BARRISTER'S BRIEFING: The Formality of Forms: Understanding the Need and Usage of Current Real Estate Forms

Over the past few years we’ve seen a tremendous increase in the use of forms. Where we once had only one or two forms to fill out (usually done on the hood of a car), we now have up to a dozen documents. So, for the purposes of guidance and clarity, I’m going to try to break things down for everyone in this month’s article.

Required Forms

The following forms are required to be provided, posted, or executed. Failure to do so can expose the agent and the brokerage to discipline, fines, and possible loss of licensure.

Agency Disclosure Form (443 Disclosure) : This form is required by the Department of State Licensing and explains to the client/customer where the agent’s fiduciary duties lie. It’s required to be provided at “first substantive contact,” meaning that you must give it to the client/customer when you first engage is any substantial way with them. This contact could be in person, over the phone, via e-mail, or even social media. If the disclosure is for a homeowner listing a property, it should be provided prior to signing up the listing. If it is with a buyer (either customer or client), it should be provided when they first engage in any meaningful conversation about the purchase of a property. It can be provided physically or electronically. This form can be found on the HGAR website at: NY State Agency Disclosure Form – Buyer/Seller.pdf ( hgar.com )

Housing and Anti-Discrimination Disclosure Form : Since June 2020, this form is also required to be provided to all consumers. It applies to all property types. Similar to the 443 Disclosure form, it too must be provided at “first substantive contact” and it must be retained for a period of at least three years. A copy of the disclosure is located on the New York State Department of State website at: Microsoft Word – 2156_new.docx ( ny.gov )

Housing and Anti-Discrimination Notice : Unlike the disclosure form, this is a notice that must be prominently displayed in each office and branch office of a brokerage, as well as at every open house (additional copies are to be supplied at open houses upon request). Additionally, a link to the notice must be “prominently and conspicuously” displayed on all websites managed by the brokerage, including all agent websites and social media pages. A copy of the notice is located on the New York State Department of State website at: FairHousingSinglePage.pdf ( ny.gov )

Notice Disclosing Tenant’s Rights to Reasonable Accommodations for Persons with Disabilities : NYS Executive Law 296 (2-b) & (18-a) went into effect last week on March 2, 2021. It requires every housing provider covered under the law to provide a written disclosure to all tenants and prospective tenants within 30 days of the beginning of their tenancy, or 30 days from the effective date of the law for current tenants. This notice is not required to be provided at “first substantive contact,” but only after a lease is signed. Additionally, it requires that a copy of the notice be “conspicuously posted in such form and manner as the division may by regulation prescribe on every vacant housing accommodation that is available to rent.” While the Division of Human Rights has not provided any regulations relating to this posting, agents for landlords and property managers should make sure their clients are posting the notice in all available rental units. NYSAR is seeking clarification on this matter and will be providing updates as more information becomes available.

On March 5, 2021, the DHR published sample language that can be used to satisfy these new requirements. That information can be found on the DHR website at: Required Notice for Required Notice for Housing Providers | New York State Division of Human Rights ( ny.gov ).

Lead Disclosure : Federal law requires that a buyer or tenant that purchases or rents a residential property built prior to 1978 must be provided a lead disclosure form prepared and executed by the homeowner or landlord as well as a copy of the lead disclosure booklet.

Exclusive Listing Agreement : While this may seem obvious, you would be surprised how many agents do not obtain a fully executed listing agreement. Without all the necessary parties signing and dating this agreement, it may be considered invalid. Usually, this means that all the parties on the deed must sign it and the broker/manager of the brokerage must sign the agreement as well. The agent cannot sign for the brokerage. Without a valid listing agreement, the listing cannot go on the MLS.

Optional Forms

Concerning optional forms, it is important for agents to discuss the pros and cons of these forms with the client. While they may provide a level of security for the client, demanding execution of these forms may also have the unintended effect of delaying showings, reducing showings and prolonging the transaction’s time. Failure to have these discussions may be deemed a Code of Ethics violation.

COVID Disclosure Forms: NYSAR has provided a sample form that can be co-branded. It is not required by law. Use of this form is not for the agent/brokerage to determine (although a brokerage may refuse to list a property where the homeowner refuses to utilize it), it’s for the client to decide. If, after discussion with the client, they decide to utilize it, the execution of this form may be a prerequisite for a showing. If it is implemented, it must be required by everyone; otherwise, the client (and brokerage) may expose themselves to a discrimination lawsuit.

COVID Questionnaire : Similar to the above-referenced form, this questionnaire may also be required as a prerequisite to showing a property. Again, this determination is by the client, not the agent/brokerage and it must be applied uniformly to all parties.

Hold Harmless Agreements : NYSAR has not provided or endorsed such forms, but again, they may be utilized as a prerequisite for showing a property.

Pre-qualification or Proof of Funds : This requirement is not new. Proof of funds or a basic pre-qualification letter from a bank is relatively common. Again, this requirement should be discussed with the homeowner.

Conclusion

As agents we are constantly inundated with forms. Obtaining a listing, finding a motivated buyer, or locating that special home is hard enough, never mind obtaining all the required signatures on forms. Further, when you add in all the additional forms and the forms that you may be required to fill out by your brokerage, it becomes an exhausting process. Nevertheless, they are necessary. They protect you, your brokerage and especially your client. Sadly, there isn’t one unified form for everything, and parties can choose to use or not use forms. For optional forms, standardized forms are available, but that doesn’t mean that parties can’t create their own forms; and there is no singular clearinghouse for obtaining these forms to create “one stop shopping.” Maybe this will happen in the future, but at the present time we must be detail-oriented, efficient, and patient and follow up on getting that “John Hancock” on all your forms.

As a final thought, an issue has arisen and is being discussed as to whether forms could be utilized as a tool to discriminate against protected classes. In filling out these forms are parties providing insight into their backgrounds? Can information be gleaned where names provide race/national origin/religious clues, or where questions reveal age, gender, familial status or sexual orientation? It’ll be interesting to see how the use of forms continues and what changes the future holds for us.