NY property agents, brokers stripped of corporate titles; The use of corporate honorifics like “senior vice president” among brokers and agents without any actual corporate duties turns out to be illegal.

August 19, 2013

NY property agents, brokers stripped of corporate titles

By ELIZABETH A. HARRIS

Alex Dietrich, a real estate agent with Nest Seekers International, has recently found himself fielding an unwelcome question from some clients. “They ask, ‘Have you been demoted?’” said Mr. Dietrich, who was a vice president and managing director until earlier this year. “It is not ideal.” Mr. Dietrich has not been demoted, nor is he alone in his tumble from grace. Tens of thousands of real estate agents and brokers around New York were stripped of their corporate titles this year — senior vice president, managing director and the like — after the New York Department of State, which issues real estate licenses, said the use of corporate honorifics without any actual corporate duties was, in fact, illegal.That legal opinion swept aside the days when a vice president and managing director of a large firm, like Mr. Dietrich, would take the time to help you sell a $419,000 one-bedroom apartment.

Since the State Department’s opinion was released in April — in response to a clarification request from the Real Estate Board of New York — countless stacks of business cards and brochures have been dumped in the trash, and Web sites have been scrubbed clean of titles by agents eager to avoid fines of up to $1,000 per violation.

“There was a fair amount of hysteria,” said Harriet Kaufman, a broker at Warburg Realty, and once upon a time, a senior managing director.

Yet, the rule is hardly new. It has been on the books for at least 50 years, according to the State Department, making it something closer to middle-aged. But few, if any, complaints were ever made about the issue, state officials say, and fines were exceptionally rare.

“Everybody started to try and outdo each other and it became Senior Executive Chief Whatever Bottlewasher,” said Kirk Henckels, the vice chairman at Stribling. “I can understand needing to clarify that for the public good.”

Real estate brokers (technically, they have the title “licensed real estate broker” or “licensed associate real estate broker”) and agents (“licensed real estate salespeople,” who work under a broker) are not generally staff employees of the firms on their business cards; they are independent contractors and split their commissions with the company. But according to the rule, to hold a corporate officer position, and therefore get to use the fancy title, one must be on staff.

Nonetheless, agents and brokers at various real estate firms were awarded corporate titles over the years for reaching sales benchmarks, or for spending a certain number of years with the company — though at a few firms, one could become a vice president just by walking in the door.

With fancier titles peeled away, some agents have requested clarification of the rule and permission to use alternate titles. Steven Spinola, the president of the real estate board, said the reaction from the commercial real estate community has been even stronger than from the residential world.

Marcos Vigil, the deputy secretary of state for business services and consumer protection, said that further guidance would be released in the next few weeks on what types of titles could be used and how.

Some firms, however, have plunged ahead with new honorifics. Meet Nikki Field, a broker at Sotheby’s International Realty, and a newly minted senior global real estate adviser.

“I was a senior vice president, so I maintained the ‘senior,’ and global real estate adviser is exactly what I do,” Ms. Field said.

“We’re in sales,” she continued. “My title gets in the door before I do.”

Frederick Peters, the president (really) of Warburg Realty, said his firm also kicked around ideas for alternate titles, but without success.

“We couldn’t come up with anything that didn’t sound kind of silly,” Mr. Peters said. “Realistically, what are you going to do? Though several agents told me they wanted to be called ‘Queen.’ I loved that idea, ‘Real Estate Queen.’”

While there are plenty of real estate professionals who are fine with the change, many brokers insisted during interviews that while the mood among their colleagues was grim, even depressed, they themselves were completely unfazed. (Mr. Peters of Warburg pointed out that this was a bit like going to the doctor as a teenager and saying you had a question about contraception for a friend.) Even among those who freely admit their disappointment, very few felt it would have an impact on their business.

“Maybe a handful of people have mentioned something, but it’s not really noticed,” said Jimmi Circosta, a broker (once senior vice president) at Citi Habitats. “Which is depressing, too.”

There is some expense associated with the change, which varies enormously depending on a broker’s enthusiasm for things like fliers. Jacky Teplitzky a broker (and former managing director) at Douglas Elliman, and a devotee of thick mailings, said she expects to spend about $10,000 reprinting business cards, show sheets, press packets, and more.

But it is not just her title Ms. Teplitzky needs to fix. She also needs to change her name to comply with new state rules, that will go into effect in January, requiring that the name under which a broker is licensed be displayed in advertising. Nicknames like “Jacky” are no longer sufficient, so her new business card says “Jaqueline (Jacky) Teplitzky.” The same goes for maiden names, too, if the agent’s married name is on the license.

“I got married to a real estate developer named Guttman,” said Penny Toepfer, a broker at Brown Harris Stevens, who was Penny Toepfer-Guttman on her license but not in business.

“I got divorced in Florida, and my lovely divorce attorney said, ‘Don’t worry about it,’” Ms. Toepfer said.

She didn’t bother changing her name until the state announced the new rule. Thus began her visits to Lower Manhattan to get her maiden name legally restored. After several trips, she finally emerged victorious as Penny Toepfer, associate broker — but not Ms. Toepfer, senior vice president.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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