BILL NUMBER: S411

SPONSOR: THOMAS
 
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 OR GENERAL IDEA OF BILL:

To provide clear standards about what the state expects for adequate and
reasonable supervision over real estate agents by real estate brokers.
 
SUMMARY OF SPECIFIC PROVISIONS:

Section one of the bill amends real property law section 442-c. The
section codifies Department of State regulations stating that real
estate brokers have a duty to supervise real estate salesmen and associ-
ate real estate brokers through regular, frequent and consistent
personal guidance, instruction, and oversight. The section expands on
the Department's regulations by requiring that broker supervision be
reasonable and adequate.

              

Reasonable and adequate supervision can be determined by (1)the avail-
ability of the supervising broker to all salesmen and associate brokers
under their supervision to review and approve all documents; (2) the
distance between the supervising broker's main location and all branch
offices with salesmen and associate brokers the supervising broker over-
sees; and (3) the ability of the broker to familiarize salesmen and
associate brokers with the requirements of federal and state law govern-
ing real estate transactions.

A broker can have their license revoked for failure to exercise reason-
able and adequate supervision over salesmen and associate brokers.

Section two is 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.

 
PRIOR LEGISLATIVE HISTORY:

2021-22: S.2156 (Thomas) / A.9740 (Solages) - Referred to Judiciary.

 
FISCAL IMPLICATIONS:

TBD.

 
EFFECTIVE DATE:
This act shall take effect immediately.