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In the dynamic landscape of New York's real estate market, maintaining the highest standards of professionalism and ethical conduct is not just a matter of personal integrity, but it is a legal and regulatory requirement. Licensed real estate agents in New York State are governed by a complex framework of laws, regulations, and ethical guidelines designed to protect the interests of consumers and ensure the fairness and integrity of the real estate market. This article aims to provide real estate agents with a general understanding of ethical complaints in New York State, including the nature of typical complaints, the process for handling them, and strategies for preventing ethical violations.

The Ethical Framework in New York Real Estate

At the core of real estate ethics in New York are the New York State Department of State (DOS) regulations and the National Association of Realtors (NAR) Code of Ethics. The DOS oversees licensing and regulatory compliance, while the NAR's Code of Ethics, adopted by local real estate boards, outlines the professional conduct expected of Realtors. These guidelines cover a wide range of practices, from fiduciary responsibilities to clients, to honesty in advertising and communications, to equitable treatment of all parties in a transaction.

Types of Ethical Complaints

Ethical complaints in real estate can arise from various scenarios, including but not limited to:

• Breach of fiduciary duty: This occurs when an agent fails to act in the best interests of their client, such as not disclosing a conflict of interest or misrepresenting property conditions.
• Misrepresentation or false advertising: Providing inaccurate information about a property or services.
• Failure to disclose material facts: Not revealing information that could affect a client's decision to buy or sell.
• Discrimination: Violating fair housing laws by discriminating against clients based on race, color, religion, sex, national origin, familial status, or disability.
• Commission disputes: Issues related to the sharing of commissions between cooperating brokers.

The Complaint Process

An ethical complaint filed against a real estate agent in New York typically follows these steps:

1. Filing the Complaint: Complaints can be lodged with the New York State Department of State Division of Licensing Services or a local Realtor association, such as the Greater Rochester Association of Realtors (GRAR) depending on the nature of the ethical breach. Sometimes they may be filed with both entities. Complaints must be filed in writing and detail the specific ethical rules believed to have been violated.
2. Investigation: The relevant authority will conduct a preliminary investigation to determine if the complaint warrants further action. This may involve gathering documents, interviewing witnesses, and reviewing evidence. Realtors are permitted to retain an attorney to represent their interests throughout the complaint process.
3. Hearing: If the investigation finds sufficient evidence of an ethical violation, a hearing will be scheduled. Both the complainant and the respondent (the agent) will have the opportunity to present their case before a panel.
4. Decision and Sanctions: After the hearing, the panel will make a decision. If an agent is found to have violated ethical standards, sanctions can range from a reprimand, required education courses, suspension of membership or license, to even permanent revocation in severe cases.

Strategies for Preventing Ethical Violations

Preventing ethical violations is paramount for real estate agents, not only to avoid the legal repercussions but to maintain their professional reputation. Here are some strategies for ensuring ethical compliance:

• Continuing Education: Regularly update your knowledge of real estate laws, regulations, and ethical standards through continuing education courses.
• Transparency and Honesty: Always provide accurate and truthful information in all transactions and communications. Disclose all material facts and potential conflicts of interest to your clients.
• Fair Treatment: Adhere to fair housing laws and treat all clients and colleagues with respect and without discrimination.
• Professional Conduct: Follow the NAR Code of Ethics and your local real estate board’s guidelines to uphold the highest standards of professionalism.

Conclusion

Understanding and adhering to ethical standards is crucial for real estate agents operating in New York State. Ethical complaints can have serious consequences, including damage to one’s reputation, financial penalties, and the loss of the ability to practice. By familiarizing themselves with the ethical framework, types of complaints, the complaint process, and strategies for prevention, agents can navigate the complexities of the real estate profession with integrity and professionalism. It's not just about complying with the law; it's about building trust and respect in the community and among clients, which are the foundations of a successful real estate career.

If you are a real estate agent facing an ethical complaint, an experienced lawyer can help. Please contact Peter J. Gregory at (585) 512-3506 or pgregory@mccmlaw.com to learn more about the process and review your options.

This publication is intended as an information source for clients, prospective clients, and colleagues and constitutes attorney advertising. The content should not be considered legal advice and readers should not act upon information in this publication without individualized professional counsel.

About MCCM

McConville Considine Cooman & Morin, P.C. is a full-service law firm based in Rochester, New York, providing high-quality legal services to businesses and individuals since 1979.  With over a dozen attorneys and a full paralegal support staff, the firm is well-positioned to right-size services tailored to each client. We are large enough to provide expertise in a broad range of practice areas, yet small enough to devote prompt, personal attention to our clients.

We represent a diverse range of clients located throughout New York State and New England.  They include individuals, numerous manufacturing and service industry businesses, local governments, and health care professionals, provider groups, facilities and associations. We also serve as local counsel to out-of-state clients and their attorneys who have litigation pending in Western New York courts.  For more information, please contact us at 585.546.2500.