New York Real Estate Salesperson — All Questions

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

• a.The Federal Trade Commission
• b.The Internal Revenue Service, through its real estate division
• c.The office of the county clerk in the county where the agent works
• 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 executed before the agent took any action at all
• d.A listing agreement the seller signed before the agent did anything at all

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 of the brokerage's listings in a single advertisement
• d.Working with several cooperating brokers on the same listed property at once

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.A dual agent
• b.A broker's agent for the listing broker
• c.Facilitator or transaction broker✓
• d.A designated sales agent for one side

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, which federal and state law both leave unprotected
• d.Only race and religion, both of which the federal Fair Housing Act already covers

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The fiduciary duty of accounting requires an agent to:

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

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

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

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

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

In New York, dual agency is permitted only when:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

• a.25
• b.16
• c.21
• d.18✓

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Which activity may a New York salesperson NOT do?

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

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

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

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

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

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

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

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

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

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

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

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

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

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