Legislation to simplify licensee termination takes effect January 1, 2013 By Anthony Gatto, Esq., NYSAR Legal Counsel

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1 New York State Association of REALTORS LEGALLINES A risk management tool for New York s REALTORS Legislation to simplify licensee termination takes effect January 1, 2013 By Anthony Gatto, Esq., NYSAR Legal Counsel THIRD QUARTER 2012 Currently the New York State Department of State, Division of Licensing Services (DOS) requires brokers to pay a fee of $10 every time an individual becomes associated with the brokerage as a licensee. Likewise, DOS charges a $10 fee every time the broker terminates the association with the licensee. After the implementation of the DOS eaccessny system, NYSAR received numerous complaints from members about brokers refusing to terminate their license until they provide the $10 to the broker. This was causing licensees to report their brokers to DOS for failing to terminate in a timely manner. In order to simplify the process of associating and terminating licensees, NYSAR proposed legislation to eliminate the termination fee and change the association fee to $20. This would eliminate the issues associated with the payment of the termination fee, and combine the association and termination fees. The law goes into effect on January 1, The text of the law is as follows: RPL 441-a(11) If a real estate salesperson shall leave the service of a real estate broker, the real estate broker shall file a termination of association notice on such form as secretary may designate. The salesperson s license may be endorsed to a new sponsoring broker upon the establishment of a new record of association filed with the Department of State. The fee for filing a record of association shall be twenty dollars. New York News NYSAR had contacted DOS in order to clarify what party was responsible for paying the termination fee, the broker or the licensee. According to DOS, the broker is responsible for paying the association and termination fee for those individuals affiliated with the broker. If the broker and licensee have a separate agreement or if the broker has a policy that a licensee is responsible for the fees, the broker must still terminate the licensee and pay the fee upon notification. It is the responsibility of the broker to collect the fee from the licensee, but such collection should not interfere with the broker s timely termination upon request. Electronic signatures legal for purchase contracts beginning Sept. 22 By Anthony Gatto, Esq., NYSAR Legal Counsel On September 23, 2011, Gov. Andrew Cuomo signed into law an amendment to the State Technology Law (STL) and Real Property Law (RPL) permitting electronic recording of instruments affecting real property. NYSAR supported the passage of the amendments as it clearly permits the use of electronic signatures on broker prepared real estate purchase contracts. By its own terms, the law is effective 365 days after being signed into law. On September 22, 2012, electronic signatures will be permitted on all real estate documents utilized by a broker in real estate transactions. Previously, NYSAR was of the opinion that electronic signatures were valid on all documents except for purchase contracts, mortgages and deeds. This decision was reached based upon current law, an opinion from the New York State Attorney General and a lack of case law directly on point. State Technology Law (STL) 307(3) states that the use of electronic signatures on documents is not applicable if said document is to any conveyance or other instrument recordable under article nine of the real property law. Article 9 of the Real Property Law (RPL) identifies purchase contracts, mortgages and deeds as being recordable documents. Furthermore, the New York State Attorney General s Office issued an opinion in 2001 stating there is substantial possibility that E-SIGN (Electronic Signatures in Global and National Commerce Act, 106 P.L. 229, 114 Stat. 464 (2000)) does not preempt RPL Article 9 or otherwise obligate county recording officers to accept for recordation [a] filing that contains only [an] electronic signature but lacks original signature. Based upon the wording of the STL, Article 9 of the RPL, the opinion of the Attorney General and a lack of court decisions, NYSAR concluded that electronic signatures were not valid for purchase contracts. At the same time, NYSAR was supporting legislation to remove the exceptions set forth in State Technology Law 307(3) of those documents identified in Article 9 of the RPL. See Electronic signatures page 3

2 PAGE 2 Federal Housing Finance Agency announces new short sale guidance By Anthony Gatto, Esq., NYSAR Legal Counsel On August 21, 2012, the Federal Housing Finance Agency (FHFA), the conservator of Fannie Mae and Freddie Mac, announced that Fannie Mae and Freddie Mac would be issuing new guidelines to enhance and streamline the short sale process. Servicers of Fannie and Freddie loans will be allowed to approve short sales for borrowers with severe financial hardship with limited documentation, provide borrowers who are current on their loan the option for a short sale if they face a financial hardship such as divorce, long distance employment transfer, or a severe disability, and provide valuation guidance to real estate agents early on in the short sale process. Servicers are required to implement the changes by November 1, According to a news release dated August 21, 2012, the new guidelines are described as follows:. Offer a streamlined short sale approach for borrowers most in need: To move short sales forward expeditiously for those borrowers who have missed several mortgage payments, have low credit scores, and serious financial hardships the documentation required to demonstrate need has been reduced or eliminated.. Enable servicers to quickly and easily qualify certain borrowers who are current on their mortgages for short sales: Common reasons for borrower hardship are death, divorce, disability, and distant employment transfer or relocation. With the program changes, servicers will be permitted to process short sales for borrowers with these hardships without any additional approval from Fannie Mae or Freddie Mac, even if the borrowers are current on their mortgage payments. Borrowers will now qualify for a short sale if they need to relocate more than 50 miles from their home for a job transfer or new employment opportunity.. Fannie Mae and Freddie Mac will waive the right to pursue deficiency judgments in exchange for a financial contribution when a borrower has sufficient income or assets to make cash contributions or sign promissory notes: Servicers will evaluate borrowers for additional capacity to cover the shortfall between the outstanding loan balance and the property sales price as part of approving the short sale.. Offer special treatment for military personnel with Permanent Change of Station (PCS) orders: Service members who are being relocated will be automatically eligible for short sales, even if they are current on their existing mortgages, and will be under no obligation to contribute funds to cover the shortfall between the outstanding loan balance and the sales price on their homes.. Consolidate existing short sales programs into a single uniform program: Servicers will have more clear and consistent guidelines making it easier to process and execute short sales.. Provide servicers and borrowers clarity on processing a short sale when a foreclosure sale is pending: The new guidance will clarify when a borrower must submit their application and a sales offer to be considered for a short sale, so that last minute communications and negotiations are handled in a uniform and fair manner. Fannie Mae and Freddie Mac will offer up to $6,000 to second lien holders to expedite a short sale. Previously, second lien holders could slow down the short sale process by negotiating for higher amounts. A copy of the news release is available at at NYSAR.com. NYSAR Legal Update Tuesday, October 1, 2012 Turning Stone Resort & Casino 8-9 a.m. Presented by NYSAR Legal Counsels S. Anthony Gatto, Esq. and Michael Wallender, Esq. To register for the Fall Business Meetings, visit NYSAR.com

3 PAGE 3 Illinois court awards damages to NAR for trademark violations An Illinois federal court has determined that a website operator s willful violation of the National Association of REALTORS (NAR) trademark rights entitled NAR to an injunction prohibiting any further infringing behavior as well as an award of $500,000 plus attorney s fees. John Fothergill (broker) owned a real estate brokerage and was a member of NAR. In 2009, the broker registered two domain names: listitonrealtor.com and listonrealtor.com. The broker s website advertised that consumers could pay a flat fee to the broker and have their listings appear on a number of websites including realtor.com In addition, some of the broker s communications appeared as though they were being sent by NAR. NAR has several trademark registrations related to the REALTOR mark, and owns the domain realtor.com. As a member of NAR, the broker received a limited license to use the REALTOR mark, as set forth in NAR s rules for trademark usage. To learn more, visit NAR s Membership Marks Manual. NAR began contacting the broker about his various misuses of the REALTOR mark. First, NAR filed a complaint with the World Intellectual Property Organization (WIPO) about the two domain names the broker had registered in The WIPO hearing panel ruled that the broker had registered domain names in bad faith and so ordered that those domain names be turned over to NAR. Following the WIPO hearing, the broker continued to violate NAR s rights. In one advertisement, he purported to offer to place for sale by owner (FSBO) listings on realtor. com for $99, even though NAR s explicitly forbid the placement of such listings on realtor.com. NAR received complaints from both members and consumers about the broker s conduct, many of whom were confused about NAR s connection with the broker. National Case In 2011, NAR filed a lawsuit against the broker alleging false designation of origin, false advertising, trademark infringement and cybersquatting. When the broker failed to answer the complaint, the court entered a preliminary injunction prohibiting the broker from using the infringing websites or otherwise implying that he had a connection with NAR through the use of the REALTOR marks. Thereafter, NAR moved for judgment in its favor. See Trademark violations, page 8 Electronic signatures continued from page 1 The new law gives county clerks the option of whether they want to accept recordable documents that are signed electronically. NYSAR has been informed that some county clerks will not be accepting documents that have electronic signatures. If you are in one of the counties that does not accept electronic signatures on recordable documents, you may still use electronic signatures on purchase contracts as long as they will not be recorded in the county clerk s office. There is no provision in statute, code, rule or regulation that makes the use of electronic signatures on non-recordable documents a county-by-county decision. New York News Licensees should be aware that if documents are to be signed electronically, the requirements of 19 NYCRR still apply states: Delivering duplicate original of instrument: A real estate broker shall immediately deliver a duplicate original of any instrument to any party or parties executing the same, where such instrument has been prepared by such broker or under his supervision and where such instrument relates to the employment of the broker or to any matters pertaining to the consummation of a lease, or the purchase, sale or exchange of real property or any other type of real estate transaction in which he may participate as a broker. As can be seen by , licensees are required to provide a duplicate original of any document signed by a consumer relating to a real property transaction (or potential transaction). NYSAR has discussed this requirement with DOS in the past and what would qualify as a duplicate original. DOS is of the opinion that a copy of the signed document would meet the requirement. This led to further discussions as to whether electronic delivery of a signed document would also meet the requirements of DOS agreed with NYSAR s position that electronic delivery is the same as a copy and would, therefore, meet the requirements of Another concern is that pursuant to 19 NYCRR brokers are required to retain certain documents for a period of three years. NYSAR also had discussions with DOS as to what medium must be used for the documents being retained. NYSAR advocated for the electronic storage of documents that are scanned or originate in electronic form. DOS agreed that the electronic retention of documents satisfies the requirements of as well. It is NYSAR s opinion that brokers who utilize electronic signatures will also be minimizing liability if the electronic signature system employed by the broker provides for delivery and storage of electronically signed documents. Licensees of the broker would have documents electronically signed by consumers, delivered to the consumer electronically and also retain a copy in the broker s electronic filing system. By doing this, the broker no longer has to rely on their affiliated licensees to bring the paperwork into the office since all the signed documents will already be in the broker s electronic storage system. Brokers should be aware that at a minimum, industry standard electronic security and file backup should be used.

4 PAGE 4 NYSAR Legal Hotline call report second quarter 2012 HOTLINE ISSUES COMMISSION LICENSE LAW 7% 11% FAIR HOUSING CONTRACT 16% 10% DISCLOSURE 2% 2% 2% 3% 6% 15% 1% AGENCY DOS REFERRALS ARBITRATION CODE OF ETHICS 12% 13% BOARD/ASSOCIATION MLS OTHER HOTLINE ISSUE ISSUES COMMISSION 99 11% LICENSE LAW 84 10% FAIR HOUSING 11 1% CONTRACT % DISCLOSURE % AGENCY % DOS 50 6% REFERRALS 22 3% ARBITRATION 21 2% CODE OF ETHICS 18 2% BOARD/ASSOCIATION 20 2% MLS % OTHER HOTLINE ISSUES 58 7% TOTAL ISSUES 872 The NYSAR Legal Hotline is available to members by calling Monday through Thursday from 9 a.m. to 1 p.m.

5 PAGE 5 Department of State rules against unlicensed property manager By Anthony Gatto, Esq., NYSAR Legal Counsel i On June 21, 2011, the New York State Department of State, Office of Administrative Hearings, heard two matters against Robin Cooper-Scott and Scott Property Management (SPM). The hearings were to determine whether Cooper-Scott and/or Scott Property Management were licensed as a real estate broker while conducting licensed activities as property managers. Cooper-Scott was licensed as a real estate salesperson during the time period the alleged activities occurred. During the term of her licensure, Cooper-Scott filed a partnership D.B.A. with her husband under the name Scott Property Management. Between March and June of 2009, Cooper- Scott and SPM entered into numerous rental DOS publishes second quarter ALJ decisions The Department of State, Division of Licensing Services (DOS) receives complaints about real estate licensees. The DOS investigates the complaints and if they are found to have merit, a licensee may be subject to a hearing before an administrative law judge (ALJ) to determine whether the licensee violated any law, rule, regulation or other duty expected of a licensee. The following citations refer to DOS decisions before an administrative law judge. Each decision provides a brief description regarding the subject matter of the violation(s) being heard before the administrative law judge. NYSAR is providing this information to REALTORS in an effort to better educate our members as to what constitutes a violation, and how to avoid having a complaint filed against you. Full copies of the decisions are available in the Legal Resources section of NYSAR.com via the court and DOS decisions link. 2nd quarter DOS decisions 154 DOS 12 denial of license 171 DOS 12 unlicensed activity, unearned commission, failure to cooperate with DOS, failure to notify DOS of address change management agreements to act as property managers without being licensed as a real estate broker. During the term of the rental agreements, Cooper-Scott and SPM mismanaged the properties, commingled and converted clients funds, failed to maintain an escrow account and failed to provide an agency disclosure form. The DOS found Cooper-Scott to be in violation RPL 440-a by providing the services of a real estate broker without being licensed to do so, RPL 443(3)(b) for failing to provide an agency disclosure form, failing to maintain an escrow account and mishandling client funds, as well as being incompetent and untrustworthy under RPL 441-c. As a result, Cooper-Scott must repay $4, to her 172 DOS 12 unlicensed activities 177 DOS 12 unlicensed activity 183 DOS 12 failure to comply with consent order 187 DOS 12 denial of license 192 DOS 12 denial of license 201 DOS 12 denial of license 224 DOS 12 denial of license 239 DOS 12 denial of license 267 DOS 12 denial of license 268 DOS 12 use of unlicensed trade name 287 DOS 12 salesperson ownership of brokerage, salesperson management of brokerage 313 DOS 12 denial of license 314 DOS 12 failure to satisfy judgment, failure to cooperate with DOS 329 DOS 12 deni al of license, unlicensed activities, unearned commissions, failure to cooperate, identity theft 334 DOS 12 denial of license 349 DOS 12 denial of license former clients as well as a $5,000-fine to DOS Cooper-Scott is also unable to be licensed under Aricle 12A until all monies have been paid. NYSAR has always been of the opinion that property managers were required to be licensed as a broker. The law is clear on this issue. Article 12- A of the RPL defines what is considered a licensed activity under its definition of real estate broker (since only a broker can perform a licensed activity). According to RPL 440(1): Real estate broker means any person, firm, limited liability company or corporation, who, for another and for a fee, commission or other valuable consideration, lists for sale, sells, at auction or otherwise, exchanges, buys or rents, or offers or attempts to negotiate a sale, at auction or otherwise, exchange, purchase or rental of an estate or interest in real estate, or collects or offers or attempts to collect rent for the use of real estate. Furthermore, 19 NYCRR addresses managing property for a client as follows: (a) When acting as an agent in the management of property a real estate broker shall not accept any commission, rebate or profit on expenditures made for his client without his full knowledge and consent. (b) A person, firm or corporation licensed or acting as a real estate broker, and having on deposit or otherwise in custody or control any money furnished as security by a tenant of real property, shall treat, handle and dispose of such money (including any required interest thereon) in compliance with the requirements of of the General Obligations Law. Failure to so comply, including failure to pay, apply or credit any required interest, shall constitute grounds for disciplinary or other appropriate action by the Secretary of State. According to the RPL and NYCRR, any licensee that shows a rental, negotiates a lease, collects rents or otherwise participates in the rental of real property and collects a fee or commission for doing so, must be a real estate broker. Therefore, any licensee conducting any such activities must do so through their respective broker or face disciplinary action from the DOS.

6 PAGE 6 New Jersey court upholds licensee discipline over property flipping A New Jersey court has considered whether the state s real estate commission properly disciplined two licensees who were part of a plan for a second buyer to purchase a unit in a new development before the first transaction had closed. Peter Petridis (salesperson) was licensed as a real estate salesperson and his supervisor was Margaret Steadman (broker), a licensed real estate broker. Both licensees were affiliated with Prudential Fox & Roach REALTORS (brokerage). National Case In 2006, Osprey Estates, LLC (developer) signed a listing agreement with the brokerage, designating it as the exclusive listing brokerage for its development. The broker was named as the listing broker and she made the salesperson responsible for the development s listing duties. The listing agreement allowed the brokerage to act a disclosed dual agent. In November 2007, the salesperson prepared an offer for Richard Vizzi (first buyer) to purchase a unit in the development. The first buyer was a long-time client of the salesperson and he was purchasing the developer s property as an investment. The developer accepted the first buyer s offer and a closing date of January 18, 2008 was established. On January 1, 2008, the salesperson met with Yishai Kedar (second buyer), who was also interested in purchasing a property in the development. The salesperson informed him that all of the constructed homes were under contract, and the second buyer was unwilling to wait six months for a home to be constructed. The second buyer expressed an interest in the property that the first buyer was in the process of acquiring. The salesperson never told the developer about the second buyer s interest in purchasing a constructed home. Instead, the salesperson contacted the first buyer about the second buyer s interest. The broker and the salesperson met to determine how to proceed, since the first buyer did not yet hold title to the property. The broker and the salesperson concluded that they had no duty to disclose the second buyer s interest to the developer. The duo also concluded that the first buyer could sign the purchase agreement even though he did not yet hold title to the property, and the agreement for sale did not need to disclose the fact that he did not hold title. The broker and salesperson also concluded that they could act as dual agents in the transaction. The second buyer purchased the first buyer s property for $130,000 more than the first purchase price, and the brokerage collected commissions from both transactions. Upon learning of the second transaction, the developer filed a complaint with the New Jersey Real Estate Commission (commission), charging the broker and salesperson with unethical practices and violations of the state s license law. After a hearing, the commission found both the salesperson and the broker liable for multiple violations. The salesperson had his license suspended for two months, and the broker s license was downgraded to a salesperson license for four months. Both were also fined $5,000. Both licensees were ordered to take remedial education courses and were placed on probation for a year. The broker and the salesperson filed a lawsuit challenging the discipline imposed upon them by the commission. The Superior Court of New Jersey, Appellate Division, upheld the commission s determinations. An appellate court will not overturn an agency s determinations unless the agency s action is arbitrary, capricious, or unreasonable. First, the court examined whether the commission had properly found that the salesperson and broker had made a misrepresentation when they did not insert a provision into the purchase agreement indicating that the first buyer did not hold title to the property. Both the licensees conceded that they were required to insert such a provision into the listing agreement, but argued that they had not misled the second buyer because he knew that the first buyer had not yet completed his purchase of the property. The court states that the Statute of Frauds requires a writing for all real estate contracts, and so the fact that the second buyer knew t his fact did not have any legal effect because the written contract was a binding legal document. Thus, the court upheld the misrepresentation allegations against the licensees. Next, the court looked at the commission s findings of incompetency and breach of fiduciary duty. The court agreed that the licensees failure to obtain dual agency consents for both transactions and also not including the necessary language in the purchase agreement constituted incompetency. The court also agreed that the licensees had breached their fiduciary duty to the developer because they had put their own interest in collecting two commissions over its client s interest in possibly making its own sale to the second buyer. Thus, the court affirmed both findings and so upheld the discipline imposed upon the licensees. New Jersey Real Estate Comm n v. Petridis, No. ATL , 2011 WL (N.J. Super. Ct. App. Div. Nov. 1, 2011). [This is a citation to a Westlaw document. Westlaw is a subscription, online legal research service. If an official reporter citation should become available for this case, the citation will be updated to reflect this information]. Editor s Note: Reprinted with permission from The Letter of the Law, National Association of REALTORS. Sign up for the Broker Involvement Program today! realtors/brokers/

7 PAGE 7 Utah court rules in favor of brokerage, brokerage retains commission A Utah federal court has considered whether a brokerage could retain two commissions that it had earned from transactions involving the sale of properties to the operators of a Ponzi scheme. From 2005 through 2007, the Madison Real Estate Group LLC (company) operated a Ponzi scheme that involved investing in apartment complexes. A Ponzi scheme typically operates by paying investors with money obtained from new investors, usually at a higher rate than would normally be attainable through standard investments. The company s principals commingled funds obtained from investors to pay not only dividends to investors but also to pay personal expenses. By October 2007, the scheme began to unravel as the company became unable to meet its financial obligations. National Case company s principal, Richard Ames Higgins, was a convicted felon; and the company was not operating properly. After learning these facts, both of the apartment complex transactions closed and the brokerage received its commission. Because of the brokerage had reason to believe that the company was likely operating a fraudulent scheme, the receiver sought to recover the brokerage s commissions from these two transactions, arguing that the brokerage had not received these payments in good faith. The United States District Court for the District of Utah, Central District, ruled that the brokerage was subsequent transferee of the company s funds and therefore had a defense against the receiver s fraudulent conveyance allegations. In order to bring a claim pursuant to the Texas Fraudulent Transfer Act (act), a party must show that a transfer was made by the debtor with the intent to defraud its creditors. Because a Ponzi scheme is insolvent from the outset, the debtor s intent to defraud creditors is presumed in all transfers and so the receiver can avoid, or recover, payments such as the commission amounts paid to the brokerage, absent a legitimate defense raised by the brokerage. The brokerage argued that it was a subsequent transferee of the company s fraudulent transfer and so had an absolute defense against the receiver s claims. The act provides that a transfer is not voidable against a person who took in good faith and for reasonably equivalent value or against any subsequent transferee. The brokerage See Utah brokerage, page 8 In 2008, the Securities and Exchange Commission filed a complaint against the company that alleged fraud in the sale or purchase of securities. At the time the complaint was filed, the court appointed Roger McConkie as the receiver for the company s assets, and also to take such necessary action as is necessary and appropriate to preserve and take control of, and to prevent the dissipation, concealment, or disposition of any assets. As part of its duty to collect assets, the receiver filed a lawsuit against Rice Properties (brokerage), a real estate brokerage. The brokerage had represented the seller in 18 transactions where the company was the buyer. NYSAR Radio Listen. Call. Learn Get answers to your legal questions. September 11 Agency, Part 3: Dual and Designated Agents September 25 NYSAR Fall Business Meetings: Preview October 9 NYSAR Fall Business Meetings: Recap October 23 Mythbusters The lawsuit sought to recover the commissions from the final two transactions as fraudulent conveyances. November 6 December 11 Fair Housing Advertising/Social Media Both transactions involved apartment complexes and during the course of these transactions, one of the brokerage s salespeople learned that: the company was no longer receiving loans because of prior defaults; the Visit NYSAR.com for more information. New York State Association of REALTORS

8 PAGE 8 Trademark violations continued from page 3 The United States District Court for the Northern District of Illinois entered judgment in NAR s favor, awarded NAR $500,000 in damages, awarded NAR its attorney s fees, and entered a permanent injunction prohibiting the broker and his companies from taking certain actions. The injunction prohibited the broker and his companies from: (a) using, registering, or maintaining any domain names containing the REALTOR marks, including the previously infringing URLs; (b) using any names, symbols, or designations that incorporate or are similar to the REALTOR marks or any other NAR trademark; (c) using any names, designation, or similar to the RE- ALTOR marks used in code or metatags to direct Internet search engines to respond to searches using the REALTOR marks or any other NAR designation; (d) otherwise infringing the REALTOR marks; (e) making representations or otherwise implying that its goods are authorized or connected to NAR; (f) any action which is likely to cause confusion about the broker s connection to NAR s domain names; and (g) making any representation that FSBO properties can be displayed on realtor.com. In addition to the injunction, the court ordered that the broker pay damages of $500,000, or $100,000 per infringing domain name. The b roker was further ordered to turn over all infringing domain names and file a report within 30 days of the order setting forth how he had complied with the order. The court also awarded NAR its attorney s fees National Ass n of REALTORS v. Fothergill, No. 1:11-cv (N.D. Ill. June 11, 2012). [Note: This opinion is not published in an official reporter and therefore should not be cited as authority. Please consult counsel before relying on this opinion.] Editor s Note: Reprinted with permission from The Letter of the Law, National Association of REALTORS. NYSAR offers a variety of legal resources at NYSAR.com. Visit the Legal section for the Brokers Reference Manual and Legal Compendium. Utah brokeragecontinued from page 7 argued that company s purchase money was paid into an escrow account for the benefit of the seller, and the seller gave the escrow agent instructions to pay a portion of the escrowed funds to the brokerage as its commission. Because its commission was paid from the seller s proceeds and not by the company, the brokerage argued that it was a subsequent transferee and so this payment was not voidable. The court ruled that the brokerage was a subsequent transferee and so could retain its commission amounts. The court rejected the receiver s argument that the brokerage had received its payment directly from the seller, as the brokerage has served as the listing broker for the sellers of both properties and was paid from the seller s sales proceeds. Even though the commission payment happened during the course of the closing, the sellers had obtained legal control of the sale proceeds during the closing and the escrow agent was following the seller s instructions when it made the payments to the brokerage. Thus, the brokerage was a subsequent transferee and so the receiver could not use the act to recover the commission payments made to the Brokerage. McConkie v. Rice Properties, No. 2:09CV275, 2012 WL (D. Utah June 11, 2012). [This is a citation to a Westlaw document. Westlaw is a subscription, online legal research service. If an official reporter citation should become available for this case, the citation will be updated to reflect this information]. Editor s Note: Through its Legal Action Committee, NAR provided financial support to the brokerage in its attempt to retain its commissions. Reprinted with permission from The Letter of the Law, National Association of REALTORS. New York State Association of REALTORS FREE LEGAL HOTLINE Monday - Thursday 9 a.m. - 1 p.m. NYSAR s Legal Hotline does not provide a client-attorney relationship. For confidential legal advice, consult an attorney.