New York Real Estate Salesperson Examination flashcards

A single mortgage that covers multiple parcels of real estate, often used by developers to finance a subdivision.

• Covers several properties under one loan.
• Commonly used in real estate development.
• Includes a 'partial release clause' for selling individual lots.

Memory trick: A blanket covers many, just like this loan covers many lots.

In mortgage underwriting, collateral refers to the property itself, which serves as security for the loan. Its value and marketability are critical to the lender.

• Property's value determined by appraisal.
• Condition and marketability are assessed.
• Protects the lender if the borrower defaults.

Memory trick: Collateral is the house; if it's broken or weird, it's a risk.

A mortgage that finances the purchase of both real property (land and buildings) and personal property (such as appliances, furniture, or equipment) under a single loan.

• Bundles real and personal property.
• Common in new construction or commercial properties.
• Simplifies financing for integrated purchases.

Memory trick: A package deal includes more than just the house.

Insurance policy that protects the lender from losses if a borrower defaults on a mortgage loan, typically required when the down payment is less than 20% of the home's purchase price.

• Protects the lender, not the borrower.
• Required for conventional loans with LTV > 80%.
• Can often be cancelled once sufficient equity is built.

Memory trick: PMI protects the lender when your down payment is less than twenty.

A document sent by a lender directly to a borrower's employer to confirm employment status, income, and job stability as part of the loan underwriting process.

• Directly from employer to lender.
• Confirms income, position, start date.
• Crucial for assessing borrower's capacity to repay.

Memory trick: For real verification, go straight to the source: the employer.

A court order that allows a lender to collect the remaining balance of a debt from a borrower when the proceeds from a foreclosure sale are insufficient to cover the entire loan amount.

• Occurs after a foreclosure sale.
• Lender sues the borrower for the unpaid balance.
• Not permitted in all states or for all loan types.

Memory trick: If the sale falls short, the lender can still sue for the 'deficiency' amount.

A mortgage granted by the buyer to the seller as part of the purchase price of real estate. The seller effectively acts as the lender.

• Seller provides financing to the buyer.
• Often used when traditional financing is difficult.
• Can offer more flexible terms.

Memory trick: Purchase money means the seller helps you fund the purchase.

A mortgage loan insured by the Federal Housing Administration (FHA) designed to make homeownership more accessible, especially for first-time homebuyers.

• Requires a low down payment (as low as 3.5%).
• Has more flexible credit score requirements.
• Requires mortgage insurance premiums (MIP).

Memory trick: FHA helps first-timers find their home's safe haven.

A lending strategy where the interest rate and other loan terms (e.g., down payment, fees) are adjusted based on the lender's assessment of the borrower's credit risk and/or the collateral's risk.

• Higher risk borrowers/properties receive less favorable terms.
• Must be applied consistently and non-discriminatorily.
• Legal and common practice in lending.

Memory trick: Fair lending means no bias, but risk-based means assessing danger.

A government-backed mortgage program designed to help low- and moderate-income individuals purchase homes in eligible rural areas, often with no down payment requirement.

• 0% down payment possible.
• Targeted at eligible rural areas.
• Income limits apply to borrowers.
• Promotes rural development and homeownership.

Memory trick: VA and USDA: No cash needed, just the right path to tread.

A mortgage loan with an interest rate that changes periodically based on an index, which can cause monthly payments to increase or decrease.

• Interest rate fluctuates with market conditions.
• Initial interest rate is often lower than fixed-rate mortgages.
• Carries the risk of increased monthly payments over time.

Memory trick: ARMs can climb or fall, like a mountain's call.

A mortgage loan where the interest rate remains the same for the entire term of the loan, resulting in predictable, unchanging monthly principal and interest payments.

• Constant interest rate.
• Predictable monthly payments.
• Common terms are 15, 20, or 30 years.

Memory trick: Fixed means 'forever the same,' adjustable means 'always changing.'

A mortgage loan where the lender shares in the income, profits, or appreciation of the property, in addition to receiving principal and interest payments.

• Lender takes an equity interest in the property.
• Common in commercial real estate financing.
• Lender participates in property's financial performance.

Memory trick: Participation: The lender wants a slice of the pie, not just the crust.

The illegal practice of lending money at interest rates that exceed the maximum legal limits established by state or federal law.

• State laws define legal interest rate caps.
• Protects borrowers from excessive interest charges.
• Violations can lead to severe penalties for lenders.

Memory trick: Usury is too much interest, redlining is rejecting areas, predatory is preying on people.

A condition that must be met or occur before an obligation under a contract becomes enforceable or before the contract itself becomes binding.

• Precedes the obligation.
• If not met, obligation may be excused.
• Example: 'subject to financing'.

Memory trick: Pre-cedent: Before the event. Sub-sequent: After the event.

A legal defense to breach of contract where unforeseen circumstances make it objectively impossible for a party to perform their contractual obligations.

• Must be objective impossibility, not just difficulty.
• Event must be unforeseen and outside parties' control.
• Often results in contract termination without liability.

Memory trick: Performance, Agreement, Impossibility, Operation of Law: How contracts end.

A legal concept where a landlord's actions (or failure to act) render the leased premises uninhabitable or unsuitable, forcing the tenant to vacate, thereby terminating the lease.

• No physical eviction occurs.
• Landlord's breach makes premises unusable.
• Tenant must actually vacate the property.
• Relieves tenant of further rent obligation.

Memory trick: Bad landlord, tenant can flee, it's 'constructive' freedom.

A court order compelling a party to perform a specific act, usually to fulfill the terms of a contract, rather than paying damages.

• Often used in real estate contracts (unique property).
• Granted when monetary damages are inadequate.
• Forces breaching party to complete the original agreement.
• Not typically used for personal services contracts.

Memory trick: Perform, Rescind, Damages: How a buyer fights for their deal.

A counteroffer serves as a rejection of the original offer and simultaneously creates a new offer.

• Terminates original offer.
• Shifts roles: original offeree becomes offeror.
• Must be accepted to form a contract.

Memory trick: Countering an offer is like hitting a reset button, the old offer is gone.

A legally binding real estate purchase contract between a seller and a buyer is formed only when the seller unequivocally accepts the buyer's offer.

• Offer must be clear.
• Acceptance must be unconditional.
• Communication of acceptance is vital.

Memory trick: Offer and Acceptance: It takes two to tango, one to ask, one to agree.

A contract may automatically terminate if a specified condition or contingency is not met by a defined deadline, especially when explicit language in the contract dictates such termination.

• Triggered by unmet conditions.
• No further action required by parties.
• Parties are discharged from obligations.

Memory trick: Contingency Clock Ticks Out: If the condition isn't met, the contract naturally dies.

The cancellation of a contract, returning the parties to the positions they were in before the contract was formed.

• Annuls the contract.
• Often used in cases of fraud, mistake, or misrepresentation.
• Restores original status quo.

Memory trick: R-e-s-c-i-n-d: R-eturn E-veryone S-tart C-lean, I-n-itial N-ature D-estroyed.

For an offer to be validly accepted and form a binding contract, the acceptance must be communicated to the offeror by the offeree or their authorized agent.

• Acceptance must be conveyed.
• Silence generally not acceptance.
• Mailbox Rule exception for proper dispatch.

Memory trick: Acceptance isn't real until it's 'Heard or Read' by the offeror.

The express refusal by the offeree to accept an offer, which immediately terminates the offer.

• Must be communicated to the offeror.
• Terminates the offer's legal power of acceptance.
• Cannot be later accepted by the offeree.

Memory trick: An offer's life ends fast if it's taken back.

A provision in a contract stating that any changes or amendments to the contract must be made in writing and signed by all parties.

• Prevents informal changes.
• Enhances contract certainty.
• Oral modifications are generally unenforceable if clause exists.

Memory trick: If it says 'Write It Down', then you can't just Talk It Out.

A leasehold estate that lasts for a fixed period of time, with a definite beginning and end date, and does not automatically renew.

• Fixed term (e.g., 1 year, 6 months).
• No notice required for termination at end of term.
• Automatically terminates on the specified end date.
• Can be for any specific duration, not just 'years'.

Memory trick: Years, Period, Will, Suffer: The four lease types.

A contractual provision that pre-determines a specific amount of money to be paid as damages in the event of a breach.

• Must be a reasonable forecast of actual damages.
• Prevents need to prove actual damages in court.
• Common in earnest money agreements.

Memory trick: Liquidated damages are like a pre-set 'ouch' fund for a broken promise.

A listing agreement where one broker is authorized to act as the exclusive agent, but the seller reserves the right to sell the property themselves without paying a commission.

• Broker gets commission if they or another broker sell.
• Seller retains right to sell and avoid commission.
• Less common than exclusive right-to-sell.

Memory trick: Exclusive Agency: Agent gets it, UNLESS the Seller handles it.

A legal principle requiring certain types of contracts, such as those involving real estate, to be in writing to be legally enforceable.

• Prevents fraudulent claims.
• Applies to contracts for sale of land, leases over one year, etc.
• Requires a written memorandum signed by the party to be charged.

Memory trick: Written land deals prevent legal sand traps.

A contract in which one party makes an express promise and the other party performs an act in response.

• Promise for an act.
• Contract formed upon completion of the act.
• Example: 'I will pay you $100 if you mow my lawn.'

Memory trick: Uni-act, Bi-promise: Unilateral means one act, Bilateral means two promises.

A contract in which the terms and conditions are clearly stated, either verbally or in writing, by the parties involved.

• Terms are explicitly agreed upon.
• Can be oral or written.
• Opposite of an implied contract.

Memory trick: Express contracts say it all, no guessing allowed.

A contract that appears valid but one or both parties have the option to either affirm or reject it due to a defect (e.g., misrepresentation, duress, minor party).

• Binding until disaffirmed.
• Option to void rests with the injured party.
• Often results from lack of genuine assent.

Memory trick: Valid, Void, Voidable: The legal traffic lights of a deal.

A provision in a contract that specifies a predetermined amount of money to be paid as compensation for a breach of contract.

• Must be a reasonable estimate of actual damages.
• Cannot be a penalty.
• Often used with earnest money deposits in real estate.
• Limits recovery to the specified amount.

Memory trick: Damage, Perform, or Keep the Cash: Seller's choices.

For a valid acceptance, especially in unilateral contracts, the offeree must have knowledge of the offer's existence and terms prior to performing the requested act.

• Essential for 'meeting of the minds'.
• Without knowledge, no intent to accept.
• Applies to both unilateral and bilateral contracts.

Memory trick: To accept, you must 'Know It and Show It' – know the offer, then perform/promise.

A provision in a real estate contract stating the buyer accepts the property in its current condition, relieving the seller of responsibility for most defects.

• Applies to observable defects.
• Does NOT typically cover known, undisclosed latent defects.
• Does NOT relieve seller of disclosure obligations for material defects.

Memory trick: 'As is' means 'as seen', not 'as hidden'.

The withdrawal of an offer by the offeror before it has been accepted by the offeree.

• Must occur before acceptance.
• Terminates the offer.
• Can be communicated directly or indirectly.

Memory trick: An offer's life ends fast if it's taken back.

The fundamental components required for a contract to be legally binding and enforceable.

• Offer and Acceptance (Mutual Assent)
• Consideration
• Legally Competent Parties
• Lawful Objective

Memory trick: CALM contracts are always good to go.

A lien placed against a specific property without the owner's consent, typically due to unpaid taxes, assessments, or municipal services (like water or sewer bills).

• Attaches to a single, specific property
• Imposed by law, not by choice of owner
• Examples include property tax liens, mechanic's liens, utility liens

Memory trick: Liens are like 'Property Chains'—some you choose, some are forced.

A personal, revocable, and non-assignable privilege to do a specific act or series of acts on the land of another, without possessing any estate or interest in the land.

• Temporary and personal
• Can be revoked by the grantor at any time
• Does not create an interest in the land

Memory trick: Licenses are like 'Permission Slips' for land, easily given and taken back.

A deed that implies the grantor holds title to the property, but does not provide express warranties against encumbrances. In New York, it's often used with a covenant against grantor's acts.

• Implies grantor has title
• Does not contain full warranties of title
• Often includes a covenant against grantor's own acts (Bargain and Sale Deed with Covenants)

Memory trick: Deeds are like 'Promise Papers'—some promise a lot, some promise very little.

The order in which liens are paid off in the event of a foreclosure, generally determined by the date the lien was recorded.

• First in time, first in right (for recorded liens).
• Property taxes and special assessments usually have super-priority.
• Determines who gets paid first from sale proceeds.

Memory trick: Recording's Ranks Rule, always remember the date.

A specific, involuntary lien placed on real property by a government entity for unpaid property taxes, typically holding super-priority over other liens.

• Specific: attaches only to the property taxed.
• Involuntary: imposed by law, not by choice.
• Super-priority: generally paid first in foreclosure, even over first mortgages.
• Can lead to tax sale if unpaid.

Memory trick: Tax liens are tough, specific, and top.

A special form of co-ownership available only to married couples, characterized by the right of survivorship and protection against individual creditor claims.

• Requires the 'four unities' plus the fifth unity of marriage.
• Property automatically passes to the surviving spouse.
• Creditors of one spouse cannot attach the property.

Memory trick: Common is separate; Joint is together; Entirety is married, no tether.

An easement that grants a personal right to use another's land to an individual or entity, rather than benefiting an adjoining parcel of land.

• Does not 'run with the land' in the same way as appurtenant easements.
• Often used by utility companies for power lines, pipelines, etc.
• Benefits the holder of the easement, not a specific property.

Memory trick: Gross gives general grants; Appurtenant is for adjacent access.

A deed that provides the greatest protection to the grantee, offering warranties against defects in the title that arose at any point in the property's history.

• Contains five covenants (seisin, quiet enjoyment, against encumbrances, further assurances, warranty forever).
• Grantor defends title against all claims, past and present.
• Most commonly used deed in real estate sales.

Memory trick: Quit is quick, Special sells some, General guarantees great.

A fee simple estate that automatically terminates and reverts to the grantor upon the occurrence of a stated event or condition.

• Uses phrases like 'for as long as,' 'while,' 'until,' 'during.'
• Automatic reversion to the grantor or his heirs.
• A type of defeasible fee estate.

Memory trick: Determinable is automatic; Condition Subsequent means you're sued.

A legally enforceable agreement that imposes limitations or conditions on the use of real property, often found in deeds or separate declarations.

• Runs with the land, binding future owners.
• Used to maintain property values and community standards.
• Can cover architectural styles, setbacks, land use, etc.

Memory trick: Covenants create community conformity.

A legal document filed by a creditor acknowledging that a judgment debt has been fully paid, thereby releasing any associated liens.

• Required to clear a judgment lien from a property's title.
• Must be filed by the lienholder (creditor) with the court.
• Ensures clear title for subsequent transactions.

Memory trick: Pay the debt, prove it's done, then the lien is gone.

In New York, a form of co-ownership exclusively for married couples with the right of survivorship. Upon divorce, this ownership automatically converts to a tenancy in common.

• Exclusive to married couples
• Includes right of survivorship
• Terminated by divorce, converting to tenancy in common

Memory trick: Divorce 'Splits the Whole' into separate, equal parts.

A leasehold estate that automatically renews for successive periods (e.g., month-to-month) until either party gives proper notice of termination.

• Created by express agreement or by holding over with landlord's acceptance of rent.
• Requires notice to terminate, typically one period in advance.
• No definite end date, unlike an estate for years.

Memory trick: Years is fixed; Periodic keeps paying; Will is whenever; Sufferance is staying.

The reversion of property to the state when a person dies without a will (intestate) and has no legal heirs.

• Prevents property from being unowned.
• A form of involuntary transfer of title.
• Governed by state law.

Memory trick: Escheat ensures the state gets the estate if no heirs await.

The essential components required for a deed to legally transfer title to real property.

• Grantor must be legally competent.
• Grantee must be identified.
• Words of conveyance (granting clause).
• Legal description of property.

Memory trick: Grantor's signature grants, grantee's acceptance gets.

An appraisal method used for income-producing properties that converts expected future income into a present value.

• Value = Net Operating Income (NOI) / Capitalization Rate (Cap Rate).
• Used for commercial and investment properties.
• Requires accurate income and expense projections.

Memory trick: Income's Value is NOI over Cap Rate.

An appraisal method that estimates value by comparing the subject property to similar recently sold properties (comparables) and making adjustments for differences.

• Adjustments are always made to the comparable properties.
• If comparable is inferior to subject, add value to comparable.
• If comparable is superior to subject, subtract value from comparable.

Memory trick: If Comp is Worse, Add Cash; If Comp is Better, Subtract Treasure.

A loss in property value due to factors outside the property itself, often incurable.

• Caused by external, environmental, or economic factors.
• Often incurable.
• Examples: proximity to undesirable facilities, economic downturns.

Memory trick: Depreciation: 'PFE' for Physical, Functional, External.

Reviewing properties that failed to sell within their listing period to understand market resistance and pricing thresholds.

• Helps identify properties that were likely overpriced.
• Provides insight into what the market will not bear.
• Crucial for advising sellers on realistic pricing.

Memory trick: CMA: Sold, Active, Expired tell the tale.

An appraisal principle stating that a property's value is maximized when it is in harmony with its surroundings and conforms to neighborhood standards.

• Properties that don't conform may suffer value loss (over-improvement or under-improvement).
• Related to homogeneity in design, size, and utility.
• Helps maintain neighborhood stability.

Memory trick: Value's Principles: CA(P) CON(T) SUB.

Modifications made to the sales price of comparable properties to account for differences between them and the subject property.

• Always adjust the comparable, never the subject.
• If comparable is superior, subtract value; if inferior, add value.
• Purpose is to make comparable similar to subject.

Memory trick: SAS: Subject Always Stays, Adjust Comparables.

An appraisal method that estimates the value of a property by calculating the cost to build a new, identical or similar structure, subtracting depreciation, and adding the land value.

• Best for new or unique properties.
• Accounts for depreciation.
• Requires estimation of land value separately.

Memory trick: Remember 'SIC' for Sales, Income, Cost.

An appraisal principle stating that the value of any component of a property is measured by its effect on the overall property's value, not by its cost.

• Improvements are only worth what they add to the total value.
• Cost does not always equal value.
• Helps determine if an improvement is economically feasible.

Memory trick: Value's Principles: CA(P) CON(T) SUB.