Property Management in New York
New York wrote both halves of the licensing question into one subdivision.
Real Property Law § 440(1) answers two licensing questions in one subdivision: it reaches the sale of a business only where the real property transferred with it is more than incidental, and it decides, on a separate test, who may operate the company afterward. Fixing the deal perimeter carries a price in New York City, a buyer acquires a permanent covenant whether or not the purchase agreement contains one, and the city tax layer stops at the city line.
New York City / Buffalo / Rochester / Albany-Schenectady-Troy
Section 440 asks about the real property, and then about the rent
Real Property Law § 440(1) provides that "the term, 'interest in real estate' shall include the sale of a business wherein the value of the real estate transferred as part of the business is not merely incidental to the transaction." The test compares values, so a company that owns no buildings has no real estate to weigh against the rest of the transaction and the sale sits outside Article 12-A. The subdivision carries a second exclusion, for "a person, firm or corporation registered pursuant to the provisions of article twenty-three-A of the general business law or federal securities laws," but that one is open only to registered persons and is not the basis for anything on this page.
Because it is a threshold test, the perimeter of the deal has to be fixed before anyone relies on it, and in New York City the price of getting it wrong is a transfer tax bill. The Department of Finance charges Real Property Transfer Tax on transfers other than one-to-three-family and comparable residential ones at 1.425% where the value is $500,000 or less and 2.625% where it is more, and the tax reaches the sale or transfer of at least 50% of the ownership of an entity that owns or leases property. An owner who holds the buildings in the same entity as the management company pays that tax on a sale of the company, whatever the licensing answer turns out to be.
Section 442-d turns the same perimeter question into a fee question. It bars any "person, copartnership, limited liability company or corporation" from bringing or maintaining an action in a New York court "for the recovery of compensation for services rendered, in any place in which this article is applicable, in the buying, selling, exchanging, leasing, renting or negotiating a loan upon any real estate" without alleging and proving they were duly licensed when the cause of action arose. The clause about where the article applies is the one that decides the question when part of a portfolio sits outside New York. Where a transaction does carry a real property component that is more than incidental, an unlicensed advisor's success fee is not recoverable here. Section 442-d's list covers buying, selling, exchanging, leasing, renting and negotiating a loan, and does not name rent collection, so its reach over pure management fees is contested.
On the operating side, the same subdivision reaches anyone who, for another and for a fee, "collects or offers or attempts to collect rent for the use of real estate," which is why the Department of State answers the management-company question in two parts: "If you collect rent or place tenants in vacant spaces on behalf of your landlord client, the answer is yes. If, on the other hand, your services are strictly maintenance, the answer is no."
Section 442-f says the article's provisions "shall not apply to receivers, referees, administrators, executors, guardians or other persons appointed by or acting under the judgment or order of any court; or public officers while performing their official duties, or attorneys at law." The only other carve-out, in § 440-a, covers tenant associations and not-for-profit corporations authorized in writing by the New York City housing maintenance code commissioner, or appointed by a court, to manage residential property the city owns. There is no employee or on-site-manager exemption in the text. Salaried staff working for a building's own owner fall outside § 440(1) because the definition reaches acts done for another and for a fee, which is a reading of the definition and not an exemption a buyer's counsel can point to in the article.
Section 441 requires a broker applicant to have attended at least 152 hours of an approved real estate course, and either to have actively participated in the general real estate brokerage business as a licensed salesperson under a licensed broker for not less than two years, or to have had equivalent experience in the general real estate business for at least three years. On the target's own side the license sits with the entity, and § 441 sets out what an entity application must disclose about its officers, members or partners. Section 442-e(1) makes any violation of the article a misdemeanor, and § 442-e(3) exposes the violator to a penalty of "not less than the amount of the sum of money received by him as such commission, compensation or profit and not more than four times the sum so received by him."
Mohawk binds the seller of goodwill, and Bessemer draws the line
New York has no non-compete statute of general application and no enacted earnings threshold. The one in-force statutory ban is sector-specific: Labor Law § 202-k stops a broadcasting industry employer from requiring, as a condition of employment, that a broadcast employee refrain from obtaining work in a specified geographic area, for a specific period of time, or with a particular employer. It does not reach property management. Senate Bill S9759 would change the general picture. It excludes anyone paid at an average annualized rate of cash compensation of $500,000 or more, and it separately preserves covenants in the sale of the goodwill of a business where the seller holds at least a fifteen percent interest. Either prong saves a covenant, so a selling manager with a small stake and a large salary stays bindable. The bill passed the Senate 40 to 21 on June 3, 2026 and sits in the Assembly Labor Committee, and it dies with the two-year session if the Assembly does not act. If it becomes law the covenant turns on a percentage nobody writes down at the time, so each selling owner's exact interest is worth papering alongside the cap table.
The covenant a buyer does ask for is governed by the sale-of-business standard. Purchasing Associates, Inc. v. Weitz, 13 N.Y.2d 267 (1963), holds that where there is a sale of a business, "involving as it does the transfer of its good will as a going concern, the courts will enforce an incidental covenant by the seller not to compete with the buyer after the sale," on the premise that a buyer may stop the seller "from recapturing and utilizing, by his competition, the good will of the very business which he transferred for value." The Court also refused to take the paperwork at face value. The document there was labeled a contract of sale, and the Court looked "behind and beyond the label to ascertain the true nature of the transaction," found a hiring rather than a sale of goodwill, and declined to apply the sale standard to it.
Mohawk Maintenance Co. v. Kessler, 52 N.Y.2d 276 (1981), goes past any covenant a buyer would think to draft. It came out of the sale of a controlling shareholder's interest in a building maintenance company, and the Court of Appeals held that the right the purchaser of goodwill acquires "must logically be regarded as a permanent one that is not subject to divestiture upon the passage of a reasonable period of time," the duty being "in reality, one imposed by law" rather than a bargained term. Two details in the case decide how a deal should be papered. The transaction was a sale of stock, and the Court had no doubt the goodwill passed with the business, so the doctrine is not confined to asset purchases. And the contract of sale did contain express restrictive covenants with their own durations, which the Court held did not limit the implied duty "in any way." A dissenting judge would have read the parties' express terms, including a clause reciting that the agreement superseded all prior agreements between them, as displacing the implied duty. That reading lost in 1981 and is still the argument a seller reaches for later, which is a reason to recite in the purchase agreement that the express covenants are in addition to, and do not limit, the duty arising by law from the transfer of goodwill.
What the implied duty does not reach is competition itself. Mohawk permitted the defendants to accept the patronage of customers who left without prompting, and Bessemer Trust Co., N.A. v. Branin, 16 N.Y.3d 549 (2011), answered the Second Circuit's question about where participation becomes improper solicitation: a seller "may not contact his former clients directly," but may answer factual questions in response to inquiries a client made on their own initiative, may assist a new employer in the "active development" of a plan responding to those inquiries, and may hold a "largely passive" role in the meeting that follows.
New York City taxes the manager and exempts the landlord it works for
The city's Unincorporated Business Tax is charged at 4% on taxable income allocated to New York City, on trades, professions and certain occupations carried on by an individual, partnership, limited liability company, fiduciary, association, estate or trust. Its real property exemption covers "an owner, lessee, or fiduciary who is engaged in holding, leasing, or managing real property for their own account." A property management company running buildings for other people is not holding, leasing or managing them for its own account, so those landlord clients sit outside the tax on their own buildings and the company sits inside it on the fees.
Which city tax applies depends on how the entity is classified for federal purposes. S corporations and entities treated as corporations for federal purposes are outside the UBT and pay the General Corporation Tax instead, because New York City has no S corporation election and does not recognize the state's. The GCT is computed by four methods and imposed at whichever produces the largest amount, the entire net income base being 8.85% of net income allocated to the city. An owner-operated management company that made an S election therefore carries a different city tax at a different rate than the LLC in the next building. UBT liabilities of $3,400 or less draw a credit for the full amount and liabilities from $3,401 to $5,400 a partial credit. A city resident operating as a sole proprietor may also claim a credit against their city personal income tax for a portion of the UBT paid, so that one shape models the 4% net of the credit; whether a partner gets an equivalent credit is a question for the company's own advisors.
The gain itself runs through the ordinary graduated rates, and a sale-year spike is what reaches the upper ones. On the 2025 Form IT-201-I schedules the state rate is 9.65% above $1,077,550 of taxable income for a single filer and above $2,155,350 for joint filers, 10.3% above $5,000,000, and 10.9% above $25,000,000. The city schedule adds 3.876% above $50,000 of city taxable income for a single filer and above $90,000 for joint filers. A seller resident in the city pays on both schedules, so the marginal rate on the top slice of a sale year is the state bracket rate plus the city's 3.876%. Reaching the top of the state schedule, the 10.9% bracket, takes taxable income above $25,000,000.
Buffalo, Rochester, Syracuse and the Albany-Schenectady-Troy market carry none of that. There is no municipal income tax and no UBT or GCT outside the city, so for an upstate seller the state schedule is the entire picture. Tax Law § 632(a)(2) reaches a nonresident shareholder. Where the shareholders of an S corporation make an election under section 338(h)(10), gain recognized on the deemed asset sale is treated as New York source income, allocated consistently with the article nine-A rules in the year of the election, and gain on payments from an installment obligation distributed under section 453(h)(1)(A) is treated the same way. A change of domicile does not by itself take that gain out of New York.
Questions New York sellers ask
- Do I need a real estate license to sell my New York property management company?
- Real Property Law § 440(1) makes it a comparison of values. A business sale involves an interest in real estate only where the value of the real property transferred as part of the business is not merely incidental to the transaction, so where no buildings move there is nothing to compare and the sale sits outside Article 12-A. Where the owner's buildings ride along with the company the answer can change, and in New York City the transaction also draws Real Property Transfer Tax.
- My buyer is not licensed in New York. What do they actually need before they can collect a management fee?
- A broker's license. The Department of State's position is that a management company collecting rent or placing tenants on behalf of a landlord client must be licensed, and that services that are strictly maintenance need not be. Section 441 requires a broker applicant to have attended at least 152 hours of an approved real estate course and either two years of active participation as a licensed salesperson under a licensed broker, or three years of equivalent experience in the general real estate business.
- Can I start another property management company in New York after I sell this one?
- You can compete, but you cannot call your old accounts. Under Mohawk Maintenance Co. v. Kessler, 52 N.Y.2d 276 (1981), a seller of the goodwill of a business is under a duty imposed by law not to solicit the transferred customers, and the Court of Appeals held that duty permanent and not subject to divestiture after a reasonable period. Bessemer Trust Co., N.A. v. Branin, 16 N.Y.3d 549 (2011), drew the line: no direct contact with a former client, but you may answer factual questions where the client came to you first, and you may accept the business that follows. Mohawk itself arose from a sale of stock, so the duty is not limited to asset deals.
- Does my management company owe New York sales tax, and why does a buyer keep asking?
- Tax Law § 1105(c)(5) taxes maintaining, servicing or repairing real property, whether the services are performed in or outside a building, so a manager billing owners for that work is a person required to collect sales tax. Being a person required to collect sales tax is what makes an asset sale a bulk sale. The Tax Department's bulletin requires the purchaser to file Form AU-196.10 at least 10 days before paying for or taking possession of any business assets, by registered mail, certified mail with return receipt, or hand delivery, and states that within five business days it will issue either Form AU-197.1, the release, or Form AU-196.2, a notice of claim. Where a claim issues, the Department notifies both parties of the amount due within 90 days, and the sum the purchaser pays out of escrow runs up to the purchase price or the fair market value of the assets, whichever is greater, so the price paid is not the ceiling. A sale of stock, with the business assets left in place, is not a bulk sale at all.
- I am in Buffalo, not New York City. Does the city tax layer apply to me?
- No. The 4% Unincorporated Business Tax, the General Corporation Tax and the city personal income tax reaching 3.876% are New York City taxes, and Buffalo, Rochester, Syracuse and the Albany-Schenectady-Troy market have no municipal income tax and no UBT or GCT. An upstate seller works from the state schedule alone: 9.65% above $1,077,550 of taxable income for a single filer and $2,155,350 for joint filers, 10.3% above $5,000,000, and 10.9% above $25,000,000. The interaction of entity form with Tax Law § 632(a)(2) is for your own CPA.
Where these facts come from
Everything above that is a rule rather than a judgment is listed here with its publisher and the date it was checked. Licensing, tax and non-compete rules change, sometimes without much notice. None of this is legal or tax advice, and it is not a substitute for your own counsel and CPA.
NY Real Property Law § 440(1), the definitions section of Article 12-A of the Real Property Law (Real Estate Brokers and Real Estate Salesmen), defines a real estate broker to include "any person, firm, limited liability company or corporation, who, for another and for a" fee performs the listed acts, among them one who "collects or offers or attempts to collect rent for the use of real estate." The subdivision further provides that "the term, 'interest in real estate' shall include the sale of a business wherein the value of the real estate transferred as part of the business is not merely incidental to the transaction," and that "In connection with the sale of a business the term 'real estate broker' shall not include a person, firm or corporation registered pursuant to the provisions of article twenty-three-A of the general business law or federal securities laws."
New York State Senate, NY Real Property Law § 440. Checked 2026-09-07.
The securities carve-out in the second quoted sentence is available only to persons registered under the Martin Act or federal securities laws, and it is not the basis for anything stated on this page. The conclusion that a management-company sale sits outside Article 12-A rests on the first test, that the real property transferred is not more than incidental. The carve-out reads "person, firm or corporation" and does not include limited liability companies. nysenate.gov returns HTTP 403 to non-browser requests, so automated link checks on this URL will report a false failure.
RPL § 442-d provides in full: "No person, copartnership, limited liability company or corporation shall bring or maintain an action in any court of this state for the recovery of compensation for services rendered, in any place in which this article is applicable, in the buying, selling, exchanging, leasing, renting or negotiating a loan upon any real estate without alleging and proving that such person was a duly licensed real estate broker or real estate salesperson on the date when the alleged cause of action arose."
New York State Senate, NY Real Property Law § 442-d. Checked 2026-09-07.
The enumerated list is buying, selling, exchanging, leasing, renting and negotiating a loan. It does not name rent collection, which is the act that makes a third-party manager a broker under § 440(1). Whether the bar reaches a claim for pure management fees is therefore contested and fact-specific, and this page does not assert the harsher result.
RPL § 442-e(1) provides that "Any person who violates any provision of this article shall be guilty of a misdemeanor." Subdivision 3 provides that an offender "shall also be liable to a penalty of not less than the amount of the sum of money received by him as such commission, compensation or profit and not more than four times the sum so received by him," recoverable by the aggrieved person in any court of competent jurisdiction.
New York State Senate, NY Real Property Law § 442-e. Checked 2026-09-07.
RPL § 442-f, the saving clause, provides in full: "The provisions of this article shall not apply to receivers, referees, administrators, executors, guardians or other persons appointed by or acting under the judgment or order of any court; or public officers while performing their official duties, or attorneys at law."
New York State Senate, NY Real Property Law § 442-f. Checked 2026-09-07.
Article 12-A contains no express employee, on-site manager or resident manager exemption. Salaried staff of a building's own owner fall outside the licensing requirement only because § 440(1) reaches acts done "for another and for a fee"; that reasoning does not extend to a third-party management company.
RPL § 440-a exempts "tenant associations and not-for-profit corporations authorized in writing by the commissioner of the department of the city of New York charged with enforcement of the housing maintenance code of such city to manage residential property owned by such city or appointed by a court of competent jurisdiction to manage residential property owned by such city" from the licensing provisions as to the properties so managed.
New York State Senate, NY Real Property Law § 440-a. Checked 2026-09-07.
RPL § 441 requires a broker's license applicant to provide "proof that they have attended for at least one hundred fifty-two hours and has successfully completed a real estate course," a course requirement the section states in words and which is 152 hours, and that "either the applicant has actively participated in the general real estate brokerage business as a licensed real estate salesperson under the supervision of a licensed real estate broker for a period of not less than two years or has had the equivalent experience in general real estate business for a period of at least three years." An application by a corporation must give the name of the corporation and the name and residence address of each of its officers; by a limited liability company, the name of the company and the name and residence of each of its members; by a partnership, the name and residence address of each member.
New York State Senate, NY Real Property Law § 441. Checked 2026-09-07.
Section 441 sets out what an entity application must disclose. It does not itself state that the licensed representative broker must be an officer, member, manager or partner of the entity, and no such requirement is claimed on this page. Confirm entity licensing mechanics with the Division of Licensing Services or New York counsel.
The Department of State states that "anyone who, on behalf of another and for a fee, 1) negotiates a sale, exchange or rental of real property, 2) collects rent, or 3) negotiates a commercial loan secured by a mortgage must be licensed." Asked whether a real estate management company needs a broker's license, the Department answers: "If you collect rent or place tenants in vacant spaces on behalf of your landlord client, the answer is yes. If, on the other hand, your services are strictly maintenance, the answer is no."
New York State Department of State, Division of Licensing Services. Checked 2026-09-07.
dos.ny.gov returns HTTP 403 to non-browser requests. Any automated link monitor run against this citation will report a false failure; verify in a browser.
New York City Real Property Transfer Tax. For residential Type 1 and Type 2 transfers, the rate is 1% of the price where the value is $500,000 or less and 1.425% where it is more. For all other transfers, the rate is 1.425% where the value is $500,000 or less and 2.625% where it is more. The tax applies to the sale or transfer of at least 50% of ownership in a corporation, partnership, trust or other entity that owns or leases property, and to transfers of cooperative housing shares.
New York City Department of Finance. Checked 2026-09-07.
New York State imposes its own real estate transfer tax in addition to the city tax; the state rate is not quoted here and should be confirmed separately before any perimeter decision is priced.
The New York City Unincorporated Business Tax is charged at "A 4% tax rate ... for taxable income allocated to New York City." Unincorporated businesses "include trades, professions, and certain occupations of an individual, partnership, limited liability company, fiduciary, association, estate, or trust." Not subject to the tax is "An owner, lessee, or fiduciary who is engaged in holding, leasing, or managing real property for their own account." S corporations and corporations treated as corporations for federal tax purposes are instead "subject to the general corporation tax." "A liability of $3,400 or less is allowed a credit for the full amount of the tax. Liabilities between $3,401 and $5,400 are allowed a partial credit." "Individual New York City residents are allowed to claim a credit against their NYC personal income tax for a portion of the UBT payments made as sole proprietors."
New York City Department of Finance. Checked 2026-09-07.
The resident personal income tax credit is described on this page as applying to UBT paid by sole proprietors. Partners may have a separate credit under the city's personal income tax rules; that is not stated on this page and is not claimed here.
The New York City General Corporation Tax applies to federal subchapter S corporations and qualified subchapter S subsidiaries doing business, employing capital, owning or leasing property in a corporate or organized capacity, or maintaining an office in the city. The Department states: "New York City does not have an S corporation election and does not recognize a New York State S corporation election." Since January 1, 2015 most other corporations file under the Business Corporation Tax instead.
New York City Department of Finance. Checked 2026-09-07.
General Corporation Tax "is computed by four different methods and is imposed at whichever method produces the largest amount of tax," the first being "Entire net income base = 8.85% of 'net income allocated to New York City'." The alternatives are a total capital base of .15% of business and investment capital allocated to the city, an alternative tax base of 8.85% of 15% of net income plus compensation paid to any person owning more than five percent of the taxpayer's issued capital stock, and a fixed dollar minimum keyed to New York City receipts.
New York City Department of Finance, General Corporation Tax Rates. Checked 2026-09-07.
Only the entire net income base is quoted in the page copy. Because the tax is the largest of four computations, the 8.85% figure is a floor for modeling rather than the whole answer for a given entity.
New York State tax rate schedules, Form IT-201-I (2025). Married filing jointly and qualifying surviving spouse: 9.65% on the excess over $2,155,350; 10.3% on the excess over $5,000,000; 10.9% on the excess over $25,000,000. Single and married filing separately: 9.65% on the excess over $1,077,550; 10.3% on the excess over $5,000,000; 10.9% on the excess over $25,000,000. Head of household: 9.65% on the excess over $1,616,450, with the same $5,000,000 and $25,000,000 breaks. New York City tax rate schedule: 3.876% on the excess over $90,000 (married filing jointly) and over $50,000 (single and married filing separately), with 3.819% between $45,000 and $90,000 (joint) and between $25,000 and $50,000 (single). Combined state and city top marginal rates are therefore 9.65% + 3.876% = 13.526%, 10.3% + 3.876% = 14.176%, and 10.9% + 3.876% = 14.776%.
New York State Department of Taxation and Finance, Form IT-201-I (2025). Checked 2026-09-07.
New York has no separate or preferential capital gains rate; gain is taxed on these ordinary schedules. These are marginal rates on income above each threshold, not effective rates on a whole gain. The 14.776% combined figure requires taxable income above $25,000,000 and applies to almost no sale in the $1M to $100M enterprise value band. These are 2025 schedules published in the current instructions; confirm the schedule for the year the gain is actually recognized.
NY Tax Law § 632(a)(2) provides that where a nonresident is a shareholder in an S corporation that has distributed an installment obligation under IRC § 453(h)(1)(A), gain recognized on receipt of payments from that obligation "will be treated as New York source income allocated in a manner consistent with the applicable methods and rules for allocation under article nine-A of this chapter in the year that the assets were sold," and that where the shareholders have made an election under IRC § 338(h)(10), gain recognized on the deemed asset sale "will be treated as New York source income allocated in a manner consistent with the applicable methods and rules for allocation under article nine-A of this chapter in the year that the shareholder made the section 338(h)(10) election."
New York State Senate, NY Tax Law § 632. Checked 2026-09-07.
This provision is the reason a change of domicile does not by itself remove New York tax from an S corporation sale structured as a deemed asset sale. Nonresident sourcing of gain on intangibles generally is governed by other provisions of Article 22 and is fact-specific; nothing broader is claimed here. This firm does not give tax advice.
NY Tax Law § 1105(c)(5) imposes sales tax on the receipts from every sale of the service of "Maintaining, servicing or repairing real property, property or land, as such terms are defined in the real property tax law, whether the services are performed in or outside of a building."
New York State Senate, NY Tax Law § 1105. Checked 2026-09-07.
The statute distinguishes taxable maintenance from non-taxable capital improvements and carries several exclusions. Whether a particular management company's billings are taxable is a facts-and-records question for its own advisors.
Tax Bulletin ST-70 (TB-ST-70), Bulk Sales, issue date June 24, 2013. A bulk sale is "The sale, transfer, or assignment of business assets, in whole or in part, by a person required to collect sales tax." A purchaser "must notify the Tax Department of a pending bulk sale by filing Form AU-196.10, Notification of Sale, Transfer, or Assignment in Bulk, at least 10 days before paying for or taking possession of any business assets, whichever happens first," by registered mail, certified mail with return receipt, or hand delivery. "Within five (5) business days after receiving Form AU-196.10, the Tax Department will issue the purchaser either: Form AU-197.1, Purchaser's and/or Escrow Agent's Release - Bulk Sale ... or Form AU-196.2, Notice of Claim to Purchaser." Where a claim issues, "The department will notify the purchaser (and the seller) of the amount of sales tax due, if any, within 90 days of receiving Form AU-196.10," and the purchaser may pay the amount due out of escrow "up to the purchase price or fair market value of the assets, whichever is greater." The bulletin also states that where business assets have not been transferred in connection with the sale of a corporation's stock, "this is not a bulk sale."
New York State Department of Taxation and Finance, Tax Bulletin ST-70. Checked 2026-09-07.
The five-business-day turnaround is the Department's stated administrative practice in this bulletin, not a statutory deadline a purchaser can enforce. The underlying statute is Tax Law § 1141(c). An older URL for this bulletin under /bus/st/ returns 404; this is the live location.
Mohawk Maintenance Co. v. Kessler, 52 N.Y.2d 276, decided February 19, 1981 by the New York Court of Appeals, arising from the 1972 sale of a controlling shareholder's interest in a building maintenance company. The Court held that "the right acquired by the purchaser of the 'good will' of a business by virtue of this 'implied covenant' must logically be regarded as a permanent one that is not subject to divestiture upon the passage of a reasonable period of time," and that "it may be somewhat misleading to describe the duty of the seller to refrain from soliciting his former customers as one emanating from an 'implied covenant', since the duty is, in reality, one imposed by law in order to prevent the seller from taking back that which he has purport[ed to sell]." The Court concluded "that the duration of defendants' duty to refrain from soliciting certain of plaintiff's customers is not in any way limited by the durational provisions contained in the express restrictive covenants," and that the duty "exists independent of any additional obligations undertaken by Kessler pursuant to certain express restrictive covenants contained in the contract of sale." It also held that "defendants may accept the patronage of those customers who were actively dealing with Mohawk on the date of the sale if such customers choose to leave Mohawk without prompting from defendants." A dissent would have held the case taken out of the general rule by the "express treaty" of the parties, noting the agreement's clause reciting that it "supersedes all prior agreements and understandings."
Caselaw Access Project (Harvard Law School Library), official reporter text of New York Reports 2d. Checked 2026-09-07.
Quotations are taken from the reporter text served as JSON by the Caselaw Access Project bulk archive; law.justia.com, nycourts.gov and casetext.com all block non-browser requests. The savings-clause drafting suggestion on this page is a response to the dissent's argument, not a holding.
Bessemer Trust Co., N.A. v. Branin, 16 N.Y.3d 549, decided April 28, 2011 by the New York Court of Appeals on a question certified by the Second Circuit. The Court restated that a seller's implied covenant not to solicit former customers is "a permanent one that is not subject to divestiture upon the passage of a reasonable period of time" (quoting Mohawk, 52 NY2d at 285), and held "that the 'implied covenant' bars a seller of 'good will' from improperly soliciting his former clients. We conclude that, while a seller may not contact his former clients directly, he may, 'in response to inquiries' made on a former client's own initiative, answer factual questions. Furthermore, under the circumstances where a client exercising due diligence requests further information, a seller may assist his new employer in the 'active development . . . [of] a plan' to respond to that client's inquiries. Should that plan result in a meeting with a client, a seller's 'largely passive' role at such meeting does not constitute improper solicitation in violation of the 'implied covenant'. As such, a seller or his new employer may then accept the trade of a former client."
Caselaw Access Project (Harvard Law School Library), official reporter text of New York Reports 3d. Checked 2026-09-07.
The line between permitted response and improper solicitation is drawn case by case on the facts. A buyer should still paper an express non-solicit rather than rely on the implied duty alone.
Purchasing Associates, Inc. v. Weitz, 13 N.Y.2d 267, decided December 30, 1963 by the New York Court of Appeals. "Where, for instance, there is a sale of a business, involving as it does the transfer of its good will as a going concern, the courts will enforce an incidental covenant by the seller not to compete with the buyer after the sale." The rule rests on the premise that "a buyer of a business should be permitted to restrict his seller's freedom of trade so as to prevent the latter from recapturing and utilizing, by his competition, the good will of the very business which he transferred for value," and the Court noted it has applied the sale-of-a-business rationale "where an owner, partner or major stockholder of a commercial enterprise has sold his interest." Although the agreement there was "labeled 'contract of sale'", the Court held it "must look behind and beyond the label to ascertain the true nature of the transaction," found "a hiring" rather than a sale of goodwill, and refused to apply the sale standard.
Caselaw Access Project (Harvard Law School Library), official reporter text of New York Reports 2d. Checked 2026-09-07.
NY Labor Law § 202-k provides that a broadcasting industry employer "shall not require as a condition of employment ... that a broadcast employee ... refrain from obtaining employment: (a) in any specified geographic area; (b) for a specific period of time; or (c) with any particular employer," without preventing enforcement of such a restriction during the term of an employment contract, and makes a violator "civilly liable to a broadcast employee for damages, attorney's fees and costs."
New York State Senate, NY Labor Law § 202-k. Checked 2026-09-07.
Cited only to be accurate that New York does have one in-force statutory non-compete ban. It is limited to the broadcasting industry and has no application to property management.
New York Senate Bill S9759 (2025-2026 session) would restrict non-compete agreements, excluding from its protection a person paid at "an average annualized rate of cash compensation ... equivalent to or greater than five hundred thousand dollars per year," and separately permitting such covenants in connection with the sale of the goodwill of a business where a partner of a partnership, a member of a limited liability company or another owner holds "at least a fifteen percent interest" in the entity being sold. The bill passed the Senate on June 3, 2026 by a floor vote of 40 Aye, 21 Nay, 1 Absent and 1 Excused, and was referred the same day to the Assembly Labor Committee.
New York State Senate, S9759. Checked 2026-09-07.
Not law. A bill that has passed only one house dies with the two-year legislative session if the other house does not act. Any source describing a $250,000 or $500,000 New York non-compete earnings threshold as current law is describing a vetoed or pending bill. Re-check this status before relying on it.
Page last reviewed 2026-09-07.
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