There are a number of legal cases arising in recent years related to real estate broker responsibility pursuant to rental permits. The following recent quote from a Farrell Fritz, P.C. article helps to outline the present situation:
“In… Ader v. Guzman & Corcoran Realty Group, LLC, et al., 135 A.D.3d 668, 22 N.Y.S.3d 576 (2d Dept. 2016), the Appellate Division held that Real Property Law §443(4)(b) does not impose a duty upon real estate brokers to investigate whether a rental property is properly permitted. Despite the Court’s holding, the New York State Department of State, in a guidance letter dated April 19, 2016, cautioned that “notwithstanding the decision in Guzman, 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 Real Property Law §§441 and 441-c.” The Department further warned that a broker’s commission “premised upon an unlawful agreement is ‘unearned’ in violation of Real Property Law §441-c.”
The linked article lists a couple of very expensive lawsuits arising from a failure to procure rental permits. The take away is that realtors in general should try to do all things lawfully and recommend that their clients do all things lawfully, including recommending a rental permit, in case the landlord should decide to rent out their home. The realtor should offer a high level of professional competency and should display a sense of duty to the client with regard to informing of potential pitfalls. Whether this is a legally required duty or just professionally recommended duty may not matter to a landlord that faces serious legal problems down the road. The Long Island Board of Realtors lists rental permit laws for various Suffolk towns (lirealtor(dot)com).
There is an acronym used to help realtors remember all the points of fiduciary duties to clients. It’s OLD CAR. Obedience, Loyalty, Disclosure, Confidentiality, Accounting, and Reasonable Care. The following quote by James Kimmons outlines the importance of reasonable care:
‘Reasonable Care: This duty is one to be very careful of. The words “reasonable care” are only finally fully defined in many cases by a judge or jury when it’s too late to change your actions. You, as a licensed real estate professional, are expected to have a certain level of knowledge and be able to advise and guide your client through the process without harm.”
In summary, why would a realtor take a chance of harming his or her reputation and/or client by not recommending a rental permit? If you are a real estate broker or salesperson, we can help to expedite the rental permit process for your clients. Call us today for more information.
Recommend a Rental Permit Expediting Service: 631.377.2046
Referenced Sources:
“As Summer Approaches, Landlords And Brokers Must Beware Of Rental Permit Requirements”
By Brian Doyle & Elizabeth Vail on February 20, 2017
‘Real Estate Agency Law – Fiduciary Duties are Like an OLD CAR’
James Kimmons, Updated September 21, 2016
‘Rental Permit Codes – Suffolk County‘
Long Island Board of Realtors
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