance criteria specified in the plan.

Mold Licensees are required after 1/1/2016 to provide the name of licensed Mold Assessment and Mold Remediation providers. Failure to do so may subject licensee to discipline Much the same as licensed home inspectors

Non-broker Document Retention 19 NYCRR§175.23 Records of transactions to be maintained (a) Each licensed broker… Licensees should never retain transaction related documentation (not your client or customer) All documentation belongs to the broker Licensees do not have any right to documents Retention of documents by licensees exposes broker to liability (personal information not secure)

LLC Real Property Law§442 “it shall be permissible for a real estate broker to pay any part of a fee, commission, or other compensation received to an unlicensed corporation or an unlicensed limited liability company if each of its shareholders or members, respectively, is associated as an individual with the broker as a duly licensed associate broker or salesman.” LLC or corporate status per DOS, Div of Corp does not make the team a stand alone entity

LLC-Sponsor memo “Payment of a commission by a real estate broker to an unlicensed limited liability company or corporation owned by a real estate salesman or associate real estate broker would be a violation of Real Property Law § 442. Allowing real estate salesmen and associate real estate brokers to be licensed as a single member limited liability company or as a sole shareholder corporation would allow them to take full advantage of the tax laws without having an adverse effect upon the public.”

LLC-DOS Section 442 of the Real Property Law currently prohibits a real estate broker from paying any part of a commission to an unlicensed person, firm, corporation or LLC if the payment is intended as compensation for a service that would require a real estate license…Accordingly, this bill amends § 442 to permit the real estate broker to by-pass the agent and to pay the agent's commission directly to the agent's unlicensed corporation or unlicensed LLC.

LLC-CPB The purpose of allowing real estate salespersons and associate real estate brokers to be licensed as a single member limited liability corporation or as a shareholder is to allow them to take full advantage of the tax laws. The CPB has no objection to this bill, but suggest that this amendment would be more appropriate as an amendment to the tax law instead of the real property law.

Brokers Agent A broker's agent is an agent that cooperates or is engaged by a listing agent or a buyer's agent (but does not work for the same firm as the listing agent or buyer's agent) to assist the listing agent or buyer's agent in locating a property to sell or buy, respectively, for the listing agent's seller or the buyer agent's buyer. The broker's agent does not have a direct relationship with the buyer or seller and the buyer or seller cannot provide instructions or direction directly to the broker's agent. The buyer and the seller therefore do not have vicarious liability for the acts of the broker's agent. The listing agent or buyer's agent do provide direction and instruction to the broker's agent and therefore the listing agent or buyer's agent will have liability for the acts of the broker's agent.

Brokers Agent A broker's agent is an agent that cooperates or is engaged by a listing agent or a buyer's agent (but does not work for the same firm as the listing agent or buyer's agent) to assist the listing agent or buyer's agent in locating a property to sell or buy, respectively, for the listing agent's seller or the buyer agent's buyer.

Brokers Agent-Seller A broker's agent is an agent that cooperates or is engaged by a listing agent or a buyer's agent (but does not work for the same firm as the listing agent or buyer's agent) to assist the listing agent or buyer's agent in locating a property to sell or buy, respectively, for the listing agent's seller or the buyer agent's buyer.

Brokers Agent-Buyer A broker's agent is an agent that cooperates or is engaged by a listing agent or a buyer's agent (but does not work for the same firm as the listing agent or buyer's agent) to assist the listing agent or buyer's agent in locating a property to sell or buy, respectively, for the listing agent's seller or the buyer agent's buyer.

Brokers Agent The broker's agent does not have a direct relationship with the buyer or seller and the buyer or seller cannot provide instructions or direction directly to the broker's agent.

Brokers Agent The buyer and the seller therefore do not have vicarious liability for the acts of the broker's agent. The listing agent or buyer's agent do provide direction and instruction to the broker's agent and therefore the listing agent or buyer's agent will have liability for the acts of the broker's agent.

Sub Agency Seller Listing Broker Cooperating Broker

Broker Agency-Seller Seller Cooperating Broker Listing Broker

Broker Agency-Buyer Buyer Cooperating Broker Buyer’s Broker

Cease & Desist No longer in effect. Bronx 8/1/14 Queens 8/1/14* Kings 11/30/12 *proposed legislation includes all of Queens

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