Wednesday, February 6, 2013

Duncan & Hill Realty v. Dep't of State case brief

Duncan & Hill Realty v. Dep't of State
62 A.D.2d 690

PROCEDURAL HISTORY: Petitioner brokerage firm sought review, pursuant to N.Y. C.P.L.R. art. 78, of the decision of the Supreme Court at Special Term (New York), which upheld the determination of respondent, the Department of State of the State of New York (Secretary of State), that suspended the brokerage firm's real estate broker's license for violation of N.Y. Real Prop. Law § 441-c.

FACTS: The brokerage firm filled out a purchase offer form for the buyers to sign, which set the purchase price, detailed the terms of a purchase-money mortgage, and recited that the offer was subject to the seller's attorney's approval and the buyers deposit with the brokerage firm of their down payment to serve as commission in the event of default. The purchase offer form used by the brokerage firm contained no caveat alerting the parties that, when signed, the instrument became a binding contract, and cautioning them that it was preferable for them to consult an attorney. When the buyer decided to terminate the contract, he was informed that the down payment would not be returned. The buyer reported the matter to the Secretary of State which charged the brokerage firm with untrustworthiness and suspended its license. On appeal, the trial court affirmed. The court upheld the determination of violation of § 441-c, but held that because of the erratic enforcement of the statute, the brokerage firm should have only been censured.

The court held that the brokerage firm engaged in the unauthorized practice of law by inserting the detailed terms of the mortgage in the offer.

As long as real estate brokers and agents do not held themselves out to be attorneys at law, confine their actions to serving their clients in relation to the specific transaction (such as drawing a contract of sale) in which the broker has a financial interest for payment of his services, and make no charge for these incidental services, such acts are proper and do not constitute the unlawful practice of law.
-The realtor shall not practice law or give legal advice directly or indirectly; he shall not act as a public conveyancer, nor give advice or opinions and he shall not discourage employing the services of a lawyer. The realtor shall not undertake to draw or prepare documents fixing and defining the legal rights of parties to a transaction. However, when acting as broker, a realtor may use an earnest money contract form for the protection of either party against unreasonable withdrawal from the transaction, provided that such earnest money contract form, as well as any other standard legal forms used by the broker in transacting such business, shall first have been approved and promulgated for such use by the Bar Association and the Real Estate Board in the locality where the forms are to be used. The realtor shall not participate in the lawyer's fees.

CONCLUSION: The court confirmed the determination of violation of real property law by the brokerage firm, but modified the judgment to only censure the brokerage firm.

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