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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to the associate broker or salesperson whether they are in the employ of another sponsoring broker or the person is no longer active in the real estate business and no longer the holder of a real estate license.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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Mother’s day Brunch at The Hampton Maid

May 11 @ 08:00 AM - May 11 @ 02:00 PM
259 East Montauk Hwy, Hampton Bays, NY, 11946
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Mother’s Day Brunch at The Baker House 1650

May 11 @ 10:00 AM - May 11 @ 01:00 PM
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Mother’s Day Sound Bath with Daniel Lauter

May 11 @ 10:00 AM - May 11 @ 11:30 AM
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Mother’s Day Brunch at Good Ground Tavern

May 11 @ 11:00 AM - May 11 @ 03:00 PM
239 East Montauk Highway Hampton Bays, NY 11946
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Paddle Diva’s Mother’s Day Paddle and Brunch

May 11 @ 11:00 AM - May 11 @ 12:00 PM
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  • It’s Mother’s Day Weekend! ⁠
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From fine jewelry to live music, art, brunches & nature — here’s what’s happening:⁠
⁠
💎 Jen Proudman Jewelry Pop-Up⁠
🗓️ Friday, May 9 | 2–5PM⁠
📍 Le Closet, 9 Windmill Lane, Southampton⁠
✨ Shop stunning gem-carved fine jewelry while browsing luxury consignment.⁠
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🎬 Gary Cooper Festival⁠
🗓️ Fri, May 9 – Sun, May 11⁠
📍 Southampton Playhouse, 43 Hill St⁠
🌟 A weekend honoring a Hollywood icon with screenings and celebrations.⁠
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🖼️ 17 Women Art Exhibition⁠
🗓️ Sat, May 10 – Sun, May 11 | 11AM–4PM⁠
📍 Ashawagh Hall, East Hampton⁠
🎨 Featuring painting, sculpture & photography by 17 female artists.⁠
⁠
🏛️ Southampton History Museum Spring Fair⁠
🗓️ Saturday, May 10 | 11AM–4PM⁠
📍 17 Meeting House Lane, Southampton⁠
🎶 Live 19th-century music, local legends, crafts, games & more!⁠
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🍳 Artists’ Table Brunch @ Watermill Center⁠
🗓️ Saturday, May 10 | 12–2PM⁠
📍 Watermill Center⁠
🥗 Chef-made meal & artist presentations in an intimate setting.⁠
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🌹 LongHouse Talks: Roses in the Garden⁠
🗓️ Saturday, May 10 | 2–4PM⁠
📍 LongHouse Reserve, East Hampton⁠
📚 Photographer Ngoc Minh Ngo shares stories & images from her new book.⁠
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🎸 The Barnstorm Live @ The Clubhouse⁠
🗓️ Saturday, May 10 | 9PM⁠
📍 174 Daniels Hole Rd, East Hampton⁠
🎤 NYC’s favorite party rock band hits the Hamptons!⁠
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🗿 Vadis Turner’s “Venus Rising”⁠
🗓️ Saturday, May 10 | 4–5PM⁠
📍 LongHouse Reserve⁠
🔥 Bold new outdoor sculpture debut + Artist Walk & Talk.⁠
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🌊 Paddle Diva’s Mother’s Day Paddle & Brunch⁠
🗓️ Sunday, May 11 | 11AM⁠
📍 Vandevere Marina, East Hampton⁠
🛶 Paddle, then brunch with Fresno. Get a free MOM-osa!⁠
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🍽️ Mother’s Day Dining Guide⁠
🗓️ Sunday, May 11⁠
🎁 Treat mom to a perfect brunch, lunch or dinner.⁠
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🎨 ArtSea Create & Sip: Horseshoe Crab Molt⁠
🗓️ Tuesday, May 13 | 6–8PM⁠
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🖌️ Paint + sip night celebrating horseshoe crabs. No experience needed!⁠
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📍 Check out more events at Hamptons.com (Link in Bio)⁠
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  • 7 Ashwood Court, Southampton, NY 11968⁠
Saunders Exclusive: $6,200,000⁠
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This magnificent new construction offers a blend of modern luxury and timeless sophistication. Spanning 7,546 +/- sq. ft. on a pristine 0.92-acre lot, this two-story traditional-style residence boasts 7 bedrooms, 7 full baths, and 1 half bath.⁠
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Inside, find an open kitchen adorned with marble countertops and high-end stainless steel appliances, perfect for the culinary enthusiast. The home features a spacious entry foyer, a living room, dining room, family room, den/office, and a study. Enjoy the comfort of two primary bedrooms, each with its own freestanding soaking tub, located on the first and second floors, respectively.⁠
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  • Steeped in tradition, history, and familiarity, a refurbished Sagaponack General Store has reopened its doors. Though still on the same footprint, the renovated establishment feels larger and more spacious, with an open layout and abundant natural light that adds warmth and charm. It now shares space with the newly restored historic Post Office at 542 Sagg Main Street in Sagaponack, located between Sagaponack Road and Hedges Lane, just south of the Sagaponack Common School.⁠
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The original 1878 building was meticulously moved 15 feet back from Sagg Main Street and now features a welcoming new porch. The Post Office, located there as well, has its own handicapped-accessible entrance. While construction is complete, the Post Office has not yet reopened to the public. ⁠
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Read the full article at Hamptons.com (Link in Bio)⁠
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  • Check out the top Hamptons events this weekend!⁠
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🎭 Coppélia at Guild Hall⁠
📅 May 2–4⁠
🕖 Fri & Sat @ 7PM | Sun @ 12PM & 5PM⁠
📍 Guild Hall, East Hampton⁠
✨ Hampton Ballet Theatre School’s spring ballet!⁠
🎟️ Link in bio⁠
⁠
🎙️ Elvis Meets Sinatra @ WHBPAC⁠
📅 Sat, May 3 | 🕗 8PM⁠
📍 Westhampton Beach PAC⁠
🎶 Top tribute acts for Elvis & Sinatra⁠
🎟️ Link in bio⁠
⁠
📚 Gingy’s Diaries @ Southampton Arts Center⁠
📅 May 2–4⁠
🕑 2PM & 7PM⁠
🎭 A witty, moving new show by Ilene Beckerman⁠
🎟️ Link in bio⁠
⁠
🌸 Spring Market @ Share the Harvest Farm⁠
📅 Sat, May 3 | 🕙 10AM–12PM⁠
📍 St. Luke’s Church, East Hampton⁠
🎶 Live music, fresh food, flowers & gifts⁠
🎟️ Link in bio⁠
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🏇 Kentucky Derby Party⁠
📅 Sat, May 3 | 🕓 4PM–7PM⁠
📍 Fauna, Westhampton Beach⁠
🍹 Cocktails, hors d’oeuvres & hat contest!⁠
🎟️ Link in bio⁠
⁠
🌼 Mother’s Day Flower Arranging Class⁠
📅 Sun, May 4 | 🕒 3PM–5PM⁠
📍 The Hampton Maid, Hampton Bays⁠
💐 Create a bouquet with Andrews Family Farm⁠
🎟️ Link in bio⁠
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🧘‍♀️ The Rise Wellness Retreat⁠
📅 Sun, May 4 | 🕘 9AM or 3PM⁠
📍 East Hampton Indoor Tennis Club⁠
💪 Yoga, Padel, painting & shopping powered by Lululemon⁠
🎟️ Link in bio⁠
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🏃 May Day 5K – East Hampton⁠
📅 Sun, May 4 | 🕘 9AM⁠
📍 101 Ocean Ave, East Hampton⁠
💖 Run for Family Service League⁠
🎟️ Link in bio⁠
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🪑 Almond Zigmund: Wading Room Exhibition⁠
📅 Opens Sun, May 4 | 🕛 12PM–5PM⁠
📍 Guild Hall, East Hampton⁠
🎨 A fusion of art, furniture & collaboration⁠
📸 Photo Credit: Francine  Fleischer
🎟️ Link in bio⁠
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🍽️ Long Island Restaurant Week⁠
📅 May 2–4⁠
📍 Various Restaurants⁠
🍷 Enjoy 3-course prix fixe meals across LI⁠
🎟️ Link in bio⁠
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⛳ CMEE Spring Golf Outing @ The Bridge⁠
📅 Wed, May 7 | 🕜 1:30PM–6PM⁠
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🥂 Golf, brunch, cocktails & auction⁠
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  • 98 Bay Street, Sag Harbor, 11963⁠
Saunders Exclusive: $8,995,000⁠
@hamptonsrealestate @edmundgaetjens⁠
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Discover an unparalleled offering in the heart of historic Sag Harbor Village. Situated on an idyllic 0.63-acre corner lot, this meticulously restored Victorian delivers the ultimate Hamptons lifestyle: a luxuriously appointed main residence, a lofted studio, and resort-like grounds with a heated gunite pool. Just moments from Sag Harbor
  • To launch the celebrations for its 50th edition, the Hampton Classic Horse Show has unveiled its 2025 poster, “Beneath the Painted Sky,” featuring artwork by Michael “Mickey” Paraskevas of Southampton, NY. Paraskevas has previously designed the Hampton Classic poster four times (1987, 1992, 1998 and 2008).⁠
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Celebrating 50 years of world-class equestrian competition, the Hampton Classic returns to Bridgehampton, NY, August 24-31, featuring FEI CSI5* and CSI2* show jumping and USEF Premier hunter competitions with more than $1 million in prize money.⁠
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📸: Poster Courtesy of the Hamptons Classic⁠
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