New York Real Estate Salesperson — All Questions

In New York, real estate salespersons and brokers are licensed and regulated primarily by the:

• a.Federal Trade Commission
• b.Internal Revenue Service
• c.Local county clerk
• d.New York Department of State, Division of Licensing Services✓

New York real estate licenses are issued and regulated by the Department of State (DOS) through its Division of Licensing Services. The DOS enforces Article 12-A of the Real Property Law and can discipline licensees. Specific rules and fees can change, so licensees should confirm current requirements with the DOS.

The New York statute governing the licensing and conduct of real estate brokers and salespersons is:

• a.The Uniform Commercial Code
• b.Article 12-A of the Real Property Law✓
• c.The Statute of Frauds only
• d.Regulation Z

Article 12-A of the New York Real Property Law is the licensing law that defines brokers and salespersons and sets rules for their conduct. The Department of State administers it. Requirements under this article can be amended, so licensees should verify current provisions.

A New York real estate salesperson may lawfully collect a commission directly from:

• a.The buyer, at closing
• b.The Department of State
• c.Any party to the transaction
• d.Their sponsoring broker only✓

A salesperson works under and is paid only by their sponsoring broker, never directly by a buyer or seller. The broker receives the commission and then compensates the salesperson per their agreement. Accepting compensation directly from a principal can be grounds for discipline.

An agent's fiduciary duty of obedience requires the agent to:

• a.Follow any instruction, even illegal ones
• b.Ignore the principal's wishes to maximize commission
• c.Obey the buyer even when it conflicts with the seller-principal
• d.Follow all lawful instructions of the principal✓

The duty of obedience requires an agent to follow the principal's lawful instructions promptly. An agent must never obey directions that are illegal, such as instructions to discriminate. In such a case the agent should refuse and may need to withdraw from the agency.

The fiduciary duties an agent owes a principal can be remembered by the acronym OLD CAR. The 'C' stands for:

• a.Contract
• b.Confidentiality✓
• c.Compensation
• d.Compliance

OLD CAR stands for Obedience, Loyalty, Disclosure, Confidentiality, Accountability, and Reasonable care. Confidentiality requires keeping the principal's private information secret, even after the relationship ends. These duties define the agent's fiduciary relationship with the principal.

In New York, the agency disclosure form must generally be presented to a prospective buyer or seller:

• a.After an offer is accepted
• b.At the closing table
• c.At the time of first substantive contact✓
• d.Only if the client requests it

New York requires licensees to provide the statutory agency disclosure form at the time of first substantive contact with a prospective buyer or seller. This ensures consumers understand whom the agent represents before sharing confidential information. Exact timing rules and form content can change, so confirm current DOS requirements.

A dual agent in New York is a broker who:

• a.Represents two different buyers on two different properties
• b.Represents both the buyer and the seller in the same transaction✓
• c.Works for two brokerage firms at once
• d.Holds both a broker and a salesperson license

Dual agency exists when one broker represents both the buyer and the seller in the same transaction, creating a conflict of interest. New York permits it only with the informed, written consent of both parties. Because loyalty is divided, the dual agent cannot fully advocate for either side.

A designated sales agent arrangement in New York allows a supervising broker to:

• a.Represent no one in the transaction
• b.Let the seller act as their own agent
• c.Appoint different agents to represent the buyer and the seller✓
• d.Let a salesperson work without a sponsoring broker

With the written consent of both parties, a supervising broker who has dual agency may appoint one licensee to represent the seller and another to represent the buyer as designated sales agents. Each designated agent can advocate for their respective client. The supervising broker remains a dual agent overall.

Which of the following would create an agency relationship by ratification?

• a.A written buyer-broker contract
• b.A principal accepting the benefits of unauthorized acts after the fact✓
• c.A formal power of attorney
• d.A signed listing agreement

Agency by ratification arises when a principal approves or accepts the benefits of an agent's previously unauthorized actions. This retroactively creates the agency relationship. Express agency, by contrast, is created by a clear agreement such as a signed listing.

Commingling, which is prohibited for New York brokers, refers to:

• a.Mixing client escrow funds with the broker's own business or personal funds✓
• b.Representing two clients in one deal
• c.Advertising more than one listing at a time
• d.Working with multiple cooperating brokers

Commingling is the improper mixing of client trust or escrow funds with the broker's own money, and it is a violation of license law. Brokers must keep client deposits in a separate escrow or trust account. Converting those funds to personal use is the even more serious offense of conversion.

The federal Fair Housing Act prohibits discrimination based on all of the following EXCEPT:

• a.The buyer's occupation✓
• b.Race and color
• c.Sex, disability, and familial status
• d.Religion and national origin

The federal Fair Housing Act protects seven classes: race, color, religion, national origin, sex, disability, and familial status. Occupation is not a federally protected class. New York State and local laws add further protected categories, so licensees must check applicable state and local rules.

The practice of inducing owners to sell by suggesting that people of a particular protected class are moving into the neighborhood is called:

• a.Blockbusting✓
• b.Steering
• c.Puffing
• d.Redlining

Blockbusting, also called panic selling, is illegal under fair housing law and involves scaring owners into selling by exploiting fears about changing neighborhood demographics. Steering is directing buyers toward or away from areas based on protected class. Redlining is denying loans or services in certain areas.

Directing prospective buyers toward or away from certain neighborhoods based on their race or religion is known as:

• a.Novation
• b.Steering✓
• c.Blockbusting
• d.Commingling

Steering is the illegal practice of channeling homebuyers to or from particular neighborhoods based on a protected characteristic, limiting their housing choices. It violates the Fair Housing Act. Agents must let clients choose freely and provide equal service to all.

Under New York law, earnest money deposits held by a broker must be:

• a.Kept in cash in the office safe
• b.Deposited into the broker's personal account for safekeeping
• c.Given directly to the seller immediately
• d.Placed in a separate escrow or trust account✓

Brokers must hold earnest money and other client funds in a separate escrow or trust account, keeping them apart from the broker's own money. This prevents commingling and protects the parties' deposit. Funds are released according to the contract terms or with proper authorization.

An agency relationship is terminated by all of the following EXCEPT:

• a.Death or incapacity of either party
• b.Completion of the purpose of the agency
• c.Mutual agreement of the parties
• d.The agent being briefly unavailable for a day✓

Agency ends by performance, expiration, mutual agreement, revocation, renunciation, or death or incapacity of a party, among other events. A brief temporary absence does not terminate the relationship. Some duties, such as confidentiality, may survive termination.

A licensee who exaggerates a property's qualities with a non-factual opinion, such as calling a view 'the most breathtaking in town,' is engaging in:

• a.Puffing✓
• b.Steering
• c.Fraud
• d.Misrepresentation

Puffing is an exaggerated opinion or sales talk that a reasonable person would not take as a statement of fact, and it is generally legal. It becomes actionable misrepresentation or fraud when it involves false statements of material fact. Agents should still be cautious to avoid crossing that line.

In New York, a real estate salesperson's license is:

• a.Held by and works under their sponsoring broker✓
• b.Renewed every ten years automatically
• c.Displayed on the wall of every property they show
• d.Kept independently, allowing solo practice

A New York salesperson's license is maintained by and works under the sponsoring broker who supervises their activity. The salesperson cannot operate independently. Licensing details, including renewal periods and continuing education, are set by the DOS and can change.

A seller's agent owes the fiduciary duty of loyalty to the:

• a.Lender
• b.Buyer
• c.Seller (principal)✓
• d.General public

The duty of loyalty requires the agent to place the principal's interests above all others, including the agent's own. A seller's agent owes that loyalty to the seller. The agent must still treat the buyer honestly and fairly and disclose known material defects.

A material defect that a seller's agent knows about the property must be:

• a.Revealed only if the buyer asks directly
• b.Reported only to the Department of State
• c.Concealed to protect the seller
• d.Disclosed to prospective buyers✓

Even while representing the seller, an agent must honestly disclose known material defects to buyers and cannot participate in active concealment or fraud. The duty of honesty to third parties coexists with loyalty to the principal. Failing to disclose can expose the agent to liability.

The relationship in which a broker represents a buyer client is known as:

• a.Seller agency
• b.Facilitator status
• c.Subagency to the listing broker
• d.Buyer agency✓

Buyer agency is created when a broker agrees to represent the buyer's interests, typically through a buyer-broker agreement. The broker then owes fiduciary duties to the buyer. This differs from a traditional arrangement where all agents represented the seller.

Which act by a licensee would most likely be grounds for revocation of a New York real estate license?

• a.Converting a client's escrow deposit for personal use✓
• b.Providing the agency disclosure form on time
• c.Presenting all written offers to the seller
• d.Recommending the buyer obtain a home inspection

Converting client escrow funds to personal use is a serious violation of trust and license law and can lead to revocation and other penalties. Presenting offers, recommending inspections, and timely disclosure are proper professional practices. The DOS enforces these standards under Article 12-A.

An agent acting under an express written listing agreement is an example of:

• a.Agency by ratification
• b.Agency by estoppel
• c.Ostensible agency
• d.Express agency✓

Express agency is created by a clear, stated agreement between principal and agent, whether written or oral, such as a signed listing contract. Implied agency arises from conduct, and agency by estoppel or ratification arise in other ways. A written listing is the classic example of express agency.

A broker who represents neither the buyer nor the seller as a client but merely helps both complete a deal may be acting as a:

• a.Dual agent
• b.Broker's agent
• c.Facilitator or transaction broker✓
• d.Designated agent

A facilitator, sometimes called a transaction broker, helps parties complete a deal without owing full fiduciary duties to either as a client. This limited role differs from single or dual agency. New York agency disclosure requirements still apply to clarify the relationship for consumers.

New York's fair housing protections extend beyond the federal classes to include additional categories such as:

• a.Age, marital status, sexual orientation, and gender identity, among others✓
• b.Occupation and education level
• c.Political party affiliation nationwide
• d.Only race and religion

New York State's Human Rights Law adds protected classes beyond the federal list, including age, marital status, sexual orientation, gender identity, military status, and more. Local laws may add further categories. Because these lists are periodically expanded, licensees should verify the current protected classes.

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 authorized to conduct a broad and continuing range of the principal's affairs
• b.Gratuitous agent who serves without any compensation and therefore owes no fiduciary duties
• c.Special agent with limited authority for one transaction✓
• d.Universal agent empowered to handle all of the principal's business 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.Designated agent appointed by a supervising broker to represent one side of a sale
• b.Special agent hired with narrow authority to complete only a single defined transaction
• c.General agent✓
• d.Subagent of the tenants who occupy the units within the building being managed

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.Facilitator who assists both parties without representing either of them as a client
• b.Subagent whose authority flows from another agent rather than directly from the principal
• c.Special agent limited to accomplishing one specific task within a narrow scope of authority
• 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, the obligation to follow the principal's lawful instructions promptly and faithfully
• b.Reasonable care, the obligation to use competence and diligence in performing agency tasks
• c.Loyalty✓
• d.Accounting, the obligation to report and safeguard money and documents entrusted to the agent

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, which requires the agent to report and safeguard all funds and documents
• b.Confidentiality, which requires keeping the principal's private information secret from others
• c.Obedience, which requires the agent to follow all of the principal's lawful instructions
• 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 federal and state income tax returns each year
• c.Personally guarantee to the principal that the listed property will sell within the term
• d.Independently set the listing price for the property without consulting with 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 unilaterally by the agent whenever the agent believes it is convenient
• b.Applies only to information the client provided in writing, not anything shared verbally
• c.Generally continues even after the agency relationship has ended✓
• d.Ends the very moment that the transaction closes and the deed is delivered to the buyer

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 to avoid creating a conflict between the parties
• c.Only the seller agrees, because the seller is considered the primary client in the deal
• d.The total commission in the transaction exceeds a specific threshold set by the state

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 insurance company that is clearing title before the scheduled closing
• c.The New York Department of State in monitoring the conduct of other licensees
• d.The consumer directly, entirely replacing the listing broker in the transaction

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, because the cooperating broker is the one actually working with that buyer directly
• b.Lender, since the cooperating broker's compensation depends on the loan closing on time
• c.Both parties equally, splitting the fiduciary duties evenly between the buyer and the seller
• 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, which enforces its own private code of member ethics
• b.Department of State, Division of Licensing Services✓
• c.Federal Reserve, which supervises banks and the national monetary and payment systems
• d.Local police department, which handles all financial disputes between private parties

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, reflecting the higher responsibility associated with handling client transaction funds
• b.16, the same minimum age at which a person may first obtain a driver's license in the state
• c.21, matching the minimum age required for various other regulated professional activities
• 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 before submitting the license application
• b.Hold a law degree from an accredited school in addition to the required real estate courses
• c.Be at least 30 years of age at the time the broker license application is filed with the state
• 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, which far exceeds any current New York requirement
• c.3 hours every single year, submitted directly to the Department of State each January
• d.No continuing education at all, since the original qualifying course satisfies 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.Life, meaning that once issued the license never needs to be renewed by the licensee
• b.Five years, after which a full new qualifying course must be retaken before renewing
• c.Two years✓
• d.One year, requiring the licensee to complete the renewal process every single year

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, state, or national REALTOR association and paying its membership dues
• b.Personally registering the new license directly with the clerk of the county they work in
• c.Being associated with and sponsored by a licensed broker✓
• d.Passing a separate federal real estate examination administered by a national agency

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.Receive advance written approval from the Department of State before it may be published
• b.Display only the salesperson's personal cell phone number and no other contact details
• c.Omit any mention of a broker so the salesperson receives all of the resulting inquiries
• 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.Full names and personal home addresses of every individual member of the sales team
• b.Name of the supervising broker or brokerage✓
• c.Exact commission split percentages that apply between the team members and the broker
• d.Complete list of every past client the team has represented over the previous few years

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.Puffing, which is an exaggerated but generally lawful statement of sales opinion
• b.Conversion✓
• c.Novation, the substitution of a new contract or party that discharges the original one
• d.Subagency, the arrangement in which one broker acts as an agent for another broker

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, with any interest earned kept by the broker as a fee
• b.Cash stored in the office safe until the transaction reaches its scheduled closing date
• c.The broker's general business operating account used to pay day-to-day office expenses
• 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 per se rule against tying separate products together in a single sale
• b.Regulation Z alone, which governs the disclosure of consumer credit costs and financing terms
• c.The Real Estate Settlement Procedures Act (RESPA)✓
• d.The Statute of Frauds, which requires certain contracts to be in writing to be enforceable

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, the inducing of owners to sell by playing on fears about the neighborhood
• b.Steering, the guiding of buyers toward or away from areas based on a protected class
• c.Price fixing under antitrust law✓
• d.Dual agency, in which one broker represents both the buyer and the seller in one deal

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, in which the broker keeps any sale proceeds above a price the seller sets
• b.Market allocation in which competitors divide territories or customers among themselves
• c.Tie-in arrangement conditioning one product's sale on the purchase of another product
• 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.Independently host an open house and answer substantive questions about the property's condition
• b.Perform clerical tasks such as scheduling and data entry✓
• c.Negotiate the price and terms of a listing directly with a prospective buyer or their agent
• d.Solicit listings from homeowners and independently show homes to interested buyers on their own

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 transaction to compensate the party who first introduced the buyer
• b.Encouraged by the Department of State as a way to expand a brokerage's referral network
• c.Prohibited under New York license law✓
• d.Allowed without restriction as long as each individual referral 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, since the Department of State cannot impose any penalties
• c.Automatic imprisonment imposed directly by the Department of State without any court process
• d.Forfeiture of the client's earnest money deposit to the state as a penalty for the violation

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 of any kind to be exchanged between the principal and the agent
• b.Can always be revoked at will by the principal at any time and for any reason at all
• c.Automatically terminates at the end of each calendar month unless it is expressly renewed
• 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 the agent about it directly during the course of the negotiations
• c.Automatically, because the seller's bottom-line price is never treated as confidential data
• d.Freely and at any time, if doing so will help push the transaction toward a quick 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 about a home is treated as a guarantee of fact
• b.Negligent misrepresentation that automatically entitles the buyer to rescind the contract
• c.Puffing, which is a permissible statement of opinion✓
• d.A fair housing violation, since praising a home unlawfully discourages certain 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 that the seller is entitled to remove from the property before the closing
• b.Purely cosmetic condition that never needs to be disclosed to a prospective purchaser
• c.Latent (hidden) defect that must be disclosed if known✓
• d.Patent defect, which is obvious and readily visible to anyone who inspects the property

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, a person who holds and manages legal title to property for the benefit of another
• b.Fiduciary, the party who owes the highest duties of trust and confidence to the principal
• c.Customer✓
• d.Subagent, an agent whose authority is delegated by another agent rather than the principal

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.

Under a typical listing, a broker is generally considered to have earned the commission when they:

• a.Produce a ready, willing, and able buyer on the seller's terms✓
• b.Merely enter the property into the multiple listing service database for the region
• c.Advertise the home online across several popular real estate marketing platforms
• d.Hold a single well-attended open house event at the property one weekend afternoon

Under a typical listing, the broker earns the commission by producing a buyer who is ready, willing, and able to purchase on the seller's stated terms, or one the seller accepts. Simply marketing the property does not by itself earn the fee.

In a commission dispute between brokers, the one who set in motion the uninterrupted chain of events leading to the sale is the:

• a.Procuring cause✓
• b.Designated agent appointed by a supervising broker to represent one party in the transaction
• c.Subagent, a broker whose authority is delegated by the listing broker rather than the seller
• d.Facilitator who assists both parties to complete the deal without representing either of them

Procuring cause is the broker whose efforts started the uninterrupted chain of events that led to the sale. In a commission dispute, being the procuring cause is central to determining which broker earned the fee.

A seller instructs their agent not to show the home to families with children. The agent must:

• a.Comply quietly with the request in order to keep the client and preserve the commission
• b.Follow the instruction as a lawful order, since the seller is the agent's principal in the deal
• c.Charge families with children a higher price to discourage them from making any offers
• d.Refuse the illegal instruction and may withdraw from the listing✓

The duty of obedience applies only to lawful instructions. Refusing to show a home to families with children violates the familial status protection, so the agent must refuse the illegal instruction and may need to withdraw from the listing.

New York's residential agency disclosure requirement generally applies to transactions involving:

• a.Only newly constructed apartment buildings that contain more than ten dwelling units
• b.Only large vacant tracts of undeveloped commercial land held for future development
• c.Government-owned office buildings being leased to private tenants and businesses
• d.One-to-four-family residential properties✓

New York's agency disclosure requirement applies to residential real property containing one to four dwelling units. The rule is designed to protect consumers in typical home purchase and sale transactions.

Today most New York cooperating brokers work as buyer's agents or broker's agents rather than subagents because subagency:

• a.Is now completely illegal in every state and cannot be used under any circumstances
• b.Exposed the buyer to an agent who actually owed fiduciary duties to the seller✓
• c.Guarantees the cooperating broker a substantially higher commission on every closing
• d.Requires absolutely no agency disclosure to be given to either party in the transaction

Under subagency, the cooperating broker owed duties to the seller even while working with the buyer, which could disadvantage buyers who assumed they were represented. To avoid this, most cooperating brokers now act as buyer's agents or broker's agents.

A broker can be held responsible for the wrongful acts of a salesperson performed within the scope of employment under the concept of:

• a.Escheat, the transfer of property to the state when the owner dies without a will or heirs
• b.Novation, the substitution of a new party or contract that releases the original obligation
• c.Vicarious liability✓
• d.Subrogation, the substitution of one party for another regarding a legal claim or right

Under vicarious liability, a supervising broker can be held responsible for the wrongful acts a salesperson commits within the scope of their employment. This is why brokers must properly supervise their affiliated licensees.

A licensee's online listing photos and descriptions must be:

• a.Approved individually and in advance by the Department of State before being posted online
• b.Exaggerated as much as possible in order to attract the largest number of online clicks
• c.Truthful and not materially misleading✓
• d.Free of the sponsoring broker's name so the salesperson receives all incoming inquiries

Advertising, including online photos and descriptions, must be truthful and not materially misleading, and it must identify the broker. Misrepresenting a property's features or condition can constitute misrepresentation and violate license law.

An agent who fails to submit a buyer's written offer to the seller has most likely breached the duty of:

• a.Accounting, the duty to safeguard and report on all funds and documents held for the client
• b.Confidentiality, the duty to keep the principal's private information from being disclosed
• c.Loyalty owed to the buyer, since the buyer is the party who actually prepared the written offer
• d.Reasonable care and diligence, as well as obedience✓

Agents must promptly present all written offers to the seller unless instructed otherwise. Failing to do so breaches the duties of reasonable care and obedience owed to the seller-principal, and it can lead to discipline.

The wallet-size identification the Department of State issues to a New York licensee is commonly called the:

• a.Certificate of occupancy, issued by a municipality when a building is deemed safe to occupy
• b.Estoppel certificate, a document stating the current balance and terms of an existing loan
• c.Pocket card✓
• d.Proprietary lease, which grants a cooperative shareholder the right to occupy a specific unit

The Department of State issues each licensee a pocket card as evidence of licensure, which the licensee carries and produces on request. It shows the licensee's status and sponsoring broker.