New York Real Estate Salesperson — All Questions

The 'part performance' doctrine can allow enforcement of an oral real estate contract when the buyer has:

• a.Received a verbal promise with no corresponding action of any kind
• b.Taken possession, made improvements, or paid part of the price in reliance✓
• c.Merely inspected the property once with the listing agent present
• d.Simply told several friends and relatives about the intended purchase

Part performance is an equitable exception to the Statute of Frauds: courts may enforce an oral land contract where the buyer has taken clear steps such as possessing the property, making improvements, and paying part of the price. These acts show a contract truly existed. Mere talk is not enough.

For a purchase contract to satisfy the Statute of Frauds, it must at minimum identify:

• a.The names of the cooperating brokers and their negotiated commission split
• b.A complete metes-and-bounds survey prepared by a licensed surveyor
• c.The parties, the property, and the price, and be signed✓
• d.The buyer's credit score, employment history, and total annual income

A writing satisfies the Statute of Frauds if it names the parties, adequately describes the property, states the price or a way to determine it, and is signed by the party to be charged. Missing an essential term can make the writing insufficient. Extra details are useful but not legally required.

Under New York's Electronic Signatures and Records Act and the federal E-SIGN Act, an electronic signature on a real estate contract is:

• a.Enforceable for the listing agreement only
• b.Valid only if a notary watches the party click
• c.Never acceptable for any document affecting real property
• d.Generally as valid and enforceable as a handwritten one✓

Electronic signatures are legally recognized under New York's ESRA and the federal E-SIGN Act, giving them the same effect as handwritten signatures for most real estate documents. This is why e-signing platforms are widely used. Certain instruments (like wills) remain exceptions.

If a seller wrongfully refuses to close, the buyer's available remedies generally include:

• a.Recording their own deed despite the refusal
• b.Automatically taking possession without any court involvement
• c.Suing for specific performance or for money damages✓
• d.Forcing the seller's broker to buy the property instead

When a seller breaches, the buyer may sue for specific performance to compel conveyance, because each parcel is unique, or elect money damages, or rescind and recover the deposit. The buyer cannot simply seize the property. The choice depends on what best makes the buyer whole.

Compensatory damages for breach of a real estate contract are intended to:

• a.Award the injured party a windfall far exceeding any actual economic loss
• b.Punish the party who breached by imposing a large monetary fine that is payable to the state
• c.Return the exact amount of the earnest money deposit and nothing more at all in every single case
• d.Put the injured party in the position they would have held had the contract been performed✓

Compensatory (actual) damages aim to make the non-breaching party whole by covering the real loss caused by the breach, placing them where full performance would have. They are not punitive and are not meant to create a windfall. The injured party must prove the loss.

For a liquidated damages clause to be enforceable, the stated amount must:

• a.Exceed the seller's actual losses so as to strongly deter any breach
• b.Always equal exactly ten percent of the total agreed purchase price
• c.Be a reasonable estimate of anticipated harm, not a penalty✓
• d.Be set by the Department of State rather than negotiated by the parties

Courts enforce a liquidated damages clause only if the amount was a reasonable pre-estimate of harm that would be hard to measure, not a punitive penalty. An unreasonably large sum may be struck down as an unenforceable penalty. In home sales the deposit often serves this function.

The duty to mitigate damages requires a non-breaching party to:

• a.Take reasonable steps to reduce the losses caused by the breach✓
• b.Immediately forgive the breaching party and abandon all legal claims
• c.Wait passively and allow the losses to accumulate before filing suit
• d.Recover damages only from the real estate broker involved in the deal

The duty to mitigate obligates the injured party to act reasonably to limit further loss, such as a landlord re-renting after a tenant breaks a lease. Damages that could have been reasonably avoided are not recoverable. It prevents a party from inflating losses.

Anticipatory repudiation occurs when, before performance is due, one party:

• a.Asks a routine question about the terms
• b.Completes their side earlier than required
• c.Clearly indicates they will not perform the contract✓
• d.Requests a short, reasonable extension of the closing date

Anticipatory repudiation (breach) is a party's clear statement or action, before performance is due, showing they will not perform. The other party may then treat the contract as breached and pursue remedies without waiting for the deadline. A mere request to reschedule is not repudiation.

New York's Property Condition Disclosure Act generally requires the seller of a one-to-four unit residential dwelling to:

• a.Guarantee in writing that the home has absolutely no defects of any kind
• b.Deliver a completed property condition disclosure statement to the buyer before contract signing✓
• c.Repair every single condition that a buyer's inspector identifies at any time prior to the closing
• d.Order and pay for a professional home inspection on the buyer's behalf before any contract is signed

Under New York's Property Condition Disclosure Act, sellers of most one-to-four family homes must complete and deliver a disclosure statement about known conditions to the buyer before the contract is signed. Certain sales are exempt. The seller discloses known conditions but does not guarantee the home is defect-free.

The federal lead-based paint disclosure rule applies to residential dwellings built:

• a.In commercial districts
• b.Before 1950
• c.Before 1978✓
• d.At any time, in any year

Federal law requires sellers and landlords of housing built before 1978 to disclose known lead-based paint hazards, provide an EPA pamphlet, and give buyers a 10-day inspection opportunity. Lead paint was banned for residential use in 1978. Newer homes are exempt from the rule.

Under New York law, a home where a death or notorious crime occurred is considered a stigmatized property, and the seller's agent generally:

• a.Is required to reduce the asking price to reflect the stigma's impact
• b.Must always disclose the event to every prospective buyer in writing
• c.Has no legal duty to volunteer the psychological stigma✓
• d.Must report the property's history to the New York Department of State

New York law does not require disclosure of purely psychological stigmas, such as a prior death or crime, because they are not physical defects. Agents must still answer direct questions honestly and cannot make affirmative misstatements. Material physical defects, however, must be disclosed.

The federal Residential Lead-Based Paint Hazard Reduction Act gives buyers of pre-1978 housing the right to:

• a.A full refund of the purchase price if any lead paint is later found
• b.Cancel the contract at any time within the first year after closing
• c.Require the seller to completely remove all paint from the structure
• d.A 10-day period to conduct a lead-based paint inspection or assessment✓

The Act entitles buyers to a 10-day opportunity (which the parties may adjust) to test for lead-based paint before becoming obligated under the contract. Sellers must also provide known information and an EPA pamphlet. The buyer, not the seller, arranges any inspection.

In a typical downstate New York transaction, the contract of sale is usually prepared by:

• a.The county clerk
• b.The listing salesperson using a form
• c.The seller's attorney✓
• d.The buyer's mortgage lender

In much of New York, especially downstate, attorneys drive the transaction: the seller's attorney customarily prepares the contract of sale, which the buyer's attorney then reviews and negotiates. This attorney-centered practice differs from states where agents complete standard forms. Customs vary by region.

At a New York closing, form TP-584 is used to:

• a.Transfer the seller's homeowner's insurance policy to the new owner
• b.Apply for the buyer's mortgage loan with the lending institution
• c.Report and pay the state real estate transfer tax✓
• d.Disclose the physical condition of the residential property to the buyer

Form TP-584 is New York's Combined Real Estate Transfer Tax Return, filed at closing to report the sale and pay the transfer tax. The related RP-5217 form reports sale data for assessment purposes. Both are standard parts of a New York deed recording.

In New York, the state real estate transfer tax is customarily paid by the:

• a.The buyer (grantee)
• b.The buyer's bank
• c.Seller (grantor)✓
• d.The listing broker

New York's real estate transfer tax is generally the seller's (grantor's) obligation. It is computed at $2 for each $500 of consideration (0.4%). The separate 'mansion tax' on higher-priced homes is paid by the buyer, so the two taxes fall on different parties.

A deed presented for recording in a New York county (outside New York City) is filed with the:

• a.County clerk's office where the property is located✓
• b.Federal Department of Housing and Urban Development regional office
• c.Local town assessor who determines the property's taxable value
• d.New York State Department of State in the capital city of Albany

Deeds are recorded with the county clerk in the county where the property sits; in New York City the City Register (or the Richmond County Clerk in Staten Island) handles recording. Recording gives public notice and establishes priority. It does not by itself transfer title.

An estoppel certificate signed by a tenant in a property being sold confirms:

• a.The tenant's agreement to purchase the property at the listed price
• b.The exact market value of the property as determined by an appraiser
• c.The lease terms and that no undisclosed claims exist against the landlord✓
• d.The buyer's approval for a mortgage loan on the leased premises

An estoppel certificate is a signed statement by a tenant verifying the lease's terms, the rent, the security deposit, and that the tenant has no undisclosed claims or defenses against the landlord. Buyers of leased property rely on it to confirm what they are acquiring. It 'estops' the tenant from later contradicting it.

A purchase contract is generally assignable to another buyer unless:

• a.The contract prohibits assignment or calls for personal performance✓
• b.The property has already been listed with a licensed real estate broker
• c.The buyer has paid an earnest money deposit into an escrow account
• d.The seller has delivered a property condition disclosure statement

Most real estate purchase contracts may be assigned to a new buyer unless the contract expressly forbids it or the seller's performance depends on the specific buyer (for example, seller financing based on that buyer's credit). After assignment, the original buyer may remain secondarily liable. Contract language controls.

The New York form RP-5217, the Real Property Transfer Report, is filed at closing primarily to:

• a.Guarantee the buyer marketable title free of any recorded liens
• b.Establish the interest rate on the buyer's new mortgage loan
• c.Provide sale data used by assessors and the state for equalization✓
• d.Serve as the legal deed that actually conveys title to the buyer

The RP-5217 records key transaction details, such as the price and property characteristics, for use by local assessors and the state in setting assessments and equalization rates. It accompanies the deed at recording. It is a reporting form, not a conveyance.

A time-is-of-the-essence closing date set by proper notice in a New York contract means:

• a.The stated closing date becomes a firm deadline, and failing to perform is a default✓
• b.The contract automatically renews if the parties miss the closing date
• c.The buyer forfeits equitable title the moment the contract is signed
• d.Either party may reschedule the closing freely as many times as needed

When a New York contract makes time of the essence, or a party sends a valid time-of-the-essence notice fixing a firm date, performance by that date is mandatory and missing it is a default. Without such a term, courts allow a reasonable adjournment. It converts a flexible date into a hard deadline.

A latent defect that a New York seller actively conceals must be:

• a.Disclosed, because active concealment can be fraud despite caveat emptor✓
• b.Ignored entirely under New York's traditional buyer-beware doctrine
• c.Repaired by the listing broker before the property may be shown
• d.Reported only to the buyer's attorney and never to the buyer directly

New York generally follows caveat emptor (buyer beware) in real estate, but a seller who takes active steps to conceal a known latent defect, or creates a false impression, can be liable for fraud. Silence alone is often permitted, but active concealment is not. Agents likewise cannot participate in concealment.

A contract signed by a person who has been legally declared mentally incompetent is:

• a.Fully enforceable as long as the signature was properly witnessed
• b.Voidable only at the option of the other, competent contracting party
• c.Void✓
• d.Valid once it has been acknowledged before a notary and recorded

A contract entered by someone already adjudicated legally incompetent is void, having no legal effect. This differs from a contract by someone with lesser incapacity (or a minor), which is typically merely voidable. Capacity of the parties is an essential element of a valid contract.

In New York, an option contract to purchase real estate must be supported by:

• a.A recorded mortgage lien against the optioned parcel of land
• b.The optionee's promise to buy the property no matter what happens
• c.A completed appraisal establishing the property's fair market value
• d.Consideration paid to keep the offer open for the option period✓

An option requires the optionee to give consideration in exchange for the owner's promise to hold the offer open for a set time. The optionee gains the right, but not the obligation, to buy. Without consideration, the owner could freely revoke the offer before it is exercised.

When an offeree changes a material term of an offer and returns it, the legal effect is to create a:

• a.Binding contract on the original offeror's stated terms
• b.Ratification of the offer that cannot later be withdrawn
• c.Counteroffer that rejects the original offer✓
• d.Valid acceptance because the essential terms still overlap

Altering a material term produces a counteroffer, which both rejects the original offer and proposes new terms the original offeror may accept or reject. The original offer is extinguished and cannot later be accepted unless revived. This is central to how negotiations proceed.

A deed that recites 'ten dollars and other good and valuable consideration' uses that language to:

• a.Guarantee the buyer a mortgage loan of at least that stated amount
• b.State that consideration was given without revealing the actual price✓
• c.Prove the property's assessed value for local property tax purposes
• d.Set the exact amount of transfer tax the seller must pay at closing

Deeds often recite a nominal consideration ('$10 and other good and valuable consideration') simply to confirm that consideration passed, while keeping the true price private. The actual sale price is reported separately for transfer tax on forms like the TP-584. The recital does not set the tax.

A 'subject to inspection' contingency that has expired without the buyer objecting generally means:

• a.The buyer may still cancel at any time before the scheduled closing
• b.The seller must automatically extend the deadline for another full month
• c.The contract is void and both parties walk away with no obligations
• d.The buyer is deemed to have accepted the property's condition and must proceed✓

If an inspection contingency period passes and the buyer neither objects nor cancels as the contract allows, the contingency is typically waived and the buyer is bound to proceed. Deadlines matter, especially when time is of the essence. The buyer must act within the stated window.

The essential difference between a bilateral and a unilateral listing is illustrated by an open listing, which is:

• a.Void, because open listings are prohibited under New York license law
• b.Unilateral, because only the broker who performs by producing a buyer is paid✓
• c.Bilateral, since the seller and every broker exchange binding promises
• d.Exclusive, because only one broker may market the property at a time

An open listing is generally treated as unilateral: the seller promises to pay only the broker who performs by procuring a ready, willing, and able buyer, and no broker is obligated to act. Multiple brokers may compete, but only the procuring cause earns the commission. Exclusive listings differ.

A contract term that is illegal, such as an agreement to violate fair housing law, renders the contract:

• a.Voidable by the benefiting party
• b.Void and unenforceable✓
• c.Fully valid if both agreed
• d.Enforceable in part

A contract with an illegal object or purpose is void and unenforceable because a lawful objective is an essential element of a valid contract. Courts will not enforce agreements to break the law, including discriminatory arrangements. Neither party can compel performance.

When both parties to a contract share the same fundamental mistake about a material fact, the contract is generally:

• a.Valid unless the mistake concerned the property's exact square footage
• b.Converted into an option contract in favor of the buyer
• c.Voidable, because there was no true meeting of the minds✓
• d.Automatically enforceable since both parties signed the document

A mutual mistake about a basic, material fact means the parties never genuinely agreed on the same thing, so the contract may be rescinded (voidable). A unilateral mistake by one party is harder to undo. The remedy protects a party from being bound by a shared error.

A seller who accepts a full-price, on-terms offer from a buyer produced by the listing broker, then refuses to sell, generally:

• a.Owes nothing because the transaction never actually reached closing
• b.May relist the property with a new broker to avoid the commission
• c.Still owes the broker the commission for producing a ready, willing, and able buyer✓
• d.Can keep the buyer's earnest money deposit as liquidated damages

A broker generally earns the commission once they produce a buyer who is ready, willing, and able to purchase on the seller's stated terms, even if the seller then backs out. The commission is tied to procuring such a buyer, not to closing. The seller's refusal does not defeat the earned fee.

A deed is properly executed for recording in New York once it is:

• a.Witnessed by the real estate salesperson who arranged the sale
• b.Approved by the buyer's lender and stamped by the appraiser
• c.Signed by the grantee and mailed to the state Department of State
• d.Signed by the grantor and acknowledged before a notary✓

To be eligible for recording, a New York deed must be signed by the grantor and acknowledged (notarized), confirming the grantor's identity and voluntary act. The grantee generally need not sign. Acknowledgment is a recording requirement, not what transfers title between the parties.

The habendum clause of a deed serves to:

• a.List the amount of consideration paid for the property in full
• b.Reserve mineral rights beneath the property to the original grantor
• c.Identify the notary public who acknowledged the grantor's signature
• d.Define the extent of the estate the grantee is receiving✓

The habendum clause, beginning 'to have and to hold,' describes the type and extent of the estate being conveyed, such as fee simple. It must be consistent with the granting clause. It clarifies exactly what interest the grantee takes.

A binder deposit given by a prospective buyer is best held:

• a.In cash by the listing salesperson until the closing date arrives
• b.In the seller's personal bank account for immediate use as they wish
• c.In the broker's escrow account until a formal contract is signed or the deal ends✓
• d.By the buyer's attorney in the firm's general operating account

Funds a broker receives, such as a binder or earnest money deposit, must be kept in a separate escrow or trust account, not commingled with the broker's or seller's own funds. The deposit is released according to the parties' agreement. Mishandling client funds can lead to discipline.

The 'granting clause' and 'consideration' recital together show that a deed:

• a.Guarantees the property will appreciate to a specific future value
• b.Conveys the described interest in exchange for value received✓
• c.Requires the county to insure the grantee's title against defects
• d.Obligates the grantee to obtain a mortgage from a named lender

A deed's granting clause contains the words that convey the interest, and the consideration recital acknowledges that value was received for the transfer. Together they evidence a completed conveyance. The recited consideration is often nominal and need not equal the true price.

A 'sale of buyer's current home' contingency benefits the buyer by:

• a.Forcing the listing broker to market both properties for a single fee
• b.Guaranteeing the buyer a higher price when they sell their old residence
• c.Letting the buyer cancel if their existing home does not sell in time✓
• d.Requiring the seller to purchase the buyer's current home at market value

This contingency conditions the purchase on the buyer selling their present home within a set period, so the buyer is not stuck owning two homes. If the current home does not sell, the buyer may cancel and recover the deposit. Sellers may add a 'kick-out' clause to keep marketing the property.

New York requires a real estate broker holding client deposits to maintain them in a manner that avoids:

• a.Commingling client funds with the broker's own money✓
• b.Providing the client any receipt or accounting for the deposit
• c.Earning any interest on the deposited funds under any circumstances
• d.Placing the funds in a federally insured banking institution

Brokers must keep client deposits in a separate escrow or trust account to avoid commingling them with the broker's personal or business funds. Commingling and, worse, conversion of client money are serious violations of license law. Proper record-keeping and prompt accounting are also required.

A quitclaim deed used to release one spouse's marital interest in the family home operates to:

• a.Guarantee the receiving spouse marketable title against all claims
• b.Convey whatever interest that spouse has, with no title warranties✓
• c.Automatically extinguish any existing mortgage lien on the property
• d.Transfer full fee simple ownership free of every prior encumbrance

A quitclaim deed conveys only whatever interest the grantor holds and makes no warranties, which is why it is well suited to releasing a spouse's or heir's possible claim. It does not affect existing mortgages or guarantee clear title. It simply removes that person's potential interest from the chain.

A contract of sale that fails to adequately describe the property being sold is:

• a.Likely unenforceable for lacking an essential term✓
• b.Automatically cured once the buyer records the eventual deed
• c.Valid because the street address is never a required contract term
• d.Fully enforceable as long as the purchase price is clearly stated

An enforceable land contract must identify the property with reasonable certainty; a description too vague to locate the parcel can render the contract unenforceable. Price, parties, and property are essential terms. A sufficient legal description or clear address usually satisfies this requirement.

A 'binder' deposit differs from the earnest money in a formal contract of sale mainly because a binder is given:

• a.After the mortgage lender has issued a final loan commitment letter
• b.By the seller to the buyer as an incentive to complete the purchase
• c.At the preliminary stage, before the binding contract is prepared✓
• d.Only at the closing table when the deed is delivered to the buyer

A binder deposit accompanies a preliminary binder agreement showing intent, typically before attorneys draft the formal contract. Earnest money is the deposit under the signed contract of sale itself. Both should be held in escrow; a binder's legal effect depends on its wording.

Under New York's Human Rights Law, a real estate agent asked to help a seller refuse offers from a protected class must:

• a.Follow the seller's instruction under the fiduciary duty of obedience
• b.Refer the seller to another agent willing to carry out the request
• c.Refuse the instruction, because obeying it would be illegal discrimination✓
• d.Quietly comply while documenting the seller's request in the file

The duty of obedience extends only to lawful instructions. Helping a seller discriminate against a protected class violates federal and New York fair housing law, so the agent must refuse and may need to withdraw. An agent who complies shares liability for the violation.

A 'meeting of the minds' can be defeated by fraud, which in a real estate contract makes the agreement:

• a.Voidable by the deceived party✓
• b.Enforceable after disclosure
• c.Fully binding once both parties sign
• d.Automatically void from the beginning

Fraud undermines genuine mutual assent, so the deceived party may rescind or enforce the contract at their option, making it voidable rather than void. A void contract has no effect at all. The remedy belongs to the innocent, defrauded party.

A 'kick-out' clause added to a contract with a home-sale contingency lets the seller:

• a.Force the buyer to waive the mortgage financing contingency at closing
• b.Continue marketing the property and accept a better offer if the buyer cannot remove the contingency✓
• c.Keep the buyer's earnest money automatically if the closing is delayed
• d.Cancel the sale at any time and for any reason at all, without giving the buyer any notice whatsoever

A kick-out clause lets a seller who accepted a contract contingent on the buyer selling their current home keep marketing the property. If a better offer arrives, the seller can notify the buyer, who must then remove the contingency within a set time or step aside. It protects the seller from being tied up.

The recording of a deed establishes its priority in New York under a system best described as:

• a.Race-notice, favoring a good-faith buyer who records first✓
• b.Pure notice, where actual knowledge alone decides every dispute
• c.First-to-sign, based solely on the date the deed was executed
• d.Pure race, in which only the order of recording matters at all

New York is a race-notice jurisdiction: a subsequent purchaser prevails only if they take without notice of a prior interest AND record first. A buyer who knows of an earlier unrecorded deed cannot win by recording. This encourages prompt, good-faith recording.

When an executor sells estate property, the deed delivered to the buyer is typically an:

• a.Referee's deed issued only after a contested judicial foreclosure sale
• b.Full general warranty deed guaranteeing the title against all prior defects
• c.Executor's deed, which conveys the estate's interest with limited warranties✓
• d.Quitclaim deed signed personally by every heir named in the will

An executor's (or administrator's) deed conveys a decedent's property from the estate, and it generally carries limited warranties because the executor conveys only in a representative capacity. The estate warrants against its own acts but not the decedent's. Court authority may be required for the sale.