NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A5499
SPONSOR: Jackson TITLE OF BILL:
An act to amend the real property law, in relation to prohibiting
single-agent dual agency, requiring representation agreements, allowing
buyers and tenants to negotiate broker fees, and prohibiting landlords,
lessors, sub-lessors, and grantors from requiring a tenant to pay
brokers' fees as a condition of entering into a lease agreement
PURPOSE OR GENERAL IDEA OF BILL:
The purpose of the bill is to prohibit single-agent dual agency, require
representation agreements, allow buyers and tenants to negotiate broker
fees, and to prohibit landlords, lessors, sub-lessors, and grantors from
requiring a tenant to pay brokers' fees as a condition of entering into
a lease agreement.
SUMMARY OF PROVISION:
Section 1: Paragraph (a) of subdivision 1 of section 238-a of the real
property law, as amended by chapter 789 of the laws of 2021, is amended
to include the prohibition of demanding broker's fees for the process-
ing, review, or acceptance of an application or to charge a brokers fee
before or at the beginning of the tenancy.
Section 2: The real property law is amended by adding a new section
443-b. Subdivision one of this section describes to whom and what the
rules and requirements in this section, or promulgated by the secretary
of state, apply to. Subdivision two defines the meanings of the follow-
ing: dual agent, designated sales agent, and representation agreement.
Subdivision three prohibits individual dual agency. Subdivision four
describes the set terms for buyer and tenant representation agreements.
Subdivision five describes the terms of agent compensation from buyer or
tenant and requires a written agreement. Subdivision six prohibits
discrimination based on representation status. Subdivision seven
requires written permission from the owner or authorized representative
to offer or advertise a property for sale or lease and prevents decep-
tive advertising practices after receiving written permission.
Section 3: Amends various subdivisions and paragraphs of subdivisions of
sections of the real property law to make changes to the real estate
agency relationship disclosure statute and the definitions used within
it.
Section 4: Sets effective date.
JUSTIFICATION:
Single-agent dual agency, the practice of a real estate agent represent-
ing both a buyer/tenant and seller/landlord, presents significant chal-
lenges. It impedes agents' ability to fulfill crucial fiduciary duties
like providing reasonable care, undivided loyalty, and full disclosure,
as agents must maintain impartiality, resulting in unfair outcomes and a
lack of transparency in real estate transactions. According to U.S News
and World Report, several states, including Alaska, Colorado, Florida,
Kansas, Maryland, Oklahoma, Texas, Vermont, and Wyoming, banned single-
agent dual agency because it fosters inadequate representation and
creates negotiation issues. Opposing goals between buyers and sellers
make it difficult for agents to effectively advocate for their clients'
best interests, leading to conflicts of interest and favoritism.
This lack of comprehensive representation leaves tenants and buyers
vulnerable to potential exploitation through deceptive advertising,
discrimination based on their representation status, and the imposition
of unaffordable fees as a condition of entering a lease agreement.
According to the New York Times, more than one-third of renters in New
York City are rent burdened and upfront costs, such as security deposits
and broker fees, are the highest they have been in years. These costs
play a significant role in making rental properties unaffordable.
Requiring broker fees as a condition for entering a lease agreement
further hinders prospective buyers and tenants, limiting their available
options.
This bill prohibits single-agent dual agency, mandates clear written
representation agreements, prevents the demand of exorbitant broker fees
before entering into a lease agreement, prohibits discrimination, and
combats deceptive advertising practices. This bill empowers tenants and
buyers to negotiate broker fees and clarifies that they are only obli-
gated to compensate an agent when they directly hire them and sign a
representation agreement. This bill also specifies the timing of signing
representation agreements, ensuring they occur before or immediately
after an agent shows a property to a tenant for the first time. These
measures seek to increase the level of representation of tenants and
buyers, thereby improving accessibility and affordability to housing.
This bill establishes dedicated representation, reduces conflicts of
interest, and promotes transparency in real estate transactions. By
banning single-agent dual agency, this bill fosters housing affordabili-
ty and fairness for all parties involved.
PRIOR LEGISLATIVE HISTORY:
2023-24: A9823 Referred to Judiciary
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
TBD.
EFFECTIVE DATE:
This act shall take effect on the one hundred eightieth day after it
shall have become law.
