New York Real Estate Salesperson — All Questions

Which of the following is considered real property rather than personal property?

• a.Loose furniture staged for a showing
• b.A tenant's freestanding refrigerator brought into an apartment
• c.A car parked in the driveway
• d.A built-in central heating system permanently attached to the building✓

Real property includes land and anything permanently affixed to it, such as a built-in heating system. Items that are movable and not attached, like a refrigerator brought in by a tenant, are personal property (chattel). The test of a fixture looks at attachment, adaptation, and intent.

The bundle of rights in real property ownership does NOT typically include which of the following?

• a.The right to sell or transfer the property
• b.The right to violate local zoning laws✓
• c.The right to exclude others
• d.The right to use the property

The bundle of rights includes possession, control, enjoyment, exclusion, and disposition. It never includes a right to break the law, so violating zoning ordinances is not part of ownership rights. All ownership rights remain subject to government limits such as police power.

A fee simple absolute estate is best described as:

• a.A lease of land that runs for ninety-nine years
• b.The highest and most complete form of ownership, with unlimited duration✓
• c.An estate that automatically ends when the owner dies, leaving nothing to devise
• d.A nonpossessory right to use land that is owned by another for a limited purpose

Fee simple absolute is the greatest interest one can hold in real property, lasting indefinitely and freely inheritable and transferable. A life estate ends at death and an easement is only a right to use another's land. It remains subject to government powers such as taxation and eminent domain.

An easement appurtenant benefits:

• a.A specific individual regardless of land ownership
• b.The servient tenement exclusively
• c.Only the government
• d.The dominant tenement, and it transfers with that parcel of land✓

An easement appurtenant runs with the land and benefits the dominant tenement while burdening the servient tenement. When the dominant parcel is sold, the easement transfers automatically. An easement in gross, by contrast, benefits a person or entity rather than a parcel.

Which government power allows the taking of private property for public use with just compensation?

• a.Taxation
• b.Escheat
• c.Eminent domain✓
• d.Police power

Eminent domain is the power to take private property for public use, exercised through condemnation, and it requires payment of just compensation. Escheat transfers property to the state when an owner dies without heirs. Police power regulates use for public welfare, such as zoning.

The process by which the state acquires property when an owner dies leaving no will and no heirs is called:

• a.Eminent domain
• b.Accretion
• c.Adverse possession
• d.Escheat✓

Escheat returns property to the state when a person dies intestate with no identifiable heirs, preventing land from being ownerless. Adverse possession is a private acquisition through hostile, open use over time. Accretion is the gradual addition of land by natural deposit of soil.

A form of co-ownership that includes the right of survivorship is:

• a.Ownership in severalty
• b.A leasehold estate
• c.Joint tenancy✓
• d.Tenancy in common

Joint tenancy carries the right of survivorship, so a deceased owner's share passes automatically to the surviving joint tenants rather than to heirs. Tenancy in common has no survivorship, and each share passes by will or inheritance. Ownership in severalty means a single owner holds title alone.

Which of the following describes an encumbrance on real property?

• a.Another name for outright fee simple ownership
• b.A claim, lien, or restriction that affects the title or use of property✓
• c.The complete absence of any ownership interest in the land or its improvements
• d.The physical dimensions and acreage of a parcel

An encumbrance is any claim or liability attached to property that may affect its value or use, such as a lien, easement, or deed restriction. It does not prevent transfer of title but travels with the property. Buyers usually want title free of undisclosed encumbrances.

A physical feature of a property that reduces its value, such as an outdated floor plan, is an example of:

• a.Highest and best use
• b.Physical accretion
• c.Functional obsolescence✓
• d.Economic obsolescence

Functional obsolescence is a loss in value caused by outdated or poorly designed features within the property itself, like a bad floor plan. Economic (external) obsolescence comes from factors outside the property, such as a nearby nuisance. Both are forms of depreciation considered in the cost approach.

The principle that a property's maximum value is achieved when it is used in the way that produces the greatest return is called:

• a.Contribution
• b.Substitution
• c.Regression
• d.Highest and best use✓

Highest and best use is the legally permissible, physically possible, financially feasible, and maximally productive use of a site. Appraisers analyze it because value is tied to the most profitable reasonable use. Substitution, regression, and contribution are other valuation principles.

Under the principle of substitution, a buyer will pay no more for a property than:

• a.The original construction cost
• b.The cost of acquiring an equally desirable substitute property✓
• c.The assessed value for tax purposes
• d.The cost of the most expensive comparable in the market

The principle of substitution holds that value is set by the cost of an equally desirable alternative. This idea underlies the sales comparison approach to appraisal. A rational buyer will not overpay when a comparable substitute is available for less.

A metes and bounds legal description relies on:

• a.Distances, directions, and monuments to define boundaries✓
• b.The street address alone
• c.Township, range, and section grid lines of the government survey
• d.Lot and block numbers shown on a recorded subdivision plat map

Metes and bounds describes a parcel by measured distances and compass directions between reference points and monuments, always returning to the point of beginning. The lot and block system uses recorded subdivision plats. The rectangular survey system uses township and range grids.

The gradual increase of land along a shoreline caused by the deposit of soil is called:

• a.Avulsion
• b.Reliction
• c.Accretion✓
• d.Erosion

Accretion is the slow buildup of land by natural deposits of soil or sediment, and the new land belongs to the adjacent owner. Erosion is the gradual loss of land. Avulsion is a sudden loss or change of land, such as from a flood.

Which type of depreciation is generally considered incurable?

• a.A broken window pane a glazier can replace inexpensively
• b.Deferred maintenance such as peeling exterior paint on the siding
• c.External (economic) obsolescence caused by a nearby factory✓
• d.Worn wall-to-wall carpet that the owner can replace inexpensively

External or economic obsolescence stems from factors outside the property, such as a neighboring nuisance, which the owner cannot fix, so it is typically incurable. Deferred maintenance and many functional issues can be corrected at reasonable cost. Curability depends on whether the fix adds value at least equal to its cost.

A private limitation placed in a deed that controls how an owner may use their property is known as a:

• a.Mechanic's lien
• b.Easement in gross
• c.Restrictive covenant✓
• d.Prescriptive easement

A restrictive covenant is a private limitation in a deed or subdivision declaration that controls land use, such as prohibiting commercial activity. It runs with the land and binds future owners. Courts will not enforce covenants that are illegal or discriminatory.

In real estate valuation, the term 'situs' refers to:

• a.The preference or economic attractiveness of a location✓
• b.The chain of title
• c.The soil composition and subsurface drainage quality of the lot
• d.A type of adjustable-rate mortgage used to finance raw land

Situs is the economic attractiveness of a location, reflecting people's preference for one area over another. It is one reason location so strongly influences value. Because land is immobile, its situs cannot be moved, only the surrounding conditions can change.

Which of the following is a physical characteristic of land?

• a.Immobility✓
• b.Permanence of investment
• c.Situs
• d.Scarcity

The physical characteristics of land are immobility, indestructibility, and uniqueness (nonhomogeneity). Scarcity, situs, permanence of investment, and improvements are economic characteristics. These traits explain why land markets are local and why no two parcels are identical.

A life estate is an ownership interest that:

• a.Automatically converts to a lease after ten years
• b.Lasts for the duration of a specified person's life✓
• c.Is always held by a corporation
• d.Lasts forever and passes to heirs

A life estate grants ownership for the lifetime of a named person, after which title passes to the remainderman or reverts to the grantor. The life tenant may use and profit from the property but cannot commit waste. It cannot be willed because it ends at death.

Riparian rights refer to a landowner's rights concerning:

• a.Mineral deposits beneath the surface
• b.Underground utility easements that cross the parcel below grade
• c.The air space directly above the property up to navigable altitude
• d.The use of water in a river or stream adjacent to the land✓

Riparian rights govern an owner's use of water from a flowing watercourse such as a river or stream bordering the land. Littoral rights apply to owners bordering large, static bodies of water like lakes or oceans. Both are appurtenant to the land.

The concept that property value tends to be maximized when there is reasonable similarity among properties in a neighborhood is called:

• a.Anticipation
• b.Change
• c.Competition
• d.Conformity✓

The principle of conformity states that homes maintain and increase value when they are reasonably similar in style, size, and quality to surrounding properties. Sharp differences can drag value through regression or lift it through progression. Anticipation ties value to expected future benefits.

When a lower-value home gains value because it is located among higher-value homes, this illustrates the principle of:

• a.Substitution
• b.Progression✓
• c.Regression
• d.Contribution

Progression is the increase in a lesser property's value due to the presence of better, higher-value properties nearby. Regression is the reverse, where a superior property loses value among lesser ones. Both flow from the broader principle of conformity.

An appurtenance is best defined as:

• a.A temporary, revocable license to enter the land
• b.A right or improvement that belongs to and transfers with the land✓
• c.A movable item of personal property that the seller is free to take away
• d.A money lien recorded against the title

An appurtenance is a right, privilege, or improvement that attaches to and passes with the land when it is conveyed, such as an easement or water right. It is included in a sale unless specifically excluded. A license, by contrast, is a revocable personal permission that does not transfer.

In New York, a form of co-ownership available only to a legally married couple, carrying an automatic right of survivorship, is:

• a.Ownership in severalty
• b.Tenancy by the entirety✓
• c.Tenancy in common, which has no survivorship
• d.A tenancy at will created by the marriage

Tenancy by the entirety is a special joint ownership reserved for married spouses in New York and carries the right of survivorship. Neither spouse can unilaterally sever it or convey their interest without the other's consent, and it offers some protection from the individual creditors of one spouse.

Which statement about a tenancy in common is correct?

• a.It automatically includes a right of survivorship among all of the co-owners
• b.Each co-owner holds an undivided interest that can pass to heirs by will✓
• c.Only legally married couples are permitted to hold title in this manner in New York
• d.It always requires that every co-owner hold an exactly equal fractional ownership share

In a tenancy in common, co-owners hold undivided interests that need not be equal, and there is no right of survivorship. When a tenant in common dies, that share passes by will or intestate succession to heirs, not to the other co-owners.

If one joint tenant sells their interest to an outside third party, the new owner generally holds title as a:

• a.Life tenant for the seller's lifetime
• b.Tenant in common with the remaining owners✓
• c.Tenant by the entirety with the remaining owners
• d.Joint tenant with the remaining owners, keeping survivorship

Selling a joint tenant's interest destroys the unity of the parties and severs the joint tenancy as to that share. The buyer takes title as a tenant in common, while any remaining original owners continue to hold their shares in joint tenancy among themselves.

An owner of a condominium unit in New York typically holds:

• a.A life estate in the unit that automatically terminates whenever the owner moves away
• b.Shares of stock in a cooperative corporation together with a proprietary lease to occupy the unit
• c.A renewable long-term ground lease of the land with no ownership of the structure itself
• d.Fee simple title to the unit plus an undivided interest in the common elements✓

A condominium owner holds fee simple (real property) title to their individual unit and shares an undivided interest in the common elements with the other owners. This differs from a cooperative, where the resident owns shares of stock and a proprietary lease rather than real property.

A purchaser of a cooperative apartment in New York City actually acquires:

• a.Shares in the cooperative corporation and a proprietary lease to the unit✓
• b.An undivided fractional ownership interest in the underlying land parcel only
• c.A condominium unit deed together with an undivided share of the building's common elements
• d.Fee simple title to the physical apartment unit, recorded as a deed with the county clerk

A cooperative buyer does not receive real property title; instead they buy shares of stock in the corporation that owns the building and receive a proprietary lease giving the right to occupy a specific unit. The interest is legally personal property, not real property.

A distinctive feature of buying into a New York cooperative, compared with a condominium, is that:

• a.The cooperative's board of directors may interview and approve or reject the prospective buyer✓
• b.No monthly maintenance or common charges are ever owed once the shares are purchased
• c.The buyer always receives a recorded deed conveying real property to the individual unit
• d.The purchase can never involve any financing because shares cannot be pledged as collateral

Cooperative boards typically have the power to interview prospective purchasers and approve or reject them, subject to fair housing law. Condominium boards usually have only a limited right of first refusal, so co-op purchases involve more buyer scrutiny.

A deed conveys land 'so long as it is used as a public library,' with title reverting automatically if that use ever ends. This creates a:

• a.Fee simple absolute
• b.Fee simple determinable✓
• c.Nonfreehold leasehold estate renewed each year
• d.Conventional life estate measured by the librarian's life

Language such as 'so long as' creates a fee simple determinable, a defeasible estate that ends automatically if the stated condition is violated. The grantor retains a possibility of reverter, so title returns to the grantor without the need for a lawsuit.

In a life estate, the third party who receives full title when the measuring life ends is the:

• a.Reversion holder
• b.Foreclosure trustee
• c.Remainderman✓
• d.Servient lot

When a life estate ends, title passes to the remainderman if a third party was named to receive it. If instead the property returns to the original grantor, the grantor is said to hold a reversion rather than a remainder.

An owner whose land borders a large lake or the ocean holds which type of water rights?

• a.Prior appropriation rights
• b.Riparian rights
• c.Percolating water rights
• d.Littoral rights✓

Littoral rights belong to owners of land bordering large, static bodies of water such as lakes, seas, and oceans, generally extending to the mean high-water mark. Riparian rights, by contrast, apply to land along flowing watercourses like rivers and streams.

A contractor who is not paid for improvements made to a property may protect the debt by filing a:

• a.Lis pendens
• b.Mechanic's lien against the property✓
• c.Satisfaction of mortgage discharging the existing lien
• d.Estoppel certificate confirming the unpaid mortgage balance

A mechanic's lien is a specific, statutory lien that secures payment for labor or materials furnished to improve real property. In New York the lien must be filed within statutory time limits, and it attaches only to the improved property.

Which of the following is a general lien rather than a specific lien?

• a.A judgment lien attaching to all of the debtor's property in the county✓
• b.A first mortgage recorded against one particular parcel pledged as loan security
• c.A mechanic's lien for construction work performed on a single named property
• d.A general real estate tax lien assessed against one specific lot for the year

A general lien attaches to all of a debtor's property rather than a single parcel. A money judgment, once docketed, becomes a general lien against real property the debtor owns in that county. Mortgages, mechanic's liens, and property tax liens are specific liens tied to one property.

In a typical priority contest among liens, which usually takes priority regardless of when it was recorded?

• a.The first mortgage recorded by the lender
• b.A general real estate (ad valorem) tax lien✓
• c.A mechanic's lien filed by the contractor
• d.A judgment lien docketed against the owner before any other claim

Real estate tax and special assessment liens generally take priority over other liens regardless of recording date. Most other liens follow the 'first to record, first in right' rule, so a purchase-money first mortgage typically outranks later liens.

A mortgage is best classified as a:

• a.Involuntary lien
• b.Voluntary, specific lien✓
• c.Involuntary, specific lien imposed without consent
• d.Statutory, general lien on every property owned

A mortgage is voluntary because the owner willingly pledges the property, and it is specific because it attaches only to the described parcel. Involuntary liens, such as tax or judgment liens, arise by law without the owner's agreement.

A landlocked parcel with no access to a public road may obtain the right to cross a neighboring parcel through an:

• a.Easement by necessity✓
• b.Estate at sufferance
• c.Encroachment across the boundary line
• d.Easement in gross held by a utility company

An easement by necessity is created when a parcel would otherwise be landlocked, giving the owner a legal right of access across adjoining land. Courts imply it because land must have a means of ingress and egress to be usable.

An easement acquired through open, continuous, and hostile use of another's land for the statutory period is an:

• a.Easement by prescription✓
• b.Easement by reservation
• c.Easement in gross granted to a pipeline company
• d.Easement appurtenant created by express written grant

A prescriptive easement arises when someone uses another's land openly, notoriously, continuously, and without permission for the statutory period, which is ten years in New York. Unlike adverse possession, it grants a use right rather than ownership.

A neighbor's fence built two feet over the boundary onto the adjoining lot is an example of an:

• a.Annual emblement
• b.Easement in gross
• c.Appurtenance
• d.Encroachment✓

An encroachment is an unauthorized physical intrusion of an improvement onto adjoining property. It is usually revealed by a survey and can cloud title or affect marketability until it is resolved.

A ballgame ticket that grants temporary, revocable permission to enter another's land is best described as a:

• a.Fee simple interest
• b.Easement appurtenant
• c.Profit
• d.License✓

A license is personal permission to use another's land for a specific purpose; it is revocable, does not transfer with the land, and creates no ownership interest. An easement, by contrast, is a more permanent right that usually runs with the land.

A property owner who wants to build in a way that does not meet a zoning setback requirement would typically seek a:

• a.Certificate of occupancy
• b.Spot rezoning of the parcel by the mayor
• c.Special warranty deed limiting the grantor's title covenants
• d.Variance from the zoning board of appeals✓

A variance is permission to deviate from a specific zoning requirement, such as a setback or height limit, granted by the zoning board of appeals when strict compliance would cause hardship. It does not change the underlying zoning classification.

A lawful commercial building that no longer matches a newly adopted residential zoning classification becomes a:

• a.Legal nonconforming use, often called 'grandfathered'✓
• b.Variance holder allowed to deviate from the rules
• c.Spot zone singled out for inconsistent treatment
• d.Parcel subject to escheat because its use now conflicts with the zoning

A legal nonconforming use is a use that was lawful before a zoning change but no longer conforms to the new rules. It is typically allowed to continue ('grandfathered'), though expansion or rebuilding after damage may be restricted.

A church or school permitted in a residential zone under specified conditions usually operates under a:

• a.Private deed restriction
• b.Nonconforming use
• c.Special use permit✓
• d.Use variance for hardship

A special use permit (conditional use) allows a use that the zoning ordinance expressly permits in a district when specified conditions are met, such as a school or house of worship. It is planned for in the ordinance rather than being an exception to it.

The illegal practice of rezoning a single small parcel in a way inconsistent with the surrounding area is called:

• a.Buffer zone
• b.Inverse condemnation
• c.Downzoning an entire district
• d.Spot zoning✓

Spot zoning is the improper singling out of one parcel for treatment different from the surrounding area, benefiting that owner without regard to the comprehensive plan. Courts often strike it down as arbitrary and inconsistent with sound planning.

Local zoning ordinances are an exercise of which government power?

• a.Police power✓
• b.Escheat
• c.Taxation
• d.Eminent domain

Zoning is an exercise of police power, the government's authority to regulate for the health, safety, morals, and general welfare of the community. Unlike eminent domain, police power does not require compensation for reasonable regulation.

Before a newly constructed home may be legally occupied, the municipality generally must issue a:

• a.Satisfaction piece
• b.Certificate of reasonable value
• c.Certificate of occupancy✓
• d.Estoppel certificate from the lender

A certificate of occupancy is issued by the local building department after inspections confirm the structure complies with building codes and is safe to occupy. Occupying a building without a required certificate can lead to penalties.

In deciding whether an item is a fixture (real property) or personal property, courts weigh all of the following EXCEPT the:

• a.Original retail price the buyer paid for the item✓
• b.Method of attachment to the real estate
• c.Intention of the party who installed it
• d.Adaptation of the item to the property's specific use

The classic fixture tests are attachment (annexation), adaptation to the real estate, and the intention of the party who installed the item, with an agreement between the parties often controlling. The price originally paid is not part of the legal test.

Shelving and equipment a commercial tenant installs to operate their business are typically:

• a.Emblements belonging to the next tenant
• b.Permanent fixtures that must remain with the landlord after the term
• c.Real property that transfers to the landlord upon installation
• d.Trade fixtures the tenant may remove before the lease ends✓

Trade fixtures are items a commercial tenant attaches to run their business, and the tenant generally may remove them before the lease ends, repairing any damage. If the tenant fails to remove them in time, they may become the landlord's property by accession.

Annual crops planted by a tenant farmer, known as emblements, are generally treated as:

• a.Real property that stays with the land when title transfers
• b.Fixtures that pass to a buyer of the land at closing
• c.The landlord's personal property, passing to the owner at lease end
• d.The tenant's personal property, which the tenant may harvest✓

Under the doctrine of emblements, crops a tenant plants and cultivates are treated as the tenant's personal property, and the tenant retains the right to re-enter and harvest them even after the tenancy ends. Perennial or naturally growing plants are usually treated as real property.

The right to use the space above the surface of a parcel, which can be sold or leased separately, is called:

• a.Prior appropriation rights
• b.Air rights✓
• c.Gas rights
• d.Subsurface rights

Air rights are the rights to use the space above a parcel, and in dense areas like New York City they can be sold or leased separately, for example transferable development rights over rail yards. Owners may not use air space in a way that unlawfully interferes with aircraft.

The right to extract minerals, oil, or gas from beneath a parcel is part of the owner's:

• a.Police power
• b.Subsurface (mineral) rights✓
• c.Littoral rights along a lake or sea
• d.Air rights above the surface

Subsurface or mineral rights include the right to extract minerals, oil, and gas beneath the land. Like air rights, these rights can be sold or leased separately from the surface, splitting ownership of a single parcel.