Common violations, penalties, disciplinary proceedings, and unlicensed assistants

Recognize the violation

New York real estate practice requires trustworthy conduct. Common problems include misrepresentation, mishandling client funds, undisclosed financial benefits, unlawful discrimination, and delegating licensed activities to unlicensed staff.

Under 19 NYCRR § 175.3, a property-managing broker may not accept a commission, rebate, or profit on client expenditures without the client's full knowledge and consent. A secret contractor rebate violates this rule even when the work is satisfactory. Under 19 NYCRR § 175.17, a competent agency's or court's finding of unlawful discrimination in licensed activities is presumptive evidence of untrustworthiness and exposes the licensee to discipline, including a revocation proceeding.

Keep assistants within clerical work

An unlicensed assistant may schedule appointments, organize records, and type licensee-approved information. The assistant must not negotiate transaction terms, solicit listings, show property as an agent, or give advice requiring a real estate license. Salary, job title, and a broker's presence do not substitute for a license. Route substantive real estate questions to a licensee.

Separate process from consequences

A complaint does not itself establish guilt or make a penalty automatic. Keep administrative discipline, criminal prosecution, and recovery by an aggrieved person distinct.

Under Real Property Law § 442-e, the Secretary of State may investigate on complaint or on the Secretary's own initiative. Applicants and licensees must supply requested business information; the Department of State can subpoena relevant books and papers and take testimony.

For ordinary license discipline, Real Property Law § 441-e requires written notice of charges at least ten days before the hearing date. Revocation, suspension, fines, and reprimands are distinct outcomes. Under § 441-c, a disciplinary determination must be written and officially signed. Licenses and pocket cards must be returned within five days after receipt of notice of revocation or suspension, or a prescribed affidavit must explain loss or destruction. A revoked or suspended broker's license may not be displayed.

A proposed application denial has a separate deadline: request a hearing in writing within thirty days after receipt of notification, or the notification becomes the final determination under § 441-e.

Criminal and monetary consequences

Under Real Property Law § 442-e, a single prohibited act can constitute a violation and a misdemeanor. The attorney general or a deputy prosecutes criminal actions under the article. If an offender received commission, compensation, or profit through a violation, an aggrieved person may sue for a court-determined penalty of at least the amount received and no more than four times that amount. This recovery is distinct from an administrative fine.