Can a lawyer complete the TP-584 and RP-5217 real estate tax forms by their instructions even though they do not disclose a grossed-up purchase price?

Plain-English summary

A lawyer handling a residential closing asked how to complete two New York tax forms consistent with the committee's seller's-concession opinions. The TP-584 reports "consideration," defined as the full price paid, so a grossed-up price would be reported there, with no place to show a seller's concession. The RP-5217 reports the sale price for assessment purposes and, by its instructions, expressly excludes seller concessions, so it reports the price net of the concession. The lawyer asked whether completing both forms by their instructions would be a misrepresentation under the committee's prior opinions, even though the gross-up would not be disclosed on either (¶¶ 1-4).

The committee recalled its four seller's-concession opinions (N.Y. State 817, 882, 892, and 993), which held that a lawyer may not participate in a "gross up" of the purchase price with a matching seller's concession unless the gross-up itself (not just the grossed-up price) is disclosed in the transaction documents that state the sales price. The question here was narrower: whether filling out these two government forms as required is a misrepresentation (¶ 5).

The committee concluded it is not. The agencies have specified how to report the price for their own purposes, and the omission does not undermine the forms' purpose or cause either agency to collect less tax. On the TP-584, a grossed-up price yields tax on the higher amount; on the RP-5217, the net price is the assessment figure whether or not there was a gross-up, so reporting per the instructions cannot be a misrepresentation (¶ 6).

This reconsidered the committee's treatment of the RP-5217 in N.Y. State 882, which had suggested the form needed to make the true price clear to the assessor. The committee found no foreseeable negative consequences within the meaning of N.Y. State 817, distinguishing this from omitting the gross-up on documents like the sales contract and the HUD-1, where lenders or subsequent mortgage purchasers may be misled. To the extent N.Y. State 882 reached a different conclusion about the RP-5217, it was modified (¶¶ 7-9).

In practice

Under the New York rules as they stood at the time of the opinion, the opinion holds that a lawyer may complete the TP-584 and RP-5217 forms in accordance with their instructions, even though that means the gross-up is not disclosed and the two forms state different prices. Per the opinion, no misrepresentation results because the forms are completed as the agencies direct and there are no foreseeable negative consequences. The committee was careful to limit this to these government tax forms; it reaffirmed that omitting a gross-up on documents such as the sales contract and the HUD-1 can mislead lenders or subsequent purchasers and remains improper, and it modified N.Y. State 882 only as to the RP-5217.

Common questions

Q: Is it a misrepresentation to leave the gross-up off the TP-584 and RP-5217?

A: No. The committee held that completing the forms as their instructions require is not a misrepresentation, because the agencies specify how to report the price and the omission causes no foreseeable negative consequences (¶¶ 6, 9).

Q: Why can the two forms show different sale prices?

A: Because the TP-584 reports the full (gross) price and the RP-5217 expressly excludes the seller's concession, so each is completed by its own instructions even though the figures differ (¶¶ 2-3, 9).

Q: Does this change the rule for other closing documents?

A: No. The committee reaffirmed that omitting the gross-up on documents like the sales contract and the HUD-1 can mislead lenders or subsequent purchasers and is still improper (¶ 8).

Background and rules framework

The opinion interprets New York Rule 8.4(b), (c), and (d) (illegal conduct, dishonesty or misrepresentation, and conduct prejudicial to the administration of justice), corresponding to ABA Model Rule 8.4. The analysis applies the committee's seller's-concession line of opinions, under which an undisclosed gross-up is a misrepresentation only where it produces foreseeable negative consequences.

Citations and references

Rules of Professional Conduct:

• MR 8.4 / NY RPC 8.4(b), 8.4(c), 8.4(d) (illegal conduct; dishonesty; conduct prejudicial to justice)

Other opinions cited:

• N.Y. State 817 (2007): gross-up must be disclosed in transaction documents
• N.Y. State 882 (2011): disclosure required in all documents stating the price; modified as to the RP-5217
• N.Y. State 892 (2011); N.Y. State 993 (2013): further seller's-concession guidance

See also

• NY State Bar Op. 1033: Short-sale negotiator fee and misrepresentation to the bank
• NY State Bar Op. 1089: A retired lawyer's use of "Esq."
• NY State Bar Op. 1097: A lawyer working as a debt collector disclosing status

Source

• Landing page: https://nysba.org/ethics-opinion-1022/