NY could require real estate licenses for referral payment

A New York State Senate bill introduced by Senator John A. DeFrancisco (R-Syracuse) would require individuals and businesses to hold a valid real estate license to be compensated for referrals.

The bill, which is being supported by the New York State Association of Realtors (NYSAR), was recently approved by the Senate Judiciary Committee and now moves on to the full senate.

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NYSAR originally asked for the bill’s introduction because some unlicensed companies and individuals compile real estate listings and sell them to licensees. “We don’t feel that there is a huge problem yet,” said Mike Kelly, NYSAR’s government and political affairs representative. “But we want to codify law to conform with what is happening in other states.”

Connecticut, New Jersey, Pennsylvania and Vermont have enacted similar laws. Currently, New York law is silent as to whether or not referrals are a regulated activity, according to a sponsor’s memo for the bill. Over the years, different administrations have offered the industry alternative interpretations of the state licensing law, which has brought uncertainty to the marketplace, the memo said.

Kelly said the bill, S.4371, is especially important because of the growth of the Internet as a tool for connecting real estate professionals with buyers and sellers. “Incompetent and untrustworthy practices by faceless businesses and individuals have the potential to increase,” he said. “Consumers would certainly benefit from paid referral activities being limited to licensed entities and individuals.”

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