Preview
FILED: WESTCHESTER COUNTY CLERK 05/14/2019 05:40 PM INDEX NO. 60767/2018
NYSCEF DOC. NO. 451 RECEIVED NYSCEF: 05/14/2019
EXHIBIT 57A
FILED: WESTCHESTER COUNTY CLERK 05/14/2019 05:40 PM INDEX NO. 60767/2018
NYSCEF DOC.
9/12/2018 NO. 451 Dual RECEIVED
Houlihan NYSCEF:
Lawrence 05/14/2019
Agency |
NEW YORK REAL ESTATE NEWs
NEW YORK GTY REAL ESTATE NEW5
Dual agency dispute serves as a warning sign for brokers
Firms hold but oversight is often
training spotty
By Meenal Vamburkar and Kevin Sun | August 22, 2018 08:00AM
(Credit:iStock)
In of 2017, Pamela Goldstein spotted a $599,000 for a Colonial-style
spring listing
the Hartsdale section of Greenburgh. She contacted the agent, Gino Bello at
listing
and received a message from Daniel Cezimbra, another agent at Houlihan
quicidy
accompanied her to the house
showing
and warned Goldstein of a
bidding
war. He
submit a $635,000 bid.
She would later raise the offer to $637,000, at Cezimbra's urging, and close
allegedly
despite an inspection that revealed problems. But what transpired
up to that
leading
directed a spotlight on a process known as dual agency, in which a brokerage represent
FILED: WESTCHESTER COUNTY CLERK 05/14/2019 05:40 PM INDEX NO. 60767/2018
9/12/2018 Dual Agency | Houlihan
Lawrence
NYSCEF DOC. NO. 451 RECEIVED NYSCEF: 05/14/2019
In a class-action seeking lawsuit filed in New York Supreme court in July, Goldstein argued that Houlihan
was not representing her best interests in the transaction, and the dual agency disclosure forms Houlihan
submitted were not properly filled out. She claimed Houlihan, which was bought by Warren Buffett's
Berkshire Hathaway last year for an undisclosed sum, provides less disclosure than itspeers about its
agents'
dual roles, baked dual agency into itsbasic business strategy, and represented both sides of the deal
in nine out of 10 of itsbiggest Westchester sales of 2012 The lawsuit, in which she's the lead plaintiff, seeks
the return of hundreds of commissions dating back to 2011 from Houlihan representing both sides of the
"predatory."
deal. She called Houlihan's practices
represented" her."
Cezimbra has said Goldstein was "well and said that every disclosure was "laid out to
Houlihan Lawrence, with 1,300-plus agents and over $3.6 billion in sales in Westchester County in 2016,
practices."
also said itwas "confident in its business
The practice of dual isn't uncommon - in markets where a few firms dominate. But
agency especially
improper disclosures and lack of transparency can quickly turn a tricky situation into an unethical, or
illegal, one, brokers said. The Houlihan Lawrence case, and others highlight the importance of training, the
dangers of being too lax and the challenges of oversight.
clearly" Compass'
"It is a subject matter that has to be clarified very, very said Leonard Steinberg. But "it's
consumer."
easily guided by what's in the best interest of the
In New York, dual agency is legal. It can occur when brokers employed by the same firm represent the
buyer and the seller in a deal. It can also happen when a seller's broker finds a buyer or tenant for a
property and represents both parties.
Regardless of how the Houlihan case pans out, it'sa reminder to the industry to ensure they engage in dual
agency in the proper ways, said Neil Garfinkel, broker counsel to the Real Estate Board of New York. Across
the top of the New York Department of State's memo on the issue, bold letters read: "BE WARY OF DUAL
AGENCY."
The guidance emphasizes that it'sthe broker's responsibility to ensure the client understands
loyalty."
they're "giving up their right to the agent's undivided
That means broker and firm need to be educated on how to handle the situation, said Elizabeth Ann
Stribling-Kivlan, president of Stribling & Associates. Especially because the paperwork can be hard to
agents shouldn't assume consumers know what they're themselves into - even ifit's an
decipher, getting
uncomfortable conversation.
things,"
"If you're negotiating deals, you should be able to have a conversation about different she said.
Another prominent case involving a dual agency dispute took place in California. In 2016, the Horiike v.
Coldwell Banker case went to the state's Supreme Court - which ruled that a real estate brokerage
up
representing both the buyer and seller in a deal owes the same fiduciary responsibilities to each party. The
case centered on Chinese millionaire Hiroshi Horiike's $12.25 million purchase of a Malibu property.
California's Second District Court of Appeals ruled that Coldwell Banker was operating as a dual agent and
https://therealdeal.com/2018/08/22/dual-agency-dispute-serves-as-a-warning-sign-for-brokers/ 2/4
FILED: WESTCHESTER COUNTY CLERK 05/14/2019 05:40 PM INDEX NO. 60767/2018
9/12/2018 Dual Agency | Houlihan
Lawrence
NYSCEF DOC. NO. 451 RECEIVED NYSCEF: 05/14/2019
owed a fiduciary responsibility to Horiike through both of its agents. The firm appealed the decision, but
the Supreme Court affirmed it.
Separately, in New York, Douglas Elliman's Roger Erickson was issued a $2,000 fine and ordered to
complete 10 hours of ethics training for allegedly having secretly worked as a dual agent on a 2009 deal.
Stribling-Kivlan said she frequently fields questions about dual agency at her firm, and it'sincluded in
learn"
agent training. Garfinkel also does training at REBNY, including "lunch and meetings in his office. In
addition to answering agent inquiries, tactics have included role-playing exercises and a video series.
Firms should have a policy and procedure in place for explaining dual agency and not being able to offer
loyalty,"
the "full realm of undivided Garfinkel said.
For Pamela D'Arc, a broker at Stribling, it'sa familiar experience. If a direct client approaches her about a
she said she is quick to explain she represents the seller - and walk them through the disclosure
listing,
before signing anything.
process,"
"Sometimes people take for granted that the layman understands the D'Arc said. "What's second
buyer."
nature to the broker is not second nature to a
Inevitably, as in any industry, there are bad actors or simply negligent ones. The trouble is that policing the
operations of a company full of independent contractors isn't easy, said Donna Olshan, head of Olshan
thing," lax."
Realty. "They call their own shots, do their own she said. "Day to day, oversight can be
But the consequences of getting caught can be significant. In California, during this decade, at least 16
agents have been disciplined - licenses restricted or revoked - due to
including being suspended,
violations dual agency, to the state's Department of Real Estate.
involving according
There can also be monetary penalties. Illinois has had around 14 instances of enforcement involving this
issue since 2010. In February 2015, for example, one agent was placed on "indefinite probation for a
minimum of two years for failing to obtain a written listing agreement and a written dual agency
transaction,"
agreement in a real estate according to the state's Department of Financial and Professional
Regulation.
Another agent in the state was placed on probation for two years and fined $4,000. Yet another was
for"
indefinitely suspended and fined $25,000 failure to disclose license status to client and for improperly
buyer."
acting as a dual agent in a transaction in which he was the
"over-communicate" -
Though itmay be difficult to monitor agents, firms stillneed to encourage agents to
and give more than just a slap on the wrist when they find wrongdoing, Steinberg said.
self-regulate," industry."
"It'sthe industry's role to he said. "So we don't have to have outside people sue the
Tags: houlihan lawrence, Residential Real Estate
https://therealdeal.com/2018/08/22/dual-agency-dispute-serves-as-a-warning-sign-for-brokers/ 3/4
FILED: WESTCHESTER COUNTY CLERK 05/14/2019 05:40 PM INDEX NO. 60767/2018
9/12/2018 Dual Agency | Houlihan
Lawrence
NYSCEF DOC. NO. 451 RECEIVED NYSCEF: 05/14/2019
https://therealdeal.com/2018/08/22/dual-agency-dispute-serves-as-a-warning-sign-for-brokerst 4/4
Preview
FILED: WESTCHESTER COUNTY CLERK 05/14/2019 05:40 PM INDEX NO. 60767/2018 NYSCEF DOC. NO. 451 RECEIVED NYSCEF: 05/14/2019 EXHIBIT 57A FILED: WESTCHESTER COUNTY CLERK 05/14/2019 05:40 PM INDEX NO. 60767/2018 NYSCEF DOC. 9/12/2018 NO. 451 Dual RECEIVED Houlihan NYSCEF: Lawrence 05/14/2019 Agency | NEW YORK REAL ESTATE NEWs NEW YORK GTY REAL ESTATE NEW5 Dual agency dispute serves as a warning sign for brokers Firms hold but oversight is often training spotty By Meenal Vamburkar and Kevin Sun | August 22, 2018 08:00AM (Credit:iStock) In of 2017, Pamela Goldstein spotted a $599,000 for a Colonial-style spring listing the Hartsdale section of Greenburgh. She contacted the agent, Gino Bello at listing and received a message from Daniel Cezimbra, another agent at Houlihan quicidy accompanied her to the house showing and warned Goldstein of a bidding war. He submit a $635,000 bid. She would later raise the offer to $637,000, at Cezimbra's urging, and close allegedly despite an inspection that revealed problems. But what transpired up to that leading directed a spotlight on a process known as dual agency, in which a brokerage represent FILED: WESTCHESTER COUNTY CLERK 05/14/2019 05:40 PM INDEX NO. 60767/2018 9/12/2018 Dual Agency | Houlihan Lawrence NYSCEF DOC. NO. 451 RECEIVED NYSCEF: 05/14/2019 In a class-action seeking lawsuit filed in New York Supreme court in July, Goldstein argued that Houlihan was not representing her best interests in the transaction, and the dual agency disclosure forms Houlihan submitted were not properly filled out. She claimed Houlihan, which was bought by Warren Buffett's Berkshire Hathaway last year for an undisclosed sum, provides less disclosure than itspeers about its agents' dual roles, baked dual agency into itsbasic business strategy, and represented both sides of the deal in nine out of 10 of itsbiggest Westchester sales of 2012 The lawsuit, in which she's the lead plaintiff, seeks the return of hundreds of commissions dating back to 2011 from Houlihan representing both sides of the "predatory." deal. She called Houlihan's practices represented" her." Cezimbra has said Goldstein was "well and said that every disclosure was "laid out to Houlihan Lawrence, with 1,300-plus agents and over $3.6 billion in sales in Westchester County in 2016, practices." also said itwas "confident in its business The practice of dual isn't uncommon - in markets where a few firms dominate. But agency especially improper disclosures and lack of transparency can quickly turn a tricky situation into an unethical, or illegal, one, brokers said. The Houlihan Lawrence case, and others highlight the importance of training, the dangers of being too lax and the challenges of oversight. clearly" Compass' "It is a subject matter that has to be clarified very, very said Leonard Steinberg. But "it's consumer." easily guided by what's in the best interest of the In New York, dual agency is legal. It can occur when brokers employed by the same firm represent the buyer and the seller in a deal. It can also happen when a seller's broker finds a buyer or tenant for a property and represents both parties. Regardless of how the Houlihan case pans out, it'sa reminder to the industry to ensure they engage in dual agency in the proper ways, said Neil Garfinkel, broker counsel to the Real Estate Board of New York. Across the top of the New York Department of State's memo on the issue, bold letters read: "BE WARY OF DUAL AGENCY." The guidance emphasizes that it'sthe broker's responsibility to ensure the client understands loyalty." they're "giving up their right to the agent's undivided That means broker and firm need to be educated on how to handle the situation, said Elizabeth Ann Stribling-Kivlan, president of Stribling & Associates. Especially because the paperwork can be hard to agents shouldn't assume consumers know what they're themselves into - even ifit's an decipher, getting uncomfortable conversation. things," "If you're negotiating deals, you should be able to have a conversation about different she said. Another prominent case involving a dual agency dispute took place in California. In 2016, the Horiike v. Coldwell Banker case went to the state's Supreme Court - which ruled that a real estate brokerage up representing both the buyer and seller in a deal owes the same fiduciary responsibilities to each party. The case centered on Chinese millionaire Hiroshi Horiike's $12.25 million purchase of a Malibu property. California's Second District Court of Appeals ruled that Coldwell Banker was operating as a dual agent and https://therealdeal.com/2018/08/22/dual-agency-dispute-serves-as-a-warning-sign-for-brokers/ 2/4 FILED: WESTCHESTER COUNTY CLERK 05/14/2019 05:40 PM INDEX NO. 60767/2018 9/12/2018 Dual Agency | Houlihan Lawrence NYSCEF DOC. NO. 451 RECEIVED NYSCEF: 05/14/2019 owed a fiduciary responsibility to Horiike through both of its agents. The firm appealed the decision, but the Supreme Court affirmed it. Separately, in New York, Douglas Elliman's Roger Erickson was issued a $2,000 fine and ordered to complete 10 hours of ethics training for allegedly having secretly worked as a dual agent on a 2009 deal. Stribling-Kivlan said she frequently fields questions about dual agency at her firm, and it'sincluded in learn" agent training. Garfinkel also does training at REBNY, including "lunch and meetings in his office. In addition to answering agent inquiries, tactics have included role-playing exercises and a video series. Firms should have a policy and procedure in place for explaining dual agency and not being able to offer loyalty," the "full realm of undivided Garfinkel said. For Pamela D'Arc, a broker at Stribling, it'sa familiar experience. If a direct client approaches her about a she said she is quick to explain she represents the seller - and walk them through the disclosure listing, before signing anything. process," "Sometimes people take for granted that the layman understands the D'Arc said. "What's second buyer." nature to the broker is not second nature to a Inevitably, as in any industry, there are bad actors or simply negligent ones. The trouble is that policing the operations of a company full of independent contractors isn't easy, said Donna Olshan, head of Olshan thing," lax." Realty. "They call their own shots, do their own she said. "Day to day, oversight can be But the consequences of getting caught can be significant. In California, during this decade, at least 16 agents have been disciplined - licenses restricted or revoked - due to including being suspended, violations dual agency, to the state's Department of Real Estate. involving according There can also be monetary penalties. Illinois has had around 14 instances of enforcement involving this issue since 2010. In February 2015, for example, one agent was placed on "indefinite probation for a minimum of two years for failing to obtain a written listing agreement and a written dual agency transaction," agreement in a real estate according to the state's Department of Financial and Professional Regulation. Another agent in the state was placed on probation for two years and fined $4,000. Yet another was for" indefinitely suspended and fined $25,000 failure to disclose license status to client and for improperly buyer." acting as a dual agent in a transaction in which he was the "over-communicate" - Though itmay be difficult to monitor agents, firms stillneed to encourage agents to and give more than just a slap on the wrist when they find wrongdoing, Steinberg said. self-regulate," industry." "It'sthe industry's role to he said. "So we don't have to have outside people sue the Tags: houlihan lawrence, Residential Real Estate https://therealdeal.com/2018/08/22/dual-agency-dispute-serves-as-a-warning-sign-for-brokers/ 3/4 FILED: WESTCHESTER COUNTY CLERK 05/14/2019 05:40 PM INDEX NO. 60767/2018 9/12/2018 Dual Agency | Houlihan Lawrence NYSCEF DOC. NO. 451 RECEIVED NYSCEF: 05/14/2019 https://therealdeal.com/2018/08/22/dual-agency-dispute-serves-as-a-warning-sign-for-brokerst 4/4