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Hamptons.com
September 6, 2021

Who Can Be Compensated for Selling and Renting Real Estate?

John A. Viterittiby John A. Viteritti
in Real Estate
Home Real Estate

The most recurring question I receive from readers has to do with real estate commissions; specifically, finders fees, referral fees, who may and who may not receive them, and variations on these questions.

 

The subject is addressed in New York State’s Real Property Law beginning with Section 442.

 

In sum it states that in order to make a claim in court for a commision related to the sale or lease of real property, residential or commercial, the claimant must be the holder of a New York State real estate broker’s license. An associate broker or licensed salesperson can only receive a commission from their sponsoring broker, never directly from a seller, buyer, landlord, tenant or a broker not their sponsoring broker. An exception would be when the associate broker or salesperson leaves the employ of their sponsoring broker before the commission has been paid to the broker. In that event the broker may pay the commission to the associate broker or salesperson whether they are in the employ of another sponsoring broker or the person is no longer active in the real estate business and no longer the holder of a real estate license.

 

In a recent article published by the New York State Association Realtors, Anthony Gatto, Counsel, and Liz Celeone, Associate Counsel discuss the New York State Supreme Court case, Sagacity Int’l Real Estate Advisors, Inc. v. Wiggins (NY 2020) which involves a commission dispute between two real estate salespersons and raises the question as to the enforceability of commission split agreements between real estate salespersons who are licensed under the same real estate brokerage. The court ruled against the salesperson claiming the commission.

 

This also applies to associate brokers and salespersons within the brokerage firm that operate as “teams.” Any commissions earned by the “teams” must be distributed to each member of the “team” individually by their sponsoring broker. A commission may not be paid to a “team leader” to be distributed to the other members of the team. According to Anthony Gatto and Liz Celeone, this is a common question that comes to them through N.Y.S.A.R.’s Legal Hotline.

 

New York State allows associate brokers and salespersons to individually form an L.L.C. (limited liability company). The broker may pay a commission to an L.L.C.

 

Competing real estate brokers may pay and receive referral fees for referring sellers and buyers, landlords and tenants to other real estate brokerage firms, but the fees may only be exchanged between brokers, never directly to the other firms’ associate brokers or salespersons. Should the referral involve an out-of-state party, the commission may be paid or received if the out-of-state party is authorized to collect and pay commissions by their state regulatory agency.

 

The most common question pertains to “finder fees,” the payment of fees to an unlicensed person who refers a seller, buyer, landlord or tenant to a real estate broker who subsequently receives a commission as a result of the referral. That question was answered on May 31, 2011 by the New York State Appellate Division, 2nd Department in the matter of Futersak v. Pearle.

The Court ruled that in order to receive a commission for a sale or rental of real estate, the claimant is required to hold a real estate broker’s license. The New York Board of Realtors and the New York State Association of Realtors filed amicus curiae briefs with the Court.

 

An exception is an attorney licensed to practice law in the State of New York who may conduct any activity related to real estate without a real estate broker’s license and receive compensation. It is not true that attorneys are automatically real estate brokers. If an attorney licensed to practice law in New York wishes to employ licensed associate brokers and salespersons, the attorney would first have to acquire a real estate broker’s license from the New York Department of State. The New York Bar Association has special rules that apply to the attorney’s role in these situations.

 

Another subject that is addressed in The New York Real Property Law pertains to the payment of “rebates,” parts of commissions paid to sellers, buyers, landlords, and tenants represented by a real estate broker in these transactions. These payments are lawful, provided the broker has earned a commission from the transaction and the payment of the rebates must be disclosed in the closing documents.

 

John is a St. John’s University graduate, licensed Real Estate Broker, DOS Certified Instructor, and real estate consultant. He previously taught at NYU, LIU, and The Cook Maran Real Estate School, which he helped found. www.johnaviteritti.com

 

 

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Oasis by the Ocean

  • Whether you are walking the fast-paced streets of New York City or taking a leisurely beach stroll in the Hamptons, there’s a slight chance you might run into Elias Friedman, known online as “The Dogist.” His adoration of dogs, combined with his passion for photography, has led him to gain over 7 million followers on Instagram. The audience at his recent Guild Hall show reflects how much people truly love their dogs and how Elias does so much more than simply take picture-perfect dog portraits. He can capture the beautiful bond between man and his best friend. His book, This Dog Will Change Your Life, is already a New York Times bestseller. Guild Hall’s lobby was filled with fans excited to get their copy signed.⁠
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His guests included local dog lovers and friends of ARF (Animal Rescue Fund of the Hamptons). Attendees had front-row seats to a “Dogist”-style encounter: a casual conversation about how the dog entered the owner’s life, followed by a quick photo shoot revealing Elias’ methods for capturing the dog’s attention (hint: It’s dog noises and treats).⁠
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I had the pleasure of talking to Elias about how “The Dogist” came to be, rescue organizations, and the Hamptons.⁠
⁠
⁠
Let’s go back to the beginning. What inspired you to dive into photography?⁠
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We had a dark room because my dad was an amateur photographer, and I’d always liked cameras and gadgets. We had a couple of Labrador retrievers who were sort of my first muses and would happily sit for pictures. I was taking dog pictures from a young age and then fast forward to 2012 in New York City I was let go from my job and saw what other street photographers were doing like Humans of New York and The Sartorialist and thought why isn’t someone doing that for dogs and I thought I wanted to be the person, I dusted off my camera and the rest is kind of history. It took off pretty quickly because it turns out people like dogs just as much as I do.⁠
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Read the full interview at Hamptons.com (Link in Bio)⁠
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#dogist #arf #dogs #animalrescue #guildhall #hamptons
  • 167 Dune Road, Bridgehampton, NY 11932⁠
Saunders Exclusive: $42,500,000⁠
@jenniferwilsonhamptons 
@edbruehl @leemohlerehamptons 
@hamptonsrealestate 
⁠
Experience extraordinary coastal living with this exquisite oceanfront estate on Dune Road in Bridgehampton. ⁠
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Designed by the renowned architect Francis Fleetwood, this remarkable property boasts 300 feet of private ocean frontage, complete with its own private boardwalk leading directly to the beach, all set on over 3 acres of prime land.⁠
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The charming shingle-style residence encompasses 4,200 +/- sq. ft. of luxurious living space, featuring 5 bedrooms and 5 full bathrooms, plus an additional half bath.⁠
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Read the full article at Hamptons.com (Link in Bio)⁠
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#duneroad #oceanfront #bridgehampton #realestate #hamptons #francisfleetwood ⁠
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  • The Hamptons have seen their fair share of collaborations and takeovers this summer. Still, nothing compares to The h.wood Group and Chase Sapphire Reserve’s transformation of Montauk hotspot Mary Lou’s into Delilah Montauk.⁠
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The four-day takeover combined unforgettable dining experiences with show-stopping live entertainment featuring performances by Zack Bia, Alesso, Gwen Stefani, and DJ Pee.Wee (Anderson Paak). ⁠
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Exclusively for Chase Sapphire Reserve cardholders, diners were treated to white glove hospitality and Delilah’s staples, including the famous chicken tenders and tuna tartare, and bold twists on Hamptons classics like lobster rolls, striped bass crudo, and crab and avocado toast. 

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#gwenstefani #alesso #djpeewee #chasesapphirereserve #delilahmontauk #montauk #hamptons
  • LVIS thrift shops are open Tuesdays through Saturdays 10 AM through 5 PM

donations are accepted Wednesday through Saturday 10 AM through 1 PM by appointment 

located at 95 Main St East Hampton
  • Check out the Top Hamptons Events This Weekend!⁠
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🚗 The Bridge IX⁠
📅 Sat, Sept 13 | 2–7PM⁠
📍 The Bridge, Bridgehampton⁠
Over 300 rare automobiles showcased across stunning landscapes.⁠
⁠
🎬 23rd Annual Surf Movie Night⁠
📅 Fri, Sept 12 | 5:30–9PM⁠
📍 Southampton Arts Center⁠
Surfboard swap, live music & outdoor film screening. 🌊⁠
⁠
🍝 San Gennaro Feast of the Hamptons⁠
📅 Sat, Sept 13 – Sun, Sept 14 | 10AM⁠
📍 Hampton Bays⁠
Italian pastries, live entertainment & fireworks Sat @ 8:15PM 🎆⁠
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🎭 In Process: Roderick George⁠
📅 Sat, Sept 13 | 7PM⁠
📍 Guild Hall, East Hampton⁠
A special in-process presentation of The Missing Fruit (Part I).⁠
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🎤 Sheena Easton at WHBPAC⁠
📅 Sat, Sept 13 | 8PM⁠
📍 Westhampton Beach PAC⁠
Grammy-winning artist live on stage!⁠
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☕ Cars & Coffee⁠
📅 Sun, Sept 14 | 9–11AM⁠
📍 Bridgehampton Museum⁠
Classic & exotic cars, food, drinks & live music.⁠
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🛍 Hampton Vintage⁠
📅 Sun, Sept 14 | 10AM–5PM⁠
📍 Westhampton Beach Village Green⁠
Shop unique vintage finds!⁠
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🎶 Hamptons Festival of Music Finale⁠
📅 Sun, Sept 14 | 4PM⁠
📍 St. Luke’s Church, East Hampton⁠
Featuring Cimarosa, Berlioz & Beethoven.⁠
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🍷 Wine Dinner with Pradorey at R.AIRE⁠
📅 Tues, Sept 16 | 6:30PM⁠
📍 Hampton Bays⁠
Five-course tasting menu with exquisite wine pairings.⁠
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🎥 Toy Story 30th Anniversary Screening⁠
📅 Sept 12–15 | Various Times⁠
📍 Southampton Playhouse⁠
Celebrate Woody & Buzz’s timeless adventure!⁠
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Check out more events at Hamptons.com (Link in Bio)⁠
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#carshow #hamptons #sangennaro #sangennarofeast #winedinner #bridgeIX
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