BILL NUMBER: S2157A

SPONSOR: THOMAS
 
TITLE OF BILL:

An act to amend the real property law, in relation to associate real
estate brokers acting as office managers

 
PURPOSE OR GENERAL IDEA OF BILL:

To mandate that licensed associate brokers, operating as office manag-
ers, have the same statutory obligations of oversight placed on brokers
at their definite place of business.

 
SUMMARY OF SPECIFIC PROVISIONS:

Section one of the bill amends the definition of office manager in
subdivision 6 of section 440 of the real property law. An office manager
must have been active in the real estate industry for two of the four
years preceding their appointment as an office manager. An office manag-
er is required to supervise salesmen and associate brokers.
              

Section two is the effective date.

 
JUSTIFICATION:

In New York, real estate brokers are required to maintain and supervise
a principal place of business. Additionally, brokers with numerous
offices can appoint a licensed associate real estate broker as an office
manager to oversee their branch offices. An associate real estate broker
has the same licensing credentials as a broker and can work as an inde-
pendent agent, but has chosen to work under the name and supervision of
another broker.

However, unlike a broker, associate brokers acting as office managers
are not held to the same statutory obligations of oversight placed on
brokers at their principal place of business. Instead, office managers
are held to the same standards as a real estate agent while maintaining
their broker's license. This lack of oversight over agents by office
managers can manifest itself with agents who are not properly trained
and supervised in their behavior, performance, and compliance with fair
housing regulations.

This bill would require that associate brokers acting as office managers
are held to the same standards as licensed real estate brokers, and
ensures that proper oversight is given over real estate agents irrespec-
tive of whether they are working out of a broker's principal place of
business or branch office under an office manager.

 
PRIOR LEGISLATIVE HISTORY:

New legislation.

 
FISCAL IMPLICATIONS:

TBD.

 
EFFECTIVE DATE:
This act shall take effect immediately.
The terms real estate agent and broker are often used interchangeably.
While there may be overlaps in what they do, the two are distinctly
different, 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. A real estate
broker, on the other hand, is someone who continues their education past
the agent level to attain a higher-level license as a broker.
For example, 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. While 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 the both, meet the minimum points
required for the experience type, (e.g., buying and selling your proper-
ty, managing property owned by your employer), have satisfactorily
completed both the qualifying agent course of 75 hours, an additional
45-hour broker course as approved by the
Secretary of State, and have passed a qualifying examination adminis-
tered 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 handle most or all of
the brokerage transactions. However, it is the broker who is ultimately
responsible for all transactions that come through their brokerage and
for the supervision and conduct of its agents within their brokerage.
Brokers employing agents take on a considerable risk if an agent is not
properly trained and supervised, particularly concerning fair housing
regulations.
On November 17, 2019, Newsday revealed that over a three-year period it
had used Fred Fieberg, cofounder of the Fair Housing Justice Center, and
Robert Schwemm, Professor of Law at Kentucky College of Law and an
expert on Fair Housing Laws, to conduct tests of real estate agents
doing business from the New York City line to the Hamptons; from Long
Island Sound to the South Shore. They used eighty-six paired matches,
thirty-nine Black and White, thirty-one Hispanic and White, and sixteen
Asian and White. Newsday confirmed that the agents had houses to sell by
doing an online search of the Zillow Website. According to the Newsday
report, forty-percent of the tests demonstrated disparate treatment in
violation of Federal Fair Housing Laws. The breakdown was forty-nine
percent of Blacks, thirty-nine percent of Hispanics, and nineteen
percent of Asians experienced disparate treatment, each being equally
qualified to purchase the properties as were the Whites with whom they
were paired. The price range of the homes were reported to be from
$400,000 into the millions.
In seven tests conducted by Newsday, agents were caught providing
blatant unequal service to minority prospective homebuyers compared with
their white counterparts. One agent demanded to see identification of
the minority tester, but not the white tester. A minority tester was
required to present proof of preapproval for a mortgage loan before
receiving listings-unlike the white paired tester. An agent refused to
show listings to a minority tester unless they agreed to sign an exclu-
sive broker's agreement before the agent invited the white tester to
view homes without requiring such agreement.
In an effort to prevent these violations of fair housing laws, the
Committees recommend the Legislature enact new statute requiring brokers
standardize pre-home showing policies, including:  Thus, it is up to the
broker to supervise his or her agents by providing direct training or
training resources concerning behavior, performance, and legal compli-
ance.
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.
Such a provision must be added to provide clear standards about the
state's expectations for adequate and reasonable supervision over real
estate agents by real estate brokers.