Commercial brokerage firm Massey Knakal Realty Services has temporarily replaced Kenneth Krasnow, the managing director of the firm’s Brooklyn office, because he is not licensed as required by the New York State Department of State, company CEO Paul Massey told The Real Deal this morning.
Krasnow had been the head of the Brooklyn office since 2008. He will be replaced by Cory Rosenthal, corporate vice president, until Krasnow obtains his license, Massey said.
“[In the] interim, Cory Rosenthal, corporate vice president, will take over day to day management of Queens and Brooklyn until Ken resolves the license issue,” Massey said.
Krasnow, who said the firm knew he did not have a license, would remain with the firm until his license was renewed, he said.
“I am not leaving the firm. I will step away from day-today management duties,” Krasnow said, adding that he accepted responsibility for not obtaining his license.
Krasnow blamed his delay in obtaining a license on his move up from Florida. He said he was not barred for any legal reason from obtaining a broker’s license.
Krasnow was removed this morning after The Real Deal contacted the firm yesterday as part of an investigation into a number of unlicensed real estate agents at New York City commercial and residential brokerage firms.
Agents at some of the leading real estate firms in the city, such as Massey Knakal, Eastern Consolidated and Gumley Haft Kleier, had missing or expired licenses. And newer firms have problems as well. A small residential firm that announced its formation last month, Blu Realty Group, does not hold a license in the company’s name.
These lapses were turned up in a review by The Real Deal comparing lists of hundreds of agents on the websites of a dozen commercial and residential brokerage firms to Department of State licensing records.
Few real estate agents like to take the test or the continuing education classes needed to obtain or maintain their license from the New York State Department of State, but most of them put up with it because it is required part of the job.
There are some, however, who don’t, either because of forgetfulness, ignorance or worse, they let their two-year licenses lapse or never obtained one.
The problem of not having licenses is not new. It arose recently in a lawsuit at Bowlmor Lanes, the new bowling alley at the old New York Times buildings at 229 West 43rd Street. A New York State supreme court judge in that case noted that Lon Rubackin, a managing director at GFI Capital Resources Group, was not licensed in 2008 and parts of 2009 when the deal was being negotiated. He is now licensed, state records show.
While any individual violation is only a misdemeanor, it can generate a fine of up to $1,000 and suspension or revocation of a license, state law says. In addition, there are possible hefty financial repercussions to brokerage firms. If an individual who does not have a license is paid a commission, the company that paid the commission can sue to have it returned. The law also allows for quadruple damages, meaning a $50,000 commission on a building sale could cost a company more than $250,000 in fines and penalties.
When asked whether the Real Estate Board of New York, the city’s leading real estate trade association, would sanction member firms like Massey Knakal that did not abide by state brokerage regulations, the organization responded: “Licensing is outside of REBNY’s purview.”
And not all individuals in the real estate industry take the licensing seriously. One attorney, speaking on background about a particular case, was dismissive, asking why the magazine was doing the investigation.
When told it was because it is illegal to operate as an agent without a license, he responded sarcastically, “Ok, thanks, officer.”
Krasnow and Jonathan Hageman, also at Massey Knakal, did not hold licenses as of last week, although Hageman was issued a license yesterday, state records show, following inquiries from The Real Deal.
Krasnow, a managing director of Massey Knakal’s Brooklyn office, has been supervising brokers there since being hired in 2008, yet has not had a New York license since February 2008, a spokesperson for the Department of State said. State law requires a manager of brokers to have one.
Hageman is a sales team manager who works closely with Robert Knakal, the company’s chairman. His application had been pending, and after a call from Massey Knakal to the Department of State yesterday, his license was approved, agency records show. Hageman had been unlicensed from December 2009 through February this year, the state agency spokesperson said.
“The company deviated from protocol by not following through with these two individuals in terms of renewing their licenses. We are going to correct this immediately, and will — moving forward — maintain our protocol,” Paul Massey said.
Other firms had agents with expired licenses as well.
— At investment sales firm Eastern Consolidated, agent Ety Lee who last year brokered the $3 million sale of 979 Second Avenue has an expired license, Peter Takiff, the company’s CFO, said. He said the firm mistakenly thought the expiration date was 2012, not December 2010. Lee was removed from the site as an agent and will remain off until she obtains her renewal, Takiff said, which he expected in days or weeks.
Another agent, Jerome Benayoum, also had an expired license, and was removed from the site while his application was pending with the state, Takiff said.
— At Gumley Haft Kleier — a residential brokerage firm which has become a household name through the HGTV show “Selling New York” — three agents were removed from the website after The Real Deal asked about why they were posted there when they had no license. One was ill, and so had not renewed her license, one was fired and one had a baby, Michele Kleier, company president and chairman, said.
“We are on top of things, but sometimes they fall through the cracks,” Kleier said. “We don’t want unlicensed [agents] on our website.”
— Blu Realty Group, a small residential firm that announced it was in business last month, had a different licensing problem. It lacks a license held in the name of the brokerage firm, which is required by law. But all its brokers were licensed under other company names, a review shows.
It mounted a publicity campaign, including a press release to The Real Deal, announcing the firm was in business. Blu claimed in its release late last month that it had $100 million in listings.
An outside spokesperson for Blu, Ron Berkowitz, said the firm did not intend to imply it was handling sales or listing properties now. That will only begin after it obtains a proper license for the company.
“From their point of view, they were not trying to mislead anyone. They just wanted to get the word out that they formed a company so that brokers would come work with them,” Berkowitz said.
— The new investment sales firm Ariel Property Advisors, launched by former Massey Knakal broker Shimon Shkury, had an individual listed as a sales associate who did not have a license. That person’s title was changed on the website, an attorney representing the company said, following a call from The Real Deal.
— Two other firms that listed agents on their sites who were not licensed — and were subsequently removed after being notified by The Real Deal — were Mercedes Berk and Argo Real Estate.