State Real Estate Board of New York Approves New Real Estate Advertising Provisions

On Friday, May 31, 2019, the State Real Estate Board of New York (the “Board”) approved new provisions to Section 175.25 of the New York Code, which governs advertising of real estate in the State of New York.  Specifically, the new advertising regulations amend Section 175.25(d)(6), and will:

1) For Broker WebsitesEliminate clunky disclaimer language—which brokers never used; and further clarify the already existing rule that requires advertising brokers to obtain the permission of the listing broker to advertise a listing; and ensure that the listing broker is identified “clearly and conspicuously”; and

2) For Third Party PortalsRequire all advertising on third party public portals to “clearly and conspicuously” identify the listing broker and include at least the word “advertisement” for any paid advertisements by brokers/agents other than the listing broker.

The new provisions are specifically geared to update Section 175.25 because of the proliferation of internet real estate advertising and try to help eliminate consumer confusion caused by third party portals and other advertising which fails to properly identify the roles of brokers.  Indeed, REBNY had received many complaints from both agents and consumers who appeared at apartment showings or received calls from agents who they had not intended to contact—including out-of-state agents, who “purchased zip codes” as part of lead generation programs.

The new provisions also culminate over two years of work by REBNY to fight for greater clarity in real estate advertisements for brokers and agents, and to help eliminate the consumer confusion discussed above.  In this bulletin, we will explain the implications of the changes in Section 175.25(d)(6), and the next steps in the enactment process for the new regulations.

The Old Version of Section 175.25(d)(6)

Section 175.25(d)(6) governed “advertisements referencing property not listed with a broker.”  In short, it amplified Section 175.25(b)(2)(ii)—which requires that a broker obtain permission to advertise another firm’s listing—by requiring a disclaimer that said the advertising broker did not have a property listing at the advertised property.  The disclaimer mainly applied to ads by brokers/agents of apartments for which they were not the listing broker.  Most brokers and agents, however, did not include the disclaimer in their advertisements, nor did any third-party portals.  Thus, these provisions are going to be deleted from Section 175.25(d)(6) and replaced with the new language.

The Amendments to Section 175.25(d)(6)

Two new sections amend Section 175.25(d)(6).  The first section relates specifically to real estate broker websites, including IDX websites and firm websites.  The new Section 175(d)(6)(i) again continues the requirements set forth in Section 175.25(b)(2)(ii)—which is not changing—and makes clear that a broker or agent must obtain authorization from the listing broker to advertise a listing.  Importantly, new Section 175.25(d)(6)(i) makes clear that any such advertising must “clearly and conspicuously” identify the listing broker, and must include language such as “Listing Provided by [insert name of the exclusive listing broker]” or  “Listing Courtesy of [insert exclusive listing broker].”  Thus, the listing broker’s name must be clear and conspicuous, and cannot be buried on the very bottom of a webpage, or in an unreadable or small font.

The second amendment, Section 175.25(d)(6)(ii), relates specifically to real estate advertising on third party portals.  In particular, the provisions sets forth that all such third party portal advertisements must include the “clear and conspicuous” requirements set forth in Section 175.25(d)(6)(i), and also requires “words to disclose that the advertisement is a paid advertisement,” immediately following the advertising brokers’ name.  At a minimum to comply with the regulation, the word “advertisement,” must appear next to the advertising broker’s name.  Here, the new language follows established legal protections created by federal agencies, such as the FTC, and mimics other important websites, like Google and Yelp, which clearly identify advertisements from traditional search results.

No Impact on Movement of Agents

We have heard some concern that the new provisions impact the ability of an agent to change firms.  The new provisions, however, relate to advertising and do not in any way inhibit the ability of an agent to move firms.  Indeed, the new regulations merely follow the old Section 175.25(b)(2)(ii) and now add that the listing broker must be “clearly and conspicuously” identified, both:  1) on a broker’s website or IDX site, and/or 2) a third-party portal site.  Moreover, it is black-letter New York law that real estate listings are property of a firm, and the new provisions do not in any way expand established New York law on that point. We are happy to discuss this concern with any REBNY member, and to allay any fears—which we believe are misplaced.

Enforcement of the New Provisions:

There are a number of steps before the new provisions will become law and enforced by the DOS.  First, the new provisions are subject to a 60-day comment period.  Any member of REBNY may provide support for the new provisions, and we encourage members to write their support for the provisions.   Please forward all such comments to Yilda Guerrero, Director of Residential Brokerage, yguerrero@rebny.com at REBNY, and REBNY will be forwarding all such comments to the DOS.

Second, after the comment period, the DOS will release an advisory opinion providing further guidance as to how agents and brokers can comply with the new provisions.  There is no timetable set for the release of the advisory letter.  Finally, it is possible that the DOS will include a “grace period,” as it did when Section 175.25 was first enacted.  We will continue to keep the membership updated on further developments and advise everyone as to when the provisions will go into effect.

The New Provisions:

Specifically, the new regulations state the following:

(i) No real estate broker, associate real estate broker, or real estate salesperson shall advertise in any manner or make reference to in any advertisement property that is subject to an exclusive listing agreement of another broker, without authorization from the exclusive listing broker.  Such advertisements must clearly and conspicuously disclose the name of the exclusive listing broker immediately after one of the following phrases: “Listing Provided by [insert name of the exclusive listing broker]”, “Listing by [insert name of exclusive listing broker]”, “Listing Broker Contact [insert name of exclusive listing broker]”, “Listing of [insert name of exclusive listing broker]”, “Listing Provided Courtesy of [insert name of exclusive listing broker]”, “Listing Courtesy of [insert name of exclusive listing broker]”, or “Listing Agent Contact [insert name of exclusive listing broker]”.

(ii) Any real estate broker, associate real estate broker, or real estate salesperson that pays a third-party for advertising involving a property that is subject to an exclusive listing agreement of another broker must, in addition to the requirements in subparagraph (i), include in any advertisement that provides the advertising broker’s name words to disclose that the advertisement is a paid advertisement, using at a minimum the word “advertisement” immediately following the real estate broker, associate real estate broker, or real estate salesperson’s name.

Conclusion

The new provisions now make it clear that an advertising broker, on its own website or on an IDX site, who does not have the listing must “clearly and conspicuously” identify the listing broker for a property.  Similarly, the new provisions make clear that on all third-party portals, an advertising broker who is not the listing broker must also “clearly and conspicuously” identify the listing broker and must also include language that sets forth that it is a paid advertisement.  Please do not hesitate to contact Sandhya Espitia, REBNY’s Senior Vice President in charge of Brokerage Affairs, or Claude Szyfer, REBNY’s counsel, should you have any questions regarding the new advertising regulations.