In New York, a salesperson may be paid by:
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The client directly
The client cannot directly compensate a salesperson in New York. This would create an illegal direct employment relationship and bypass the required broker oversight. The salesperson's license is sponsored by and under the supervision of a broker, not directly tied to individual clients.
Only their sponsoring broker
Any licensed broker
A salesperson cannot receive compensation from any broker other than their sponsoring broker. Doing so would violate the exclusive agency relationship and could potentially create unauthorized practice of real estate. Compensation must come through the broker who holds their license.
The title company
Title companies cannot compensate salespersons directly as this would create a conflict of interest and potentially influence the impartiality of the transaction. Such compensation arrangements are illegal and violate real estate regulations regarding referral fees and kickbacks.
Why is this correct?
In New York, salespersons are legally required to operate under a sponsoring broker who holds their license. Compensation must flow through this broker as the salesperson is an independent contractor or employee of the broker, not an independent business entity. This structure ensures proper supervision and regulatory compliance.
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