Dolgetta Law

Lawyers and Real Estate Commissions

This column has previously addressed the inability of a lawyer to receive brokerage compensation in any transaction in which the lawyer is also functioning as counsel to any of the parties. On April 1, 2009 New York’s Code of Professional Responsibility for attorneys was replaced by the New York Rules of Professional Conduct which are patterned after the American Bar Association’s Model Code of Ethics. The new Rules provide methods by which an attorney can obtain the informed consent of the parties and thereby resolve conflicts of interest. Many attorneys thought that the new Rules would permit an attorney to act as both broker and lawyer in a real estate transaction. The New York State Bar Association’s Committee on Professional Ethics recently issued Opinion 845 which reaffirmed the prior Rule, that an attorney may not, even with the consent of all parties, receive compensation as both the lawyer and the broker in the same transaction.

Realtor Interaction with Attorneys

Realtors have sometimes been asked to offer compensation to attorneys when the attorney refers a client or customer to the Realtor. Realtors have no ethical constraint or restriction on doing so. An attorney has the right under Section 442-(f) of the Real Property Law to act as a broker in a transaction. That does not make the attorney a licensed real estate broker. It simply permits the attorney to receive a brokerage commission. Many attorneys, suffering through difficult economic times, have elected to also obtain licenses as a real estate broker. Obtaining a real estate license allows the attorney to hold himself or herself out as a licensed real estate broker and to have associates (salespersons) affiliated with the firm.

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