New York Real Estate Salesperson Examination flashcards

A salesperson must refuse any discriminatory instruction from a client, even if it means losing the listing, as compliance would be a violation of fair housing laws.

• Fair Housing Act prohibits discrimination.
• Salesperson cannot comply with unlawful requests.
• Duty to uphold law supersedes client's instructions.

Memory trick: Fair Housing is Law, No Client Can Break!

In New York, when a dispute arises over escrow funds, the broker must hold the funds in the escrow account until the parties agree in writing or a court orders disbursement.

• Broker remains neutral.
• Funds stay in escrow.
• Requires written agreement or court order.

Memory trick: When funds fight, let the law decide or parties unite

In New York, all real estate advertisements placed by a salesperson must clearly identify the name of their supervising broker or brokerage firm.

• Mandatory disclosure for transparency.
• Ensures accountability.
• Applies to all forms of advertising.

Memory trick: Salesperson's voice needs the broker's name.

Distressed sales (e.g., foreclosures, short sales) do not typically reflect fair market value due to the seller's motivation. They should be used cautiously in a CMA, often as explanatory notes rather than primary comparables.

• Distressed sales are not arm's length transactions.
• They can depress market value unnaturally.
• Best practice is to note them with explanation, relying on non-distressed comps.

Memory trick: Contextualize the Comps, Don't Confuse the Value.

An agent's obligation to act at all times solely in the best interests of their principal, even above their own interests.

• Puts client's interests first.
• Requires full disclosure of material facts to client.
• Central to the agency relationship.

Memory trick: OLD CAR is how agents serve their heart

In New York, real estate brokers must retain all transaction records, including escrow account ledgers and bank statements, for a minimum of three years.

• Applies to all transaction records.
• Minimum retention period is three years.
• Ensures accountability and audit readiness.

Memory trick: Three years to keep the deal's history clear.

The illegal practice of guiding prospective buyers or renters to or away from certain neighborhoods based on protected characteristics.

• Violates Fair Housing Act and NY Human Rights Law.
• Can be subtle or overt.
• Broker's duty to client does not override anti-discrimination laws.

Memory trick: Fair Housing: No Steering, No Blockbusting, No Redlining!

The fiduciary duty of care requires a real estate agent to apply their skill and knowledge to protect their client's best interests, including advising them on potential risks and consequences of their decisions, even if the client ultimately chooses a risky path.

• Agent must use reasonable skill and care.
• Advise clients on risks and benefits.
• Document advice given, especially for risky decisions.
• Protect client's interests above all else.

Memory trick: Always Advise, Always Act in Client's Interest.

Advertising a salesperson's language proficiency is permissible as a service. However, advertisements must not be targeted or worded in a way that suggests a preference, limitation, or discrimination based on national origin, language, or any other protected characteristic, and must be broadly distributed.

• Fair housing laws apply to advertising content and distribution.
• Advertising language skills as a service is generally allowed.
• Targeted advertising to specific demographic groups can be discriminatory.
• Ads should promote inclusivity, not exclusivity.

Memory trick: Advertise Broadly, Not Biasedly.

New York real estate brokers are legally required to retain all transaction-related records for a minimum of three years from the date of the transaction.

• Mandatory for all transaction documents.
• Ensures accountability and audit trail.
• Applies to contracts, disclosures, correspondence, etc.

Memory trick: Three years for real estate records, clear as day!

In New York, security deposits for residential rentals must be in interest-bearing accounts. Interest belongs to the tenant, unless the property has six or more units, where the landlord may retain it.

• Interest-bearing accounts required.
• Tenant is typically entitled to the interest.
• Exception for properties with six or more units (landlord can retain interest).

Memory trick: Deposit interest: tenant's gain, unless the building is big.

In New York, a real estate salesperson must inform their supervising broker of any other employment. The broker is then responsible for ensuring that this outside employment does not create a conflict of interest or hinder the salesperson's ability to perform their real estate duties.

• Salesperson must notify their broker of other jobs.
• Broker must assess for conflicts of interest.
• Broker must ensure no interference with real estate duties.
• Broker is ultimately responsible for salesperson's conduct.

Memory trick: Two Jobs? Tell the Boss, Check the Balance.

In New York, real estate brokers must deposit all funds belonging to others (e.g., earnest money) into a designated escrow account within three business days of receipt.

• Applies to all client funds.
• Mandated by NY Real Property Law.
• Ensures proper handling and security of funds.

Memory trick: Three Days To Deposit What's Not Yours.

In New York, real estate brokers are prohibited from accepting post-dated checks as earnest money deposits.

• Earnest money must be immediately available.
• Post-dated checks create uncertainty and potential issues.
• Brokers must request a currently dated form of payment.

Memory trick: No future money for a current deal.

A real estate broker's legal and ethical obligation to oversee the activities of their associated salespersons, ensuring compliance with laws and ethical standards.

• Includes training and guidance.
• Ensures legal and ethical conduct.
• Broker is responsible for salesperson's actions.

Memory trick: Broker's watchful eye, keeps salespersons flying high

A real estate salesperson must immediately report any client complaints, especially those involving legal threats or regulatory bodies, to their supervising broker. The broker is responsible for overseeing and addressing such issues.

• Salespersons work under broker's license and supervision.
• All client complaints require broker notification.
• Brokers are responsible for resolving disputes involving their salespersons.
• Salespersons should not attempt to resolve legal matters independently.

Memory trick: When Trouble Knocks, Tell the Boss.

In New York, any cash earnest money received by a real estate broker must be deposited directly into a segregated escrow account within 24 hours of receipt, without co-mingling or conversion.

• All client funds must go into escrow.
• Cash deposits have a 24-hour deposit deadline.
• Co-mingling (mixing with personal/operating funds) is illegal.
• Conversion (using client funds for broker's own use) is illegal.

Memory trick: Cash to Custody, Quickly and Cleanly.

A buyer's agent must disclose all material facts known to them, which could influence the client's decision, to their buyer client.

• Mandatory for all material facts.
• Protects the client's best interests.
• Applies immediately upon discovering the fact.

Memory trick: A buyer's agent sees all, tells all to their client.

In New York, any advertisement placed by a real estate salesperson must prominently display the name of their supervising broker or brokerage firm.

• Broker's name is mandatory.
• Salespersons cannot advertise independently.
• Ensures consumer protection and oversight.

Memory trick: Salesperson speaks, but the broker's name echoes loud.

Real estate professionals must refuse any discriminatory instructions from clients, as compliance would violate fair housing laws. They have a duty to educate clients about protected classes and the illegality of such requests.

• Fair Housing Act prohibits discrimination based on protected classes.
• Age is a protected class in NY (and related to familial status federally).
• Salespersons cannot obey unlawful instructions.
• Duty to educate clients on fair housing.

Memory trick: Lawful Last, Discrimination Never.

New York real estate brokers are legally responsible for the supervision of their affiliated salespersons and must ensure their compliance with real estate law and ethical practices.

• Brokers must actively supervise salespersons.
• Includes training, monitoring, and corrective action.
• Failure to supervise can lead to broker liability.

Memory trick: Brokers Guide, Correct, and Oversee All.

Net listing agreements, where the seller specifies a net amount they wish to receive and the broker's commission is any amount above that, are generally prohibited or highly discouraged in New York due to the inherent conflict of interest they create for the broker.

• Illegal or highly restricted in NY.
• Broker's interest conflicts with client's interest.
• Broker incentivized to sell at highest price for personal gain, not necessarily client's best interest.
• Standard listing agreements are preferred.

Memory trick: No Net, No Conflict, No Problem.

A special bank account used by a broker to hold funds on behalf of clients, separate from the broker's own business or personal funds.

• Mandatory for earnest money deposits.
• Must be non-interest-bearing in New York.
• Protects client funds from co-mingling.

Memory trick: Keep Client Cash in a Clean, Clear Account

In New York, a real estate salesperson can only accept compensation for real estate services, including referral fees, from their own supervising broker.

• Compensation flows through the broker.
• Direct payment to salesperson from third party is prohibited.
• Broker is responsible for salesperson's actions.

Memory trick: All money flows through the broker's door

New York law requires all real estate advertisements by salespersons or brokers to prominently display the name of the licensed broker.

• Mandatory for all advertising.
• Ensures transparency and accountability.
• Applies to both print and digital media.

Memory trick: Always Be Clear on Broker's Name

The requirement for a real estate licensee to disclose any dual agency relationship or other dual roles that create a potential conflict of interest, and to obtain informed consent from all affected parties.

• Mandatory for transparency.
• Protects client's best interests.
• Requires written informed consent.

Memory trick: Two hats, one head: Disclose before you tread!

In New York, all real estate advertisements created by a salesperson must clearly state the name of the brokerage firm they are associated with.

• Ensures transparency in advertising.
• Identifies the supervising broker/firm.
• Required by New York Real Property Law.

Memory trick: Always Show Broker's Name When You Advertise.

Real estate professionals must avoid providing subjective opinions or making statements that could influence a client's decision based on protected characteristics, such as school quality, and instead direct clients to objective, verifiable sources.

• Steering is illegal under Fair Housing laws.
• Salespersons should never offer personal opinions on demographics or community quality.
• Always refer clients to official, objective data sources.

Memory trick: Direct, Don't Decide for Them.

Real estate brokers in New York are legally responsible for the proper supervision of their salespersons, which includes reviewing all advertising. Failure to adequately supervise can lead to disciplinary action against both the salesperson and the broker for violations.

• Brokers must supervise all salesperson activities.
• Advertising (including social media) requires broker approval.
• Both salesperson and broker can be disciplined for violations.
• Supervision is a non-delegable duty.

Memory trick: Linked Licenses, Shared Liabilities.

In New York, a real estate broker acting as a dual agent must obtain written informed consent from both the buyer and the seller. This requires a clear explanation of the limited fiduciary duties the broker can provide in a dual agency role.

• Dual agency is permitted in NY.
• Requires full disclosure of limited duties.
• Written informed consent from both parties is mandatory.
• Without consent, broker must withdraw or represent only one party.

Memory trick: Double Duty, Double Disclosure, Double Docs.

In New York, real estate salespersons are classified as independent contractors if they are compensated solely by commission and the broker does not control their work hours or methods, only the results.

• Compensation is commission-based.
• Broker controls results, not methods or hours.
• Salesperson pays own expenses and taxes.
• Required for specific tax and regulatory compliance.

Memory trick: Independent means commission-driven, not clock-controlled.

New York real estate advertising regulations mandate that all advertisements placed by a real estate salesperson, including directional signs, must clearly and conspicuously display the name of the licensed real estate broker with whom they are associated.

• Applies to all forms of advertising.
• Broker's name must be prominent.
• Ensures public knows who is ultimately responsible.
• Prevents misrepresentation of agency.

Memory trick: Broker's Brand, Always in the Ad's Hand.

The process of determining the annual tax amount due on a property based on its assessed value and the local tax rate.

• Assessed value is a percentage of market value.
• Tax rates can be expressed as mills, dollars per $100, or dollars per $1,000.
• Property taxes fund local government services.

Memory trick: Assessed value divided by a thousand, then times the rate, no floundering.

In New York, properties where certain events (e.g., natural death, illness, haunting) have occurred are generally NOT considered material defects requiring disclosure, unless directly inquired about by a buyer.

• Natural death not a material defect.
• HIV/AIDS status not disclosable.
• Disclosure only if directly asked by buyer.
• Focus on physical defects, not psychological impact.

Memory trick: NY's 'Stigma Silence' means no need to disclose, unless the buyer asks, then let it flow!

Real estate licensees must disclose all material facts to their clients, including legitimate age restrictions (e.g., 55+ communities), as it impacts the client's eligibility and use of the property.

• Age restrictions are material facts.
• Must be disclosed to client.
• Impacts buyer's eligibility/use.

Memory trick: Any property 'No-Go' must be a 'Know-Go' for your client.

An agent's fiduciary duty to exercise skill, expertise, and care in performing their responsibilities, acting competently and promptly in the client's best interest.

• Requires competence and effort.
• Includes prompt action.
• Breached by negligence or undue delay.

Memory trick: For your client, always 'Care for their affairs with Diligence and Flair'.

New York State Executive Law Article 15 prohibits discrimination in housing based on various protected characteristics, including disability, race, creed, color, national origin, sexual orientation, gender identity, military status, age, marital status, and familial status.

• Broader than federal Fair Housing Act in some protections.
• Applies to most housing transactions.
• Enforced by the NYS Division of Human Rights.

Memory trick: New York's Human Rights protect all in their homes.

The point in time when a real estate licensee has a meaningful conversation with a prospective client regarding specific property, needs, or confidential information, triggering agency disclosure requirements.

• Mandates disclosure of agency relationships.
• Ensures informed consent.
• Protects consumers.

Memory trick: First chat, then the form, no delay, keep it warm.

Loan points are fees paid to the lender at closing to reduce the interest rate or as an origination fee, calculated as a percentage of the loan amount.

• One point equals 1% of the loan amount.
• Paid by the borrower at closing.
• Can be used to 'buy down' the interest rate.

Memory trick: Down payment first, then points on the loan's thirst.

A buyer's agent must act solely in the best interests of their buyer client, including disclosing all material information that could influence the client's decision or negotiating position.

• Primary duty is to the client.
• Must prioritize client's interests above all others.
• Includes disclosing all material facts.

Memory trick: Always serve your buyer, their interests are your golden ticket.

A form of homeownership where residents own shares in a corporation that owns the building, and those shares entitle them to a proprietary lease for a specific unit.

• Shares are personal property.
• Board approval required for sale/sublease.
• Proprietary lease grants occupancy rights.

Memory trick: Co-op shares the building, condo owns the air.

A form of rent regulation in New York City and certain other municipalities that limits the amount a landlord can charge for rent and restricts rent increases to percentages set annually by the Rent Guidelines Board.

• Applies to buildings built before 1974 (with exceptions).
• Protects tenants from excessive rent increases and evictions.
• Rent increases set by the Rent Guidelines Board.

Memory trick: Stabilized rent, RGB's intent, not landlord's content.

In New York, residential security deposits must be held in a separate, interest-bearing escrow account in a New York bank, with the interest (less a 1% administrative fee) belonging to the tenant.

• Separate account required.
• Must be interest-bearing.
• Interest accrues to tenant (less fee).

Memory trick: Security deposits for NY tenants earn interest in a separate bank, like a locked treasure chest.

Monthly fees paid by condominium unit owners to the homeowners' association (HOA) to cover the costs of maintaining common areas, building insurance, utilities for common areas, and contributions to reserve funds.

• Mandatory for all unit owners.
• Varies by building and amenities.
• Covers collective expenses, not individual unit costs.

Memory trick: Common charges, shared burden, building's journey.

Real estate licensees are prohibited from providing legal advice, drafting legal documents, or engaging in any activity that constitutes the practice of law without being a licensed attorney.

• Applies to salespersons and brokers.
• Protects the public from unqualified legal advice.
• Requires referral to legal counsel for complex legal matters.

Memory trick: Stay in your lane, legal eagles not real estate names.

A financial ratio that compares the amount of a mortgage loan to the value of the property, used by lenders to assess risk.

• Calculated as (Loan Amount / Property Value) * 100%.
• Higher LTV ratios generally mean higher risk for lenders.
• Often determines if private mortgage insurance (PMI) is required.

Memory trick: Value times LTV is loan, then find down payment, add points on loan's own.

Under New York's rent control laws, landlords can apply for rent increases based on approved Major Capital Improvements (MCIs) to the building, with the percentage of increase determined by the HCR.

• Requires HCR approval.
• Applies to rent-controlled and rent-stabilized units.
• Calculated as a percentage of current rent.

Memory trick: Major improvements mean major adjustments to your rent.

The total amount of money a seller pays to a broker based on the agreed-upon commission rate and the final selling price of the property.

• Calculated on the selling price, not the listing price.
• Includes all agreed-upon commission percentages.
• Typically paid by the seller at closing.

Memory trick: Selling price is the base, commission rate is the pace.

A calculation used to analyze the profitability of income-generating real estate investments before the impact of debt service and income taxes.

• Calculated as Gross Operating Income minus Operating Expenses.
• Does NOT include mortgage payments (debt service).
• A key metric for property valuation and investment analysis.

Memory trick: Gross income first, then subtract operating expenses, no thirst for debt.

To qualify for a New York real estate salesperson license, applicants must complete a 75-hour Department of State-approved qualifying real estate course.

• 75 hours minimum.
• Must be from an approved provider.
• Prerequisite for the state exam.

Memory trick: 75 hours, pass the test, then put your skills to the quest.

In New York, while material defects must be disclosed, licensees generally follow a seller's lawful instruction regarding non-material defects after advising on best practices, balancing the duty of obedience with ethical considerations.

• Material defects require disclosure.
• Non-material defects: duty of obedience applies to lawful instructions.
• Agent should still advise on best practice of disclosing all known defects.

Memory trick: For small flaws, obey if lawful, but 'Suggest the Truth, then Stand by Your Client'.

Real estate licensees in New York must fully disclose any financial benefit or referral fee they receive for recommending ancillary services (e.g., lenders, attorneys, inspectors) to their clients.

• Required by New York License Law and RESPA (federal).
• Must be in writing.
• Ensures transparency and avoids undisclosed conflicts of interest.

Memory trick: Referral fees are fine, but disclosure is divine.

Sellers/agents should disclose known mold issues, especially if related to water damage. Buyers are advised to conduct inspections as mold can cause health problems and property damage.

• Requires moisture to grow.
• Can cause health issues (respiratory).
• Can damage property structure.
• Disclosure of known issues is crucial.

Memory trick: Mold needs water, so don't ignore; inspect and disclose, then you're at the door!

In New York, if a seller fails to complete and deliver a Property Condition Disclosure Statement (PCDS) to the buyer before the contract of sale is signed, the seller must provide a $500 credit to the buyer at closing.

• Applies to 1-4 family residential properties.
• Credit is a statutory penalty for non-disclosure.
• Does not excuse the seller from liability for willful misrepresentation.

Memory trick: No disclosure, five hundred goes.

A non-invasive investigation performed to identify potential or existing environmental contamination liabilities for a property, primarily for 'due diligence' purposes.

• Non-invasive (no sampling).
• Reviews historical records, site visit, interviews.
• Identifies 'Recognized Environmental Conditions' (RECs).
• Often required by lenders for commercial properties.

Memory trick: Phase One's the 'Recon' run, no digging, just looking for issues, my son!

A seller's agent should advise their client to obtain verifiable proof of a buyer's financial capability (e.g., pre-approval letter) rather than relying solely on verbal assurances, to protect the client's interests.

• Verbal claims may be insufficient.
• Advise client to request documentation.
• Protects seller's interest against unqualified buyers.

Memory trick: For buyer's cash, 'Advise to Ask for the Paper Flash'.

Comprehensive Environmental Response, Compensation, and Liability Act (1980), federal law establishing liability for hazardous substance releases and creating a trust fund for cleanup.

• Strict liability: no need to prove fault.
• Joint and several liability: any responsible party can be held liable for entire cost.
• Retroactive liability: applies to past actions.
• Applies to current owners, past owners, generators, transporters.

Memory trick: CERCLA's 'Strict, Joint, Retroactive' net catches all, even if you bought it, fault or not, you fall!

A listing agreement where the seller grants the broker the exclusive right to sell the property and promises to pay a commission if the property sells during the listing period, regardless of who finds the buyer.

• Broker earns commission even if seller finds buyer.
• Most common type of listing.
• Provides maximum protection for the broker.

Memory trick: Exclusive right, broker's might, commission's light.

A naturally occurring, colorless, odorless, radioactive gas that seeps from the ground into homes and can cause lung cancer. EPA recommends mitigation if levels are 4 pCi/L or higher.

• Naturally occurring, radioactive.
• Colorless, odorless, tasteless.
• Causes lung cancer.
• EPA action level: 4 pCi/L.

Memory trick: Radon's silent threat, if high, don't let it lie; test again, then mitigate, or you'll regret!

A real estate agent's legal and ethical obligation to disclose any known facts that could significantly affect a buyer's decision to purchase a property or the property's value.

• Must be known to the agent.
• Must significantly impact value or desirability.
• Includes environmental hazards.
• Failure to disclose can lead to liability.

Memory trick: Disclose all known 'Material Facts' or face the legal 'Wrath'!