The real estate industry has expressed concerns regarding the potential repercussions of the FARE Act.
NAR continues to believe that offers of compensation are an important option to help make professional representation more accessible.
Starting out in her 20s, Rondon worked with real estate legend Faith Hope Consolo while at Garrick Aug Associates, where she spent 13 years.
At the recent May 1, 2024, HGAR Board of Directors meeting, the Board voted on two association matters relating to the filing of arbitrations and administration of ethics complaints.
As seems to be the case, we are always being barraged by tons of information from various sources. Some are reliable. Others, not so much. Still, others are downright conspiratory and false. In an effort to help create a reference point for recent questions/developments and all things Realtor-related, I’m making this month’s article a “cheat sheet” of recent developments.
At the recent May 1, 2024, HGAR Board of Directors meeting, the Board voted on two association matters relating to the filing of arbitrations and administration of ethics complaints. These important changes were as follows:
Increase in Arbitration Filing Fee: In accordance with the Code of Ethics and Arbitration Manual, the HGAR Board of Directors unanimously voted to increase the fee that is to be accompanied by all arbitrations demands, effective May 1, 2024. The new fee will be increased from $250 to $500, thus bringing the fee in line with current economic conditions and inflation.
Administrative Charge in Ethics Hearings When Respondent Violates the Code of Ethics: Pursuant to the Code of Ethics and Arbitration Manual, the HGAR Board of Directors unanimously voted to establish an administrative fee of $500 that will be imposed upon any Realtor respondent found in violation of the Code of Ethics or other membership duty. No fee will be charged if no violation is found. This fee will be applicable for any ethics matter filed after May 1, 2024. The purpose of imposing this fee is to offset the costs related to all ethics proceedings, including costs related to staffing, hearings, filing, storage, and oversight. In the past, HGAR did not charge a fee. No fee is required to file a complaint.
New Property Condition Disclosure Statement (PCDS): As a reminder, the new, New York State PCDS law is now in full force. A $500 credit will no longer be permitted in lieu of providing the PCDS. Pursuant to the law, licensees representing a seller must explain the rights and responsibilities relating to the PCDS to their client, which includes: (1) the PCDS must be filled out (preferably with the guidance of the seller’s attorney); (2) it must be provided to the buyer prior to execution of a contract of sale and; (3) it must be attached to the contract of sale.
Alternatively, if the licensee is representing a buyer, they must: (1) inform the buyer that they are entitled to receive the PCDS prior to the execution of the contract of sale and; (2) that the PCDS must be attached to the contract of sale.
In the PCDS, there are new questions relating to flooding and mold. These must be filled out to the best of the seller’s knowledge. If, at some point, new information is revealed that requires the PCDS to be updated, that must be done.
Cold Calling Prohibited: Cold calling in New York State is still prohibited. Failure to comply may result in a fine is now up to $20,000 for each violation (i.e. each call made).
NY Freelancer Law: Originally, this new law was contained in the New York State Labor Law, but it has been amended and moved to New York State General Business Law. It will become effective Aug. 28, 2024. This law establishes unified rules relating to the creation of the independent contractor agreement, including how payment of compensation will be made between “freelance workers” (i.e. real estate agents) and the “hiring party” (i.e., the real estate brokerage). It further addresses issues of intimidation, harassment, discrimination, filing a complaint and possible recovery outcomes. An addendum to the independent contractor agreement will be provided by NYSAR for brokerages to use.
NYSAR Call to Action: NYSAR is reaching out to those Realtors who live or work in the New York City area to contact their City Council member to oppose a new bill that would prohibit a landlord from collecting a broker's fee from a renter. This bill would drastically change the rental market by eliminating the ability to negotiate who pays a commission and would result in higher rents for tenants. Prohibiting this common practice could reduce the use of real estate professionals in rentals, harming both Realtors and tenants. The New York City Council will be holding a public hearing to consider this legislation on June 12, 2024.
To urge your City Council Member to oppose this bill click here.
NAR’s proposed settlement agreement is continuing to move forward in the courts. In anticipation of its acceptance, several rule changes will be taking effect on Aug. 17, 2024.
Written Buyer Agreements
Effective Aug. 17, 2024, all Realtors “working with” a buyer will be required to have a written buyer agreement with that client before touring a property. This agreement must contain: (1) a provision indicating that all compensation is fully negotiable; (2) an objectively ascertainable amount and; (3) language that prohibits compensation to exceed the amount or range indicated.
As for the term “working with,” NAR has indicated that this means that if you are working as a listing agent, a broker’s agent, or a subagent, you are not “working with” a buyer (example: working at an open house). Moreover, you are not “working with” a buyer who wishes to be unrepresented (i.e. a customer).
Written buyer agreements will vary greatly. They could be exclusive, non-exclusive, limited in time, or scope, and can vary on how/what the compensation will entail. Details of what will be recommended and what will be necessary in the written buyer agreement are still developing. NYSAR, in coordination with other counsel, including HGAR, is in the process of developing these agreements.
Prohibition of Compensation Publication on the MLS
Also, a part of the proposed settlement is the agreement that NAR and its related MLSs will no longer publish cooperating compensation on the MLS and the MLS will not facilitate the publication of cooperating compensation elsewhere (example: posting on ShowingTime is prohibited). This does not mean that cooperating compensation is no longer an option; it only means that cooperating compensation cannot be posted on the MLS (It can be posted on a broker’s website, for example). As we all know, all compensation is fully negotiable. After an agent establishes their value proposition, a discussion should be held regarding listing side compensation, as well as whether the homeowner sees a benefit in offering cooperating compensation. Such compensation can occur in various ways: (1) cooperating compensation from the listing agent; (2) cooperating compensation direct from the seller or; (3) a seller concession. Any other option to offer cooperating compensation is also permitted; the key is that any cooperating compensation should be fully negotiated and it cannot be marketed on the MLS.
As noted, discussion should be held with the homeowner regarding all compensation, as well as how offers will be addressed, as it may be inevitable that a buyer’s agent will present their client’s offer, which would include a provision that the homeowner/listing agent pay for the buyer agent’s commission in one way or another.
Obviously, these issues continue to evolve and cannot be fully addressed in this short article. For additional information, you can click on facts.realtor for additional information.
While this brief article only scratches the surface of what is going on in our industry, I am hopeful that it gives you a resource to address recent issues and the links that can answer many of your questions. You are also free to contact the NYSAR hotline at 518.436.NYSAR (518.436.9727) or by contacting me at brian.levine@hgar.com.
The real estate industry has expressed concerns regarding the potential repercussions of the FARE Act.
Despite representing different parties, Latimer and Lawler share a bipartisan focus on housing policy solutions. Both have expressed support for raising the cap on the State and Local Tax (SALT) deduction.
Unfortunately, many small businesses, including most real estate brokerage firms, and real estate investment and holding companies, will not meet these criteria and will therefore be required to comply fully with the CTA’s filing requirements.
It is important for brokers and agents to note that where a similar form has been made available by both HGAR and NYSAR, those forms do contain varying provisions. Every broker must carefully review each form, and ultimately determine which they would like to utilize.
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