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As real estate professionals, it is important to stay up-to-date on the latest developments in law that can have an effect on your industry, and one such recent story is unfolding with the Houlihan & Lawrence class action lawsuit. Filed in 2018 the complaint alleges that “Houlihan & Lawrence holds itself out to potential clients as a trustworthy guide that is “there to help” and will be there for its clients “every step of the way” only to dishonor those promises–and breach its fiduciary duties by acting as the agent for both parties on both sides of the negotiating table without making adequate disclosures about its dual agency to either one of them.” Houlihan & Lawrence denies the allegations.


Currently the parties are “working” their way through discovery issues. A hearing was recently held on January 31, 2023, and another Conference-Compliance hearing is scheduled for March 15, 2023, at 11:00 AM. The Twenty-Third Report and Recommendation of Discovery Referee includes the following “given the discordant discovery record in this case, the parties are reminded of the well settled good faith standard governing the conduct of discovery. All depositions should be conducted in an orderly fashion, consistent with well-settled law and free of unnecessary and inappropriate questions and objections. The discovery referee should not have to monitor depositions. However, if either party believes it is necessary to address the misconduct of the other, I will monitor the depositions and award attorney’s fees and costs as appropriate. An unwarranted request for monitoring will equally justify the imposition of attorney’s fees and costs.” 


Why should brokers and agents be interested in this proceeding? Damages in this case have been estimated in the hundreds of millions of dollars. If the Plaintiffs prevail it is likely that “copycat” lawsuits could be filed all around New York. If the Plaintiffs prevail regulatory agencies in New York may reconsider the dual-agency law. The Judge in this case has made it clear that she does not feel that simply getting a signature on the 443 Disclosure form satisfies the Legislature’s intent for proper disclosure. This trail could significantly impact whether dual agency is permitted in New York (it is not in several other states) and how it is practiced, if permitted. Given the potential impact on the real estate industry in New York this is a class action is one that licensees should pay attention to. Agents should discuss, with their supervising Broker, how to properly disclose dual agency as required by law.  




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