Category: John Dolgetta

“Fiduciary duty” is a critical element of successful day-to-day business operations and interactions in the real estate industry. Such duties apply to any industry for that matter. While many real estate agents, members of boards of directors and officers of organizations and corporations are familiar with the term “fiduciary duty”, very few understand its full import. Such duties apply to anyone acting as an agent. It imposes obligations upon organizations, professions, corporations and their executives, shareholders, members, clients, customers and the public in general. This article will outline the key elements of “fiduciary duties” and highlight their importance to the real estate industry.
Continue reading “Fiduciary Duties of Boards of Directors in the Real Estate Industry”

The Federal Trade Commission (“FTC”) has enacted the Business Opportunity Rule (the “Rule” or the “BOR”) which became effective on March 1, 2012 (the text of the BOR can be found at http://ftc.gov/os/fedreg/2011/11/111122bizoppfrn.pdf). The Rule requires that certain disclosures be made by persons who sell or offer business opportunities to others. One of the FTC’s main objectives is to protect consumers. The FTC amended the existing interim Business Opportunity Rule to require expanded disclosure by those offering or selling a business opportunity to members of the public. The new and final Rule now covers a wider variety of business opportunities which on its face seems to extend to the solicitation of salespersons by brokerage firms. The Rule provides for a more simplified and straightforward disclosure process.
Continue reading “The FTC’s Business Opportunity Rule: Does It Apply To Realtors?”

On August 19, 2011, the Federal Trade Commission (“FTC”) issued the Mortgage Acts and Practices – Advertising Rule, also known as the “MAP” rule (the “MAP Rule” or the “Rule”). The MAP Rule “…, among other things: prohibits any misrepresentation in any commercial communication regarding any term of any mortgage credit product; and imposes certain recordkeeping requirements.” The MAP Rule affects all individuals or entities that engage in dissemination of information about mortgages (in virtually any form or format), specifically residential mortgages and related mortgage products, in a commercial setting. It is important to note that real estate agents and brokers are included under the scope of this Rule if they engage in disseminating information relating to mortgages affecting dwellings as defined under the Rule.
Continue reading “How The New MAP Rule from the FTC Affects You”

In an opinion issued on May 31, 2011 (the “Opinion”), a senior attorney for the State of New York Insurance Department, Sapha S. Maloor, Esq., pointed out the very real risks real estate agents face when referring business to attorneys and title agencies in the normal course of their day-to-day work. (A copy of the Opinion can be found on the Insurance Department’s website at http://www.ins.state.ny.us). The Opinion points out that certain referral arrangements violate the Insurance Law and harsh penalties can be imposed as a result. This article will highlight the inherent conflicts and problems that arise when setting up formal or informal business referral arrangements between real estate agents, title agents and attorneys.
Continue reading “Referral Arrangements: Real Estate Agents May Be Unknowingly Violating NYS Insurance Laws”

The real estate market is slowly becoming more stable and will undoubtedly become stronger in the coming months. Stronger market activity, the risk of rising interest rates, the eventual loosening of lender requirements and the increasing popularity of FHA loans will likely cause more buyers to enter into the market to take advantage of the lower prices of real estate. As a result, an increasing number of buyers will bring back into focus the obligations of brokers when multiple offers become more prevalent once again and are presented on the same property. NYSAR points out that the rights and obligations of sellers, buyers and brokers are governed by four areas: 1) the REALTOR® Code of Ethics, 2) the Law of Agency, 3) License Law and Regulations and 4) Tort Law (See Broker’s Duty Regarding Multiple Offers, published by NYSAR). The purpose of this article is to outline the obligations of brokers in light of multiple offers.
Continue reading “Anticipating Better Times: Multiple Offers Will Return”

The Home Valuation Code of Conduct (“HVCC”) establishes a code of conduct providing for standards to be followed by lenders, appraisers, real estate agents and other third parties involved in the mortgage process. The HVCC became effective as of May 1, 2009. It is not new legislation passed by Congress but rather an agreement that was entered into by New York State Attorney General Andrew Cuomo, and Fannie Mae and Freddie Mac, also known as government sponsored enterprises (“GSEs”), involving the establishment of “…standards for solicitation, selection, compensation, conflicts of interest and appraiser independence…” relating to the appraisal procedures to be followed in connection with mortgage applications on one to four family homes.
Continue reading “Home Valuation Code of Conduct: The Impact on Real Estate Agents”

It is important for Realtors® to understand the fundamentals of Errors and Omissions Insurance coverage. Errors and omissions coverage, commonly known as E&O insurance, affords licensees and real estate brokerage firms protection against claims or lawsuits initiated by clients who feel that his or her agent failed to provide adequate services. Although most licensees have heard of E&O insurance, and in most instances have E&O coverage, very few actually review the specific terms of the policy to ensure that they are fully protected.
Continue reading “Errors and Omissions Coverage: An Essential Element of Being an Agent”

Recently the Appellate Division issued several decisions concerning real estate transactions which failed to close and in which buyers, sellers and brokers were negatively affected by provisions in each of the relevant contracts. The cases below all point out the importance of strictly abiding by provisions of a contract that governs the relationships between buyer and seller, as well as the broker.
Continue reading “Recent Appellate Division Decisions: A Buyer’s Breach, a Seller’s Breach and a Broker Who Doesn’t Get Paid”

The Environmental Protection Agency (“EPA”) reports that it has been investigating real estate agents for the past seven years and for the most part, has found the agents to be in compliance with the requirements of the Residential Lead-Based Paint Hazard Reduction Act (the “Act”). In some instances, there are agents who have not been in full compliance. The public’s attention to lead paint has been heightened by incidents unrelated to the EPA (i.e., imported toys and other products containing lead based paint). Non-compliance by agents of the EPA regulations, although infrequent according to the EPA, can produce harsh consequences and burdensome fines.
Continue reading “Lead Paint Disclosure Requirements The EPA is at The Door!”

On February 28, 2007 an important decision was issued by Manhattan Supreme Court Justice Rolando T. Acosta in the matter of Blumenthal-Levy v. Coldwell Banker Hunt Kennedy, relating to representations that Buyer’s Agents make to their clients. This decision points out the importance of Buyer’s Agents ensuring that statements or representations hey make are accurate. Although this decision comes at a very early stage (i.e. the summary judgment phase) in the lawsuit between the client/buyer Hilary Blumenthal-Levy (the “Plaintiff”) and her real estate agent, Elayne Reimer, and brokerage firm, Coldwell Banker Hunt Kennedy (collectively referred to as “Defendant”), it is imperative that brokers and agents follow the progression of this case through to the end. The ultimate decision has potential implications about how a Buyer’s Agent should handle certain situations, especially being careful about what representations and information are provided to the client.
Continue reading “Buyers’ (or Sellers’) Agents Beware: Yes, The Home Is Located In …”