Bill S5693B-2013

Relates to clarifying the permissibility of commissions, fees, or other compensation paid to real estate brokers

Relates to clarifying the permissibility of commissions, fees, or other compensation paid to real estate brokers.

Details

Actions

  • Jun 16, 2014: returned to senate
  • Jun 16, 2014: passed assembly
  • Jun 16, 2014: ordered to third reading rules cal.266
  • Jun 16, 2014: substituted for a7979b
  • Jun 12, 2014: referred to codes
  • Jun 12, 2014: DELIVERED TO ASSEMBLY
  • Jun 12, 2014: PASSED SENATE
  • Jun 11, 2014: ORDERED TO THIRD READING CAL.1334
  • Jun 11, 2014: COMMITTEE DISCHARGED AND COMMITTED TO RULES
  • Jun 4, 2014: PRINT NUMBER 5693B
  • Jun 4, 2014: AMEND AND RECOMMIT TO JUDICIARY
  • May 29, 2014: PRINT NUMBER 5693A
  • May 29, 2014: AMEND AND RECOMMIT TO JUDICIARY
  • Jan 8, 2014: REFERRED TO JUDICIARY
  • Jan 8, 2014: returned to senate
  • Jan 8, 2014: died in assembly
  • Jun 20, 2013: referred to judiciary
  • Jun 20, 2013: DELIVERED TO ASSEMBLY
  • Jun 20, 2013: PASSED SENATE
  • Jun 20, 2013: ORDERED TO THIRD READING CAL.1538
  • Jun 20, 2013: COMMITTEE DISCHARGED AND COMMITTED TO RULES
  • Jun 5, 2013: REFERRED TO JUDICIARY

Meetings

Calendars

Votes

Memo

BILL NUMBER:S5693B

TITLE OF BILL: An act to amend the real property law, in relation to clarifying the permissibility of commissions, fees or other compensation paid to real estate brokers

PURPOSE OR GENERAL IDEA OF BILL:

The bill amends § 442 of the Real Property Law titled "Splitting Commissions," to state that nothing shall prohibit a broker from offering any part of a fee, commission, or other compensation received by the broker to the seller, buyer, landlord or tenant as an incentive for using the licensed services of that broker.

SUMMARY OF SPECIFIC PROVISIONS:

Section 1 amends section 442 of the real property law to include commissions earned in the sale or lease of cooperative apartments to the prohibition against splitting commission with a non-agent. Subdivision 2 clarifies that nothing in this section shall prohibit a real estate broker from offering any part of a fee, commission, or other compensation received by the broker to the seller, buyer, landlord or tenant who is buying, selling, exchanging, leasing, renting or negotiating a loan upon any real estate including the resale of a condominium or cooperative apartment. Such fee, commission, or other compensation must not be made to the seller, buyer, landlord or tenant for performing any activity requiring a license under this Article.

Section 2 provides that his act shall take effect immediately.

JUSTIFICATION:

Section 442 of the Real Property Law prohibits a real estate broker from offering to pay any part of the broker's commission to any party to a real estate transaction if the purpose of the payment is to compensate an unlicensed party for providing services that would otherwise require a real estate broker's license. Generally speaking, section 442 was intended to discourage unlicensed activity. Section 442 does not, however, prohibit a real estate broker from offering cash, services, or products to attract new clients and customers.

Due to the confusing language of Sec. 442, there is uncertainty in the real estate community regarding the offering of rebates and other incentives to consumers. The Department of State and the Attorney General's office have both agreed in various opinions and decisions, the ability of brokers to offer buyers and sellers, landlords and tenants, rebates and other monetary incentives for using their licensed real estate broker services.

This legislation amends § 442 of the Real Property Law to clarify the statutory language to reflect the decisions of the Department of State and the Attorney General that nothing shall prohibit a broker from offering any part of a fee, commission, or other compensation received by the broker to the seller, buyer, landlord or tenant as an incentive for using the licensed services of that broker. Since Broker rebates/incentives are already legal in New York State, this

legislation simply amends the existing statutory language to clarify and codify the practice.

PRIOR LEGISLATIVE HISTORY:

New bill.

FISCAL IMPLICATIONS:

None.

EFFECTIVE DATE:

Immediately.


Text

STATE OF NEW YORK ________________________________________________________________________ 5693--B 2013-2014 Regular Sessions IN SENATE June 5, 2013 ___________
Introduced by Sens. ZELDIN, VALESKY -- read twice and ordered printed, and when printed to be committed to the Committee on Judiciary -- recommitted to the Committee on Judiciary in accordance with Senate Rule 6, sec. 8 -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee AN ACT to amend the real property law, in relation to clarifying the permissibility of commissions, fees or other compensation paid to real estate brokers THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Section 442 of the real property law, as amended by chapter 45 of the laws of 1982, the opening paragraph as amended by chapter 316 of the laws of 2004, the second undesignated paragraph as amended by chapter 734 of the laws of 1986, is amended to read as follows: S 442. Splitting commissions. 1. No real estate broker shall pay any part of a fee, commission or other compensation received by the broker to any person for any service, help or aid rendered in any place in which this article is applicable, by such person to the broker in buying, selling, exchanging, leasing, renting or negotiating a loan upon any real estate including the resale of a condominium OR COOPERATIVE APARTMENT unless such a person be a duly licensed real estate salesman regularly associated with such broker or a duly licensed real estate broker or a person regularly engaged in the real estate brokerage busi- ness in a state outside of New York; provided, however, that notwith- standing any other provision of this section, it shall be permissible for a real estate broker to pay any part of a fee, commission, or other compensation received to an unlicensed corporation or an unlicensed limited liability company if each of its shareholders or members,
respectively, is associated as an individual with the broker as a duly licensed associate broker or salesman. 2. Furthermore, notwithstanding any other provision of law, it shall be permissible for a broker properly registered pursuant to the provisions of article twenty-three-A of the general business law who earns a commission on the original sale of a cooperative or homeowners association interest in real estate, including condominium units to pay any part of a fee, commission or other compensation received for bring- ing about such sale to a person whose [prinicipal] PRINCIPAL business is not the sale or offering of cooperatives or homeowners association interests in real property, including condominium units in this state but who is either: (i) a real estate salesman duly licensed under this article who is regularly associated with such broker; (ii) a broker duly licensed under this article; or a person regularly engaged in the real estate brokerage business in a state outside of New York. Except when permitted pursuant to the foregoing provisions of this section no real estate broker shall pay or agree to pay any part of a fee, commission, or other compensation received by the broker, or due, or to become due to the broker to any person, firm or corporation who or which is or is to be a party to the transaction in which such fee, commission or other compensation shall be or become due to the broker; PROVIDED, HOWEVER, THAT NOTHING IN THIS SECTION SHALL PROHIBIT A REAL ESTATE BROKER FROM OFFERING ANY PART OF A FEE, COMMISSION, OR OTHER COMPENSATION RECEIVED BY THE BROKER TO THE SELLER, BUYER, LANDLORD OR TENANT WHO IS BUYING, SELLING, EXCHANGING, LEASING, RENTING OR NEGOTIAT- ING A LOAN UPON ANY REAL ESTATE INCLUDING THE RESALE OF A CONDOMINIUM OR COOPERATIVE APARTMENT. SUCH FEE, COMMISSION, OR OTHER COMPENSATION MUST NOT BE MADE TO THE SELLER, BUYER, LANDLORD OR TENANT FOR PERFORMING ANY ACTIVITY REQUIRING A LICENSE UNDER THIS ARTICLE. S 2. This act shall take effect immediately.

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