Some 33 New York City residential brokers from firms including the Corcoran Group, Nest Seekers International and Rapid Realty faced sanctions in the last year from state licensing regulators, a review of public records show.
The New York State Department of State infractions ranged from keeping unearned commissions to conducting business under an unlicensed corporation, generating fines that ranged from $500 to $4,500, the review shows.
The DOS provided The Real Deal with all 23 consent orders signed by city brokerage firms or brokers over the past 12 months. (See below for a PDF chart of the violations.) While the department offers a searchable database of the consent orders, a TRD review found that it was not complete.
A consent order is one possible resolution of the hundreds of complaints that pour into the DOS each year statewide. The order is an agreement between the state and brokers or agents in which the professionals admit to the violations or to similar language. For example, there were 953 complaints filed statewide in 2012, and 73 consent orders signed. Other possible resolutions include dropping the complaint, or, if the brokerage will not sign a consent order, taking the case to an administrative judge who would make a determination.
The infractions over the last year illustrate both the complex and legalistic nature of the brokerage profession, while at the same time underscoring the interconnections between the firms and the public that relies on their services.
In one of the most intriguing cases, Corcoran’s Grace Chan, an associate broker in Manhattan, was accused in 2010 of a charge that would have come as a stunning surprise to most licensed professionals at the time. The state said she was using the title “vice president” without being an officer at the firm, as required by law.
Chan received the violation nearly three years before the DOS clarified the rules on broker titles, in response to a request from the Real Estate Board of New York, which has spurred a sea change in titles.
Chan declined to comment, but Neil Garfinkel, a partner at the law firm Abrams Garfinkel Margolis Bergson and an outside counsel for REBNY, said her consent order, signed Dec. 31, 2012, was not the impetus for the trade group’s appeal for a clarification in March.
“The issue and concern over titles had been discussed for quite some time. The Chan case had nothing to do with the request for the opinion,” Garfinkel said.
The largest total fine fell to professionals at the Midtown-based Nest Seekers, who had to pay a total of $4,500 for several license violations. Some penalties involved not obtaining client disclosure forms — the most common offense of the year — but others were related to the corporation.
In 2011, the state accused the company of publicly using the name Nest Seekers International, while Eddie Shapiro, the firm’s CEO and broker of record, had a license, but it was with an entity called Nest Seekers Corporation that was dissolved in 2009.
Shapiro violated the law “by conducting licensed activity on behalf of the unlicensed brokerage, Nest Seekers International, while associated solely with Nest Seekers Corp.,” the consent order said.
Shapiro declined to comment. The Real Deal reached out for comment from all the individuals or their firms except three individuals who could not be reached for comment.
Surprisingly, about half of the city’s consent orders involved the misdeeds of Brooklyn agents.
For example, Anthony Lolli, CEO of Rapid Realty, an expanding franchise firm, was accused of not properly dissolving a Brooklyn brokerage called Rapid Realty NYC.
In addition, Lolli and his former agent Chauncey Palmer allegedly failed to obtain the proper agency disclosure forms. However, the state acknowledged in the consent order that the client refused to sign the form.
The case was more complicated than it appeared, Lolli said. The tenant — who was disbarred from practicing law in California twice – snagged the firm in an unintentional violation of the disclosure law, which Lolli admitted were made.
Also in Brooklyn, the state found that Brown Harris Stevens agents David Cobell and Charles Ruoff did not obtain a disclosure statement in a timely fashion, but unlike in most cases, the two did not admit to the charges.
“The consent agreement had no admission or finding of guilt or wrongdoing,” a spokesperson for Brown Harris Stevens said in a statement, noting that the DOS said the actions “may have been unintentional but nevertheless constituted technical violations.”
Some insiders faulted a complex system for the number of violations that brokers faced.
For example, one real estate professional, who asked not to be identified criticizing state law, said it was difficult to navigate the rules prohibiting solicitations of homes on “cease and desist” lists of homeowners who do not want to be contacted about selling their properties.
Frederick Mowatt, whose firm at the time of the violation was not identified, was accused in 2008 of allowing an agent under his supervision in Queens to ask if a homeowner on such a list would sell the home. Mowatt was slapped with a $2,000 fine this June because the old complaint over the solicitation was still pending. Mowatt paid the fine, terminating the complaint. He declined to comment.
In 2008, the cease and desist lists were similar to phone books, and it was difficult and time consuming, especially for a small company to check which homes were on the list, the source said.