A real estate agent or broker in NYC who lists her or his own home for sale has a duty to disclose this ownership interest to prospective purchasers. This disclosure is mandated by both the New York State Real Estate Licensing Law (which applies to all agents) as well as the Real Estate Board of New York (which applies to REBNY member agents).
There is no specific timeframe during a transaction in which a NYC real estate agent must disclose an ownership interest in a property she or he is marketing in the capacity of a listing agent.
This disclosure obligation is memorialized in New York Codes, Rules and Regulations, Title 19 – DEPARTMENT OF STATE, Chapter V – Division of Licensing Services, Subchapter D – Real Estate Brokers And Salesmen, Part 175 – Regulations Affecting Brokers And Salesmen, Section 175.6 – Broker’s sale of property in which he owns an interest:
REBNY member agents have an additional duty of disclosure for ownership interests, as outlined in the REBNY Code of Ethics, Section II (B):
More specifically, REBNY agents must disclose any ownership interest in an exclusive listing in the listing information disseminated through the RLS Broker Database, as outlined in the REBNY Universal Co-Brokerage Agreement, Article IV. COMPENSATION, Section 7.:
We suggest making an ownership interest disclosure in writing and as soon as possible, ideally at the first substantive contact with each prospective purchaser.
The time frame of ‘first substantive contact’ is when an agent must present prospective purchaseres with both the NY Agency Disclosure Form and the NYS Fair Housing and Anti-Discrimination Disclosure Form, so it’s a convenient opportunity for an agent to ‘come clean’ regarding ownership interests as well.
There’s really no upside in delaying the disclosure of an ownership interest. At a minimum, an ownership interest should be disclosed prior to offer negotiation and certainly before an accepted offer.
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Best practice is to make sure that any ownership interest is disclosed in the purchase contract, as this will deter a disgruntled purchaser from initiating any form of dispute or litigation on the grounds that an agent failed to disclose an ownership interest.
