DEPARTMENT OF STATE

OFFICE OF THE SECRETARY OF STATE

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In the Matter of

GABELLI REALTY, LLC AND

PETER J. SCHNEEBERG

                                    Appellants,                                                                                         DECISION

5 DOS APP 07

                        -against-

DEPARTMENT OF STATE

DIVISION OF LICENSING SERVICES,

                                    Respondent

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            Appellant Peter J. Schneeberg, a limited liability broker with Appellant Gabelli Realty LLC, appeals an adverse determination of the Office of Administrative Hearings (OAH) (719 DOS 06). In a decision dated September 12, 2006, Administrative Law Judge (ALJ) Roger Schneier, found that Appellants violated Real Property Law § 443 and 19 NYCRR § 175.12 and imposed a fine of $2,000.00, payable on or before October 31,2006. A stay of the imposition of the fine pending the Secretary’s decision on appeal and seeking an extension of time in which to prepare Appellants’ brief was granted on October 30, 2006.

            Appellant Schneeberg submitted a letter dated November 21, 2006, acknowledging the violations but requesting that the financial penalty be reduced.

            Respondent Division of Licensing Services has submitted a Memorandum in Opposition to the appeal.  

ISSUE PRESENTED

            The issue presented is whether or not the ALJ’s decision to impose a fine of two thousand dollars ($2000) upon the Appellants for having a client sign a real estate agency relationship disclosure form which inaccurately described the agency relationship and for failing to immediately deliver signed copies of the real estate agency relationship disclosure form and listing agreement to the client is reasonable under the circumstances.                       

FINDINGS OF FACT

            The Findings of Fact made by the ALJ in the decision below, not being in dispute, are adopted in full for purposes of this appeal. The Findings accurately reflect the essential facts in the record on appeal.

OPINION

            Pursuant to RPL §443(3)(b), a real estate broker acting as a seller’s agent in the sale of residential real property, as was Mr. Schneeberg, must provide an real estate agency relationship disclosure form to the seller and must obtain a signed acknowledgment therefor, at the time of the first substantive contact with the seller. Further, pursuant to 19 NYCRR § 175.12, a real estate broker must immediately deliver a duplicate original of any instrument to any party or parties executing an instrument which has been prepared by the broker. In the transaction at issue that contact occurred on August 22, 2005. Mr. Schneeberg, however, sent Mr. Grieco copies of the listing agreement and real estate agency relationship disclosure form some days after they were executed. He therefore violated the regulation.

            In his appeal letter dated November 21, 2006, Appellant Schneeberg admits that the real estate agency relationship disclosure form was not immediately handed back to Mr. Grieco as required by law. Arguing that the monetary penalties should be reduced, he claims this was a minor error and was committed without malicious intent. The Legislature in enacting Real Property Law §443 (3) did not require an element of intent. The mere failure to provide a client with the real estate agency relationship disclosure form, by itself, violates the statute.

            Pursuant to Real Property Law §443, a real estate broker who has agreed to act as the agent of the seller of residential property is required to provide a real estate agency relationship disclosure form to the seller prior to entering into a listing agreement with the seller. That form must accurately describe the nature of the agency relationship, i.e., whether the broker represents the seller or the buyer or has undertaken a dual agency. In the subject transaction, Mr. Schneeberg completed a real estate agency relationship disclosure form which was ambiguous in that it stated that the Appellants were the agents of both the seller and the buyer, in violation of the statute. Appellant had the affirmative obligation to inform the seller whether he was acting as the seller’s agent, as the buyer’s agent or as a dual agent. Not only did Appellant not make it clear for whom he was working, he withheld the real estate agency relationship disclosure form itself, preventing the seller from contesting the error.

             The ALJ’s decision found Appellants guilty of two violations and assessed a fine of $1,000 for each violation. The penalties imposed upon the Appellant are governed by Real Property Law §441-C (1)(a) which provides in relevant part:

The Department of State may revoke the license of a real estate broker or salesman or suspend the same, for such period as the Department may deem proper, or in lieu thereof may impose a fine not exceeding one thousand dollars payable to the Department of State, or a reprimand upon conviction of the licensee of a violation of any provision of this article...or if such licensee....has demonstrated untrustworthiness or incompetency to act as a real estate broker or salesman.....

            On its face, the fines are within the limits set by the statute. However, Appellants argue that the $2,000 penalty imposed was unreasonably high in light of the circumstances. In considering whether the fine should be reduced, it is necessary to reflect on the factual circumstances and also to compare the fines in similar cases.

            Appellants were given several opportunities to pay a lesser fine, but each offer was rejected. By letter dated February 8, 2006, the Appellants were offered the opportunity to resolve the matter by paying a fine of $700.00.(State's Ex. 4). They did not accept that offer. In a subsequent letter dated April 17, 2006, the Appellants were offered an additional opportunity to resolve the matter, this time by signing a consent order admitting the charges and paying a fine of $1000.00 (State's Ex. 5). They rejected that offer. The Appellants rejected the offers of settlement in return for a hearing, where they were found to have committed two violations and were assessed $2,000 .

            In many instances, “where such an offer of settlement has been refused or not accepted and the respondent has subsequently been found guilty, it is proper to impose a fine higher than that which was asked for in the settlement offer.” Vito v Jorling, 197 AD2d 822 (3^rd Dept. 1993). The ALJ has followed this rule in numerous disciplinary proceedings. In imposing the higher penalty, the ALJ noted “the fact that Mr. Schneeberg was clearly aware of the wrongfulness of his conduct as demonstrated by his obvious attempt to mislead the complainant by submitting to it an altered copy of the disclosure statement.”

            The penalty of $2000 is not unreasonable when compared with penalties imposed in similar cases. In DLS v. Albarracin, 745 DOS 06, the ALJ assessed a $2,000 penalty in a case where a real estate salesperson failed to obtain signed real estate agency relationship disclosure forms from a prospective tenant and a prospective landlord. In Lemke v. DLS, 17 DOS APP 04, the Appellant’s license was suspended for six months after it was determined that he failed to provide a real estate agency relationship disclosure form and failed to transmit a counter-offer to his client. In DLS v. Camino, 771 DOS 03, a $2,000 penalty was imposed for separate violations of failing to provide a real estate agency disclosure form and employing an unlicensed salesperson.

            While now contrite about his error and aware of the seriousness of the consequences, Appellant Schneeberg has raised no new facts or special circumstances which would warrant reducing the penalty in this case.

DETERMINATION

            For the foregoing reasons, the decision of the ALJ is affirmed. 

So ordered on January 30, 2007

                                                                                    ______________________

                                                                                    Matthew L. Andrus

                                                                                    First Deputy Secretary of State