As a rule that requires a RFA, RAFA or JIS, this rule will be initially reviewed in the calendar year 2023, which is no later than the 3rd year after the year in which this rule is being adopted.

The Department of State (“Department”) has received over 700 comments since the original proposal (No. DOS-42-19-00001-P; October 16, 2019) was published in the State Register.

A summary and analysis of issues raised, significant alternatives suggested by the comments, and reasons why any significant alternatives were not incorporated into the rule are described below.

The overwhelming majority of comments submitted to the Department originated from letter writing campaign by the New York Residential Agent Continuum (“NYRAC”) and its individual members. The comments from the NYRAC members principally consisted of the same two boilerplate letters and were therefore consolidated. The NYRAC comments focused on StreetEasy (“SE”), a specific web based real estate platform, and a consumer program, called “Premier Agent”, asserting, in part, that this program is deceptive. Much of the NYRAC comments consisted of general concerns regarding SE’s programs and questioned the legality of the same. In addition, some of the NYRAC commenters included personal experiences regarding SE but the same did not materially differ from the general comment and were therefore consolidated. To the extent the NYRAC comments suggest “significant alternatives” the Department’s responses are as follows:

NYRAC COMMENT 1:

In the comments, NYRAC requested: “DOS should require third-party aggregator websites to use language that clearly identifies to whom and where the consumer is submitting their contact information when inquiring about a property.”

RESPONSE TO NYRAC 1:

The purpose of the proposed rule is to require licensed professionals to use specific text in advertising, across a broad range of media platforms, to promote transparency. It is the Department’s position that this comment seeks to propose a “new” rule governing the process by which online platforms, that in some instances may not be licensed by the Department, must follow when a customer submits information. The suggestion would materially alter the purpose of the proposed rule and is therefore beyond the scope. Accordingly, the alternative cannot be incorporated into the existing proposal for adoption without consideration by the State Real Estate Board (“Board”) (NY RPL § 442-k; NY SAPA § 202(4-a)).

NYRAC COMMENT 2:

The proposed rule should require “online aggregators” such as SE’s “Premier Agent” program to disclose the fee collected from the licensee.

RESPONSE TO NYRAC 2:

See, RESPONSE TO NYRAC 1.

NYRAC COMMENT 3:

The proposed rule should require SE’s “Premier Agent” program to have “[a] pop-up … disclosing there is a referral fee along with the percentage amount” before information is sent via the program, along with an additional disclaimer regarding the relationship of the agent in bold.

RESPONSE TO NYRAC 3:

See, RESPONSE TO NYRAC 1.

PUBLIC COMMENT 1:

One commentator suggested that “challenge could arise from the proposed language in Section (d)(3)(ii), which requires broker contact information to be included on pages that display multiple properties or property search results” because these type of pages (i.e., multiple view pages) “are designed to allow consumers to drive their search based on the primary photo designated by the listing agent or property owner. Consumers are likely not ready to contact an agent until they have reviewed details (such as photos, location, amenities, property description) on the listing page - where the listing agent’s information is provided.”

RESPONSE TO PUBLIC COMMENT 1:

Insomuch as the comment does not offer a “significant alternative” other than apparent removal, upon belief the rule will not be effective in promoting transparency, the Department has not made any changes to the rule and disagrees with the premise. Before proposing the regulation, the Department consulted with interested stakeholders and industry representatives, including this commentator, and believes that consumers will benefit from having this information available when considering whether to select a particular property. Specifically, the Department believes that consumers viewing multiple property pages may record specific properties along with broker information and then select properties for more information once they have potentially narrowed down a list of viable locations.

PUBLIC COMMENT 2:

One license holder asked: “Does the IDX agreement among brokerage firms satisfy the ‘authorization’ required under the terms of the proposed rule change?”

RESPONSE TO PUBLIC COMMENT 2:

The proposed rule made no changes to the requirement that a licensee obtain the consent of another broker before advertising property that is subject to an exclusive listing. 19 NYCRR § 175.25(b)(2). Whether authorization has been provided depends, in part, on agreement itself.

PUBLIC COMMENT 3:

One license holder requested “clarification of the rule to reflect advertising on social media sites.”

RESPONSE TO PUBLIC COMMENT 3:

The proposed rule does apply to social media sites utilized by licensees. If a licensee uses a social media website (e.g., Twitter, Facebook) to advertise services, whether it mentions a specific property or not, such advertisement must still comply with Section 175.25. Social media websites are considered by the Department to be including within “web-based advertising” pursuant to paragraph (d)(3) of this section. Accordingly, if an agent uses social media to refer to another property, such post must comply with all applicable parts of the section, including disclosure of the listing broker in a conspicuous manner.

PUBLIC COMMENT 4:

The proposed rule “should not limit our intellectual property” and should include other information relating to advertising by brokers.

RESPONSE TO PUBLIC COMMENT 4:

The proposed rule is not intended to affect the intellectual property rights of licensees. Intellectual property (e.g., trademark and copyright) is generally regulated by federal law.

PUBLIC COMMENT 5:

The proposed rule should apply to “ad placement agencies” such as “premier agent platforms”.

RESPONSE TO PUBLIC COMMENT 5:

The proposed rule applies to licensed entities subject to the Department’s authority. Accordingly, a licensee cannot use an ad placement service which would not ensure compliance with the rule. A licensee that relies upon a non-compliant service may be subject to Department discipline.