Preview
FILED: WESTCHESTER COUNTY CLERK 07/14/2018 08:37 PM INDEX NO. 60767/2018
NYSCEF DOC. NO. 96 RECEIVED NYSCEF: 07/14/2018
FILED: WESTCHESTER COUNTY CLERK 07/14/2018 08:37 PM INDEX NO. 60767/2018
7/3/2018 Agency Disclosure
NYSCEF DOC. NO. 96 RECEIVED NYSCEF: 07/14/2018
Onysar
„nySal
New York $tate Associatiori
of REAl.TOR5",In
CALENDAR MEETINGS & GOVERNANCE FOUNDATIONS & DIVISIONS PROFESSIONAL STANDARDS PRESSROOM
CONTACT US
Government Affairs Legal Education~ Industry Resources
Member Perks About NYSAR
Agency Disclosure
v Key Legal Issues On August 30, 2010, the most recent revisions to the
Sprinkler for
disclosure agency disclosure law were signed by Governor David
residential
leases effective Paterson. This amendment includeschanges to the
December 3, 2014
agency disclosure form as it relates
to dualagency and
New Document Retention designated as well as the
agency requiring agency
Regulation October
effective
disclosure form to be used for all
condominiums and
13, 2014
cooperative apartments as well.As such alllicensees will
AdvertisingRegulations new form
be required to use the startingJanuary 1, 2011.
Agency Disclosure This guide willhighlightthe new changes and help to
Legal ActionCommittee betterclarifythe roleof a licenseein complying with the
decisions requirements of Real Property Law §443.
Independent contractor
CHANGES TO THE AGENCY DISCLOSURE LAW
IRS form990 policies
Standards ofPractice3-4 The major
first change is thereqnew Advanced Consent
and 16-16 still
not to Dual Agency bill
in Legal Linesuirement thatthe agency
enforceablein New York disclosure form be used in all
transactionsinvolving
Tenant Law condominiums and cooperative apartments. Priorto
Screening
January 1, 2011,condominiums and cooperative
Megan's Law
. . . apartments were exempt
specifically from the definition
of
Advertisingguidelines property"
"residentialreal thatwould have required the
Handlingof Deposits
use of theagency disclosure form. Now, withthe passage
UnlicensedReal Estate of thenew theexemption has been removed. After
law,
Assistants
January 1, 2011 agency disclosure forms must be used in
Lead paint-Juarez Courtof property"
alltransactions involving"residentialreal which
Appeal Decision
now includes condominiums and cooperative apartments.
HUD ReleasesFinal RESPA
Regulations The Department of State,Divisionof Licensing Services
(DOS) has always considered dual agency to be
Can-SPAM E-mail rules
transactionalin nature.As a result,clientscould not
Commission Escrow Act
consent to dualagency in advance of dualagency
F Brokers Reference Manual
actuallyoccurring. In a legalmemorandum published on
F LegalCounsel Compendium the DOS website, it wasclearly statedthat"As soon as
the buyer'sagent introduces the buyer to propertyin
https://www.nysar.com/legal/key-legal-issues/agency-disclosure 1/8
FILED: WESTCHESTER COUNTY CLERK 07/14/2018 08:37 PM INDEX NO. 60767/2018
7/3/2018 Agency Disclosure
NYSCEF DOC. NO. 96 RECEIVED NYSCEF: 07/14/2018
which the sellerisrepresented by the seller's
agent, dual
F NYSAR Radio
arises."
agency (DOS Legal Memorandum LI12).For
I Court/DOS Decisions years, licensees have been hampered thisnarrow
by
approach to dualagency. As a result,licenseeswho
t Legal HotlineFAQ
represented consumers as a buyer's agent were unable
t Sample Legal Forms to show properties listedwiththeir brokerage unless the
buyer's agreed to change agency relationshipsand have
Licensing Regulatory Changes
the licensee show the propertyas a seller'sagent,or the
Legal Update Documents buyer and seller both consented to dual and
agency
acknowledged me same by signing me agency disclosure
Advertising Regulations
form. Only then could the licensee show the buyer
Sample Flood Insurance listed theirbrokerage. As a result,buyers
property by
DisclosureStatement were forced to change agency relationshipswith the
and Real EstateLaws licensee thereby losingthe fiduciaryduties owed by the
Licensing
buyer's agent if the
sellers did notconsent to dualagency
Do-Not-Call Rules resource
or were unable to be reached priorto theshowing (which
Page disadvantaged the sellerbecause fewer buyers were
viewing the property).
With the new changes to theagency disclosure law,
consumers can now consent to dualagency and dual
agency with designated sales agents in advance of dual
agency actuallyarising.
CHANGES TO THE STATUTE NOT FOUND ON THE
FORM
The first
change involvesthe definitionof"residentialreal
property".The new definitionincludes condominiums and
cooperative apartments and is defined as "realproperty
used or occupied, or intended to be used or occupied,
wholly or as
partly, the home or residence of one or more
persons improved by (i)a one-to-four familydwelling or
a condominium
(ii) or cooperative apartments, but shall
not referto unimproved realproperty upon which such
constructed."
dwellings are tobe As can be seen, vacant
land and commercial property are exempt from the
requirement of usingthe form but thereis still
an
obligationunder 19 NYCRR §175.7 to"make it clear
for
acting."
which party he is Although thiscan be done
verballyit is
highly recommended thatdisclosure of
agency relationshipsbe acknowledged in writing.
The second change not found on the form is theaddition
oftwo new paragraphs defining advanced consent to dual
and designated agency. Real Property Law §443(1) now
contains the followingdefinitions:
Agency"
p. "Advance Consent toDual means written
consent signed by the Seller/Landlordor Buyer/Tenant
thatthe ListingAgent and/or buyer's agent may act as a
Dual Agent forthat Seller/Landlordand a Buyer/Tenant
forresidentialrealproperty which isthe subjectofa listing
agreement.
q. "Advanced Consent toDual Agency withDesignated
Aaents"
Sales means writtenconsent sianed by the
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7/3/2018 Agency Disclosure
NYSCEF DOC. NO. 96 J
RECEIVED NYSCEF: 07/14/2018
Seller/Landlord or Buyer/Tenant thatindicates the name
of theagent appointed torepresent the Seller/Landlordor
Buyer/Tenant as a Designated Sales Agent forresidential
realproperty which isthe subjectofa listingagreement.
Overall,the changes tothe form and the additionofthe
definitionswillhelp tosimplifythe disclosure process for
licensees. The optionto allowsellersand buyers to
consent to dualagency and designated agency will
benefitboth consumers and licensees from having tofill
out numerous agency disclosure forms in dualagency
situations.
WHEN DO YOU NEED TO FILL OUT AN AGENCY
DISCLOSURE FORM
Licensees are required by law and regulationto disclose
to consumers what type of agency relationshipthat
licensee is currently
acting under. Generally, a licenseeis
acting."
required to "make it clear
forwhich party he is 19
NYCRR §175.7. This requirement applies to all
licensees
regardless ofthe type of realproperty being sold or
leased. Although §175.7 does not require a licenseeto
a form
utilize to disclose the licensee'sagency
relationship,licensee'sshould be diligentin their
disclosure to consumers exactlywhat type of agency
relationshipthe licensee is actingunder.
Article12-A of the Real Property Law setsforth
mandatory requirements relatingto thedisclosure of
agency relationships.Pursuant to Real Property Law
§443(2), "This sectionshallonly apply to transactions
involvingresidentialrealproperty". "Residentialreal
property"
is definedas "realproperty used or occupied, or
intended to be used or occupied, wholly or as
partly, the
home or residence of one or more persons improved by
(i) a one-to-four
family dwellingor a condominium
(ii) or
cooperative apartments, but shallnot refertounimproved
realproperty upon which such dwellings are tobe
constructed. The agency disclosure form required under
RPL§443(4) must be presented and acknowledged by a
consumer pursuant to RPL§443(3)(a)-(c). Listingagents
are required to providethe form toa consumer pursuant
to RPL§443(3)(a) which states: "A agent
listing shall
provide the disclosureform set forthin subdivisionfour of
thissection to a seller
or landlordpriorto entering intoa
agreement
listing with theselleror landlordand shall
obtain a signed acknowledgment from the selleror
landlord,except as provided inparagraph e ofthis
subdivision."
Seller'sand landlord'sagents are required
under RPL§443(3)(b) to "providethe disclosureform set
buyer'
forthin subdivisionfour ofthissection to a buyer,buyer's
agent, tenant or tenant'sagent at thetime of thefirst
substantive contact with thebuyer or tenant and shall
obtain a signed acknowledgement from the buyer or
tenant,except as provided inparagraph e ofthis
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7/3/2018 Agency Disclosure
NYSCEF DOC. NO. 96 RECEIVED NYSCEF: 07/14/2018
subdivision."
Likewise, a buyer's or tenant'sagent
pursuant to RPL§443(3)(c) must "provide the disclosure
form to thebuyer or tenantpriorto entering intoan
agreement to actas the buyer's agent or tenant'sagent
and shall obtaina signed acknowledgment from the buyer
or tenant,except as provided inparagraph e ofthis
subdivision.A buyer's agent or tenant's agent shall
provide the form tothe seller,seller's
agent, landlord or
landlord'sagent atthe time of thefirstsubstantive contact
with theselleror landlord and shall obtaina signed
acknowledgment from the seller,landlordor agent,
listing
subdivision."
except as provided inparagraph e ofthis
As can be seen by RPL§443(3)(a)-(c), the agency
disclosure form set forthinRPL§443(4) must be
presented to a consumer at"first
substantive contact".
contact"
The issuewith "first
substantive is thatthe
Department of State (DOS) provides no definitionas to
what would constitute"first
substantive contact".In the
body"
past, DOS has used the"warm approach when
body"
addressing "first
substantive contact".The "warm
approach is assimple as it sounds. If a licensee
comes
intocontact with a consumer in one ofthe scenarios set
forthinRPL§443(3)(a)-(c), the disclosure must be
presented. There are ofcourse some exceptions tothe
body"
"warm approach; the most prevalent ofwhich being
open houses. DOS has provided an opinion letterdated
August 18, 1995, thatstates a seller's
agent does not
have to present a disclosure form to everyperson who
contact"
attends an open house where no "substantive
has been made (broker greeting people, showing them
the house, providing general information and answering
contact"
questions about the property)."Substantive
occurs should buyer express serious interestin
discussing the terms ofan offerorwhere seller'sagent
helping buyer identifysuitableproperty.Another exception
to thewarm body approach is one thatis occurringwith
greater frequency in themodern technology driven
market, consumers emailing,faxing, telephoning or
communicating via theinternetwith licensees.Through a
decision by an Administrative Law Judge, it canbe
determined what standard licensees willbe held toin a
situationwhere the only contactwith a consumer is
through email, fax,telephone or viathe internet.
In the
case of DOS v. Holzbach, 49 DOS 02 (2002) a licensee
had been communicating with a consumer to represent
the consumer as a buyer's agent. On April25,2001, the
licensee and the consumer agreed via telephone, thatthe
buyer'
licensee would represent the consumer as a buyer's
agent. No agency disclosure form was provided in any
manner atthis time.On May 6, 2001, the licenseeand the
consumer met for thefirsttimeand a backdated agency
disclosure form was provided.The Administrative Law
Judge determined that"although the buyers were not
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7/3/2018 Agency Disclosure
NYSCEF DOC. NO. 96 RECEIVED NYSCEF: 07/14/2018
present inRochester atthe time of thatcontact, the
evidence amply demonstrates thatthe form could have
been faxed tothem and that they could have faxed back
theiracknowledgements. The backdating ofthe form,
although intended to show when the first
substantive
contact was, improperly muddied the issue and was a
incompetency."
demonstration of DOS v. Holzbach, 49
DOS 02 (2002).As such, it is foreseeable
thatthe same
standard should be applied in scenariosinvolving
licensees communicating with consumers via email,fax or
viathe internet.The agency disclosure can be provided to
the consumer viafax, email or by download from the
internet(DOS has the form available fordownload atthe
"REAL ESTATE BROKER/SALESPERSON PAGE"). The
decision clearlystates thatthe licensee could have
satisfiedthe requirements of RPL§443(3)(c) by faxing the
agency disclosure form to theconsumer, have the
consumer sign theform and fax it backtothe licensee. As
such, the same should hold truefor licensees
body"
communicating with consumers where no "warm
meeting occurs at first
substantive contact.
When dual agency is discussed with theclient,the client
willhave the option to indicatetheirconsent to dual
agency in advance by indicatingthe same on the agency
disclosure form. Advanced consent to dualagency with
designated salesagents can be done in thesame
manner. The onlydifferenceis thattheseller,landlord,
buyer or tenant willbe able todesignate a specific
licensee as a designated agent should it arise.
It is not
required that bothdesignated agents are filled
in when
advanced consent is given.In otherwords, when a seller
consents to dualagency with designated sales agents in
advance, it is likely
thatthe seller
willdesignate their
agent
listing (unlessthe listingagent is theprincipal
broker since principalbrokers are prohibitedfrom acting
as a designated agent). Likewise, a buyer willmost likely
designate theirbuyer's agent as theirdesignated agent
(except in theinstance where the buyer's agent is the
principal).
Once dual agency with designated sales
agents arises, both sides willknow the identityofthe
other designated agent.
In discussions with the Department of State, NYSAR has
clarified
the responsibilityofa licensee once dualagency
or dualagency with designated salesagents arises.If
dual agency arisesas a resultof a showing, the licensee
is notrequired to the
notify sellerimmediately since the
sellershould reasonably presume thatdual agency
showings willoccur during the time ofthe listing.
However, it is highly
recommended thatthe seller be
informed as to all
instances ofdual agency thatare the
resultofa showing. This notification
can be done via
telephone, email (using the address provided by the
fax
seller), (using thefax number provided by the seller)
. ... . . ...-.- . .. ..
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7/3/2018 Agency Disclosure
NYSCEF DOC. NO. 96 RECEIVED NYSCEF: 07/14/2018
or by letter.
As always, NY5AN recommends allnotices
be in writingso the licenseewillhave documented proof
ofany such notification.
Afterdual agency arises,if a potential
purchaser begins
negotiations ofany type,it is required
thatthe licensee
contact the sellerand inform them thatthere is a dual
agency situationwhere the buyer is showing interestin
the property.Again, thisnotificationcan be done via
telephone, email (using the address provided by the
fax
seller), (using the faxnumber provided by the seller)
or by letter.
In orderto minimize the potentialforliability,
allnotices should be in writing
and made at thetime of
negotiations or immediately thereafter.If a dual
agency
showing resultsin thepresentation ofa purchase offer,it
is recommended thatthe signed agency disclosure forms
be attached tothe purchase offerso it is clear
tothe seller
and buyer thatthe transactionis dualagency innature.
There is nothingprohibitinga licenseefrom having their
execute
client(s) a new agency disclosure form at thetime
ofcontract to memorialize theirunderstanding of a
licensee'sagency status.
Licensees should be aware thatdual agency must be
discussed with thesellerand/or buyer atthe onset of
discussions concerning agency. The law specifically
states thatthe client consent
is giving to "advanced
informed consent". This means the clientmust be fully
informed as to all
aspects of dualagency. Clientsneed to
be fullyinformed as tothe fiduciaryobligations they willbe
losing by agreeing to dualagency as well.Licensees must
make clear
it perfectly what the clientis consentingto and
how it will
affectthe representation they are receiving
from the licensee.Failure to do so can be considered a
violationof Article
12-A of the Real Property Law and may
subject the licenseeto DOS disciplinaryaction.
Upon signing the agency disclosure form, the licensee
must provide a copy of theform tothe consumer. 19
NYCRR §175.12 states as follows:"a realestate broker
shallimmediately delivera duplicate original
ofany
instrument to any partyor partiesexecuting the same,
where such instrument has been prepared by such broker
or under hissupervision and where such instrument
relatesto theemployment ofthe broker or toany matters
pertainingtothe consummation of a lease,or the
purchase, sale orexchange of realproperty or any other
type of realestatetransaction in which he may participate
broker."
as a
If at first
substantive contactwith theconsumer, a
licensee provides the agency disclosureform to a
consumer and the consumer refuses to signthe form,
RPL§443(3)(e) provides the licenseewith a mechanism
by which the licensee can document the refusal.
RPL§443(3)(e) states: "If the
seller,buyer,landlord or
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FILED: WESTCHESTER COUNTY CLERK 07/14/2018 08:37 PM INDEX NO. 60767/2018
7/3/2018 Agency Disclosure
NYSCEF DOC. NO. 96 RECEIVED NYSCEF: 07/14/2018
tenant refuses to signan acknowledgment of receipt
pursuant tothis subdivision,the agent shallset forth
under oath or affirmationa writtendeclaration ofthe facts
ofthe refusal and shallmaintain a copy ofthe declaration
years."
fornot less than three If a licenseeis involvedin a
situationwhere a consumer refuses to signthe agency
disclosure form,the licensee should clearlystatethe
name(s) ofthe consumer(s) and the facts surrounding the
refusalofthe acknowledgement. Afterwhich, the licensee
needs to signthe declarationin thepresence of a notary
publicand have the declaration notarized.It shouldbe
noted that RPL§443(3)(e) is onlyapplicable in those
situationswhere a consumer refuses to signthe form. It
would be contrarytothe statute if the
licensee were to
followthe provisions of RPL§443(3)(e) forany other
reason such as the licensee forgot to bringthe agency
disclosure form with them.
NYSAR has developed severaltoolsto assist members in
compliance with thenew agency disclosure requirements
including:
Click here toview the 2011 Agency Disclosure Guide
• Click here todownload the Advanced Informed
Consent to Dual Agency form
• Click here todownload the disclosureform for
buyers and sellers
• Click here todownload the disclosureform for
landlordsand tenants
• Click here toread about the new Advanced
Consent to Dual Agency bill
in Legal Lines
Preview
FILED: WESTCHESTER COUNTY CLERK 07/14/2018 08:37 PM INDEX NO. 60767/2018 NYSCEF DOC. NO. 96 RECEIVED NYSCEF: 07/14/2018 FILED: WESTCHESTER COUNTY CLERK 07/14/2018 08:37 PM INDEX NO. 60767/2018 7/3/2018 Agency Disclosure NYSCEF DOC. NO. 96 RECEIVED NYSCEF: 07/14/2018 Onysar „nySal New York $tate Associatiori of REAl.TOR5",In CALENDAR MEETINGS & GOVERNANCE FOUNDATIONS & DIVISIONS PROFESSIONAL STANDARDS PRESSROOM CONTACT US Government Affairs Legal Education~ Industry Resources Member Perks About NYSAR Agency Disclosure v Key Legal Issues On August 30, 2010, the most recent revisions to the Sprinkler for disclosure agency disclosure law were signed by Governor David residential leases effective Paterson. This amendment includeschanges to the December 3, 2014 agency disclosure form as it relates to dualagency and New Document Retention designated as well as the agency requiring agency Regulation October effective disclosure form to be used for all condominiums and 13, 2014 cooperative apartments as well.As such alllicensees will AdvertisingRegulations new form be required to use the startingJanuary 1, 2011. Agency Disclosure This guide willhighlightthe new changes and help to Legal ActionCommittee betterclarifythe roleof a licenseein complying with the decisions requirements of Real Property Law §443. Independent contractor CHANGES TO THE AGENCY DISCLOSURE LAW IRS form990 policies Standards ofPractice3-4 The major first change is thereqnew Advanced Consent and 16-16 still not to Dual Agency bill in Legal Linesuirement thatthe agency enforceablein New York disclosure form be used in all transactionsinvolving Tenant Law condominiums and cooperative apartments. Priorto Screening January 1, 2011,condominiums and cooperative Megan's Law . . . apartments were exempt specifically from the definition of Advertisingguidelines property" "residentialreal thatwould have required the Handlingof Deposits use of theagency disclosure form. Now, withthe passage UnlicensedReal Estate of thenew theexemption has been removed. After law, Assistants January 1, 2011 agency disclosure forms must be used in Lead paint-Juarez Courtof property" alltransactions involving"residentialreal which Appeal Decision now includes condominiums and cooperative apartments. HUD ReleasesFinal RESPA Regulations The Department of State,Divisionof Licensing Services (DOS) has always considered dual agency to be Can-SPAM E-mail rules transactionalin nature.As a result,clientscould not Commission Escrow Act consent to dualagency in advance of dualagency F Brokers Reference Manual actuallyoccurring. In a legalmemorandum published on F LegalCounsel Compendium the DOS website, it wasclearly statedthat"As soon as the buyer'sagent introduces the buyer to propertyin https://www.nysar.com/legal/key-legal-issues/agency-disclosure 1/8 FILED: WESTCHESTER COUNTY CLERK 07/14/2018 08:37 PM INDEX NO. 60767/2018 7/3/2018 Agency Disclosure NYSCEF DOC. NO. 96 RECEIVED NYSCEF: 07/14/2018 which the sellerisrepresented by the seller's agent, dual F NYSAR Radio arises." agency (DOS Legal Memorandum LI12).For I Court/DOS Decisions years, licensees have been hampered thisnarrow by approach to dualagency. As a result,licenseeswho t Legal HotlineFAQ represented consumers as a buyer's agent were unable t Sample Legal Forms to show properties listedwiththeir brokerage unless the buyer's agreed to change agency relationshipsand have Licensing Regulatory Changes the licensee show the propertyas a seller'sagent,or the Legal Update Documents buyer and seller both consented to dual and agency acknowledged me same by signing me agency disclosure Advertising Regulations form. Only then could the licensee show the buyer Sample Flood Insurance listed theirbrokerage. As a result,buyers property by DisclosureStatement were forced to change agency relationshipswith the and Real EstateLaws licensee thereby losingthe fiduciaryduties owed by the Licensing buyer's agent if the sellers did notconsent to dualagency Do-Not-Call Rules resource or were unable to be reached priorto theshowing (which Page disadvantaged the sellerbecause fewer buyers were viewing the property). With the new changes to theagency disclosure law, consumers can now consent to dualagency and dual agency with designated sales agents in advance of dual agency actuallyarising. CHANGES TO THE STATUTE NOT FOUND ON THE FORM The first change involvesthe definitionof"residentialreal property".The new definitionincludes condominiums and cooperative apartments and is defined as "realproperty used or occupied, or intended to be used or occupied, wholly or as partly, the home or residence of one or more persons improved by (i)a one-to-four familydwelling or a condominium (ii) or cooperative apartments, but shall not referto unimproved realproperty upon which such constructed." dwellings are tobe As can be seen, vacant land and commercial property are exempt from the requirement of usingthe form but thereis still an obligationunder 19 NYCRR §175.7 to"make it clear for acting." which party he is Although thiscan be done verballyit is highly recommended thatdisclosure of agency relationshipsbe acknowledged in writing. The second change not found on the form is theaddition oftwo new paragraphs defining advanced consent to dual and designated agency. Real Property Law §443(1) now contains the followingdefinitions: Agency" p. "Advance Consent toDual means written consent signed by the Seller/Landlordor Buyer/Tenant thatthe ListingAgent and/or buyer's agent may act as a Dual Agent forthat Seller/Landlordand a Buyer/Tenant forresidentialrealproperty which isthe subjectofa listing agreement. q. "Advanced Consent toDual Agency withDesignated Aaents" Sales means writtenconsent sianed by the https://www.nysar.com/legal/key-legal-issues/agency-disclosure 2/8 FILED: WESTCHESTER COUNTY CLERK 07/14/2018 08:37 PM INDEX NO. 60767/2018 7/3/2018 Agency Disclosure NYSCEF DOC. NO. 96 J RECEIVED NYSCEF: 07/14/2018 Seller/Landlord or Buyer/Tenant thatindicates the name of theagent appointed torepresent the Seller/Landlordor Buyer/Tenant as a Designated Sales Agent forresidential realproperty which isthe subjectofa listingagreement. Overall,the changes tothe form and the additionofthe definitionswillhelp tosimplifythe disclosure process for licensees. The optionto allowsellersand buyers to consent to dualagency and designated agency will benefitboth consumers and licensees from having tofill out numerous agency disclosure forms in dualagency situations. WHEN DO YOU NEED TO FILL OUT AN AGENCY DISCLOSURE FORM Licensees are required by law and regulationto disclose to consumers what type of agency relationshipthat licensee is currently acting under. Generally, a licenseeis acting." required to "make it clear forwhich party he is 19 NYCRR §175.7. This requirement applies to all licensees regardless ofthe type of realproperty being sold or leased. Although §175.7 does not require a licenseeto a form utilize to disclose the licensee'sagency relationship,licensee'sshould be diligentin their disclosure to consumers exactlywhat type of agency relationshipthe licensee is actingunder. Article12-A of the Real Property Law setsforth mandatory requirements relatingto thedisclosure of agency relationships.Pursuant to Real Property Law §443(2), "This sectionshallonly apply to transactions involvingresidentialrealproperty". "Residentialreal property" is definedas "realproperty used or occupied, or intended to be used or occupied, wholly or as partly, the home or residence of one or more persons improved by (i) a one-to-four family dwellingor a condominium (ii) or cooperative apartments, but shallnot refertounimproved realproperty upon which such dwellings are tobe constructed. The agency disclosure form required under RPL§443(4) must be presented and acknowledged by a consumer pursuant to RPL§443(3)(a)-(c). Listingagents are required to providethe form toa consumer pursuant to RPL§443(3)(a) which states: "A agent listing shall provide the disclosureform set forthin subdivisionfour of thissection to a seller or landlordpriorto entering intoa agreement listing with theselleror landlordand shall obtain a signed acknowledgment from the selleror landlord,except as provided inparagraph e ofthis subdivision." Seller'sand landlord'sagents are required under RPL§443(3)(b) to "providethe disclosureform set buyer' forthin subdivisionfour ofthissection to a buyer,buyer's agent, tenant or tenant'sagent at thetime of thefirst substantive contact with thebuyer or tenant and shall obtain a signed acknowledgement from the buyer or tenant,except as provided inparagraph e ofthis https://www.nysar.com/legal/key-legal-issues/agency-disclosure 3/8 FILED: WESTCHESTER COUNTY CLERK 07/14/2018 08:37 PM INDEX NO. 60767/2018 7/3/2018 Agency Disclosure NYSCEF DOC. NO. 96 RECEIVED NYSCEF: 07/14/2018 subdivision." Likewise, a buyer's or tenant'sagent pursuant to RPL§443(3)(c) must "provide the disclosure form to thebuyer or tenantpriorto entering intoan agreement to actas the buyer's agent or tenant'sagent and shall obtaina signed acknowledgment from the buyer or tenant,except as provided inparagraph e ofthis subdivision.A buyer's agent or tenant's agent shall provide the form tothe seller,seller's agent, landlord or landlord'sagent atthe time of thefirstsubstantive contact with theselleror landlord and shall obtaina signed acknowledgment from the seller,landlordor agent, listing subdivision." except as provided inparagraph e ofthis As can be seen by RPL§443(3)(a)-(c), the agency disclosure form set forthinRPL§443(4) must be presented to a consumer at"first substantive contact". contact" The issuewith "first substantive is thatthe Department of State (DOS) provides no definitionas to what would constitute"first substantive contact".In the body" past, DOS has used the"warm approach when body" addressing "first substantive contact".The "warm approach is assimple as it sounds. If a licensee comes intocontact with a consumer in one ofthe scenarios set forthinRPL§443(3)(a)-(c), the disclosure must be presented. There are ofcourse some exceptions tothe body" "warm approach; the most prevalent ofwhich being open houses. DOS has provided an opinion letterdated August 18, 1995, thatstates a seller's agent does not have to present a disclosure form to everyperson who contact" attends an open house where no "substantive has been made (broker greeting people, showing them the house, providing general information and answering contact" questions about the property)."Substantive occurs should buyer express serious interestin discussing the terms ofan offerorwhere seller'sagent helping buyer identifysuitableproperty.Another exception to thewarm body approach is one thatis occurringwith greater frequency in themodern technology driven market, consumers emailing,faxing, telephoning or communicating via theinternetwith licensees.Through a decision by an Administrative Law Judge, it canbe determined what standard licensees willbe held toin a situationwhere the only contactwith a consumer is through email, fax,telephone or viathe internet. In the case of DOS v. Holzbach, 49 DOS 02 (2002) a licensee had been communicating with a consumer to represent the consumer as a buyer's agent. On April25,2001, the licensee and the consumer agreed via telephone, thatthe buyer' licensee would represent the consumer as a buyer's agent. No agency disclosure form was provided in any manner atthis time.On May 6, 2001, the licenseeand the consumer met for thefirsttimeand a backdated agency disclosure form was provided.The Administrative Law Judge determined that"although the buyers were not https://www.nysar.com/legal/key-legal-issues/agency-disclosure 4/8 FILED: WESTCHESTER COUNTY CLERK 07/14/2018 08:37 PM INDEX NO. 60767/2018 7/3/2018 Agency Disclosure NYSCEF DOC. NO. 96 RECEIVED NYSCEF: 07/14/2018 present inRochester atthe time of thatcontact, the evidence amply demonstrates thatthe form could have been faxed tothem and that they could have faxed back theiracknowledgements. The backdating ofthe form, although intended to show when the first substantive contact was, improperly muddied the issue and was a incompetency." demonstration of DOS v. Holzbach, 49 DOS 02 (2002).As such, it is foreseeable thatthe same standard should be applied in scenariosinvolving licensees communicating with consumers via email,fax or viathe internet.The agency disclosure can be provided to the consumer viafax, email or by download from the internet(DOS has the form available fordownload atthe "REAL ESTATE BROKER/SALESPERSON PAGE"). The decision clearlystates thatthe licensee could have satisfiedthe requirements of RPL§443(3)(c) by faxing the agency disclosure form to theconsumer, have the consumer sign theform and fax it backtothe licensee. As such, the same should hold truefor licensees body" communicating with consumers where no "warm meeting occurs at first substantive contact. When dual agency is discussed with theclient,the client willhave the option to indicatetheirconsent to dual agency in advance by indicatingthe same on the agency disclosure form. Advanced consent to dualagency with designated salesagents can be done in thesame manner. The onlydifferenceis thattheseller,landlord, buyer or tenant willbe able todesignate a specific licensee as a designated agent should it arise. It is not required that bothdesignated agents are filled in when advanced consent is given.In otherwords, when a seller consents to dualagency with designated sales agents in advance, it is likely thatthe seller willdesignate their agent listing (unlessthe listingagent is theprincipal broker since principalbrokers are prohibitedfrom acting as a designated agent). Likewise, a buyer willmost likely designate theirbuyer's agent as theirdesignated agent (except in theinstance where the buyer's agent is the principal). Once dual agency with designated sales agents arises, both sides willknow the identityofthe other designated agent. In discussions with the Department of State, NYSAR has clarified the responsibilityofa licensee once dualagency or dualagency with designated salesagents arises.If dual agency arisesas a resultof a showing, the licensee is notrequired to the notify sellerimmediately since the sellershould reasonably presume thatdual agency showings willoccur during the time ofthe listing. However, it is highly recommended thatthe seller be informed as to all instances ofdual agency thatare the resultofa showing. This notification can be done via telephone, email (using the address provided by the fax seller), (using thefax number provided by the seller) . ... . . ...-.- . .. .. https://www.nysar.com/legal/key-legal-issues/agency-disclosure 5/8 FILED: WESTCHESTER COUNTY CLERK 07/14/2018 08:37 PM INDEX NO. 60767/2018 7/3/2018 Agency Disclosure NYSCEF DOC. NO. 96 RECEIVED NYSCEF: 07/14/2018 or by letter. As always, NY5AN recommends allnotices be in writingso the licenseewillhave documented proof ofany such notification. Afterdual agency arises,if a potential purchaser begins negotiations ofany type,it is required thatthe licensee contact the sellerand inform them thatthere is a dual agency situationwhere the buyer is showing interestin the property.Again, thisnotificationcan be done via telephone, email (using the address provided by the fax seller), (using the faxnumber provided by the seller) or by letter. In orderto minimize the potentialforliability, allnotices should be in writing and made at thetime of negotiations or immediately thereafter.If a dual agency showing resultsin thepresentation ofa purchase offer,it is recommended thatthe signed agency disclosure forms be attached tothe purchase offerso it is clear tothe seller and buyer thatthe transactionis dualagency innature. There is nothingprohibitinga licenseefrom having their execute client(s) a new agency disclosure form at thetime ofcontract to memorialize theirunderstanding of a licensee'sagency status. Licensees should be aware thatdual agency must be discussed with thesellerand/or buyer atthe onset of discussions concerning agency. The law specifically states thatthe client consent is giving to "advanced informed consent". This means the clientmust be fully informed as to all aspects of dualagency. Clientsneed to be fullyinformed as tothe fiduciaryobligations they willbe losing by agreeing to dualagency as well.Licensees must make clear it perfectly what the clientis consentingto and how it will affectthe representation they are receiving from the licensee.Failure to do so can be considered a violationof Article 12-A of the Real Property Law and may subject the licenseeto DOS disciplinaryaction. Upon signing the agency disclosure form, the licensee must provide a copy of theform tothe consumer. 19 NYCRR §175.12 states as follows:"a realestate broker shallimmediately delivera duplicate original ofany instrument to any partyor partiesexecuting the same, where such instrument has been prepared by such broker or under hissupervision and where such instrument relatesto theemployment ofthe broker or toany matters pertainingtothe consummation of a lease,or the purchase, sale orexchange of realproperty or any other type of realestatetransaction in which he may participate broker." as a If at first substantive contactwith theconsumer, a licensee provides the agency disclosureform to a consumer and the consumer refuses to signthe form, RPL§443(3)(e) provides the licenseewith a mechanism by which the licensee can document the refusal. RPL§443(3)(e) states: "If the seller,buyer,landlord or https://www.nysar.com/legal/key-legal-issues/agency-disclosure 6/8 FILED: WESTCHESTER COUNTY CLERK 07/14/2018 08:37 PM INDEX NO. 60767/2018 7/3/2018 Agency Disclosure NYSCEF DOC. NO. 96 RECEIVED NYSCEF: 07/14/2018 tenant refuses to signan acknowledgment of receipt pursuant tothis subdivision,the agent shallset forth under oath or affirmationa writtendeclaration ofthe facts ofthe refusal and shallmaintain a copy ofthe declaration years." fornot less than three If a licenseeis involvedin a situationwhere a consumer refuses to signthe agency disclosure form,the licensee should clearlystatethe name(s) ofthe consumer(s) and the facts surrounding the refusalofthe acknowledgement. Afterwhich, the licensee needs to signthe declarationin thepresence of a notary publicand have the declaration notarized.It shouldbe noted that RPL§443(3)(e) is onlyapplicable in those situationswhere a consumer refuses to signthe form. It would be contrarytothe statute if the licensee were to followthe provisions of RPL§443(3)(e) forany other reason such as the licensee forgot to bringthe agency disclosure form with them. NYSAR has developed severaltoolsto assist members in compliance with thenew agency disclosure requirements including: Click here toview the 2011 Agency Disclosure Guide • Click here todownload the Advanced Informed Consent to Dual Agency form • Click here todownload the disclosureform for buyers and sellers • Click here todownload the disclosureform for landlordsand tenants • Click here toread about the new Advanced Consent to Dual Agency bill in Legal Lines