Log In   ·   Become A Member

What Is A Real Estate Brokerís Responsibility With Respect To Hamptons Rentals?

John A. Viteritti

189 Further Lane in East Hampton is available for rent from August to Labor Day for $295,000. (Photo: www.hamptonsrentals.com)

In January 2016, Hamptons.com posted an article regarding the rental laws in effect in the towns of Southampton and East Hampton, including a real estate broker's responsibility as may be viewed by the New York Department of State, the regulatory agency empowered with the authority to license, regulate, and penalize real estate licenses. You can read the article here. The issue has found reality in a case regarding a seasonal rental in the Town of Southampton. The case in point has resulted in an apparent disagreement between the Appellate Division of the Suffolk County Supreme Court and the Department of State.

When the issue was brought before a lower court, it did find that the landlord had failed to acquire a rental permit as required by the Town and therefore the lease was illegal and no rent should have been collected. The issue at hand has to do with the responsibility of the real estate broker who represented the landlord. The court ruled that the broker had no responsibility to know or disclose to the tenant that the landlord did not have a rental permit. It relied on what it called the legal principle in New York of "caveat emptor" - buyer beware. In preparation for this article I consulted S. Anthony Gatto, Esq. General Counsel of the New York State Association of Realtors (NYSAR), and David A. Mossberg, Esq. Counsel of the Department of State. Mr. Gatto provided me with an article he wrote for the current July/August issue of NYSAR's official publication. In it he states: "NYSAR has always been of the opinion that licensees should verify the legal status of a property before listing or selling it. NYSAR's opinion is based on a long line of DOS decisions from the past 25 years. This obligation extends to verifying the owners of the property, all of whom must sign the listing agreement for sale or rent. Licensees who once claimed ignorance or 'put their heads in the sand' when taking listings that are illegal rentals or sales ... are contrary to the licensing law."

Mr. Gatto provided me with a DOS opinion issued on April 19, 2016 which answers an inquiry, "Does the DOS require a landlord's agent to investigate/discover the legal status of a rental property or if the status of the property is unknown does this eliminate liability for license law violation?" The DOS opinion included the following statement: "A broker who fails to demonstrate a working knowledge of the property being marketed, fails to demonstrate the level of competency required to transact business as a licensee in violation of NY Real Property Law." The DOS also stated, in part: "Any broker participating in a transaction involving an illegal rental is prohibited from collecting a commission."

I also raised the issue of an apparent conflict between the court ruling and the opinion letter issued by the DOS with David Mossberg, the DOS Legal Counsel. His reply, "We disagree with that limited interpretation of the case and will find a broker liable for similar misconduct under a different theory of law which was not specifically litigated in that case."

Anthony Gatto concludes his article with the following statement: "Failure to verify the legal status of a property may subject the licensee and their broker to discipline by the DOS as well as the return of any commission earned in such a transaction."

John is a St. John's University graduate, licensed Real Estate broker, lecturer, teaches real estate license classes at LIU, NYU, and Cook Maran Real Estate School, and is a well-respected consultant to the real estate industry. www.johnaviteritti.com

Related Articles:

Be the first to comment on this article. (Just fill out the form below)

Submit Your Comment

Please note, you are not currently logged in. Your comment will be submitted as a guest.
To submit your comment as a member, please click here.
Your Name:
* Comments will be reviewed and posted in a timely fashion
* All fields are required
What color is the sky?
(For spam prevention, thanks)
Gary R. DePersia, Corcoran Real Estate
With over $2 billion in transactions on the East End and since 1995, Gary DePersia is consistently ranked among the top producers in the Hamptons. A year-on-year member of The Corcoran Group Presidentís Council, he has qualified as a national list maker since 2007. In 2008 he was Corcoran's top broker on the East End by sales volume and rental units; and ranked as the nationís 4th top broker. In the 2017 REAL Trends & The Wall Street Journal list of Americaís top real estate professionals, he was designated #26 nationally, #4 in the Hamptons and #3 at Corcoran overall by volume with nearly $200 million of transactions for the past year. His office operates with four licensed assistants allowing him to build a business stretching from Southampton to Montauk and Sagaponack to Shelter Island. gdp@corcoran.com

East End Tick Control
The East End's only New York State licensed dedicated tick and mosquito control specialists!

Bridgehampton National Bank
For over 100 years Bridgehampton National Bank has been the East End's hometown bank. Many success stories...one bank, BNB!

Advertise on Hamptons.com - Have your business be seen by over 2 million viewers including NEW searches
Hamptons.com- Our exclusive online magazine has 2.6 million Page Views YTD for 2015. Contact us to join our elite group of clients that benefit from having a presence on the Hamptons award winning publication www.Hamptons.com

Hamptons Carpet One Floor & Home
We pay less,and so do you.With over 1,000 stores in our buying group, we can get the lowest prices from the best flooring manufacturers ó and pass the savings on to you.Visit our other locations: Hamptons Carpet One Floor & Home, 675 North Sea Road,Southampton, NY 11968

Southampton Masonry-Visiting the Southampton or the Wainscott locations is an exciting experience.
Southampton Masonry has been serving Long Island's masonry and tile needs since 1975. Delivering quality products from Manhattan to Montauk for over three decades. The company's continued success is due primarily to their number one priority: customer satisfaction, with a promise of prompt and courteous service from the professional, knowledgeable staff. Southampton Masonry has the largest inventory on the east end. As direct importers they can offer a large variety of the finest quality products at the most competitive pricing for both your interior and exterior projects.

CP Complete- Landscape Design & Construction
Paul Guillo And Chris Hall Two Of The Most Respected Names In The Community Together, they are partners in CP Complete. They bring their years of experience and integrity to creating and renovating luxury backyards.

CP Complete- Landscape Design & Construction
Paul Guillo And Chris Hall Two Of The Most Respected Names In The Community Together, they are partners in CP Complete. They bring their years of experience and integrity to creating and renovating luxury backyards.

D+J Concepts is known for a high-end cutting edge approach to design.
D+J Concepts is known for a high-end cutting edge approach to design with a balance between functionality and imagination. We skillfully and tastefully transform ordinary spaces into classic modern styles, which are understated, and luxe. Weíre known for our modern transitional style incorporating antiques and modern elements for an unexpected edge.