New York Real Estate Salesperson — All Questions

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.Enter the property into the multiple listing service
• c.Advertise the home on several of the popular online marketing platforms
• d.Hold a single well-attended open house one weekend

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.Listing broker
• c.The subagent broker
• d.Transaction facilitator

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 to keep the client and the commission
• b.Follow the instruction, since the seller is the agent's principal
• c.Charge families with children a higher asking price
• 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 built apartment buildings over ten units
• b.Only large vacant tracts of commercial land
• c.Government-owned office buildings
• 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 to a state
• b.Novation of contract
• c.Vicarious liability✓
• d.Subrogation of claims

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 in advance by the Department of State
• b.Exaggerated to attract clicks
• c.Truthful and not materially misleading✓
• d.Free of the broker's name

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 for all funds and documents held for the client
• b.Confidentiality owed to the principal
• c.Loyalty owed to the buyer, who 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
• b.Estoppel certificate
• c.Pocket card✓
• d.Master deed

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.

A comparative market analysis (CMA) prepared by a salesperson differs from a formal appraisal in that a CMA:

• a.Sets the exact loan amount the lender will advance
• b.Is a certified, USPAP-compliant opinion of value
• c.Is an informal pricing estimate, not a certified appraisal✓
• d.May be performed only by a state-licensed appraiser, never a salesperson

A CMA is an informal analysis of comparable sales that helps a seller or buyer estimate a listing or offer price. It is not an appraisal, which is a formal, USPAP-compliant opinion of value prepared by a licensed or certified appraiser.

A broker price opinion (BPO) is typically used to:

• a.Substitute fully for an appraisal in a federally related loan
• b.Determine the assessed value used for property taxes
• c.Certify that the title is marketable and unencumbered
• d.Give a lender or client a quick estimate of likely sale price✓

A broker price opinion is a broker's estimate of a property's probable selling price, often used by lenders for non-lending decisions such as evaluating short sales. It is not a substitute for an appraisal in federally related mortgage transactions.

The most common consequence of significantly overpricing a listing is that it:

• a.Sells faster and at full asking price every time
• b.Lowers the annual property taxes while it is listed
• c.Guarantees multiple competing offers within the first week or two
• d.Tends to sit on the market and may ultimately sell for less✓

Overpriced listings tend to languish on the market, grow stale, and often ultimately sell for less after price reductions. Accurate pricing based on a CMA usually produces a faster sale closer to market value.

Federal law requires disclosure of known lead-based paint hazards for residential housing built:

• a.After the year 2000
• b.Only within New York City
• c.Before 1950
• d.Before 1978✓

The federal Residential Lead-Based Paint Hazard Reduction Act (Title X) requires disclosure of known lead-based paint and hazards for most housing built before 1978, when residential lead paint was banned. It applies nationwide, not just in New York City.

Under the federal lead-based paint rule, a buyer of a pre-1978 home must be given the opportunity to conduct a lead inspection or risk assessment, generally for:

• a.30 days measured from the scheduled closing date
• b.24 hours from the moment the contract is signed
• c.10 days, unless the parties agree in writing to a different period✓
• d.No period at all, because the inspection opportunity is entirely optional

The federal lead rule gives buyers of pre-1978 homes a 10-day period (or another period the parties agree to) to conduct a lead-based paint inspection or risk assessment. Sellers must also provide required disclosures and the EPA pamphlet.

Sellers and landlords of pre-1978 housing must give buyers or tenants the EPA pamphlet titled:

• a.'Protect Your Family from Lead in Your Home'✓
• b.'Your Home Loan Toolkit'
• c.'Settlement Costs and You'
• d.'The Fair Housing Handbook for Buyers and Sellers'

Under the federal lead-based paint rule, sellers and landlords of pre-1978 housing must provide the EPA pamphlet 'Protect Your Family from Lead in Your Home,' along with disclosing known hazards and giving the inspection opportunity.

The federal lead-based paint disclosure rule generally does NOT apply to:

• a.Housing built in 1990 or later✓
• b.A pre-1978 rental apartment
• c.A 1970 condominium unit being sold
• d.A 1965 single-family home for sale

The lead disclosure rule applies to most housing built before 1978. Housing built in 1990 (well after 1978) is not covered. Certain other housing, such as zero-bedroom units and some housing for the elderly, is also exempt.

Radon, a concern in some New York homes, is a:

• a.Type of asbestos fiber commonly used in older pipe wrap and ceiling tile insulation
• b.Man-made chemical binder that was widely added to interior and exterior house paint
• c.Water contaminant that leaches into the drinking supply primarily from old lead pipes
• d.Naturally occurring radioactive gas that can seep from the ground into buildings✓

Radon is a naturally occurring, colorless, odorless radioactive gas produced by the decay of uranium in soil and rock, and it can enter buildings from the ground. Testing and mitigation systems can reduce elevated indoor radon levels.

Asbestos, once used in insulation and flooring, is most hazardous when it is:

• a.Located outdoors, where any released fibers are quickly dispersed by the open air
• b.Friable, meaning it is crumbling and releasing fibers into the air✓
• c.Sealed, encapsulated, and left completely undisturbed within the building's structure
• d.Painted over with several coats of standard interior latex paint to keep it in place

Asbestos is most dangerous when friable, meaning it can be crumbled by hand and release airborne fibers that are hazardous to inhale. Intact, undisturbed, or encapsulated asbestos generally poses less immediate risk, though disturbance during renovation can release fibers.

The federal 'Superfund' law (CERCLA) is chiefly concerned with:

• a.Liability and cleanup of hazardous-substance contamination✓
• b.Setting the interest rates lenders may charge
• c.Licensing real property appraisers nationwide
• d.Regulating fair housing advertising to prevent discriminatory preferences

CERCLA, the Comprehensive Environmental Response, Compensation, and Liability Act ('Superfund'), addresses cleanup of hazardous-substance contamination and can impose liability on current and past owners. Buyers of potentially contaminated land should perform environmental due diligence.

Development on land classified as protected wetlands generally:

• a.May require a permit and be restricted under state or federal regulation✓
• b.Requires no approvals of any kind, since wetlands are treated the same as ordinary lots
• c.Is prohibited entirely, so no construction may ever occur on any part of the parcel
• d.Is governed solely by the local homeowners association rather than any government agency

Building on wetlands is regulated to protect water quality and habitat and typically requires permits under state and federal law, with limits on what may be done. Filling or altering wetlands without approval can lead to significant penalties.

When a buyer is concerned about possible mold, the agent's best course is to:

• a.Quietly paint over any visible staining before the buyer's scheduled showing appointment
• b.Assure the buyer there is definitely no mold present anywhere within the property
• c.Tell the buyer that indoor mold is never a health concern and can be safely ignored
• d.Recommend a qualified professional inspection and remediation assessment✓

Agents are not environmental experts, so when mold is a concern the prudent course is to recommend a qualified professional inspection rather than reassure or conceal. Agents must never hide known material conditions.

Under federal TRID rules, the lender must provide the borrower the Closing Disclosure at least:

• a.3 business days before closing✓
• b.1 day before closing
• c.10 business days after the closing
• d.At the closing table, just before signing

Under the TILA-RESPA Integrated Disclosure (TRID) rules, the lender must give the borrower the Closing Disclosure at least three business days before consummation, so the borrower can review the final loan terms and costs. Certain changes restart the three-day period.

RESPA applies to:

• a.Purchases of vacant commercial land parcels
• b.All-cash home purchases with no mortgage
• c.Federally related mortgage loans on residential property✓
• d.Residential lease agreements between landlords and tenants

RESPA governs federally related mortgage loans on residential property, requiring disclosures and prohibiting kickbacks for settlement services. It generally does not apply to all-cash deals or to purely commercial land transactions.

A lender's title insurance policy protects the:

• a.Lender up to the loan balance against title defects✓
• b.Broker's right to the earned commission
• c.Buyer's entire equity against every future title loss
• d.Seller against the risk that the buyer defaults before closing

A lender's (mortgagee) title policy protects the lender up to the loan amount against covered title defects. It does not protect the buyer's equity; a separate owner's policy is needed to protect the buyer.

A title that is free from significant defects and reasonable doubt, such that a buyer would accept it, is called:

• a.Marketable title✓
• b.Constructive title
• c.Equitable title
• d.Apparent color of title

Marketable title is title reasonably free from defects, liens, and doubt, such that a well-informed buyer would accept it. Purchase contracts typically require the seller to convey marketable title at closing.

A summary of the recorded history of conveyances and encumbrances affecting a parcel is the:

• a.A sponsor's offering plan
• b.Abstract of title✓
• c.Certificate of occupancy
• d.Closing statement

An abstract of title is a condensed history of all recorded documents affecting a parcel, used to trace the chain of title and identify encumbrances. Title examiners and attorneys review it, often together with a title search, to assess marketability.

In a deed, the party conveying title to real property is the:

• a.Grantor✓
• b.Devisee
• c.Grantee (buyer)
• d.Mortgagee

In a deed, the grantor is the party conveying title, and the grantee is the party receiving it. Remember that the party whose role ends in '-or' gives, while the '-ee' receives.

Which deed offers the buyer the greatest protection through full covenants of title?

• a.Quitclaim deed
• b.Executor's deed with limited authority
• c.Bargain and sale deed without covenants
• d.Full covenant and warranty deed✓

A full covenant and warranty deed provides the greatest protection because the grantor warrants title against all defects, even those arising before the grantor owned the property. A quitclaim deed offers no warranties at all.

A quitclaim deed is often used to:

• a.Cure a cloud on title or transfer whatever interest the grantor may have, with no warranties✓
• b.Convey title following a foreclosure sale conducted by the sheriff or a court referee
• c.Provide the strongest possible warranties that the title being conveyed is completely clear
• d.Guarantee to the buyer that the property is free of all liens and every other encumbrance

A quitclaim deed conveys only whatever interest, if any, the grantor holds, with no warranties. It is commonly used to clear clouds on title, such as releasing a possible claim, rather than for arm's-length sales.

Title actually passes to the buyer when the deed is:

• a.Notarized by a notary public at the closing
• b.Delivered by the grantor and accepted by the grantee✓
• c.Recorded in the county's land records office by the clerk
• d.Signed by the buyer at the closing table

Title passes when the deed is delivered by the grantor with intent to convey and accepted by the grantee. Recording gives public notice and protects priority but is not what actually transfers title.

When two deeds to the same property conflict, most recording statutes protect the:

• a.Party who paid the highest price
• b.Good-faith purchaser who records first✓
• c.Party living closest to the property
• d.Party who signed the purchase contract first, regardless of recording

Recording statutes generally protect a bona fide (good-faith) purchaser for value who records first, encouraging prompt recording. This is why buyers record their deeds immediately after closing.

At closing, property taxes the seller prepaid covering time after the closing date are typically:

• a.Ignored, since prepaid items are never prorated at all
• b.Kept by the buyer with no adjustment made
• c.Paid by the broker out of the commission
• d.Credited to the seller and debited to the buyer✓

Prorations divide ongoing costs fairly as of the closing date. When the seller has prepaid taxes covering time after closing, the buyer reimburses the seller, so the amount is credited to the seller and debited to the buyer.

On a closing settlement statement, the purchase price is entered as a:

• a.Debit to the buyer and a credit to the seller✓
• b.Credit to both the buyer and the seller
• c.Debit to the real estate broker
• d.Credit to the buyer, who provides the funds for the purchase

The purchase price is a debit (charge) to the buyer, who owes it, and a credit to the seller, who is entitled to receive it. Settlement statements record debits and credits to each party to arrive at the amounts due.

The buyer's final walk-through shortly before closing is primarily to:

• a.Sign the deed conveying title from the seller to the buyer ahead of the formal closing
• b.Confirm the property's condition and that agreed repairs were completed✓
• c.Order the lender's appraisal so the loan can be finalized before the closing takes place
• d.Renegotiate the purchase price downward based on current conditions in the housing market

The final walk-through lets the buyer verify that the property is in the agreed condition and that any required repairs were completed before closing. It is not the time to renegotiate price or to transfer title.

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

• a.Title insurance company, as part of the premium
• b.Real estate broker, out of the commission
• c.Seller (grantor), unless the parties agree otherwise✓
• d.Buyer, who pays all taxes and government fees on the purchase

In New York, the state real estate transfer tax is customarily paid by the seller (grantor), though the parties can agree otherwise. New York City and some localities impose additional transfer taxes, and rules and rates can change, so confirm current requirements.

New York's additional 'mansion tax' generally applies to residential sales of:

• a.$1 million or more, and it is typically paid by the buyer✓
• b.Under $500,000, targeting lower-priced starter homes
• c.Only commercial office and retail property, never any homes
• d.Any amount, since it applies to every residential sale

New York's mansion tax applies to residential purchases of $1 million or more and is generally paid by the buyer, starting at 1 percent with higher graduated rates in New York City. Rates and thresholds can change, so confirm the current law.

A management agreement between an owner and property manager should specify all of the following EXCEPT the:

• a.The compensation the property manager will earn for managing the owner's property
• b.The scope of the manager's authority and the specific duties they are expected to perform
• c.The term of the agreement, including its start date and how it may be ended by either party
• d.Future resale price the owner expects to receive for the building✓

A management agreement should define the manager's compensation, authority and duties, and the term of the agreement, among other things. A speculative future resale price is not a standard element of a management contract.

In New York, a residential security deposit collected by a landlord or manager must generally be:

• a.Spent immediately on advertising the unit to prospective replacement tenants
• b.Treated as nonrefundable income that the landlord may keep regardless of the condition
• c.Kept separate and returned, less lawful deductions, after the tenant moves out✓
• d.Applied directly toward the property manager's commission for leasing the apartment

New York generally limits most residential security deposits to one month's rent, requires them to be held separately, and requires timely return (less lawful deductions) after the tenant vacates. Because tenant-protection rules change, confirm the current law.

A property manager applying identical, written screening criteria to every applicant is:

• a.Violating fair housing law by imposing the very same standards on all of the applicants
• b.Following a sound practice that helps ensure fair, nondiscriminatory treatment✓
• c.Required by law to automatically reject any applicant household that includes minor children
• d.Permitted to charge applicants who belong to a minority group a higher security deposit

Applying consistent, objective, written screening standards to every applicant helps ensure compliance with fair housing law by treating applicants equally. Inconsistent standards, or ones tied to protected classes, invite discrimination claims.

A seller's agent asked by the buyer about a known leaking roof should:

• a.Truthfully disclose the known material defect✓
• b.Deny that any problem exists at all
• c.Tell the buyer to waive all inspection contingencies
• d.Change the subject to nicer features

Even while representing the seller, an agent must deal honestly with the buyer and disclose known material defects such as a leaking roof. An agent may not actively conceal defects or make false statements.

The term 'REALTOR' specifically refers to a real estate licensee who:

• a.Is a member of the National Association of REALTORS and follows its Code of Ethics✓
• b.Holds a broker license only, since salespersons are never permitted to use the designation
• c.Has simply passed the state licensing examination, whether or not they join any association
• d.Practices real estate exclusively within New York State rather than in any other state

REALTOR is a trademarked term for a licensee who is a member of the National Association of REALTORS and agrees to abide by its Code of Ethics. Not every licensee is a REALTOR; membership is voluntary.

Federal rules on appraiser independence prohibit a lender or agent from:

• a.Pressuring an appraiser to reach a predetermined value✓
• b.Paying the appraiser a customary, reasonable fee
• c.Giving the appraiser a copy of the sales contract
• d.Ordering an appraisal from a properly licensed appraiser

Appraiser independence rules prohibit coercing or pressuring an appraiser to hit a target value. Ordering the appraisal, sharing the sales contract, and paying a reasonable fee are all permissible; improperly influencing the value is not.

Licensed and certified appraisers must follow the:

• a.The Statute of Frauds, which requires certain contracts in writing
• b.The Fair Housing Act and nothing else
• c.The Truth in Lending Act (Regulation Z)
• d.Uniform Standards of Professional Appraisal Practice (USPAP)✓

Appraisers must comply with the Uniform Standards of Professional Appraisal Practice (USPAP), which sets ethical and performance standards for developing and reporting appraisals. Compliance is required for federally related transactions.

'Market value' is best described as the:

• a.Most probable price a willing buyer and seller would agree to in an arm's-length sale✓
• b.Original price that the current seller actually paid when they first bought the property
• c.Assessed value that the local municipality assigns to the property for annual tax purposes
• d.Cost that would be required to completely rebuild the structure using current materials

Market value is the most probable price a property should bring in a competitive, open market between a willing, informed buyer and seller acting without undue pressure. It differs from price paid, assessed value, and replacement cost.

A multiple listing service (MLS) primarily allows member brokers to:

• a.License new salespersons for the Department of State
• b.Share listings and offers of cooperation and compensation✓
• c.Avoid the agency disclosure requirement
• d.Set uniform commission rates that all member brokerages must charge

An MLS is a cooperative database where member brokers share listing information and offers of cooperation and compensation, broadening exposure for sellers and choices for buyers. It does not set commissions, which must remain independently determined.

New York's Property Condition Disclosure Act generally requires a seller of a one-to-four-family home to:

• a.Personally guarantee to the buyer that the home is completely free of any and all defects
• b.Provide the buyer a completed property condition disclosure statement, subject to current law✓
• c.Pay in full for the buyer's professional home inspection before the closing takes place
• d.Waive all implied warranties that would otherwise apply to the condition of the property

New York's Property Condition Disclosure Act generally requires sellers of one-to-four-family homes to give buyers a completed disclosure statement about the property's condition. The law has been amended in recent years, so licensees should confirm the current requirements and remedies.

Regarding registered sex offender information, a New York agent should generally:

• a.Guarantee to the buyer that no registered offenders live anywhere near the subject property
• b.Refuse to discuss the neighborhood in any way to avoid saying anything about its residents
• c.Personally investigate the surrounding area and disclose every registered offender to buyers
• d.Refer buyers to the publicly available state registry for that information✓

Under Megan's Law, sex offender registry information is publicly available, and agents typically refer buyers to the official registry rather than investigating or guaranteeing anything. This avoids inaccuracy while directing buyers to the authoritative source.

In a typical New York purchase, ordering the title search and clearing title is usually coordinated by the:

• a.Buyer's attorney and the title company✓
• b.The lender's appraiser
• c.The building's property manager
• d.The listing salesperson acting alone, with no attorney involved

New York is an attorney-closing state, so the buyer's attorney, working with a title company, typically orders the title search and coordinates clearing any title issues before closing. The salesperson facilitates but does not perform these legal and title functions.

A New York salesperson who drafts custom contract clauses and gives legal advice to clients risks:

• a.Committing a fair housing violation
• b.Engaging in the unauthorized practice of law✓
• c.Earning a higher commission for the service
• d.Nothing at all, because salespersons count as attorneys

Drafting custom legal provisions and giving legal advice can constitute the unauthorized practice of law, which salespersons are not permitted to do. Licensees should use standard forms and refer legal questions to an attorney, especially in an attorney-closing state like New York.

A general warranty deed is distinguished from other deeds because the grantor:

• a.Guarantees the title only against problems created during the grantor's own ownership
• b.Warrants the title against all defects, even those arising before the grantor owned the property✓
• c.Makes no promises whatsoever about the condition of the title being conveyed
• d.Transfers only whatever interest, if any, the grantor happens to hold

A general (full covenant) warranty deed gives the broadest protection: the grantor warrants against all title defects, including those predating the grantor's ownership. A bargain and sale deed with covenant warrants only against the grantor's own acts, and a quitclaim gives no warranties at all.