Dolgetta Law, PLLC

DOS Changes Policy on Whether Office Manager

May Supervise More than One Office

Real Estate In-Depth July, 2013

By: Edward I. Sumber

Board Counsel

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In January 2013 I was asked to confirm to one of our members that it is permissible for a multi-office firm to have a single manager in charge of more than one physical office. I assured the member that this was a common practice and that I knew of no law or regulation under Article 12(A) of the Real Property Law which would prohibit a single manager from supervising multiple offices. When I went to verify this with Whitney A. Clark, Associate Attorney for the New York State Department of State's Division of Licensing Services, Ms. Clark informed me that DOS had an internal policy prohibiting a single individual from assuming managerial responsibility for more than one office.


On May 15, 2013 we received a letter from Ms. Clark confirming that the Department of State has changed its internal policy confirming that an "...office manager may supervise more than one office so long as he or she has adequate resources to fulfill such duties."


What Was the Basis of DOS's Internal Policy?


When this matter was initially discussed with the Department of State, Associate Attorney Clark indicated that the primary basis for the policy was Regulation Section 175.21(a) (19 NYCRR 175.21(a)). This provision includes the following verbiage requiring brokers to "provide regular, frequent and consistent personal guidance, instruction, oversight and superintendence..." in order to supervise a real estate salesperson.


In my January discussion with Ms. Clark I pointed out that the Regulation in question is over 50 years old and was placed into effect at a time when fax machines, cell phones, computers, smartphones, iPads, email and computerized multiple listing had not yet been invented. More importantly, many firms have moved into a large firm format with hundreds of salespersons and in the economic climate that has existed in the industry, it would be an extreme burden for multi-office firms to hire a separately compensated manager for each of its offices. Current technology allows much of the supervisory activities to occur remotely.


After extensive discussion with Ms. Clark she invited me to request a change in DOS policy which my office submitted on January 25, 2013.





Why We Felt the Policy of DOS Should Be Changed


The following points were made in our petition to DOS that it consider changing its internal policy:


  1. Regulation 175.21(a) has been in effect for more than 50 years and technology has vastly changed the operation of real estate brokerage offices, the business models of brokerage firms and the ability of an individual to be supervised remotely. Most of the technology in use today did not exist when the Regulation went into effect.


  1. In our region there is a high concentration of large firms with multiple offices. Except for staff meetings, many salespersons have minimal contact with their managers that are consistent with a "warm body standard". Much of the supervision which occurs is conducted through electronic communications.


  1. As a result of guidance from the New York State Department of Labor most managers work under the direction and control of the principal broker and receive W-2 compensation. As a result, the necessity of appointing a paid office manager for each office can be economically burdensome and inconsistent with current business models.


  1. Most of the larger firms with which I am in contact, have a single manager who supervises more than one office. The practice is commonplace and the internal policy of the Department of State has been unknown to the industry.


DOS Reverses its Position


In her May 8, 2013 letter confirming DOS's reversal of its internal policy, Attorney Whitney A. Clark made the following statements:


  • "Section 440 of the Real Property Law defines ‘office manager' as, "a licensed associate real estate broker who shall by choice elect to work as an office manager under the name and supervision of another individual broker or another broker who is licensed under a partnership, trade name, limited liability company or corporation..."


  • "19 NYCRR 175.21(a) requires brokers to provide "regular, frequent and consistent personal guidance, instruction, oversight and superintendence."


  • "...(I)t is my opinion that an office manager may supervise more than one office so long as he or she has adequate resources to fulfill such duties. Per the Deputy Secretary's instruction the Division of Licensing Services has changed its policy on this issue to conform to this opinion."


Relationship with DOS Personnel


Our industry has been benefited by its ability to have an ongoing dialogue with its regulatory agency during past administrations. It is gratifying to know that DOS is open to hearing another point of view and willing to reconsider positions which may no longer serve consumers or licensees. We are most grateful to Ms. Clark and to the Deputy Secretary for their favorable response on this subject.


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Legal Column author Edward I. Sumber, Esq. is the principal attorney in the law firm of Dolgetta Law, PLLC. The firm has been counsel to the Hudson Gateway Association of Realtors, Inc. since 1974 and the firm was responsible for incorporating the Hudson Gateway Multiple Listing Service, Inc. in 1976. For information about Dolgetta Law, PLLC. go to http://www.sumberlaw.com/.





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