Broker-Dealer Registration When Selling Co-Ops

December 15, 2017 | By Charles Botensten

Q. Does a licensed real estate broker, associate real estate broker or real estate salesperson (collectively, a “Licensee”) representing a seller in a co-op transaction have to register as a “broker-dealer” with New York State?

A. No, a Licensee generally does not have to register with the State of New York Department of Law - Real Estate Finance Bureau (the “Bureau”) when representing a seller in a co-op transaction.  The sale of shares in a co-op is technically classified as the sale of securities which, under most circumstances, would require registration as a “broker-dealer” by filing a form M-10 with New York State.  However, Licensees are exempt from the registration requirement provided that the Licensee is not acting as a “dealer.”  A “dealer” is defined as any person engaged in the business of buying and selling securities for his/her own account, through a broker or otherwise.    Therefore, provided that the Licensee is not in the business of buying and selling co-ops for his or her own account, the Licensee would not be required to register with the Bureau in order to represent sellers in co-op transactions.

The Legal Line Question by:
Neil B. Garfinkel
REBNY Broker Counsel

Partner-in-charge of real estate and banking practices at Abrams Garfinkel Margolis Bergson, LLP