Manhattan Housing Legal Question of the Week #2- Can A ...

Manhattan Housing Legal Question of the Week #2- Can A Manhattan Real Estate Broker Represent Himself When He is Also On the Co-op Board?

A New York Times article in the Real Estate Q&A section the following was asked: Is it legal or proper for the president of a co-op board who is also a Manhattan real estate broker to arrange both the sale and the purchase of a Manhattan apartment in his building, and to get a commission on the transaction?

?

The answer given was that the president is probably entitled to broker transactions in the building if he discloses his involvement to the board, removes himself from the approval process and does not sit on the admissions committee. Is this correct?

?

Answer:?? The REBNY (Real Estate Board of NY) legal counsel states that he does not believe that a co-op board member (whether the President or not) should serve on a co-op board and act as a Manhattan real estate broker in real estate transactions in the co-op building.

?

A co-op board member has specific duties to the co-op corporation. These duties include a duty to perform his or her role as a board member in good faith and with due care. In addition, a board member of a co-op corporation has an implicit duty of confidentiality.

?

A Manhattan real estate broker also has specific obligations and duties when they participate in the Manhattan realestate transactions. These duties include an obligation of undivided loyalty and confidentiality to the party that the Manhattan real estate broker is representing. In addition, a Manhattan real estate broker has obligations to the party that they are not representing in a transaction. For example, a selling broker has an obligation to disclose to a buyer all material facts that affect the value or desirability of a property.

?

With these obligations in mind, consider a real life scenario which was recently presented to me. A REBNY member serves on her co-op board and the co-op is considering a major capital improvement program involving the elevators in the building. The board has decided that it is too premature to make this information available to the shareholders and to the public. The REBNY member is also representing a seller in the building and a contract has been sent to a prospective purchaser. The REBNY member believes that she has an obligation to disclose the capital improvement project to the prospective purchaser as it is a material fact that affects the value or desirability of the property (there will be very large assessments charged to the shareholders). However, she has been instructed by the President of the Board that, under no circumstances, is she permitted to disclose the capital improvement project to anyone.

?

The REBNY member is in an untenable position. She has a duty of confidentiality to her co-op board that directly conflicts with her duty of disclosure to the prospective purchaser.

?

It has been suggested that Manhattan real estate brokers could recuse themselves from certain matters in order to avoid this conflict of interest. From my perspective, there is no appropriate way for the real estate broker / co-op board member to filter the information that he or she receives in the ordinary course of serving on the co-op board. Once the information is received, the Manhattan real estate broker may have an obligation to disclose such information.

Thanks to Neil B. Garfinkel, the REBNY Residential Counsel

Search?apartment listings in Manhattan?now!

How to Buy an Apartment in Manhattan and Get the Best Interest Rate

?The Importance of Finding the Best Representation When Buying Real Estate for Sale in Manhattan

What Home Buyers Should Consider When Deciding What Type of Manhattan Housing to Buy

Work with a trusted,?Luxury Manhattan real estate broker?specializing in?Manhattan apts,?NYC brownstones, and?dog friendly apartments?for?rent & sale:

Soho Lofts-?Tribeca Condos?-?WestVillage Apartments?-?Upper East Side NYC Apartments-Upper West Side Apartments?-?Battery Park City Apartments?-Chelsea Apartments-?Gramercy Apts?-?Midtown East NYC?-?Midtown West NYC?-?Murray Hill in NYC?-?Lower East Side NYC-?East Village Apartments

Disclaimer: This web site (the ?Site?) is a general service that provides legal information over the Internet. ?We are not a law firm and our employees are not acting as your attorney. The information contained on this Site is general legal information and should not be construed as legal advice to be applied to any specific factual situation. ?If you are unsure whether your particular situation requires that a document be changed, you should consult a lawyer. ?The information on the Site is not a substitute for the advice of a lawyer. Jennifer Chiongbian Real Estate or Rutenberg Realty DOES NOT provide any legal advice and users of this web site should consult with their own lawyer for legal advice.

marco scutaro betty white ed reed football schedule jo paterno dead south carolina tuskegee airmen