Razik v. New York State Dept. of State Div. of Licensing Services: Court Upholds Discipline of Licensees

A New York appellate court has considered the sanctions against a licensee and her broker for their actions in a transaction involving a variable commission rate.

A homeowner listed a property for sale with Hyunsook Kim (“Salesperson”), a salesperson associated with the brokerage ReMax Universal Real Estate (“Brokerage”). Tayseer Razik (“Broker”) was the managing broker for the Brokerage. The listing agreement stated that the owner would pay a commission within a certain range if the property sold.

The property sold, and the homeowner offered the Salesperson a check for commission using the commission percentage at the low end of the range. The Salesperson claimed she was entitled to a higher percentage. The Salesperson contacted the Broker about suing the seller for the higher commission amount. Eventually, the Salesperson and the Brokerage filed a lawsuit against the seller. The trial court ruled in favor of the seller, finding that the listing agreement was ambiguous and so should be construed against the drafter, which was the Salesperson.

Following the trial court’s ruling, the seller filed an administrative complaint against the Salesperson and the Broker with the New York Department of State (“Commission”), which is responsible for enforcing the state’s real estate license laws. The Commission conducted a hearing into the allegations before an administrative law judge (“ALJ”).

The ALJ determined that there were violations of the state’s license laws. The Broker was found to have demonstrated untrustworthiness and incompetence through his failure to supervise the Salesperson. The ALJ ruled that the Salesperson violated the license laws by improperly completing a brokerage agreement and also, along with the Broker, for commencing a lawsuit against a client in violation of the state’s laws. The Broker and Salesperson appealed these rulings.

The Supreme Court of the State of New York, Appellate Division, affirmed the ALJ’s rulings. The court found that the evidence supported the ALJ’s ruling. A real estate broker is responsible for the wrongful actions of a salesperson if the broker had knowledge of the salesperson’s actions. Here, the Broker knew that the Salesperson intended to file suit against her client, yet failed to stop the lawsuit. The court also found that the two month suspension of the Broker and the Brokerage’s licenses was supported by the evidence and so dismissed the challenge to the ALJ’s discipline. Thus, the court affirmed the ALJ’s rulings.

Razik v. New York State Dept. of State Div. of Licensing Services, 875 N.Y.S.2d 184 (N.Y.A.D. 2009).

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