senate Bill S5693

Signed by Governor Amended

Relates to clarifying the permissibility of commissions, fees, or other compensation paid to real estate brokers

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Bill Status


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed by Governor
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actions

  • 05 / Jun / 2013
    • REFERRED TO JUDICIARY
  • 20 / Jun / 2013
    • COMMITTEE DISCHARGED AND COMMITTED TO RULES
  • 20 / Jun / 2013
    • ORDERED TO THIRD READING CAL.1538
  • 20 / Jun / 2013
    • PASSED SENATE
  • 20 / Jun / 2013
    • DELIVERED TO ASSEMBLY
  • 20 / Jun / 2013
    • REFERRED TO JUDICIARY
  • 08 / Jan / 2014
    • DIED IN ASSEMBLY
  • 08 / Jan / 2014
    • RETURNED TO SENATE
  • 08 / Jan / 2014
    • REFERRED TO JUDICIARY
  • 29 / May / 2014
    • AMEND AND RECOMMIT TO JUDICIARY
  • 29 / May / 2014
    • PRINT NUMBER 5693A
  • 04 / Jun / 2014
    • AMEND AND RECOMMIT TO JUDICIARY
  • 04 / Jun / 2014
    • PRINT NUMBER 5693B
  • 11 / Jun / 2014
    • COMMITTEE DISCHARGED AND COMMITTED TO RULES
  • 11 / Jun / 2014
    • ORDERED TO THIRD READING CAL.1334
  • 12 / Jun / 2014
    • PASSED SENATE
  • 12 / Jun / 2014
    • DELIVERED TO ASSEMBLY
  • 12 / Jun / 2014
    • REFERRED TO CODES
  • 16 / Jun / 2014
    • SUBSTITUTED FOR A7979B
  • 16 / Jun / 2014
    • ORDERED TO THIRD READING RULES CAL.266
  • 16 / Jun / 2014
    • PASSED ASSEMBLY
  • 16 / Jun / 2014
    • RETURNED TO SENATE
  • 05 / Dec / 2014
    • DELIVERED TO GOVERNOR
  • 17 / Dec / 2014
    • SIGNED CHAP.514

Summary

Relates to clarifying the permissibility of commissions, fees, or other compensation paid to real estate brokers.

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Bill Details

See Assembly Version of this Bill:
A7979
Versions:
S5693
S5693A
S5693B
Legislative Cycle:
2013-2014
Law Section:
Real Property Law
Laws Affected:
Amd §442, RP L

Sponsor Memo

BILL NUMBER:S5693

TITLE OF BILL: An act to amend the real property law, in relation to
clarifying the permissibility of commissions, fees or other
compensation paid to real estate brokers

PURPOSE OR GENERAL IDEA OF BILL: The bill amends § 442 of the Real
Property Law titled "Splitting Commissions," to state that nothing
shall prohibit a broker from offering any part of a fee, commission,
or other compensation received by the broker to the seller, buyer,
landlord or tenant as an incentive for using the licensed services of
that broker.

SUMMARY OF SPECIFIC PROVISIONS:

Section 1. amends Section 442 of the real property law, to read:
Nothing in this section shall prohibit a real estate broker from
offering any part of a fee, commission, or other compensation received
by the broker to the seller, buyer, landlord or tenant who is buying,
selling, exchanging, leasing, renting or negotiating a loan upon any
real estate including the resale of a condominium or cooperative
apartment. Such fee, commission, or other compensation must not be
made to the seller, buyer, landlord or tenant for performing any
activity requiring a license under this Article.

Section 2. This act shall take effect immediately.

JUSTIFICATION: Section 442 of the Real Property Law prohibits a real
estate broker from offering to pay any part of the broker's commission
to any party to a real estate transaction if the purpose of the
payment is to compensate an unlicensed party for providing services
that would otherwise require a real estate broker's license.
Generally speaking, section 442 was intended to discourage unlicensed
activity. Section 442 does not, however, prohibit a real estate broker
from offering cash, services, or products to attract new clients and
customers.

Due to the confusing language of Sec. 442, there is uncertainty in the
real estate community regarding the offering of rebates and other
incentives to consumers. The Department of State and the Attorney
General's office have both agreed in various opinions and decisions,
the ability of brokers to offer buyers and sellers, landlords and
tenants, rebates and other monetary incentives for using their
licensed real estate broker services.

This legislation amends § 442 of the Real Property Law to clarify the
statutory language to reflect the decisions of the Department of State
and the Attorney General that nothing shall prohibit a broker from
offering any part of a fee, commission, or other compensation received
by the broker to the seller, buyer, landlord or tenant as an incentive
for using the licensed services of that broker.

Since Broker rebates/incentives are already legal in New York State,
this legislation simply amends the existing statutory language to
clarify and codify the practice.

PRIOR LEGISLATIVE HISTORY: New bill.


FISCAL IMPLICATIONS: None.

EFFECTIVE DATE: Immediately.

view bill text
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  5693

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                              June 5, 2013
                               ___________

Introduced  by  Sen.  ZELDIN -- read twice and ordered printed, and when
  printed to be committed to the Committee on Judiciary

AN ACT to amend the real property law, in  relation  to  clarifying  the
  permissibility of commissions, fees or other compensation paid to real
  estate brokers

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Section 442 of the real property law, as amended by chapter
45 of the laws of 1982, the opening paragraph as amended by chapter  316
of  the  laws  of  2004, the second undesignated paragraph as amended by
chapter 734 of the laws of 1986, is amended to read as follows:
  S 442. Splitting commissions. 1. No real estate broker shall  pay  any
part  of  a fee, commission or other compensation received by the broker
to any person for any service, help or aid  rendered  in  any  place  in
which  this  article  is  applicable,  by  such  person to the broker in
buying, selling, exchanging, leasing, renting or negotiating a loan upon
any real estate including the resale of  a  condominium  OR  COOPERATIVE
APARTMENT  unless  such a person be a duly licensed real estate salesman
regularly associated with such broker or a  duly  licensed  real  estate
broker  or a person regularly engaged in the real estate brokerage busi-
ness in a state outside of New York; provided,  however,  that  notwith-
standing  any  other  provision of this section, 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.
  2. Furthermore, notwithstanding any other provision of law,  it  shall
be  permissible  for  a  broker  properly  registered  pursuant  to  the
provisions of article twenty-three-A of the  general  business  law  who
earns  a  commission on the original sale of a cooperative or homeowners

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD11341-02-3

S. 5693                             2

association interest in real estate, including condominium units to  pay
any  part of a fee, commission or other compensation received for bring-
ing about such sale to a person whose [prinicipal] PRINCIPAL business is
not  the  sale  or  offering  of  cooperatives or homeowners association
interests in real property, including condominium units  in  this  state
but  who  is either: (i) a real estate salesman duly licensed under this
article who is regularly associated with such broker; (ii) a broker duly
licensed under this article; or a person regularly engaged in  the  real
estate brokerage business in a state outside of New York.
  [Except  when  permitted  pursuant to the foregoing provisions of this
section no real estate broker shall pay or agree to pay any  part  of  a
fee,  commission,  or other compensation received by the broker, or due,
or to become due to the broker to any person, firm or corporation who or
which is or is to be a party to  the  transaction  in  which  such  fee,
commission or other compensation shall be or become due to the broker.]
  3.  NOTHING  IN  THIS SECTION SHALL PROHIBIT A REAL ESTATE BROKER FROM
OFFERING ANY PART OF A FEE, COMMISSION, OR OTHER  COMPENSATION  RECEIVED
BY  THE  BROKER  TO THE SELLER, BUYER, LANDLORD OR TENANT WHO IS BUYING,
SELLING, EXCHANGING, LEASING, RENTING OR NEGOTIATING  A  LOAN  UPON  ANY
REAL  ESTATE INCLUDING THE RESALE OF A CONDOMINIUM OR COOPERATIVE APART-
MENT. SUCH FEE, COMMISSION, OR OTHER COMPENSATION MUST NOT  BE  MADE  TO
THE  SELLER,  BUYER,  LANDLORD  OR  TENANT  FOR  PERFORMING ANY ACTIVITY
REQUIRING A LICENSE UNDER THIS ARTICLE.
  S 2. This act shall take effect immediately.

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