ALBANY, NY – May 18, 2010 – (RealEstateRama) — Secretary of State Lorraine Cortés-Vázquez today announced that since the start of 2010 the Department of State has taken dozens of actions against dishonest licensed real estate professionals, leading to numerous revocations, suspensions and fines.
At the same time, given the improving real estate market, the Department is increasing outreach efforts, through a new Real Estate Education Campaign, aimed at helping prospective buyers, sellers and renters learn their rights when engaging in real estate transactions.
“We are slowly emerging from a prolonged housing crisis. The Department of State is working to instill confidence in the real estate market by ensuring that all practicing real estate professionals are licensed and that they conduct themselves with honesty and integrity and in accordance with the laws of New York state,” Secretary Cortés-Vázquez said.
“By and large, the vast majority of real estate professionals in New York are hard workers who follow the rules, but as with any trade, some people abuse those rules, and those individuals should no longer have the privilege to work in the industry,” the Secretary added. “The goal of the Department of State is to ensure that New Yorkers have confidence in real estate professionals, and that’s why we’re promoting a set of guidelines – the ‘Real Estate Education’ campaign – that prospective buyers, sellers and renters should follow before entering into a real estate transaction.”
The Department of State licenses nearly 120,000 real estate professionals in New York, including salespeople, brokers and appraisers. Each year the Department investigates hundreds of complaints against licensed real estate professionals who may have engaged in untrustworthy or dishonest behavior. Some of the violations frequently investigated by the Department include: mishandling or overcharging of fees or deposits associated with a transaction; making false claims about a property or about one’s experience in the industry; failure to complete the required continued education courses; or gross malfeasance, often a combination of the above violations.
Here are some examples of recently revoked licenses:
Gross malfeasance
- James M. Graham (license revoked October 29, 2009)
Graham, of Monroe Co., was a notorious property flipper who owned and managed real estate across Upstate New York, demonstrating untrustworthiness and incompetency at every turn. Graham sold a number of properties to individuals located in other countries or far away regions of the United States and then agreed to manage the properties for them. As property manager, he was responsible for collecting rents, paying bills and repairing the units, while the excess rent was to be paid to the owners. Although Graham collected rent, he failed to pay bills, do repairs or turn money over to the owners. In addition, Graham was ordered by local courts to pay a number of five- and six- figure settlements to numerous individuals and business totaling nearly $575,000 for various deceitful practices from 2007 to 2009.
- Kevin Wood (license revoked January 25, 2010)
The Suffolk County Office of Consumer Affairs determined that Wood had engaged in 23 deceptive practices as a real estate salesperson, including falsely telling consumers that if their homes did not sell within 90 days of being listed, his company, For Sale by Owner Services, Inc., would purchase them. In addition, he charged unreasonable and excessive fees, made false claims to clients, employed an unlicensed salesperson and himself acted as a real estate broker without a broker’s license.
Mishandling or overcharging of fees
- Michael McCabe (license revoked February 11, 2010)
McCabe, formerly of Erie Co., failed to refund deposit money to his clients when the sale of the clients’ property was canceled. The clients took McCabe to court to get their money back but to no avail, and when a Department of State investigator contacted McCabe, his office was vacant and the landlord said McCabe had moved to Texas.
- Jeffrey Walton (licensed revoked March 12, 2010)
Walton, of Montgomery Co., took money from client intended to be applied toward the purchase price of property but then deposited the money into a regular office bank account. State law mandates that a real estate broker must “maintain a separate, special bank account to be used exclusively for the deposit” money, such as an escrow account. Additionally, Walton wrote bad checks and failed to cooperate with Department of State investigators as they were looking into his character and history as a broker.
Making false claims about a property
- Marie E. Manfredi (license revoked February 4, 2010)
Manfredi helped a Westchester Co. dog owner find an apartment in Oct. 2007 but neglected to consult the owner of the building if dogs were allowed in the unit. When Manfredi found out no pets were allowed, she did not refund the dog-owning renter her deposit money.
- Alice Karamouzis (license revoked March 16, 2010)
Karamouzis, of Queens, failed to provide a prospective tenant with a disclosure form showing her relationship to an accredited real estate agency at the time of their first substantive contact, as is required by law.
The Department of State’s “Real Estate Education” Campaign
The following are some basic facts that anyone looking to buy, sell or rent should know. These facts are part of a new brochure that is available for download on the Department of State homepage, www.dos.state.ny.us.
What you need to know before entering into a real estate transaction:
- All real estate professionals[1] must be licensed by the Department of State, and they must renew their licenses every two years.
- To check if a person who represents themselves as a real estate salesperson or broker is, in fact, licensed by the state of New York, you can search the Department of State website, www.dos.state.ny.us, by clicking on the “eAccessNY” link and entering the name of the person or by calling (518) 474-4429.
- Buyers, sellers, renters and landlords all have the right to hire their own broker in a real estate transaction.
- You should not assume that an agent is acting solely on your behalf. Unless you have entered into a written agreement with the broker, he or she could be representing the other party to the transaction.
- When you have hired an agent to represent you, he or she owes you the following duties: reasonable care, undivided loyalty, confidentiality, full disclosure and the ability to provide you with an accounting of any money collected or expended on your behalf.
- Real estate salespeople and brokers must disclose whom they are representing in the transaction at the time of their first contact with you.
- Commission fees are negotiable. You have the right to negotiate the amount of the commission to be paid to a broker or salesperson. There is no such thing as a mandatory commission rate.
- If a broker collects fees that you owe to the landlord or seller, such as a deposit or the first month’s rent, the broker has an obligation to separate that money from his or her own. If the money is not immediately provided to the landlord or seller, the broker must put the money into a separate escrow account until the transaction has been closed. If the transaction does not close, the broker cannot keep the money and must return it to you.
- Non-refundable commission deposits are not permissible. A broker earns a commission when he or she finds a person who is ready, willing and able to purchase the property or rent the apartment. Only if the broker has assisted the parties in reaching an agreement on all of the material elements of the deal has he or she earned a commission.
- Real estate salespeople and associate brokers work under the oversight and supervision of the broker with whom they are associated. You have the right to contact the broker with any concerns about the transaction or the agent’s handling of the transaction. Some salespeople and associate brokers advertise themselves as a “team” or “group.” This is not a separate company. These agents still work for a broker who is responsible for supervising their activity.
The brochure also includes information on where New Yorkers can turn if they believe that they have been a victim of a loan scam or of abusive lending practices. New Yorkers are encouraged to visit the Department of State’s website if they have any further questions about what constitutes illegal or dishonest actions by licensed real estate professionals – and to report these actions to the Department if they experience them.
[1] To become a licensed real estate salesperson, an individual must take specific coursework and pass an exam on state real estate law and practice. To work in New York state, salespersons must be associated with a real estate broker. Real estate brokers are individuals who, after gaining two years of experience in real estate sales, take additional coursework and exams in order to own or operate their own brokerage firms. Real estate appraisers must take required coursework and exams to become certified in estimating the value of real property.
