New York Real Estate Salesperson — All Questions

In a condominium, the lobby, elevators, roof, and land are typically:

• a.Owned outright by the managing agent
• b.Common elements owned jointly by all unit owners✓
• c.Leased by the association from the municipality under a ground lease
• d.Owned individually by whichever unit is physically closest to them

In a condominium, areas outside the individual units, such as the lobby, elevators, roof, hallways, and land, are common elements owned jointly by all unit owners as tenants in common. Owners share responsibility for them through common charges.

The document that legally creates a condominium and defines the units and common elements in New York is the:

• a.Certificate of occupancy issued for the finished building
• b.Declaration, together with the related bylaws✓
• c.Estoppel certificate from the lender
• d.Proprietary lease for a co-op unit

A condominium is legally created by recording a declaration (and related bylaws) that submits the property to the condominium form of ownership and defines the units and common elements. In New York, the offering plan is also reviewed by the Attorney General.

In New York, the offering plan for a newly created condominium or cooperative must be filed with and accepted by the:

• a.The Internal Revenue Service
• b.The Department of State's licensing division
• c.New York State Attorney General✓
• d.The Federal Housing Finance Agency

In New York, sponsors of new condominiums and cooperatives must file an offering plan that is reviewed and accepted by the New York State Attorney General's office before units or shares may be sold. This consumer-protection review is distinct from DOS licensing.

When a life estate ends and title returns to the original grantor rather than passing to a third party, the grantor holds a:

• a.Remainder
• b.A possibility of reverter
• c.A leasehold estate
• d.Reversion✓

If a life estate is set to return to the grantor when it ends, the grantor holds a reversion. If instead a named third party will take title, that party holds a remainder.

The primary purpose of New York's statutory agency disclosure form is to:

• a.Serve as the binding contract of sale between the buyer and the seller of the property
• b.Transfer legal title of the real property from the current owner to the incoming buyer
• c.Explain the different agency relationships so the consumer knows whom the agent represents✓
• d.Set the commission rate that the seller will be legally required to pay the listing broker

New York's agency disclosure form explains seller's agent, buyer's agent, broker's agent, dual agent, and dual agent with designated sales agents, so consumers understand whom a licensee represents. It is a disclosure, not a contract, and it does not set commission or transfer title.

If a prospective buyer refuses to sign the New York agency disclosure form, the licensee should:

• a.Note the refusal in a dated declaration and keep a copy for their records✓
• b.Simply skip the form entirely because signing it is optional for both of the parties
• c.Sign the buyer's name on the form personally so that the file appears to be complete
• d.Refuse to work with or show any properties to that buyer for the rest of the transaction

If a consumer will not sign the agency disclosure form, the licensee should still deliver it, then set forth a signed and dated written declaration noting the refusal and keep it on file. The disclosure obligation is not waived just because the consumer declines to sign.

A real estate broker hired to find a buyer under a listing agreement is typically a:

• a.General agent with broad, continuing authority
• b.Gratuitous agent who serves without any compensation at all
• c.Special agent with limited authority for one transaction✓
• d.Universal agent acting under a power of attorney

A listing broker is a special agent, hired with limited authority to accomplish a specific task, usually procuring a ready, willing, and able buyer. A special agent cannot bind the principal beyond the scope of that limited authority.

A property manager who handles ongoing leasing, maintenance, and rent collection for an owner is usually a:

• a.Buyer's agent
• b.Special agent for one deal
• c.General agent✓
• d.Subagent of the tenants

A property manager is generally a general agent, authorized to perform a continuing series of tasks on the owner's behalf, such as leasing, collecting rent, and arranging repairs. This is broader authority than a special agent's single-transaction role.

An agent authorized to conduct all of a principal's affairs, often under a broad power of attorney, is a:

• a.Broker's agent
• b.Subagent of another agent
• c.Special agent for one task
• d.Universal agent✓

A universal agent has the broadest authority, empowered to handle essentially all of the principal's affairs, typically through a general power of attorney. A special agent, by contrast, is limited to a single specified task.

An agent who secretly buys the principal's listed property through a relative, without disclosure, most directly violates the duty of:

• a.Obedience
• b.Care
• c.Loyalty✓
• d.Accounting

Buying the principal's property through an undisclosed relative is self-dealing that puts the agent's interest ahead of the principal's, violating the duty of loyalty (and disclosure). An agent must place the principal's interests above their own and reveal any personal interest.

An agent's duty to reveal to the principal all relevant facts that could affect the principal's decision is the duty of:

• a.Accounting
• b.Confidentiality
• c.Obedience to orders
• d.Disclosure✓

The duty of disclosure requires an agent to share with the principal all material facts the agent knows that could influence the principal's decisions, such as a buyer's willingness to pay more. It works alongside the other fiduciary duties.

The fiduciary duty of accounting requires an agent to:

• a.Report and safeguard all money and documents entrusted to the agent✓
• b.Prepare and file the principal's annual income tax returns
• c.Personally guarantee that the listed property will sell within the term
• d.Independently set the listing price without consulting the principal

The duty of accounting requires the agent to keep accurate records and safeguard all money, documents, and property entrusted to them, promptly reporting their status to the principal. Client funds must be kept in a separate escrow account, not commingled.

An agent's duty of confidentiality to a former client:

• a.May be waived by the agent whenever convenient
• b.Applies only to information that the client gave the agent in writing
• c.Generally continues even after the agency relationship has ended✓
• d.Ends the moment the deed is delivered at the closing

The duty of confidentiality survives the termination of the agency relationship, so an agent generally may not later reveal a former client's confidential information, such as their bottom-line price or personal motivations. Only the client can release the agent from this duty.

In New York, dual agency is permitted only when:

• a.Both the buyer and the seller give informed written consent✓
• b.The broker keeps the arrangement secret
• c.Only the seller agrees, because the seller is the primary client
• d.The total commission in the deal exceeds a state-set threshold

Dual agency, where one broker represents both buyer and seller, is legal in New York only with the informed written consent of both parties. Because the agent's loyalty is divided, the dual agent cannot fully advocate for either side.

In a New York designated agency arrangement, the supervising broker who appoints one agent for the buyer and another for the seller:

• a.Owes no fiduciary duties whatsoever to any party involved in the transaction
• b.Represents only the buyer while leaving the seller entirely without any representation
• c.Must resign from the brokerage before either designated agent may proceed with the deal
• d.Becomes a dual agent with a limited ability to advocate for either side✓

When a broker uses designated sales agents, one licensee represents the buyer and another the seller, but the supervising broker remains a dual agent overall with limited ability to advocate. This requires the informed written consent of both parties.

A 'broker's agent' in New York is a licensee engaged to act for and cooperate with:

• a.The listing or buyer's agent to assist that agent's client✓
• b.The title company clearing title before closing
• c.The Department of State in monitoring licensees
• d.The consumer directly, entirely replacing the listing broker

A broker's agent is engaged by the principal's agent (not by the principal directly) to help represent the principal's interests, for example a cooperating broker assisting the listing broker. The broker's agent does not have its own separate agency with the consumer.

Under traditional subagency, a cooperating broker who works with the buyer but represents the seller owes fiduciary duties to the:

• a.Buyer
• b.Lender
• c.Both parties equally
• d.Seller✓

In traditional subagency, the cooperating broker is a subagent of the listing broker and therefore owes fiduciary duties to the seller, even while assisting the buyer. This arrangement can mislead buyers, which is why buyer agency and broker's agents are now more common.

Article 12-A of the New York Real Property Law primarily governs:

• a.The licensing and conduct of real estate brokers and salespersons✓
• b.The zoning and land use decisions made by local municipalities and planning boards
• c.The imposition and collection of state income tax on gains from selling real property
• d.The recording of deeds and mortgages in the county land records for public notice

Article 12-A of the Real Property Law is New York's real estate license law, defining brokers and salespersons and setting standards for their licensing and conduct. The Department of State administers and enforces it.

Complaints alleging that a New York licensee mishandled escrow funds are investigated by the:

• a.National Association of REALTORS ethics panel
• b.Department of State, Division of Licensing Services✓
• c.Federal Reserve bank supervision staff
• d.The local police department, which handles financial disputes

The Department of State, through its Division of Licensing Services, investigates complaints against licensees and can impose discipline for violations such as mishandling escrow funds. It enforces the standards set out in Article 12-A.

The minimum age to obtain a New York real estate salesperson license is:

• a.25
• b.16
• c.21
• d.18✓

An applicant must be at least 18 years old to obtain a New York real estate salesperson license. Applicants must also complete the required qualifying education and pass the state licensing examination.

To qualify for a New York salesperson license, an applicant must complete a state-approved qualifying course of:

• a.22.5 hours
• b.152 hours
• c.300 hours, a total not required for any current New York real estate licensing category
• d.77 hours✓

New York requires a 77-hour approved qualifying course to sit for the salesperson exam (increased from 75 hours). Requirements can change, so applicants should confirm the current hour requirement with the Department of State.

To become a licensed real estate broker in New York, a candidate must generally complete additional qualifying education totaling 152 hours and:

• a.Have no prior real estate experience of any kind
• b.Hold a law degree from an accredited school in addition to the required courses
• c.Be at least 30 years of age at the time the broker license application is filed
• d.Have qualifying experience or equivalent points as a licensed salesperson✓

A New York broker candidate must complete 152 total hours of qualifying education and have qualifying experience (generally about two years as a licensed salesperson or equivalent points), then pass the broker exam. Specific requirements can change, so confirm current DOS rules.

New York real estate licensees must complete continuing education to renew, generally totaling:

• a.22.5 hours every two-year license term✓
• b.100 hours for each renewal
• c.3 hours every single year, filed with the state each January
• d.No continuing education at all before renewal

New York generally requires 22.5 hours of continuing education per two-year term, including required content such as fair housing, agency, and implicit bias. Because these requirements are periodically updated, licensees should verify the current rules with the Department of State.

A New York real estate salesperson or broker license is generally issued for a term of:

• a.The licensee's lifetime
• b.Six years
• c.Two years✓
• d.One year only

New York real estate licenses are issued for a two-year term and must be renewed with the required continuing education. Letting a license lapse can require additional steps to reinstate it.

A newly licensed New York salesperson may begin practicing only after:

• a.Joining a local REALTOR association and paying dues
• b.Registering the new license with the county clerk directly
• c.Being associated with and sponsored by a licensed broker✓
• d.Passing a separate federal real estate examination given nationally

A salesperson's license must be held by a sponsoring broker, who supervises the salesperson's activities. A salesperson cannot lawfully operate independently or begin practicing until associated with a licensed broker.

Which activity may a New York salesperson NOT do?

• a.Hold and manage escrow deposits in their own name independent of the broker✓
• b.Prepare a comparative market analysis for a seller under the broker's supervision
• c.Show listed properties to prospective buyers on behalf of the sponsoring broker
• d.Host an open house at a listed property to market it to interested prospective buyers

Client escrow deposits must be held by the sponsoring broker in the broker's trust account, not by the salesperson individually. A salesperson may show property, prepare a CMA under supervision, and host open houses, all under the broker's authority.

A 'blind ad,' which is prohibited in New York, is an advertisement that:

• a.Fails to disclose that the advertiser is a licensed real estate broker or firm✓
• b.Lists more than one property for sale within the same single printed advertisement
• c.States the asking price of the property prominently at the top of the advertisement
• d.Contains a photograph of the exterior of the property being offered for sale or rent

A blind ad conceals that the advertiser is a licensed real estate professional, making it appear to be a for-sale-by-owner. New York requires advertising to identify the broker or brokerage, so blind ads are prohibited.

When a New York salesperson advertises a listing, the advertisement must:

• a.Be approved in advance by the Department of State
• b.Display only the salesperson's cell phone number
• c.Omit any mention of a broker so the salesperson gets the calls
• d.Include the name of the sponsoring broker or brokerage✓

Because a salesperson works under a broker, advertising must include the sponsoring broker's or brokerage's name so the public knows a licensed broker stands behind the ad. Salespersons may not advertise listings solely under their own name.

New York rules on team advertising generally require that a team's advertising also clearly include the:

• a.Home addresses of every team member
• b.Name of the supervising broker or brokerage✓
• c.Exact commission splits between the team and the broker
• d.A complete list of every past client the team represented

New York requires team advertising to include the name of the brokerage or supervising broker, so the public understands that the team operates under a licensed broker. Team names may not be presented in a way that implies the team is a separate brokerage.

A broker who takes money from the client escrow account and uses it to pay office rent has committed:

• a.Lawful puffing
• b.Conversion✓
• c.Novation of contract
• d.Subagency

Using client escrow funds for the broker's own purposes is conversion, the misappropriation of trust money, and is even more serious than commingling. Both are violations of license law and can lead to revocation and other penalties.

New York brokers who hold client deposits must keep those funds in:

• a.A personal savings account
• b.Cash kept in the office safe until closing
• c.The broker's general business operating account
• d.A separate escrow or trust account✓

Client deposits, such as earnest money, must be held in a separate escrow or trust account, kept apart from the broker's own funds. This prevents commingling and protects the parties' money until it is properly disbursed.

Paying or receiving an unearned fee for referring a homebuyer to a particular title company violates:

• a.The Sherman Act's rule against tying
• b.Regulation Z alone, which governs credit disclosure
• c.The Real Estate Settlement Procedures Act (RESPA)✓
• d.The Statute of Frauds writing rule

RESPA Section 8 prohibits paying or accepting kickbacks or unearned fees for referring settlement-service business, such as steering buyers to a title company for a fee. Only fees for services actually performed are permitted.

Two competing brokerages that agree to charge the same commission rate are engaged in illegal:

• a.Blockbusting
• b.Steering buyers by their protected class
• c.Price fixing under antitrust law✓
• d.Dual agency in the same transaction

Commission rates are negotiable and must be set independently by each brokerage. An agreement among competitors to fix commission rates is a per se antitrust violation under the Sherman Act.

Several brokers agree not to cooperate with a new discount brokerage in town. This is an illegal:

• a.Net listing arrangement
• b.Price fixing
• c.Tie-in arrangement
• d.Group boycott✓

An agreement among competing brokers to refuse to deal with a particular competitor is an illegal group boycott under antitrust law. Like price fixing, group boycotts are treated as per se violations.

An unlicensed personal assistant working for a broker may lawfully:

• a.Host an open house alone and answer buyers' questions
• b.Perform clerical tasks such as scheduling and data entry✓
• c.Negotiate the price and terms directly with a buyer's agent
• d.Solicit listings from homeowners and independently show homes

Unlicensed assistants may perform ministerial and clerical tasks, such as scheduling, data entry, and administrative support. They may not perform licensed activities like negotiating, soliciting listings, or independently showing property and discussing its substantive details.

Paying a commission or finder's fee to an unlicensed person for referring real estate business is generally:

• a.Required in every single transaction
• b.Encouraged by the state as good practice
• c.Prohibited under New York license law✓
• d.Allowed if each fee stays under $500

New York license law generally prohibits paying commissions or referral fees to unlicensed persons for real estate brokerage activity. Compensation for brokerage services may be paid only to licensed brokers (who then pay their salespersons).

The Department of State's possible sanctions against a New York licensee who violates license law include:

• a.Reprimand, fines, suspension, or revocation of the license✓
• b.Only an informal verbal warning from the department
• c.Automatic imprisonment imposed without any court proceeding at all
• d.Forfeiture of the client's earnest money deposit to the state

For violations of Article 12-A, the Department of State may reprimand a licensee, impose fines, or suspend or revoke the license after a hearing. Criminal penalties, if any, would be pursued separately through the courts.

An agency relationship that arises from the conduct of the parties rather than a written agreement is:

• a.Gratuitous agency
• b.Express agency
• c.Universal agency, which grants the agent authority to handle essentially all of one's affairs
• d.Implied agency✓

Implied agency is created by the parties' conduct, when their actions reasonably indicate they have agreed to an agency relationship. Express agency, by contrast, is created by a clear oral or written agreement such as a signed listing.

A seller who fires a broker without cause before an exclusive-right-to-sell listing expires:

• a.Converts the exclusive-right-to-sell listing into a net listing by operation of state law
• b.Owes the broker absolutely nothing under any circumstances once the listing is canceled
• c.Automatically transfers the existing listing agreement to a different competing brokerage
• d.May have the power to revoke but could be liable for damages or a commission✓

A principal generally has the power to revoke an agency, but doing so without cause before the term ends may breach the contract, exposing the seller to liability for damages or the commission. Power to terminate is not the same as the legal right to do so without consequences.

An agency 'coupled with an interest,' in which the agent holds a financial stake in the property itself, is unusual because it:

• a.Requires no consideration between the parties
• b.Can always be revoked at will by the principal
• c.Automatically terminates at the end of each calendar month
• d.Generally cannot be revoked by the principal alone✓

An agency coupled with an interest gives the agent an ownership or security interest in the subject property, so the principal generally cannot revoke it unilaterally. This protects the agent's financial stake.

A seller's agent learns the seller will accept far less than the list price. The agent may disclose this to a buyer:

• a.Only with the seller's authorization✓
• b.Whenever the buyer asks about it
• c.Automatically, since it is never confidential
• d.Freely, if it will speed up the closing

A seller's bottom-line price is confidential information, and the seller's agent may not reveal it to a buyer without the seller's consent. Doing so would violate the fiduciary duties of loyalty and confidentiality owed to the seller.

Under New York law, a licensee generally is NOT required to disclose that a death occurred in a home or that it is reputedly haunted because these are:

• a.Conditions that automatically make the home uninhabitable and void any resulting sales contract
• b.Material physical defects that must always be disclosed to every prospective buyer in writing
• c.Facts the Department of State forbids licensees from ever discussing with a prospective buyer
• d.Non-material stigma facts, though the agent still must not knowingly make false statements✓

New York law shields licensees from liability for failing to disclose that a property was the site of a death or is reputedly haunted, treating these as non-material 'stigma' facts. However, a licensee may not knowingly make a false statement in response to a direct question.

A seller's agent asked by a buyer whether a prior occupant had AIDS should:

• a.Decline to answer, since this is confidential, protected information not subject to disclosure✓
• b.Answer truthfully and in detail using whatever medical information the agent may have heard
• c.Guess an answer based on neighborhood rumor so as not to appear evasive to the buyer
• d.Report the inquiring buyer to the Department of State for asking an improper question

A prior occupant's medical condition, such as AIDS, is protected information and is not a material defect requiring disclosure. Disclosing it could violate fair housing protections for persons with disabilities, so the agent should decline to answer.

Telling a buyer 'this is the best-built home in the neighborhood' as sales enthusiasm is generally:

• a.Fraud, because any positive statement is a guarantee
• b.Negligent misrepresentation allowing rescission
• c.Puffing, which is a permissible statement of opinion✓
• d.A fair housing violation that discourages buyers

Puffing is exaggerated opinion or sales talk that a reasonable person would not take as a statement of fact, and it is generally lawful. It crosses into misrepresentation or fraud only when it involves false statements of material fact.

A hidden structural crack that a buyer could not discover on a reasonable inspection is a:

• a.Trade fixture the seller may remove before closing
• b.Purely cosmetic condition that need not be disclosed at all
• c.Latent (hidden) defect that must be disclosed if known✓
• d.Patent defect, obvious to anyone who inspects

A latent defect is a hidden problem that a buyer could not reasonably discover on inspection. If the seller or agent knows of a material latent defect, it generally must be disclosed; a patent defect, by contrast, is open and obvious.

If a brokerage refers clients to an affiliated mortgage company it partly owns, RESPA generally requires the brokerage to:

• a.Do nothing at all, because RESPA does not apply to referrals between affiliated companies
• b.Charge each referred client a mandatory referral fee for connecting them to the lender
• c.Hide the ownership relationship so that the referral appears fully neutral to the client
• d.Provide a written affiliated business arrangement disclosure and not require use of that company✓

Under RESPA, when a brokerage refers clients to an affiliated settlement-service provider, it must give a written affiliated business arrangement disclosure, and it generally cannot require the consumer to use that provider. The disclosure lets consumers shop elsewhere.

In agency terminology, the person the agent represents is the 'client' (principal), while the third party the agent deals with fairly but does not represent is the:

• a.Trustee
• b.Fiduciary
• c.Customer✓
• d.Subagent

The client (principal) is the party the agent represents and owes fiduciary duties, while the customer is the third party the agent deals with honestly and fairly but does not represent. Understanding this distinction helps clarify who is owed which duties.

The New York agency disclosure form should be signed and dated by:

• a.The prospective buyer or seller acknowledging receipt, and the licensee✓
• b.The title insurance company that is responsible for clearing title before the closing date
• c.The mortgage lender financing the purchase, as a condition of approving the buyer's loan
• d.The Department of State, which must countersign every agency disclosure form before use

The agency disclosure form is signed and dated by the consumer to acknowledge receipt and by the licensee. It documents that the required disclosure was made; it is not signed by the Department of State, lender, or title company.

A licensee who contacts a for-sale-by-owner to solicit the listing must still:

• a.Conceal the fact that they hold a real estate license so the owner will speak more freely
• b.Immediately report the for-sale-by-owner homeowner to the Department of State for review
• c.Comply with license law, including honestly identifying themselves as a licensee✓
• d.Offer to personally purchase the owner's home before discussing a possible listing agreement

When soliciting a for-sale-by-owner, a licensee must still follow license law, including honestly identifying themselves as a real estate professional. Concealing licensure or misleading the owner would violate professional standards.

Net listings are discouraged and considered risky in New York because they:

• a.Guarantee the seller will receive the highest possible price in every market condition
• b.Eliminate the seller's need to receive and sign any agency disclosure form in the deal
• c.Create a conflict of interest and the potential to overcharge the seller✓
• d.Are legally required for all commercial real estate transactions completed within the state

In a net listing, the broker keeps everything above a net amount the seller sets, which creates a conflict of interest and the temptation to conceal the property's true value. Because of the potential for abuse, net listings are strongly discouraged or restricted.