The Real Estate Board of New York’s guidelines on buyer representation agreements fall short of the clear, comprehensive language needed under new industry requirements, an influential law professor argued in a new report.
REBNY’s six-page checklist is designed to help brokerages construct contracts for their agents, but it uses terms inconsistently and relies on “extensive legalese,” according to a report by University of Buffalo law school professor Tanya Monestier.
“New York City buyers deserve better than a poorly drafted template issued by REBNY,” wrote Monestier, an influential authority on the subject.
The professor has taken aim at agreements from other state associations, drawing attention from a consumer watchdog group and the Department of Justice.
Monestier cautioned buyers about some of the provisions included in REBNY’s checklist, Brick Underground reported last month. Among her objections to the document was a section stating that a buyer is consenting to dual agency by just viewing a property with the listing agent, which she said conflicts with another portion requiring a buyer’s written consent to dual agency.
She noted that the checklist doesn’t include a clause outlining how and when a buyer can cancel the contract, though several brokerages told the publication they added their own. It also doesn’t have a provision explaining what would happen to extra commission dollars if a seller offered to pay more than the commission percentage included in the buyer agreement.
REBNY released the checklist at the start of the year, alongside new rules targeting offers of compensation — an issue at the heart of dozens of antitrust lawsuits filed across the country, including one against the trade group and other New York-based brokerages.
But scrutiny over how groups are advising their members on commissions has only grown since then.
The California Association of Realtors was the first such group to run into trouble over language, after releasing new buyer agreements in July, it was slapped with a report published with the Consumer Federation of America, in which Monestier argued that the included “anti-consumer provisions” and that “no layperson [would] be able to understand and appreciate the terms they are agreeing to.”
About a month after the report was published, the DOJ launched a “formal inquiry” into CAR’s forms, prompting the association to delay the release of its agreement initially slated for late June. It instead released a new version with some of Monestier’s recommendations in July.
“REBNY welcomes comments and recommendations from this author and any other stakeholder on this important, evolving issue,” a spokesperson for REBNY wrote in a statement. “Our goal is to promote transparency and ensure all parties are informed of the homebuying process.”
REBNY released the checklist before news broke of NAR’s settlement deal but updated the document last month with a provision explicitly stating that commissions are negotiable.
Though Monestier maintains REBNY is not expecting or recommending brokerages use the language as a copy-and-paste agreement, she maintains that “some brokerages will use the wording wholesale” considering the language is “written in the exact style of a document.”
In March, the National Association of Realtors agreed to pay $418 million to settle the litigation and change some of its rules. REBNY isn’t one of the state associations under the NAR umbrella, so its members aren’t subject to the national organization’s new rules. However, REBNY has opted into NAR’s settlement as a non-affiliated residential listing service and is still negotiating its terms.
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