On July 14, 2018 a
Exhibit,Appendix
was filed
involving a dispute between
Ellyn Berk,
Pamela Goldstein,
Paul Benjamin,
Tony Berk,
and
Houlihan Lawrence Inc.,
for Commercial Division
in the District Court of Westchester County.
Preview
FILED: WESTCHESTER COUNTY CLERK 11/02/2021 04:43 AM INDEX NO. 60767/2018
NYSCEF DOC. NO. 797 RECEIVED NYSCEF: 11/02/2021
EXHIBIT 101
FILED:
FILED:
FILED: WESTCHESTER
WESTCHESTER
WESTCHESTE R COUNTY
COUNTY CLERK
CLERK 11/20/2018
11/02/2021 11:34
04:43 PM
AM INDEX
INDEX
INDEX NO.
NO.
NO. 60767/2018
60767/2018
60767/2018
11/20/2018 11:34 PM
NYSCEF
NYSCEF DOC.
DOC.
DOC. NO.
NO.
NO. 354
797
354 RECEIVED
RECEIVED NYSCEF:
NYSCEF:
NYSCEF: 11/20/2018
11/02/2021
11/20/2018
A
\
State of New York
Department of State
Albany N Y 1 2231 -OOOl
Gam S Shaf f lfv
Skchftapy of St a ft
M F. M O R A N D U M
TO: Elizabeth Moore
Counsel to the Governor
FROM: James N. Baldwin i
Executive Deputy Secretary ate
SUBJECT: A- 5684-A (M. of A. Robach, »1)
Recommendation : Approval
DATE: July 12, 1991
You have requested our comments and recommendations on
the above -numbered bill.
In reviewing the regulation of real estate licensees, the
Department of State discovered much confusion among licensees and
their clients regarding the choices available to consumers and
those typically offered in residential real estate transactions
with respect to the nature of agency relationships, scope of
services available, negotiability of compensation and other issues.
The Department attempted to address these issues and explain the
choices available to consumers in law by distributing a set of
preliminary regulations for informal comment in December 1989.
This raised public consciousness about these issues and encouraged
vigorous debate about them.
A typical residential real estate transaction in New York
State results in the payment of thousands of dollars by a consumer
to a real estate licensee for services rendered. Therefore, the
Department believes that adequate disclosure to consumers by real
estate licensees is of vital importance. The first level of
disclosure should provide consumers with the range of options
available in developing a business relationship with the licensee
and also some basic information to the consumer enabling him or her
to make choices available at law. This bill addresses the primary
focus of the Department ' s proposed regulations - disclosure of the
agency status of real estate licensees to the parties in a
residential real estate transaction.
1
ccuo&l
FILED:
FILED:
FILED: WESTCHESTER
WESTCHESTER
WESTCHESTER COUNTY
COUNTY CLERK
CLERK 11/20/2018
11/02/2021
11/20/2018 11:34
04:43
11:34 PM
AM
PM INDEX
INDEX
INDEX NO.
NO.
NO. 60767/2018
60767/2018
60767/2018
NYSCEF
NYSCEF DOC.
DOC.
DOC. NO.
NO.
NO. 354
797
354 RECEIVED
RECEIVED NYSCEF:
NYSCEF:
NYSCEF: 11/20/2018
11/02/2021
11/20/2018
This bill would require real estate licensees to provide
written disclosure to residential buyers and sellers that each can
have their own agent and that brokers, when acting as agents, owe
their respective principals the six common law fiduciary duties; 1)
reasonable care, 2) confidentiality, 3) obedience, 4) full
disclosure, 5) undivided loyalty, 6) duty to account, The
disclosure form would also inform buyers and sellers that they have
several options available in authorizing their agents to work with
other brokers in appointing subagents, broker's agents and working
with agents for the other principal.
The disclosure form warns consumers that they should
carefully consider the consequences of consenting to "dual agency"
and alerts them that a broker who works as a dual agent cannot
offer the full range of fiduciary duties, Consumers are informed
that brokers cannot represent both parties absent the consumers
informed consent and that they have a right to expect the broker to
"explain the possible effects of dual representation , including
that, by consenting to the dual agency relationship, the buyer and
seller are giving up their right to undivided loyalty" . This
disclosure and the accompanying acknowledgement does not and was
not intended to relieve the licensee of his/her common law duty to
the principal to obtain informed consent through full disclosure of
the implications of the proposed dual agency relationship on the
principal .
This Department has consistently opposed the legalization
of dual agency outside of current common law strictures or its
legitimization as a regular business practice. This bill does
neither. Finally, and very significantly, the bill provides that
this statute neither limits nor alters the application of the
common law of agency to residential real estate transactions .
The bill contains the following technical drafting
defects which the sponsors acknowledge will need to be corrected by
technical amendment to prevent consumer confusion. 1) Disclosure
concerning the Buyers Agent , at lines 39-40 of page 3 of the bill
should read as follows: "The obligations of an agent are also
subject to any specific provisions set forth in the agreement
between the agency and the [seller] buyer" 2) Disclosure
concerning the Buyers Agent , at lines 41-45 of page 3 of the bill
should read as follows: "In dealings with the seller, a buyer ' s
agent should (a) exercise reasonable skill and care in performance
of the agents duties; ( b) deal honestly, fairly and in good faith
[ 1 ]; and (c) disclose all facts known to the agent materially
affecting [the value or desirability of property] the buyers
ability and/or willingness to fully perform a contract to acquire
seller' s property. 3 ) The Acknowledgment of Prospective Buyer , at
lines 38-40 of page 4 of the bill should read as follows: " ( 4) I
understand that I may engage my own agent to be my buyer ' s [broker]
agent. " The technical defects do not destroy the bills positive
effect.
2
•7"">
CCitlO^
FILED:
FILED:
FILED: WESTCHESTER
WESTCHESTER
WESTCHESTER COUNTY
COUNTY CLERK
CLERK 11/20/2018
11/02/2021
11/20/2018 11:34
04:43
11:34 PM
AM
PM INDEX
INDEX
INDEX NO.
NO.
NO. 60767/2018
60767/2018
60767/2018
NYSCEF
NYSCEF
NYSCEF DOC.
DOC.
DOC. NO.
NO.
NO. 354
797
354 RECEIVED
RECEIVED NYSCEF:
NYSCEF:
NYSCEF: 11/20/2018
11/02/2021
11/20/2018
There are several features that make this statutory
disclosure a distinct improvement over other state's statutes .
First, the bill expressly states that the statute does
not alter or repeal common law. The common law of agency was
incorporated by reference into the Real Property Law as the
standard by which the trustworthiness and competence of real estate
licensees should be measured. Thus, this statute adds a duty of
disclosure without impliedly repealing other fiduciary duties.
Second, the bill does not deceive consumers about dual
agency . In contrast to some other state' s statutes or regulations ,
which have incorrectly stated that a dual agent owes fiduciary
duties equally to adverse parties in the same transaction, the bill
makes it clear that consumers will not receive the full range of
fiduciary duties, that they waive their right to undivided loyalty
if they consent and that they should carefully consider the
consequences of consenting to such an arrangement .
Third, the bill informs consumers that they have choices
about structuring their agency relations with licensees who will
assist their agent in accomplishing their business objective.
Thus , the bill begins to correct a misconception that it is "none
of the seller's business" how much compensation will be offered to
cooperating brokers or what their agency status will be. In fact,
the disclosures required by the bill constitute a welcome change
for consumers of real estate services in that they are based upon
the premise that the buyers and the sellers are in charge of the
agents-riot the other way around . The agency status of any
assisting broker affects the scope of a principal 's potential
accountability for their errors and the amount of compensation
offered affects the effort they will expend to assist. Both
choices should be fully informed consumer choices . The disclosure
form alerts consumers to these issues.
Finally, the bill contemplates that the prescribed
disclosure form is the beginning of full disclosure of any adverse
interests between a broker and prospective clients . The disclosure
form informs consumers that the agent is expected to "carefully
explain" the real meaning of dual agency and "the possible effects
of dual representation" .
This language , when read together with the explicit
statement that the statute does not alter the common law, means
that the disclosure form is not offered as a "one size fits all"
substitution for the rigorous duties of full disclosure set forth
in common law.
The disclosure of adverse interests which exist and may
arise between broker and client, has long been inadequate in
practice and has worked to the detriment of consumers . The
Department of State as regulatory agency for the real estate
3
CCHJ033
FILED:
FILED:
FILED: WESTCHESTER
WESTCHESTER
WESTCHESTER COUNTY
COUNTY CLERK
CLERK 11/20/2018
11/20/2018
11/02/2021 11:34
11:34
04:43 PM
PM
AM INDEX
INDEX
INDEX NO.
NO.
NO. 60767/2018
60767/2018
60767/2018
NYSCEF
NYSCEF
NYSCEF DOC.
DOC.
DOC. NO.
NO.
NO. 354
797
354 RECEIVED
RECEIVED
RECEIVED NYSCEF:
NYSCEF:
NYSCEF: 11/20/2018
11/02/2021
11/20/2018
industry, took the lead in bringing these issues to the attention
of New York's licensee s and consumer s beginnin g in 1986. We were
pleased to particip ate in the negotiat ions that led to the approval
of this legislation by the Legislature.
The bill constitutes a significant step in addressing
numerous issues that impact consumers of real estate services
throughout New York State. The disclosures it prescribes answer
some common consumer questions and, hopefully, raise others which
consumers will pursue before entering into a contract to pay
thousands or tens of thousands of dollars for the services of real
estate licensees.
We recommend the bill be approved.
JNB : hw
4
CCOOIi'l
Document Filed Date
November 02, 2021
Case Filing Date
July 14, 2018
Category
Commercial Division
For full print and download access, please subscribe at https://www.trellis.law/.
Preview
FILED: WESTCHESTER COUNTY CLERK 11/02/2021 04:43 AM INDEX NO. 60767/2018 NYSCEF DOC. NO. 797 RECEIVED NYSCEF: 11/02/2021 EXHIBIT 101 FILED: FILED: FILED: WESTCHESTER WESTCHESTER WESTCHESTE R COUNTY COUNTY CLERK CLERK 11/20/2018 11/02/2021 11:34 04:43 PM AM INDEX INDEX INDEX NO. NO. NO. 60767/2018 60767/2018 60767/2018 11/20/2018 11:34 PM NYSCEF NYSCEF DOC. DOC. DOC. NO. NO. NO. 354 797 354 RECEIVED RECEIVED NYSCEF: NYSCEF: NYSCEF: 11/20/2018 11/02/2021 11/20/2018 A \ State of New York Department of State Albany N Y 1 2231 -OOOl Gam S Shaf f lfv Skchftapy of St a ft M F. M O R A N D U M TO: Elizabeth Moore Counsel to the Governor FROM: James N. Baldwin i Executive Deputy Secretary ate SUBJECT: A- 5684-A (M. of A. Robach, »1) Recommendation : Approval DATE: July 12, 1991 You have requested our comments and recommendations on the above -numbered bill. In reviewing the regulation of real estate licensees, the Department of State discovered much confusion among licensees and their clients regarding the choices available to consumers and those typically offered in residential real estate transactions with respect to the nature of agency relationships, scope of services available, negotiability of compensation and other issues. The Department attempted to address these issues and explain the choices available to consumers in law by distributing a set of preliminary regulations for informal comment in December 1989. This raised public consciousness about these issues and encouraged vigorous debate about them. A typical residential real estate transaction in New York State results in the payment of thousands of dollars by a consumer to a real estate licensee for services rendered. Therefore, the Department believes that adequate disclosure to consumers by real estate licensees is of vital importance. The first level of disclosure should provide consumers with the range of options available in developing a business relationship with the licensee and also some basic information to the consumer enabling him or her to make choices available at law. This bill addresses the primary focus of the Department ' s proposed regulations - disclosure of the agency status of real estate licensees to the parties in a residential real estate transaction. 1 ccuo&l FILED: FILED: FILED: WESTCHESTER WESTCHESTER WESTCHESTER COUNTY COUNTY CLERK CLERK 11/20/2018 11/02/2021 11/20/2018 11:34 04:43 11:34 PM AM PM INDEX INDEX INDEX NO. NO. NO. 60767/2018 60767/2018 60767/2018 NYSCEF NYSCEF DOC. DOC. DOC. NO. NO. NO. 354 797 354 RECEIVED RECEIVED NYSCEF: NYSCEF: NYSCEF: 11/20/2018 11/02/2021 11/20/2018 This bill would require real estate licensees to provide written disclosure to residential buyers and sellers that each can have their own agent and that brokers, when acting as agents, owe their respective principals the six common law fiduciary duties; 1) reasonable care, 2) confidentiality, 3) obedience, 4) full disclosure, 5) undivided loyalty, 6) duty to account, The disclosure form would also inform buyers and sellers that they have several options available in authorizing their agents to work with other brokers in appointing subagents, broker's agents and working with agents for the other principal. The disclosure form warns consumers that they should carefully consider the consequences of consenting to "dual agency" and alerts them that a broker who works as a dual agent cannot offer the full range of fiduciary duties, Consumers are informed that brokers cannot represent both parties absent the consumers informed consent and that they have a right to expect the broker to "explain the possible effects of dual representation , including that, by consenting to the dual agency relationship, the buyer and seller are giving up their right to undivided loyalty" . This disclosure and the accompanying acknowledgement does not and was not intended to relieve the licensee of his/her common law duty to the principal to obtain informed consent through full disclosure of the implications of the proposed dual agency relationship on the principal . This Department has consistently opposed the legalization of dual agency outside of current common law strictures or its legitimization as a regular business practice. This bill does neither. Finally, and very significantly, the bill provides that this statute neither limits nor alters the application of the common law of agency to residential real estate transactions . The bill contains the following technical drafting defects which the sponsors acknowledge will need to be corrected by technical amendment to prevent consumer confusion. 1) Disclosure concerning the Buyers Agent , at lines 39-40 of page 3 of the bill should read as follows: "The obligations of an agent are also subject to any specific provisions set forth in the agreement between the agency and the [seller] buyer" 2) Disclosure concerning the Buyers Agent , at lines 41-45 of page 3 of the bill should read as follows: "In dealings with the seller, a buyer ' s agent should (a) exercise reasonable skill and care in performance of the agents duties; ( b) deal honestly, fairly and in good faith [ 1 ]; and (c) disclose all facts known to the agent materially affecting [the value or desirability of property] the buyers ability and/or willingness to fully perform a contract to acquire seller' s property. 3 ) The Acknowledgment of Prospective Buyer , at lines 38-40 of page 4 of the bill should read as follows: " ( 4) I understand that I may engage my own agent to be my buyer ' s [broker] agent. " The technical defects do not destroy the bills positive effect. 2 •7""> CCitlO^ FILED: FILED: FILED: WESTCHESTER WESTCHESTER WESTCHESTER COUNTY COUNTY CLERK CLERK 11/20/2018 11/02/2021 11/20/2018 11:34 04:43 11:34 PM AM PM INDEX INDEX INDEX NO. NO. NO. 60767/2018 60767/2018 60767/2018 NYSCEF NYSCEF NYSCEF DOC. DOC. DOC. NO. NO. NO. 354 797 354 RECEIVED RECEIVED NYSCEF: NYSCEF: NYSCEF: 11/20/2018 11/02/2021 11/20/2018 There are several features that make this statutory disclosure a distinct improvement over other state's statutes . First, the bill expressly states that the statute does not alter or repeal common law. The common law of agency was incorporated by reference into the Real Property Law as the standard by which the trustworthiness and competence of real estate licensees should be measured. Thus, this statute adds a duty of disclosure without impliedly repealing other fiduciary duties. Second, the bill does not deceive consumers about dual agency . In contrast to some other state' s statutes or regulations , which have incorrectly stated that a dual agent owes fiduciary duties equally to adverse parties in the same transaction, the bill makes it clear that consumers will not receive the full range of fiduciary duties, that they waive their right to undivided loyalty if they consent and that they should carefully consider the consequences of consenting to such an arrangement . Third, the bill informs consumers that they have choices about structuring their agency relations with licensees who will assist their agent in accomplishing their business objective. Thus , the bill begins to correct a misconception that it is "none of the seller's business" how much compensation will be offered to cooperating brokers or what their agency status will be. In fact, the disclosures required by the bill constitute a welcome change for consumers of real estate services in that they are based upon the premise that the buyers and the sellers are in charge of the agents-riot the other way around . The agency status of any assisting broker affects the scope of a principal 's potential accountability for their errors and the amount of compensation offered affects the effort they will expend to assist. Both choices should be fully informed consumer choices . The disclosure form alerts consumers to these issues. Finally, the bill contemplates that the prescribed disclosure form is the beginning of full disclosure of any adverse interests between a broker and prospective clients . The disclosure form informs consumers that the agent is expected to "carefully explain" the real meaning of dual agency and "the possible effects of dual representation" . This language , when read together with the explicit statement that the statute does not alter the common law, means that the disclosure form is not offered as a "one size fits all" substitution for the rigorous duties of full disclosure set forth in common law. The disclosure of adverse interests which exist and may arise between broker and client, has long been inadequate in practice and has worked to the detriment of consumers . The Department of State as regulatory agency for the real estate 3 CCHJ033 FILED: FILED: FILED: WESTCHESTER WESTCHESTER WESTCHESTER COUNTY COUNTY CLERK CLERK 11/20/2018 11/20/2018 11/02/2021 11:34 11:34 04:43 PM PM AM INDEX INDEX INDEX NO. NO. NO. 60767/2018 60767/2018 60767/2018 NYSCEF NYSCEF NYSCEF DOC. DOC. DOC. NO. NO. NO. 354 797 354 RECEIVED RECEIVED RECEIVED NYSCEF: NYSCEF: NYSCEF: 11/20/2018 11/02/2021 11/20/2018 industry, took the lead in bringing these issues to the attention of New York's licensee s and consumer s beginnin g in 1986. We were pleased to particip ate in the negotiat ions that led to the approval of this legislation by the Legislature. The bill constitutes a significant step in addressing numerous issues that impact consumers of real estate services throughout New York State. The disclosures it prescribes answer some common consumer questions and, hopefully, raise others which consumers will pursue before entering into a contract to pay thousands or tens of thousands of dollars for the services of real estate licensees. We recommend the bill be approved. JNB : hw 4 CCOOIi'l