In an interesting bit of industry news, the State of New York recently made a decision to ban real estate brokerages from giving out prestigious-sounding titles to their top sellers. This means pretenses such as “senior vice president,” “executive vice president,” “managing director” and the like will no longer be legally available to real estate agents in the Empire State. The reason? Most real estate salespeople are prohibited from having such titles in the first place.
In a letter sent from the state to the Real Estate Board of New York’s attorney, the state explained that brokers cannot hold titles unless they are actually officers of the corporation. Furthermore, brokers are not allowed to market themselves using these so-called “empty” titles.
So how can a broker legitimately gain one of these impressive titles? As it turns out, it’s practically impossible, since real property law prohibits a real estate salesperson from holding a corporate management position. In other words, any salesperson, including brokers and associate brokers, who sell real property under another broker cannot legally obtain a title such as VP, EVP or SVP, etc. Basically, in order to be called a “Senior Vice President,” you have to actually be Senior Vice President.
“These provisions prohibit a real estate salesperson from holding voting stock or being appointed an officer in a corporate brokerage, a manager or membership of a limited liability corporation or a member of a partnership,” the decision states.
The only way a real estate salesperson can legally hold one of these titles is if the company officially appoints them to a corporate management position…which is also next to impossible, as most salespeople cannot legally be appointed as such, as explained above. So as you can see, it seems to be one big loop of dead ends when it comes to finding a way for brokers to legitimately hold these titles. Needless to say, the new decision is sure to frustrate brokers across the state. Aside from the headaches of getting new business cards printed, redesigning letterheads and updating their online profiles, brokers in New York will be faced with the challenge of having to promote themselves without the noteworthy titles they undoubtedly worked hard for.
While it’s unclear just how much of an impact this decision will make on the New York real estate industry, one thing is for sure: the state will have to come up with a clever way to reward and promote their top dogs without handing out potentially misleading titles.
Just in case you were wondering…
What’s the difference between a real estate broker and a real estate salesperson?
Real estate brokers and real estate salespeople are both considered real estate agents. The main difference between the two is that a real estate salesperson must work under a broker. Once they gain enough experience, real estate salespeople can take courses and pass an exam to become brokers. Brokers are typically independent workers, but some do work under other brokers. Many real estate salespeople choose to become brokers later on in order to be their own boss.