Codifies the duty of real estate brokers to supervise salespersons and associate brokers through regular, frequent and consistent personal guidance, instruction and oversight; lists elements of supervision including the ability to familiarize salespersons with state and federal laws against discrimination.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A5164
SPONSOR: Solages TITLE OF BILL:
An act to amend the real property law, in relation to the duty of a
licensed real estate broker to supervise real estate salespersons
PURPOSE:
To provide clear standards for what the state expects for adequate and
reasonable supervision of real estate agents by real estate brokers.
SUMMARY:
Section 1. Amends section 442-c of the real property law, as amended by
chapter 529 of the laws of 2022.
Section 2. Sets the effective date.
JUSTIFICATION:
The terms "real estate agent" and "real estate broker" are often used
interchangeably. While there may be overlaps in what they do, the two
titles are distinct, especially when it comes to their qualifications. A
real estate agent serves as a facilitator of real estate transactions,
and is responsible for bringing buyers and sellers together. Real estate
brokers, on the other hand, are individuals who continue their education
past the agent level to attain a higher-level license as a broker.
In New York, an agent is required to complete a 75-hour real estate
education course in real estate approved by the Secretary of State and
pass a qualifying examination administered by the Department of State. A
broker must have at least two years of experience as a licensed agent or
at least three years of experience in the general real estate field, or
a combination of both, meet the minimum points required for the experi-
ence type (e.g., buying and selling his or her own property, managing
property owned by his or her employer), have satisfactorily completed
both the qualifying agent course of 75 hours and an additional 45-hour
broker course as approved by the Secretary of State, and have passed a
qualifying examination administered by the Department of State.
Having a broker's license allows an individual to work as an independent
agent or have a brokerage business with other agents working under them.
When a broker employs other agents, those agents work on transactions on
their own. Even so, brokers are ultimately responsible for all trans-
actions that come through their brokerage and for the supervision and
conduct of their agents within their brokerage. Brokers employing agents
take on a considerable risk when an agent is not properly trained and
supervised, particularly in regards to fair housing regulations. A 2019
Newsday report revealed that, over a three-year period, it had conducted
tests of real estate agents doing business from the New York City line
to the Hamptons and from Long Island Sound to the South Shore. According
to.the report, forty percent of the tests demonstrated disparate treat-
ment in violation of Federal Fair Housing Laws. The breakdown was that
forty-nine percent of Blacks, thirty-nine percent of Hispanics, and
nineteen percent of Asians experienced disparate treatment.
Although the Newsday report did not expose anything new concerning hous-
ing discrimination, it does underscore how important it is to make sure
that brokers supervise their agents with direct training or training
resources concerning behavior, performance, and legal compliance.
Currently, Article 12-A of the real property law does not have a section
detailing a broker's supervisory responsibilities over an agent. This
bill seeks to correct this issue by adding this new section to the law.
It is crucial that such a provision be added to provide clear standards
about what the state expects for adequate and reasonable supervision
over real estate agents by real estate brokers.
LEGISLATIVE HISTORY:
2023-24: A8119; referred to judiciary.
2022: A9740; referred to judiciary.
FISCAL IMPLICATIONS:
TBD.
EFFECTIVE DATE:
This act shall take effect immediately.
