Broker supervision of salespersons and records of transactions

Supervision is active

New York's 19 NYCRR § 175.21 requires regular, frequent and consistent personal guidance, instruction, oversight and superintendence by the licensed broker regarding the general brokerage business and all related matters. Sponsorship on paper is not a substitute for that continuing involvement.

The broker and salesperson must keep written records of all listings obtained by the salesperson and all sales and other transactions effected by, or with the aid and assistance of, the salesperson during the association. The records must clearly identify the transactions and indicate their dates. The salesperson submits these records to the Department of State with an application for a broker's license. For qualifying participation, § 175.21(c) describes active service under a licensed broker's supervision for at least 35 hours per week for 50 weeks in each required year.

A separate transaction record rule

Under New York's 19 NYCRR § 175.23, each licensed broker must maintain paper and/or electronic records for three years for covered sales effected through the office. Coverage includes property used or intended wholly or partly as a residence and improved by a one-to-four-family dwelling, or condominium or cooperative apartments. It excludes unimproved land on which those dwellings are to be constructed. Do not extend this particular three-year rule to every kind of brokerage transaction.

The required contents are:

• Seller and buyer names and addresses.
• The broker-prepared purchase contract or binder; if the broker did not prepare the purchase contract, the purchase price and deposit amount, if the broker collected a deposit.
• The commission paid to the broker.
• The broker's gross profit if the broker bought for resale.
• Any document required under Real Property Law article 12-A.
• The listing agreement, commission agreement or buyer-broker agreement.

If the broker is not provided a copy of documents required by § 175.23(a), subsection (b) says the broker will not be found to have violated that section in those instances. That is different from discarding a document the broker received.

Keep the duties distinct

A salesperson's dated listing and transaction history under § 175.21 supports an application for a broker's license. The broker's covered residential sale file under § 175.23 carries the three-year retention requirement. An unsold listing can belong in the former history without being a completed sale under the latter rule.