A real estate agent's responsibilities are often determined by an administrative law judge of New York's Department of State or a civil court judge. It is not uncommon for real estate agents to ask, "Can I be held responsible if?" The answer often depends on the opinion of the court.
In a Richmond County court, a judge found both the owner and the owner's real estate agent derelict in their obligations to inform a buyer that the property they were in contract to purchase lacked the required certificate of occupancy for a two family house. The judge stated further that it was the obligation of the real estate agent to know and inform the Buildings Department of the home's illegal status.
The same judge in a recent case where a landlord brought an action against a tenant for unpaid rent ruled that the landlord was unable to collect rent because the apartment did not have a certificate of occupancy. The tenant wanted the return of rent paid, due to the apartment's illegal status. The judge ruled that the tenant could not collect the rent paid since they occupied illegally. The judge did recommend that the tenant file a suit against the real estate broker who rented them the apartment for the amount of the rent they paid to the landlord.
In a conversation with the Town of Southampton Town Attorney's office regarding the Town of Southampton Rental Permit Law, I was told that the number of complaints their office has received from landlords and tenants who have been found in violation of the law complaining that the real estate agent they dealt with did not inform them of the law has increased dramatically. The Town Attorney has advised them to register their complaints with the Department of Sate, the regulatory agency that has jurisdiction over real estate licensees. Additionally, courts have not permitted landlords who have tried to collect rent or evict tenants if they have not complied with the Rental Permit Law.
A reading of the License Law Section 443-a, addresses the specifics of property condition disclosure. It also addresses what are generally known as "stigmatized properties;" murders, suicides, haunted houses. Each of these topics has been discussed at length in previous articles available on this website.
Too often real estate agents place themselves in jeopardy when they try to parse the language of the law.
Alfred M. Fazio, a legal expert and partner in the law firm Capruder Fazio Giacoia advises real estate licensees, "disclose, disclose, disclose." This includes both agency disclosure and facts about the property.
The real estate agent has a fiduciary responsibility to its client, the person it is representing. It also has a duty of fair and honest dealing towards third parties and is expected to act competently and professionally. Whether the real agent meets these requirements, will often be determined by an administrative law judge or in a court of law.
The best defense is too know the law, including the case law, and be very cautious when dealing with circumstances and situation where your conduct could be considered unprofessional and untrustworthy.
John is a St. John's University graduate, licensed Real Estate Broker, DOS Certified Instructor, and real estate consultant. He previously taught at NYU, LIU, and The Cook Maran Real Estate School, which he helped found.