STATE OF NEW YORK
DEPARTMENT OF STATE
OFFICE OF ADMINISTRATIVE HEARINGS
420 DOS 04
DIVISION OF LICENSING SERVICES,
TEAKWOOD GROUP LTD., DECISION
Real Estate Broker,
RICK S. SCHUSSEL,
Representative Real Estate Broker,
ADMINISTRATIVE LAW TRIBUNAL
123 William Street, New York, NY 10038
Held: February 17, 2004
Felix Neals, Supervising Administrative Law Judge
Teakwood Group Ltd. and Mr. Rick S. Schussel were represented by Jay J. Gurfein, Esq., Gurfein and Paer, Esqs.
Division of Licensing Services was represented by Allen B. Shayo, Esq., Litigation Counsel.
Under Real Property Law, §441-e, State Administrative Procedure Act, Articles 3 and 4, and 19 New York Codes, Rules and Regulations, §400, Division of Licensing Services alleges that the respondent demonstrated untrustworthiness and incompetence. Specifically, the complaint alleges that Mr. Schussel gave false, misrepresenting, and misleading information on his application for licensure as a real estate broker, and relying thereon, the Division of Licensing Services issued a real estate broker license for the term ending March 17, 2005.
Under provisions of Real Property Law, §441(1)(b), and 19 New York Codes, Rules and Regulations, §179.1, Mr. Schussel submitted an application for licensure of Teakwood Group Ltd. as a real estate broker with Mr. Schussel as the representative real estate broker.
The statute and the regulation provide that the applicant for licensure as a real estate broker under the equivalent experience provisions must prove equivalent, full-time experience for a minimum, two-year, duration of time in general, real estate business activity as defined in Real Property Law, §440.
Mr. Schussel bases his license application on experience gained in the duration of time from 1985 to March 2003, primarily as director of New Dance Group Studio Inc. (NDGS). His duties included management of a building owned by NDGS that contains studios that were rented under four, various agreements termed "Cooperative Teaching Licensing Agreement," "Space Grant Agreement, “Studio Licensing Agreement," and "'Walk-in' Studio Licensing Agreement."
In support of the application for licensure as a real estate broker under Real Property Law, §441(1)(b), Mr. Schussel classified the licensing agreements as commercial leases and submitted numerous copies of the various licensing agreements and copies of invoices that itemize approximately 10,600 transactions. All of the licensing agreements are preprinted forms used by NDGS in allocating space to consumers at an hourly rate.
The cooperative teaching license agreement provides, in part, as follows:
"1. NDG hereby grants Teacher the right to use studio space specified in the attached schedule for the times, hours and rates specified in the schedule. This grant is a 'license' for the use of the specified space in accordance with the schedule and is not leasehold or any other interest in any studio or real estate of NDG. The word 'cooperative' as used in this agreement is to describe a relationship between NDG and its Teacher/Licensees.
. . .
"18. NDG reserves the right to change the studio reserved by Teacher. If the change is to a higher-priced studio, Teacher shall not be obligated to pay the higher license fee. If the change is to a higher-priced space, Teacher will receive an adjustment reflecting the lower cost. In the case of over crowded classes, NDG reserves the right, at sole discretion, to move Teacher to a larger studio, if available. Teacher will then be obligated to pay the appropriate higher rental fees.”
The studio licensing agreement terms include the following:
"1. License granted: NDG hereby grants a License to Licensee for studio space at NDG's Arts Center for its stated usage only as specified in the attached invoice. Licensed space is not transferrable to any other party without NDG's written approval. Licensee understands that license rates vary depending on types of usage. Licensee grants NDG sole right to append additional charges if the intended use changes.
. . .
"3. Change in rates: Rates are subject to change. Any rate change shall not alter the remaining terms of this Agreement.
. . .
“(12) A. Assignments of a specific studio are not guaranteed. NDG reserves the right to change the studio originally designated/booked when it is, in NDG's judgment, necessary to do so.
. . .
“13) A. If Licensee or the licensee's invites enters and uses a studio prior to the scheduled time, Licensee agrees to be responsible for the additional time and costs.
"B. Licensee agrees to vacate the licensed studio on time. This means that is Licensee is scheduled from 10 a.m. to 6 p.m., Licensee must clean up and be out of the studio at 6 p.m. Licensee will be charged for any additional time used. If Licensee's delay interferes with the next Licensee's scheduled time, a penalty fee will be charged. Licensee agrees to pay $100 for each fifteen-minute interval (or part) the room remains occupied by Licensee. This time period includes occupation by Licensee's guests or the time needed for NDG to move the equipment back to their original location due to Licensee's failure to do so.
. . .
"G. Space rentals exceeding NDG's normal business hours need NDG's prior written approval. Additional charges apply."
The space grant agreement "...supplements the Studio Licensing Agreement" and "awards" the "licensee" a "Space Grant" of specified hours at a "Net Licensing Fee" in dollars "per hour." A grantee-licensee "...agrees that in exchange for this Space Grant, Licensee shall list NDG among the credits in all printed materials related to promotion, productions, and future productions for one year. Licensee shall print in a form substantially similar to the following: '[Licensee] is the recipient of a rehearsal space grant by the NEW DANCE GROUP ARTS CENTER, New York, NY. New Dance Group maintains programs to support established and emerging artists since 1932.'"
The walk-in studio licensing agreement “...grants a ‘one-time, license to Licensee for studio space at NDG’s Arts Center” on a specific date at an hourly rate.
The homogeneity of the licensing agreement are axiomatic. The unambiguous wording of each agreement either clearly states or indicates that the agreement does not convey a leasehold or any other interest in real estate, does not give a licensee exclusive control over a specific space (NDGS reserves the right to change the space designated in the agreement), and does not establish a price certain (NDGS reserves the right to change the hourly rate stated in the agreement).
To formulate a valid, lease contract of an estate or interest in real property, an agreement must set forth the area to be conveyed, the duration of the contract, and the price to be paid without reservation of any of the terms for future negotiation.
Mr. Schussel argues that the licensing agreements are really leases because of the nature of the services performed by him in renting studio spaces, and consequently, the studio-space, rental transactions are real estate transactions as defined by Real Property Law, §440. In support of that argument, Mr. Schussel cites 1932 Op. A.G. 193, Reed v Watson, 279 NYS 863, 244 AD 522, and Sockel v Degel Yehudo Cemetery Corporation of New Jersey, 268 AD 207, 49 NYS2d 176. Scrutiny of the three citations reveal that the nature of the services rendered therein are not congruent with the nature of the services performed by Mr. Schussel in the renting of space at an hourly rate with contractual reservations concerning both space and rate.
The opinion expressed in 1932 Op. A.G. 193, was based on “...one who is employed for the purpose of soliciting lodges and fraternities to lease space in the building of his employer on either a yearly or monthly basis, is engaging in the business of real estate broker or salesman as the case may be, and should be required to obtain a license.” (Emphasis added).
In Reed v Watson, supra, the court held that the nature of the services rendered by a “business broker” in affecting a lease of an operating hotel premises was a lease of an interest or estate is real property and not a “lease of the hotel as a going concern.” (sale of a business).” The nature of the services furnished by a hotel employee in the renting of hotel accommodations to transient guests is concomitant to the nature of the services provided by Mr. Schussel in renting studio space under licensing agreements with various contractual reservations.
In citing Sockel v Degel Yehudo Cemetery Corporation of New Jersey, supra, Mr. Schussel states that the purchaser of a burial plot acquires an easement or license, but in order to sell a burial plot, a person is required to be licensed in accordance with Real Property Law, Article 12-A. The statement is an aliquant of the Court’s decision. The Court further held: The title that one obtains by the purchase of a cemetery plot is unquestionably an estate or interest in real estate governed by provisions of Real Property Law, §440, that defines the term, “real estate broker.” And in order to recover commissions for the sale of cemetery plots, one must be licensed as a real estate broker under Real Property Law, Article 12-A.
The tribunal is aware of the decision in Cemetery Gardens Inc. v Blueweiss, 140 Misc. 608, 251 NYS 546 (N.Y. Mun. Ct. 1931), holding that the sale of burial plots by a cemetery corporation is not the sale of real estate as defined in Real Property Law, §440, and a person employed by a cemetery corporation to sell burial plots, even for a commission, is not a real estate agent. The decision of the Municipal Court predates the opinion of the Appellate Division rendered in Sockel, supra,
Furthermore, both prior to and subsequent to enactment of Not-For-Profit Corporation Law, Article 15, the courts of New York have consistently held that the sale of a burial plot involves an estate or interest in real estate. For example:
In Natowitz v Niagara Falls Park Memorial Cemetery Association Inc., 235 AD 658, 255 NYS 831 (4th Dept. 1932), the court held that a purchaser of a burial plot or grave obtains an estate or interest in real estate and denied recovery of a commission by a person not licensed to engage in the real estate brokerage business.
In re McDonald’s Estate, 139 NYS2d, 386 (NY Sur. 1955), the Surrogate Court declined jurisdiction because the controversy concerned the purchase of a burial plot, an estate or interest in real estate.
City of New York v Washington Cemetery, 188 NYS2d 52 (NY Sup. 1959), held, “whether purchased from a cemetery or from another owner of the fee...” a purchaser of a burial plot becomes “...possessed of a property right which the law protects from invasion (citations omitted).”
Antithetical to Mr. Schussel’s asseveration, the sale and purchase of a burial plot is not a licensing of space but a conveyance of an interest in real estate and is a real estate transaction governed by Real Property Law, Article 12-A.
To illustrate his position that there is confusion on the subject of and difficulty in differentiating between a license and a lease, respondent cites Miller v City of New York, 15 NYS2d 34, 255 NYS2d 78 (Ct. App. 1964), and North Shore Mart v Grand Union, 58 Misc2d 640, 296 NYS2d 855 (Dist. Ct. 1968).
In Miller, supra, the Court did mot find it difficult to differentiate between a license and a lease where the New York City Park Commission granted a private corporate the right to operate an enterprise on a percentage rental basis for 20 years. The Court found the transaction to be a lease and not a revocable permit.
Concordantly, in North Shore Mart, supra, the Court found that a supplemented provision to a lease agreement and the lease agreement formed one, single agreement. The Court was not persuaded by the landlord’s claim that the supplemental agreement was a revocable license. More apropos, the Court held that a license may be for a definite duration of time and cannot be revoked in violation of its term; and where the term of a license has run, the licensee does not have a right of a holdover tenant.
In making a determination, the tribunal did not consider the copy of the transcript of deposition, New York State Department of Labor, Charities Bureau, submitted by the Division of Licensing Services as an attachment to its brief.
The renting of space on an hourly basis under agreements wherein the specific area to be rented and the hourly rate to be paid are reserved for future negotiations is not a real estate transaction as defined in Real Property Law, §440.
The space rental transactions performed by Mr. Schussel under the terms of the cooperative teaching licensing agreements, space grant agreements, studio licensing agreements, and walk-in licensing agreements are not real estate transactions as defined in Real Property Law, §440.
Mr. Schussel failed to prove by substantial evidence that he possesses the experience prescribed by Real Property Law, §441(1)(b), and 19 New York Codes, Rules and Regulations, §179.1.
The State failed to prove by substantial evidence that in his application for licensure as a real estate broker, Mr. Schussel deliberately made a wilful, material misstatement with intent to deceive the licensing agency.
I ORDER the real estate broker license issued to Mr. Rick S. Schussel for the term March 17, 2003, to March 17, 2005 (UID 31SC0974565), is revoked effective immediately.
I FURTHER ORDER under provisions of Real Property Law, §441-c(2), that within five (5) days of receipt of a copy of this decision, Mr. Rick S. Schussel deliver in person or by certified mail to Ms. Usha Barat, Customer Service Unit, Department of State, Division of Licensing Services, 84 Holland Avenue, Albany, NY 12208, (a) the real estate broker license and pocket card issued to him under the provisions of Real Property Law, Article 12-A, or (b) alternatively, files an affidavit in form prescribed by the Division of Licensing Services if the failure to return the license and pocket card is due either to the documents’ loss or destruction.
I FURTHER ORDER that this decision shall not affect the validity or status of Mr. Rick S. Schussel’s real estate salesperson license (UID 40SC0974565).
I FURTHER ORDER that this decision is without prejudice to any future application by Mr. Rick S. Schussel for licensure as a real estate broker.
SO ORDERED: May 6, 2004
Supervising Administrative Law Judge