Proposed NYS real estate ad rules stir debate

From left: Diane Ramirez president of Halstead Property, Eileen Spinola, a senior vice president of REBNY, and Duncan MacKenzie, the CEO of the New York State Association of Realtors

The first major overhaul of state real estate advertising regulations in 34 years is nearly complete but is being held up because the Real Estate Board of New York and the New York State Association of Realtors can’t agree on a few final points.

The 11-member quasi-governmental New York State Board of Real Estate, which advises the state Department of State and helps craft real estate brokerage regulations, held its first meeting in more than two years this month and briefly discussed the new rules. The board is supposed to meet three times per year, but as The Real Deal reported in July, it has not gathered since June 2009. Members include Diane Ramirez, president of Halstead Property, and Eileen Spinola, a senior vice president of REBNY.

REBNY and NYSAR agree on most issues in the 11 pages of proposed regulations that aim to update scattered rules (see first PDF below) as well as the two-paragraph advertising regulation, that was passed in 1977, as part of the broader Real Property Law (see second PDF below), but can’t see eye-to-eye on the size of brokerage names and logos relative to the brokers and agents placing the ads.

The major players in the negotiations are the state Department of State, which regulates real estate licensing, REBNY and NYSAR, insiders said.

The state sought to update the rules in part because of questions from brokers and agents who did not have a clear idea of advertising rules in the Internet age.

The new proposed rules lay out the relative size of the names of teams, brokers and salespersons compared to the company name in multiple forms of advertising including on the Web. The other major change is for the first time regulating teams, which first became popular around 2000, and became more prominent as the market started to cool in 2006. For instance, a team name has to include names of team members, or if it does not, it must include the name of the firm.

The two sides provided a hint about the split over name size and placement in the Nov. 16 hearing held by video conference in both Albany and Manhattan.

NYSAR wants to allow broker and agents to have their names larger than the brokerage company name, although the company name would have to be “clear and conspicuous” to a consumer. On the other hand, REBNY wants the firm’s name to be “equal to or greater” than the name of the broker or salesperson. The current draft has the REBNY language.

The seemingly hyper-technical issue is important for brokers and agents that want to highlight their names more prominently than their firms to create brand awareness.

At the Nov. 16 meeting, the board members briefly discussed the new rules, then heard comments from the public, including from Neil Garfinkel, counsel to the 12,000-member REBNY, New York City’s most influential industry voice, and Duncan MacKenzie, the CEO of NYSAR, the state’s largest real estate trade group.

“We ended up in a pretty good place,” Garfinkel said at the meeting, about the overall draft rules, but he highlighted the strong difference with NYSAR on the one topic. “I am concerned that the ‘clear and conspicuous’ standard will create more problems… [And] is going around the clear intent of the law.”

Duncan, whose group represents about 51,000 brokers and agents in the state including about 11,000 in New York City, in an interview with The Real Deal today, said changing to the REBNY-backed standard would cost professionals a great deal of money. For example, they would have to alter sales material and signage in which many associate brokers and salespersons have their names larger than the firm’s name.

He wondered why the standard should change, when he was not aware of instances where the public has been harmed.

“If there has been no harm, why create a standard that will change a bunch [of companies’] business models?,” he asked.

The new rules, which were first proposed in 2008, will next be formally discussed during a board meeting that has not yet been scheduled, but will likely be next spring. Once the board approves a draft, the rules are sent to Governor Andrew Cuomo’s office, then a public comment period follows, and then it goes before board again for a vote. If approved, the regulations would become official.

Proposed Advertising Guidelines
Current Real Property Law