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NYS REAL ESTATE EXAM QUESTIONS AND CORRECT ANSWERS
“What agency issues real estate licenses? - CORRECT ANSWER The New York State
Department of State (NYDOS), Divison of Licensing Services" "If my license has expired, for how long can i continue to practice real estate sales?In other words,
what is the grace period? - CORRECT ANSWER No Grace Period"
"Your real estate license with the pocket card will be sent to your sponsoring broker. who holds
the license? Who holds the pocket card? - CORRECT ANSWER Broker holds the license and I
hold the pocket card"
"How many hours of continuing ed must a sales person take? - CORRECT ANSWER 22.
hours"
"As a real estate sales person, you have to take continuing ed classes every? - CORRECT
ANSWER 2 years"
"There is also a component of _________ required every two years. - CORRECT ANSWER Fair
housing"
"What does First substantive contact mean? - CORRECT ANSWER When the customer begins
to ask questions pretaining to the Real Estate Property."
"What should you do if a customer refuses to sign an Agency Disclousure form? - CORRECT
ANSWER Fill out an affidavit stating the refusal to sign, then have it notarizied."
"As a real estate sales person I am what kind of agent? - CORRECT ANSWER Special Agent"
"As a property manager I am what kind of agent? - CORRECT ANSWER A General Agent"
"As an estate planner, I am what kind of agent? - CORRECT ANSWER Universal Agent"
"What is it called when I represent the seller as my client but then work in the best interest of the
buyer? - CORRECT ANSWER Undisclosed Dual Agency"
"If I represent the buyer as a broker, this is called? - CORRECT ANSWER Buyers Broker"
"Who do I owe my Fiduciary duties to? Client or Customer? - CORRECT ANSWER Client"
"What Fiduciary duties to I owe the Customer? - CORRECT ANSWER Fairness and Honesty"
"If my driveway crosses over my neighbors property, this would be called an? - CORRECT
ANSWER Easement Appurtenant"
"If my driveway crosses my neighbors property, I am the______ - CORRECT ANSWER
Dominant"
"If my driveway crosses my neighbors property, My neighbro is the _______ - CORRECT
ANSWER Servient"
"If a utility company has a right to use my property, this is called? - CORRECT ANSWER
Easement in Gross" "If someone uses a property that is open and notorious, exclusive and adverse to the best intrest
of the owner, this is called? - CORRECT ANSWER Squatters Rights"
"When someone makes use of another's property? - CORRECT ANSWER Adverse Possession"
"What do you call the power of the government to acquire personally held real property for the
benefit of the public? - CORRECT ANSWER Eminent Domain or Condemnation"
"A zoning ordinance would NOT require? - CORRECT ANSWER C-material"
"When I goto the building department and i want to put an extension on my house or modify
something, I am making an application for? - CORRECT ANSWER Building Permit"
"What law regulates CFC's? - CORRECT ANSWER Clean Air Act"
"What would you call the first wooden member to be laid down on the foundation wall? -
CORRECT ANSWER Still Plate"
"When I build a house, I am going to have an architectural rendering of it, also known as a? -
CORRECT ANSWER Blueprint"
"The spelling out of how it is to be built along the lines of a blueprint are called? - CORRECT
ANSWER Specifications"
"Solicitation of the sale or lease of property, due to a change in the ethnic structure of a
neighborhood is _______? - CORRECT ANSWER Blockbusting"
"What is the minimum age to enter into a contract? - CORRECT ANSWER 18"
"If you were to sell your house to someone under the age of 18, how you characterize the contract
of sale? - CORRECT ANSWER Voidable by the minor"
"What is the name of the "regulation" that requires the lead paint disclosure form? - CORRECT
ANSWER Regulation X"
"I have to give the "protect your family from lead paint in your home" and the lead paint
disclosure form to prospective buyers and tenants if the building was constructed in? -
CORRECT ANSWER 1978"
"A condo association will reserve the right to be the first buyer if you decide to sell. This is called?
CORRECT ANSWER Right of first refusal"
"I am going to rent an apartment for one week, this is known as what type of leasehold? -
CORRECT ANSWER An Estate for years"
"Co-Op ownership is what type of estate? - CORRECT ANSWER Leasehold"
"How would you describe an interest in a co-op? - CORRECT ANSWER Leasehold"
"A mortgage that covers more than one property is called? - CORRECT ANSWER Blanket
Mortgage"
"A mortgage that finances both real property and the personal property is called? - CORRECT
ANSWER Package Mortgage"
"A loan that allows you to move from one property to another? - CORRECT ANSWER Bridge,
Swing, Interim loan" "If I were a renter, in order to protect all my stuff and also give me liability insurance, I would buy
a ___________ policy? - CORRECT ANSWER HO-4"
"What is a lien of the highest priority? - CORRECT ANSWER Real Property Tax"
"Who plans, designs and does construction of New Yorks Public work facilities and projects? -
CORRECT ANSWER Municipal Engineers Office"
"what governmental authority oversees our fresh drinking water suppply? - CORRECT
ANSWER Department of State"
"Does the building department write the code or enforce it? - CORRECT ANSWER Enforce it"
"What governmental agency oversees how the community is developed? - CORRECT
ANSWER The planning Board"
"Homeowner policies which provide content coverage for apartment owners is? - CORRECT
ANSWER HO-1"
"What governmental body overseas mortgage brokers and mortgage bankers? - CORRECT
ANSWER Department of Banking"
"The income i earn for going to work is called? - CORRECT ANSWER Active income"
"The income i earn from a rental is called? - CORRECT ANSWER Passive income"
"The income i earn from my paper assets is called? - CORRECT ANSWER Portfolio income"
"If i have rental properties, the income that i derive from renting out parking spaces , closets in
the basement, my coin op washer/dryer is considered? - CORRECT ANSWER Miscellaneous
Income"
"We are taxed on our Real Property according to the value of property known as? - CORRECT
ANSWER Assessed Value"
"What is the depreciation of residential building? - CORRECT ANSWER 27.5 years"
"what is the depreciation of a commercial property? - CORRECT ANSWER 39 years"
"in order to calculate depreciation you deduct the cost of the __________ from the aquisition cost of
the property then divide by the number of years - CORRECT ANSWER Land
Cost of property - cost of land/ Number of years"
"If the seller wants to net 250k after commission of 5%, calculate the actual sale price? -
CORRECT ANSWER 250000x.05+250000=262500"
In NYS, how old must one be to enter into contracts? - CORRECT ANSWER 18"
"What other capability should they possess? - CORRECT ANSWER Mental and emotional
capability"
"What happens if one of the parties to the contract is a minor? - CORRECT ANSWER The
contract is voidable by the minor"
"What does the zoning board of appeals do? - CORRECT ANSWER Grants variances"
"What regulates construction standards in NYS? - CORRECT ANSWER Building codes"
"What does municipal engineer's office do? - CORRECT ANSWER Oversees planning and
construction of major highways, sweet systems and water connections" "If a property ad states that the property is near the vicinity of a geographical area, what else mud
the ad include? - CORRECT ANSWER It must include the name of the geographical area
where the property is actually located"
"Who is usually exempt from property taxes? - CORRECT ANSWER Disabled, veterans,
farmers, elderly gold star parents *kids die in the war, star program homeowners"
"Who is not usually exempt from property taxes? - CORRECT ANSWER Second home
owners"
"What covers fully or personal property lost in a fire? - CORRECT ANSWER Replacement
cost" "Find the square footage of a rectangular shaped floor plan. How do you find the area of a
square/rectangle? - CORRECT ANSWER Length x Width = Area"
"What is the cash on cash return on a $2,000,000 property with a down payment of $500,000 and
$15,000 monthly rental income? - CORRECT ANSWER 36%"
"Who hires the agent? - CORRECT ANSWER Principal or client"
"What is not a CMA (Comparative Market Analysis?) - CORRECT ANSWER An apprasial"
"What cannot a salesperson do? - CORRECT ANSWER Collect money directly from the client
or customer"
"When should the Agency disclosure form be submitted? - CORRECT ANSWER At the first
substantive contact"
"Which document describes the agency (who he or she represents) of the salesperson? -
CORRECT ANSWER Agency disclosure form"
"What is another name for the slope of a roof? - CORRECT ANSWER Pitch"
"What carcinogenic component was used as insulation in electric transformers that
contaminated soil and ground water? - CORRECT ANSWER PCB's or polychlorinated
biphenyls"
"What can brokers provide their salespeople if they are independent contractors? - CORRECT
ANSWER Office phone"
"Whats right to access whiter from a river or stream called? - CORRECT ANSWER Riparian"
"What did the civil rights act of 1866 protect without exception? - CORRECT ANSWER Race"
"What did the 1988 amendment to the civil rights act protect? - CORRECT ANSWER
Disability and familial status" "What is convincing owners to sell/lease property by telling them a particular group of people are
moving into the area called? - CORRECT ANSWER Blockbusting"
"What type of maintenance is fixing a leaky faucet? - CORRECT ANSWER Corrective
maintenance"
"What are property taxes based on? - CORRECT ANSWER Assessed value"
"What is the market value? - CORRECT ANSWER What the property will sell for in a
competitive marketplace"
"What is a loft lease? - CORRECT ANSWER Its a lease for space that is not divided into rooms"
"What does the Real Estate Settlement Procedures Act (RESPA) require? - CORRECT
ANSWER Good faith estimate of the closing costs for federally funded loans"
"What is the right reserved for the condo association that gives them the first opportunity to buy
or lease a unit when it becomes available? - CORRECT ANSWER Eight of first refusal"
"A coop is what type of ownership? - CORRECT ANSWER Leasehold"
"What is the summary of the chronological history of title and related documents to that called?
CORRECT ANSWER Abstract of title"
"What type of mortgage is when a new mortgage that is higher in amount wraps around an
existing first mortgage thats smaller in amount? - CORRECT ANSWER Wraparound
Mortgage"
"What does the secondary mortgage market do? - CORRECT ANSWER Buys and sells
mortgages"
Independent contractor must pay their own expenses. - CORRECT ANSWER According to IRS
code section 3508[A, B], real estate agents are statutory non-employees and are therefore independent contractors. The code also states that there must be a written contract between the broker and the sales associate, also reviewed every 12-15 months · All records must be kept for 3 years · If sales associate not deemed independent then they will not be able to file "SCHEDULE C' of the federal return · The Independent Contractor Relationship Ø Salespersons are free to engage in outside employment Ø Either party may terminate the relationship at any time"
"Duties That Require Licensure - CORRECT ANSWER * Selling or purchasing real estate at an
auction *Negotiating the sale of a business for which the values of the real estate transferred is not merely incidental to the transaction (RE value is worth more than the business
- Salespersons must be 18 years of age.
- Brokers must be 20 years old with 2 years experience
- Points for Broker License work as salesperson & 3500 points or 3 years and 5250 points. *Licenses are renewed every two{2} years"
"Exemptions to Licensure - CORRECT ANSWER Building superintendents or maintenance
workers who perform tasks such as rent collecting for one owner, company or entity."
"Classes of Licensure for Brokers - CORRECT ANSWER Ø Each officer of a corporation or
member of a co-partnership must be licensed as a broker. Ø Salespersons licenses are not issued to officers of corporations or members of co-partnerships. Ø Salespersons and associate brokers may not be principals in the brokerage firm and may not own voting stock in the licensed brokerage corporation."
"Law of Agency - CORRECT ANSWER When one person is hired to act on behalf of another
person, an agency relationship is created. The person hired on the other person's behalf is the agent. · An agency relationship is consensual. · The person who selects the agent to act on his behalf is the principal or client. · The Customer of an agent is the party whom the agent brings to the principal as a seller or buyer of the property. · A General agent represents the principal in a specific range of matters. · E.G. A Property Manager · A special agent is someone who has narrow authorization to act on behalf of the principal. · EG: Real estate broker who has listing. · The term fiduciary means a position of trust."
"Law of Agency - CORRECT ANSWER Agent's Fiduciary Responsibilities to Principals
- Obedience- the agent must act with obedience and obey reasonable and legal instructions from the principal.
This is called price fixing and is an act in restraint of trade that violates the Sherman Antitrust Act."
"Percentage of Final Sales Price - CORRECT ANSWER Real estate firms generally establish
their own individual office policy regarding the level of commission charged."
"Net Listing - CORRECT ANSWER This type of commission arrangement is illegal in New
York."
"Express Agency - CORRECT ANSWER an agency relationship created by an oral or written
agreement between the principal and agent."
"An agency by estoppel - CORRECT ANSWER exists when a principal does not stop an
individual from representing his interests, thus creating an agency relationship between the two."
"A buyer agent - CORRECT ANSWER cannot be a subagent of the seller broker."
"Broker's Agent - CORRECT ANSWER *In the case of the subagent, the principal accepts
vicarious liability for the acts of the agents and subagents.
- In the case of the broker's agent, the broker accepts vicarious liability for the acts of the agents working for his principal through him."
"A dual agency exists - CORRECT ANSWER when a real estate firm or agent attempts to
represent both the buyer and seller in the same transaction."
"Broker dual agency - CORRECT ANSWER can occur if agents of the broker represent both
the buyer and seller in the same transaction, as stated above, or if the broker offers services to a buyer, such as finding or negotiating a mortgage for the buyer, when the broker already represents the seller."
"An unintended dual agency - CORRECT ANSWER occurs if the buyer believes by the agent's
actions and/or representations that the buyer is being represented by that broker. Illegal. Consensual Dual Agency · The law of agency in New York permits consensual dual agency with disclosure and informed consent of all parties to the transaction. Informed consent includes timely and complete disclosure of the nature and consequences of the dual agency."
"Obtaining Informed Consent of Both Parties - CORRECT ANSWER When the listing takes
place, the licensee should give a full explanation of dual agency although neither party should sign an acceptance of dual agency at this time. · A buyer's broker may perform a market analysis and advise the buyer on an offer."
"Disclosure and Listing Forms - CORRECT ANSWER The form must be explained by the
agent, and read, acknowledged, and signed by the principal prior to signing the listing agreement."
"Exclusive Right To Sell Agreement - CORRECT ANSWER Under the exclusive right to sell
agreement, the property is listed with only one broker as the agent. If anyone else sells the property during the term of the listing, the broker is legally entitled to the commission. 1 broker-commission no matter who sells"
"Exclusive Agency Agreement - CORRECT ANSWER In an exclusive agency listing, the
property is listed with only one broker as the agent, if the broker affects the sale of the property or the listing is on MLS and any other broker sells it the broker is legally entitled to the commission agreed upon, but if the owner sells the property, the broker earns no commission. Ø 1 broker, commission only if broker sells New York prohibits automatic extensions of listings."
"Agency Disclosure Section 443 requires - CORRECT ANSWER that licensees present a
written agency disclosure form that details consumer choices about representation at the first substantive contact with a prospective seller or buyer. *The law does not cover vacant land."
"A real estate broker - CORRECT ANSWER shall make it clear for which party he is acting and
he shall not receive compensation from more than one party - *except with the full knowledge and consent of all parties.""
· Materialmen's lien is a specific lien filed by a supplier of products required in the construction. · New York law requires that a mechanic and materialmen's lien for residential property be filed with the county clerk where the property is situated within 4 months from the date when the labor or materials were furnished. The time and date of filing determines the priority of the lien. In New York, mechanic's liens must be renewed annually. · Lis pendens means pending litigation. This filing is a legal notice that a lawsuit has been filed concerning the specific property. · If one has a possessory interest in property, that individual cannot own an easement. The common terminology for easement is right-of-way.[legal trespass] · Easements in gross are also called commercial easements in gross. The category is usually owned by the government, an agency of the government, or a public utility. · Easement appurtenant category includes all easements that are no in gross. The land that benefits from easement appurtenant is called the dominant tenement. The land that must suffer and allows the use is called the servient tenement. · A license is defined as permission to do a particular act or series of acts on another's land without possessing any estate or interest in the land. A license is not assignable, not inherita"
"Deeds - CORRECT ANSWER · Transfer of title to real property in law is called alienation.
· A deed is the document used to convey title legality to real property, also known as a conveyance. · The deed must contain an adequate formal legal description of the property. · Habendum Clause "to have and to hold" · A full covenant and warranty deed is the strongest and broadest form of title guarantee. · The quitclaim deed contains no warranties whatsoever; it is simply a deed of release. · Execution of a judicial deed results from a court order; examples are guardian's deed, referee's deed, tax deed, and administrator or executor's deed. · Metes are the distances from point to point; · Bounds are the directions from one point to another. · Intestate Descent
Ø When a person dies and leaves no valid will, the laws of intestacy determine the order in which the property is distributed to the heirs."
"Title Closing and Costs - CORRECT ANSWER · Title is the evidence of the right to possess
property. · Deed is the instrument used to convey title. · The final survey document is a type of blueprint showing measurements, boundaries and area of property. · Chain of title involves tracing the successive conveyances of title, starting with the current deed and going back an appropriate time. · An abstract of title is a condensed history of the title, setting forth a summary of all the links in the chain. · Real Estate Settlement Procedures Act (RESPA) Ø It regulates lending activities of lending institutions in making mortgage loans for housing. · Regulation Z, which covers all residential mortgages, addresses all advertisement of credit terms. · Co-op and Condo Fees Ø Cooperatives may have a flip tax imposed upon transfer, paid by the seller. · A closing usually involves proration, the division of expenses and income between buyer and seller."
"A contract is - CORRECT ANSWER an agreement between competent legal parties to do or
refrain from doing some legal act in exchange for consideration."
"Types of Agreements - CORRECT ANSWER Express Contract-the parties to the contract have
definitely agreed on all the terms in the contract Ø Bilateral Contract-two parties have made promises of some kind to each other. The offer to purchase a home is bilateral because it is based on the exchange of promises in which the seller will sell and the buyer will buy. Ø Executory Contract-a contract that is not fully performed or completed"
"Competent Parties - CORRECT ANSWER Contracts entered into by parties lacking legal
capacity are voidable by the party lacking capacity.
· The assignment of the lease involves the transfer of the lease contract from the present tenant to the assignee. · In a sublease, the original tenant is still responsible to the owner for the lease payments under the lease contract. · Actual eviction is the removal of the tenant from the premises without the aid or control of the court system. · Lease agreement does not terminate when an owner sells, new owner is bound by terms of lease · A gross lease provides for the owner to pay all expenses, such as real property taxes, owner's insurance, liability insurance, and maintenance. · In a net lease, the tenant pays some or all of the expenses. · A percentage lease has a base rent plus an additional rent that is a percentage of the lessee's gross sales. Commercial · A graduated lease is one in which the rent changes from period to period over the term {escalates}"
"Human Rights and Fair Housing - CORRECT ANSWER The Civil Rights Act of 1866-first
significant statute affecting equal housing · Has no exemptions · 1968 case Jones v. Alfred H. Mayer Company-prohibited racial discrimination · Brown v. Board of Education-landmark decision-separate facilities were unequal Federal Fair Housing Act of 1968-prohibits discrimination in housing on the basis of race, color, religion or national origin · 1988-provision added to prevent discrimination based on mental or physical handicap or familial status · Owners must allow tenants with disabilities to make reasonable modifications to apartment AT THE TENANTS EXPENSE"
"The exception to FAMILIAL STATUS - CORRECT ANSWER is SENIOR HOUSING!!!"
"Human Rights and Fair Housing - CORRECT ANSWER Blockbusting-illegal [scare tactic]
· Steering-direct prospective purchasers from diverse backgrounds to presently integrated areas to avoid integration of nonintegrated areas.
· Redlining-refusing to make loans to purchase, construct or repair a dwelling by discriminating · The Sexual Orientation Non-Discrimination Act (SONDA) (2002) added sexual orientation as a protected class under the Human Rights Law. · In housing discrimination only, punitive damages not exceeding $10,000 may be awarded to the complainant. · LAWFUL OCCUPATION is protected class only in NEW YORK CITY!!!! · Testers, either volunteers, employees of federal programs, or civil rights groups visit real estate offices posing as prospective homebuyers to see if race influences the information"
"Estates and Interests - CORRECT ANSWER Another name for "PERSONAL PROPERTY" is
"CHATTEL"
· Riparian rights belong to the owner of property bordering a flowing body of water (R-river) · Littoral rights apply to property bordering a stationary body of water (L-lake) · The real estate term for improvements both on and to the land is FIXTURE. · Trade fixtures-items of personal property that a business owner installs in rented building space. · Fee Simple Absolute-provides the most complete form of ownership and bundle of rights in real property. · The life estate is ownership, possession and control for someone lifetime. · With a life estate, two outcomes are possible upon death, Ø an estate in remainder, Ø An estate in reversion. Remainder interest is a fee simple present interest. · An estate at sufferance describes a tenant who is originally in lawful possession of another's property but refuses to leave after his right to possession terminates. · A tenant who does not leave upon expiration of the lease is termed a holdover tenant. · When title to real property is held in the name of only one person or entity, it is called ownership in severalty.
