NYS REAL ESTATE EXAM QUESTIONS AND CORRECT ANSWERS

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 22.5 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" "What material was used to insulate heating pipes? - CORRECT ANSWER Asbestos" "What is the name of the colorless, odorless, radioactive gas? - CORRECT ANSWER Radon" "Percolation rate is? - CORRECT ANSWER The movement of water through soil" "A CMA is not an ? - CORRECT ANSWER Appraisal" "An estimation of how much property will sell for in a typical transaction ? - CORRECT ANSWER Market Value" "The highest price a Buyer will take and the lowest price a seller will take? - CORRECT ANSWER Market Value" "What classes were protected under the 1968 FHA? - CORRECT ANSWER Race, Religion, National Origin" "In 1974, there was an amendment- what class was added to the 1968 legislature? - CORRECT ANSWER Gender" "In 1988 there was an amendment- what class was added to the 1968 legislature? - CORRECT ANSWER Familial and Disability" "I am taking "green" customers to an only "green" people neighborhoods, this is known as ? - CORRECT ANSWER Steering" "I am going into a neighborhood and inducing "panic selling". What is this called? - CORRECT ANSWER Block-busting" "A banker decided not to lend in a community because of the infusion of people of a particular race, religion, or nationality. What is this called? - CORRECT ANSWER Red-lining" "What is exempt from federal fair housing laws? - CORRECT ANSWER Age" "There are never any exemptions from fair housing laws based on? - CORRECT ANSWER Race" "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" "How much is the capital gains tax incentive for a single person? - CORRECT ANSWER $250,000" "How much is the capital gains tax incentive for a married couple? - CORRECT ANSWER $500,000" "When the government gives a tax incentive through depreciation is called? - CORRECT ANSWER Tax Shelter" "What types of property are exempt from real property assessment ? - CORRECT ANSWER No types are exempt" "Which types of property are exempt from real property taxations? - CORRECT ANSWER Religious and Governmental" "For purposes of property, tax valuation, a residential condominium would be a ? - CORRECT ANSWER homestead property" "Industrial and commercial parcels and most vacant land are considered? - CORRECT ANSWER non-homestead properties" "Each discount point or discount points are generally what percentage of the total loan amount? - CORRECT ANSWER 1%" "A building that includes condominium and cooperative ownership is called? - CORRECT ANSWER Condop" "Which group oversees the management of cooperative entity? - CORRECT ANSWER Board of directors" "What state agency is the offering plan for a condominium or cooperative building submitted? - CORRECT ANSWER Attorney General" "Joe earns 1000 per week. His local bank is willing to give him mortgage financing based on front end ratio of 28%. What does he qualify for as a monthly payment? - CORRECT ANSWER ((1000x52)/12)x.28= 1,213.33" "if a seller nets 180 k from the sale of his property after paying a 10% broker fee, what was the selling price of the property? - CORRECT ANSWER 180000x.1+180000= 198000" "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" "Which types of commercial properties use percentage lease? - CORRECT ANSWER Retail stores/ shopping malls" "Who is responsible for the terms in the lease if the unit has been subleased? - CORRECT ANSWER Lessee" "What is the tang of private property by the government for public use called? - CORRECT ANSWER Eminent Domain" "How many years is a residential investment property depreciable for? - CORRECT ANSWER 27.5 years" "How much profit can a single person claim from the sale of a personal residence thats tax free? - CORRECT ANSWER $250,000" "What is the right to use another's land that falls short of ownership called? - CORRECT ANSWER Easement" "Joe was not paid for the supplies and labor he provided to homeowner Smith. What kind of lien will he file against Smith? - CORRECT ANSWER Mechanics Lien" "What serves the same function as a circuit breaker? - CORRECT ANSWER Fuse" "What type of estate is created when only one person holds title to real property? - CORRECT ANSWER Ownership in severalty" "How much should the seller reimburse the buyer for refusing to provide a property disclosure form? - CORRECT ANSWER $500" "Seller tells the listing agent he filed for bankruptcy the previous year. The seller ends up not listing the property with the agent, Still, what fiduciary duty does the agent owe the seller? - CORRECT ANSWER Confidentiality" "What type of financing is used to purchase a new property when the old property hasn't been sold yet? - CORRECT ANSWER Swing loan or bridge loan" "Who is the borrower of a mortgage loan? - CORRECT ANSWER Mortgagor" "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. *Loyalty-An agent must demonstrate loyalty to the principal and must work diligently to serve the best interests of the principal under the terms of the employment contract *Confidentiality-information should not be given to prospective purchasers without the seller's permission. *care-using your best efforts and skills on behalf of their clients' respective interests. *accounting-the duty of accounting for all funds that are given to you *disclosure-to reveal any facts you are aware of that benefit your client." "Agent's Responsibilities to Third Parties - CORRECT ANSWER The basis for imposing liability in case of misrepresentation consists of: Ø a false representation of a material fact Ø the fact that the person making the false representation knew or should have known it to be false Ø the fact that the misrepresentation was made with an intent to induce the party to act or refrain from acting in reliance upon the misrepresentation Ø the fact that the party relied upon the misrepresentation in acting or failing to act Ø the fact that there was damage to the party who relied upon the misrepresentation in acting or not acting" "Law of Agency - CORRECT ANSWER · Brokerage refers to the business of bringing buyers and sellers together and assisting in negotiations for the terms of sale of real estate. · Vicarious Liability means that one person is responsible for the actions of the other. · With strict disclosure regulations in New York, real estate agents must clearly define to buyers and sellers whom they represent in that real estate transaction." "· Determination of Compensation - CORRECT ANSWER Ø The fee or rate of commission paid to a real estate broker is strictly negotiable between the broker and the seller or buyer. Ø It is also illegal for two or more brokers to agree to charge certain commission rates to listing sellers. 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."" "When the agency disclosure form should be used - CORRECT ANSWER Ø At the first substantive contact and the buyer must sign and acknowledge the form. Ø The agent must provide a copy of the disclosure form to the buyer or seller and maintain a copy for a minimum of 3 years." "When disclosure should take place - CORRECT ANSWER Ø Walk-ins-a prospective buyer or seller may walk into a real estate office and want to discuss listing or purchasing a property, at this point, disclosure must be made." "Refusal to sign disclosure form - CORRECT ANSWER The agent should make notes in an appointment book of the names of the prospective buyers, the time, the date and the reason for refusal. At this point, the property may be shown." "Elements of an antitrust violation - CORRECT ANSWER Any business activity in which there is a monopoly, *a contract, a conspiracy or a combination that negatively impacts an individual or company's ability to do business. This is called restraint of trade. · The Federal Trade Commission-The FTC has the authority to enforce compliance with the Sherman Act and certain sections of the Clayton Act. · The antitrust division of the Department of Justice enforces the Sherman and Clayton Antitrust Acts. · Price Fixing-occurs when competitors in a group conspire to charge a same or similar price for services rendered." "Liens and Easements - CORRECT ANSWER · An encumbrance is anything that lessens the bundle of rights in real property. · At execution and foreclosure of liens, priority is based upon the time [day and hour] were recorded in office of county clerk. · In New York, liens for real property taxes and special assessments receive the highest priority of all liens!!!!!. · Taxes levied by a local government constitute a specific lien against the real estate. · Mechanic's lien is a specific lien filed by a person who provides labor to a property. · 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. Individuals giving a person power of authority allow that person to act for them in legal transactions such as real estate contracts." "The Statute of Frauds, - CORRECT ANSWER which in New York is codified in the General Obligations Law, state that contracts involving the creation or conveyance of an interest in real property must be written to be enforceable. · Oral testimony is not sufficient to create a contract involving the transfer of title to real property. · A form of agreement that terminates contracts is novation-the substitution of a new contract for a prior contract or the substitution of a new party for an old party. · Assignment is when a new party to the contract agrees to satisfy the former party's obligation. · Statute of Limitations Ø If a party to a contract fails to bring a lawsuit against a defaulting party within a time period set by statute, the injured party loses the right of remedy. In New York, the time limit by statute to bring legal action against a party in a real estate transaction is 6 years. · Specific performance means that the contract will be completed as originally agreed. · Liquidated damages are an amount of money to be paid upon certain breaches of the contract. · The time is of the essence rule means that the closing must take place on or before the exact date stipulated in the contract. · Installment Sales Contract The buyer contracts to obtain legal title to the property by paying the purchase price in installments, and the seller agrees to transfer the legal title to the buyer by delivering a deed upon the buyer's full payment of the purchase price. · Lease With Option To Buy An option is an express unilateral contract." "A lease is - CORRECT ANSWER a contract, in which, for a consideration, an owner of property transfers a property interest to the tenant for a prescribed period of time. · The owner of the property is called the lessor, the tenant is the lessee. · Security deposit: The security deposit must be held in an escrow account. · Dwellings with 6 or more units, security deposit must be place in an interest-bearing account. Interest belongs to the tenant. · 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. · Right of survivorship means that if one or more of the co-owners die, the surviving co-owners automatically receive the interest of the deceased co-owner. · A special characteristic of joint tenancy is the right of survivorship. · Join Tenancy must have 4 unities= time, title ,interest, possession. · By acquiring as a joint tenancy, each joint tenant gives up the right of inheritance. · Ownership as tenants by the entirety is limited to husband and wife. · A corporation is an artificial being-invisible, intangible, and existing only pursuant to law. · Syndicates denote multiple joint participation in a real estate investment. · A joint venture is an organization formed by 2 or more parties for th" "Land Use Regulations - CORRECT ANSWER Individual owners have the right to place private controls on their own real estate. · Deed restrictions are in the form of covenants or conditions. These restrictions run with the land. · The environmental impact statement (EIS) is the process that describes and analyzes a proposed action that may significantly affect the environment. The EIS is available to the public for review and comment. · Eminent domain is the power of the government or its agencies to acquire private property for public use. · A "taking" occurs when private property is regulated by a government authority to the economic detriment of the owner, without compensation. · POWER OF ESCHEAT: if an owner dies intestate no valid will decedents property is distributed to heirs. If there are no heirs or creditors the state uses the power of ESCHEAT the property goes to the state · The Zoning Board of Appeals It is a local administrative appeal agency and an interpreter of the zoning ordinance. If the request is denied by the zoning board of appeals, the property owner may petition the New York Supreme Court through an · Article 78 proceeding- an appeal brought forth because of a ruling by a government agency. · Certificate of Occupancy document issued by gov't agency after satisfactory inspection of structure · A variance is a permitted deviation from specific requirements of the zoning ordinance. · Zoning Classifications [eg: residential, commercial, etc.] · Spot zoning-spot zoning is illegal in New York" "Real Estate Finance (Mortgages) - CORRECT ANSWER A mortgage is a loan that constitutes a lien against the real property. The mortgage is a two-party instrument between the lender and borrower. · The borrower who gives the mortgage is called the mortgagor. · The lender who receives the mortgage is called the mortgagee. · Acceleration clause - enables the lender to declare the entire balance remaining immediately due and payable if the borrower is in default. · Alienation clause-entitles the lender to declare the principal balance immediately due and payable if the borrower sells the property during the mortgage term and makes the mortgage unassumable. · In making a mortgage, the lender requires the borrower to sign promissory note-providing evidence that a valid debt exists. · Equity of Redemption After default, and up to the time a foreclosure sale is held, the borrower has an equitable right to redeem his property by paying the principal amount of the debt, accrued interest, and lender costs incurred in initiating the foreclosure. · A JUNIOR MORTGAGE REFERS TO ANY MORTGAGE THAT IS SUBORDINATE TO ANOTHER MORTGAGE. Negative amortization-when a loan payment amount is not sufficient to cover interest due, the shortfall added back into the principal, causing the principal to grow larger after payment is made. · Graduated payment mortgage-the monthly payments are lower in the early years of the mortgage term and increase at specified intervals until the payment amount is sufficient to amortize the loan over the remaining term. · Blanket mortgage-two or more parcels of real estate are pledged as security for payment of the mortgage debt. The blanket mortgage usually contains a release clause that allows certain parcels of property to be removed from the mortgage lien if the loan balance is reduced by a specified amount. · Purchase Money Mortgage-another type of s" "The Valuation Process - CORRECT ANSWER An appraisal is an unbiased estimate of the nature, quality, value or utility based on factual data, of an interest in or aspect of identified real estate and related personality as of a certain date. (ESTIMATE OR OPINION OF VALUE) · Valuation is the process of estimating the market value of an identified interest in a specific property as of a given date. · Insured value is the cost of replacing or reproducing the structure in the event of a total loss because of an insured hazard. · Value in use is the value of the property based on its usefulness to an owner or investor. · Mortgage value is whatever the lender believes the property will bring at a foreclosure sale or subsequent resale. · Plottage value of land is the increase in value and utility when small plots of land are combined to form a larger plot. · Market value-the most probable price, as of a specific date, in cash or in other terms, for which the property should be sold after reasonable exposure in a competitive market, under conditions requisite to a fair sale, with the buyer and seller acting prudently, knowledgeably, and for self-interest, and assuming that neither is under undue duress. · Price is the amount a particular purchaser agrees to pay and a seller agrees to accept under the circumstances surrounding the transaction. · Direct costs include the cost of labor and materials [called HARD COST] · Indirect costs are costs that create and support the project. Surveyors, attorneys," "Introduction to Construction - CORRECT ANSWER The building plan, also known as the blueprint, is a detailed architectural rendering of the structure that usually includes the plans for the mechanical systems. · The New York State Department of Health (NYSDOH) has regulations for sanitary and safe water that act as the guideline for well water. · Percolation is movement of water through soil. · The footing is the concrete base below the frost line that supports the foundation of the structure. · Of the 3 types of foundations built in New York, full basements are the most common (more than 80%), followed by slab-on-grade and crawl space. · Slab-on-grade construction-concrete slab is poured directly on the ground and therefore eliminates the crawl space or basement. · Floating slab-pouring the footing first and then pouring the slab. · Framing refers to the wooden skeleton of the house. · Studs-used vertically for the wall. · Joists-for floor and ceiling. · Rafters-roof framing system · The sill plate is the first wooden member of the house and is used as the nailing surface for the floor system. · The girder is the main carrying beam, either a steel beam or several wooden members fastened together. · The bearing walls support the ceiling and/or the roof and include the outside wall frame. · Platform framing is the most common type of framing used in residential construction. · The pitch is the slope of the roof. · Eaves are the overhangs, which are part of the sloped roof. · Flashing is a metallic material that is used in certain areas of the roof and walls to prevent water seepage into the structure. · Sheathing is a plywood covering placed over the exterior framing members. · R-factor means the degree of resistance to heat transfer of the walls, the larger the R-factor, the greater the degree of insulation HEATING: Ø HOT WATER SYSTEM Ø FORCED WARM AIR SYSTEM. Whe" "Environmental Issues - CORRECT ANSWER The Federal Safe Drinking Water Act of 1974 is the guideline for New York's drinking water regulations. New York State Department of Health (NYSDOH) is the regulatory agent that oversees the safety of drinking water. · One of the biggest concerns about the safety of water is that highly corrosive water may contain dangerous amounts of lead. · The installation and approval of individual residential on-site wastewater treatment systems of less than 1,000 gallons per day in NY are regulated by NYSDOH. · 1,000 gallons or more overseen by NYSDEC · Only an individual licensed by NYSDEC may apply pesticides. · NYSDEC oversees wetlands, and must be larger than 12.4 acres to be protected. · Asbestos is a fibrous material found in rocks and soil is a carcinogen · Friable refers to the crumbly or flaky texture of asbestos when hand pressure is applied. · Asbestos has been identified as a carcinogen, and is dangerous when inhaled. · Lead is a metallic element found worldwide in rocks and soils. It can be present in drinking water, interior and exterior paint and in soil. · The Residential Lead Based Paint Hazard Reduction Act of 1992 sets forth procedures disclosing the presence of lead based pint for sales of properties built prior to 1978. Penalties for noncompliance up to $10,000. · Many homes built prior to 1988 contain plumbing systems that use lead-based solder in pipe connections. · Radon is a colorless, odorless, tasteless, radioactive gas found worldwide as a by-product of the natural decay of uranium present in the earth. Radon from surrounding soil enters a home through small spaces such as cracks in basements · Under the State Environmental Quality Review Act (SEQRA) the state environmental quality review is a process that requires government to assess the environmental significance of actions for which they have discr" "Municipal agencies & property insurance - CORRECT ANSWER Everything is done at the local level Real property tax based on assessed value Zoning board of appeals hears request for variance and special permits Tax assessor determines the assessed value does not determine tax" "Property insurance - CORRECT ANSWER Liability insurance covers for financial losses Two most common policies dwelling and homeowners Dwelling policy covers loss to property as well indirect Flood insurance is purchased from "national flood insurance program" Deductible helps control cost of insurance Umbrella policy provide high limits of liability Mortgage clause covers the lender" "Taxes & assessments - CORRECT ANSWER New york property tax are based on the value Property tax liens have highest priority Non-assessable improvements e.g. landscaping, storm windows Exemptions: schools, federal gov't, hospitals religious groups Special assessments district [tax] areas designated for infrastructure cost for specific projects e.g. sidewalks, curbs." "Income tax - CORRECT ANSWER Second homes have deductions, property tax and mortgage interest if not rented for more than 14 days Gains & losses: short term holding less than a year Exclusion couple filing joint returns $500,000 Types of income: active: job portfolio: stocks passive: rent Progressive tax is federal income tax Depreciation classes residential 27.5 years non-residential 39 years" "Condo & coops - CORRECT ANSWER Sponsor is developer Offering plan provided by sponsor offers detailed info on condo or co-op Cps1 is policy statement signed by attorney to test the market Share loan co-op loan buyer is purchasing shares in a corp. House rules address common area noise pets etc. Alteration agreement before any renovations are done. Board package all info on buyers Interview board sees all even children" "Commercial - CORRECT ANSWER No special license needed!!!!!!!! Must be 18years old Commissions: graduated percentage, fixed percentage, fixed fee, or retainer Cash flow measure of cash inflow and outflow from investment Market value is what a ready, willing and able buyer will pay. Remember market price is what they pay. This may be in other chapters Amenity purchaser values property on ability for his specific needs Liquidity: ability to convert asset into cash quickly without loss Leverage: use of borrowed funds to finance portion of purchase price. Financial risk: results when debt is used to finance an investment Legislative risk: risk that changes in law will affect e.g.: tax laws, land use, zoning. Negative leverage occurs when borrowed funds are invested at rate of return "lower" than cost of funds to the borrower. Four classes of office buildings generally are: a, b, c, d. Community shopping center main subject has area from 100,000 to 300,000 Ground leases also land leases tenants lease only "land" no improvements e.g. no buildings or structures Net operating income: income from property that remains after annual operating costs are paid. Operating statement used by current owner shows total revenues for a given period "cash flow components" "depreciation" incentive for investors to buy real estate instead of stocks for tax shelters. Depreciation is used in many chapters "be careful" Loss factor or "load factor" difference between rentable square footage and usable footage." "Property management - CORRECT ANSWER Property manager is a "general agent" Management agreement written agreement governs the relationship between owner and manager. Management proposal plan to oversee the property Operating budget created to project income over "one-year period" Stabilized budget is created for "five-year period" Anchor tenant major chain or department store in shopping center to give exposure to smaller stores." "At what age can you become a real estate salesperson? - CORRECT ANSWER 18" "Do you need experience in the field to become a sales person? - CORRECT ANSWER No" "What is the minimum age to become a real estate broker? - CORRECT ANSWER 20" "If your license is revoked, how long do you have to wait to re-apply for it? - CORRECT ANSWER One year" "Do you need experience in the field to become a broker? - CORRECT ANSWER Yes, at least 2 years of experience and 3200 points" "As a licensing salesperson, I can receive compensation from my? - CORRECT ANSWER Sponsoring Broker" "As a real estate licensee you will more often than not be an ________, will receive a ____________ and will file a _____________ - CORRECT ANSWER Independent contractor, 1099, Schedule C" "Attorneys admitted to the bar in NYS are _____ from the licensure law, unless they take on sales people - CORRECT ANSWER Exempt" "If you mix your clients money with the office operating funds, it is called________ and you have violated which fiducary duty? - CORRECT ANSWER Commingling funds and Accountability" "For how long does a broker need to keep his/her records for? - CORRECT ANSWER Three years" "Are Real Estate brokers also required to take the CE classes? - CORRECT ANSWER Yes" "If a seller decides not to provide the purchaser with the Property Condition Disclosure Form, how much of a reduction in price does he have to give? - CORRECT ANSWER $500" "If you are a independent contractor what can a broker provide to you? - CORRECT ANSWER Telephone" "As an independent contractor are you paid for the hours you put into a deal, or for "production'? - CORRECT ANSWER no" "What is the term of a real estate licensure? - CORRECT ANSWER two years" "If i was a real estate licensee and wanted to apply to become a mortgage broker, how many years of experience would i need? - CORRECT ANSWER Two Years" "Violation of real estate Licensee law is a? - CORRECT ANSWER Misdemeanor" "What is the possible penalty of violating Real Estate Licensee Law? - CORRECT ANSWER $1000 fine, and up to one year in jail" "What is the very first document you should fill out with a client or customer? - CORRECT ANSWER Agency Disclosure Form" "At what moment should you take out the Agency Disclosure form? - CORRECT ANSWER At first Substantive Contact" "For how many years must another use some one else property for it to become theres? - CORRECT ANSWER 10 years through Adverse Possession" "If someone has a right to cross your property, this is called a(n)? - CORRECT ANSWER Easement" "If a thing is crossing over your property, this is called a(n)? - CORRECT ANSWER Encroachment" "If you buy materials from a supply house and fail to pay them, they can file a? - CORRECT ANSWER Mechanics Lien" "How is an example of a formal legal description(FLD) ? - CORRECT ANSWER Metes and Bounds, Block and Lot, Section" "What is not a FLD? - CORRECT ANSWER Street name and Street address" "Who determines what the commission will be on a real estate sale? - CORRECT ANSWER Client and Broker" "If someone dies without having a valid will, this is called? - CORRECT ANSWER Intestate" "If someone dies without having a valid will or heirs or creditors, that persons property reverts to the state through a process called? - CORRECT ANSWER Escheat" "What is the name of the standardized closing statement or settlement statement, required by RESPA? - CORRECT ANSWER HUD-1" "What is a synonym for proration? - CORRECT ANSWER Adjustment" "What is the name of the deed that give the most legal promises to the buyer? - CORRECT ANSWER Convenant and Warranty Deed" "What is it called to track back the successive owners of a piece of real estate, starting with the current deed and working my way back? - CORRECT ANSWER Abstract of title(Chain of Title)" "the instrument that conveys a grantors interest in real property? - CORRECT ANSWER A deed" "Who creates the real estate "Contract of Sale"? - CORRECT ANSWER Sellers Attorney" "Who signs the contract first? - CORRECT ANSWER Buyer" "What does the buyer attach to the contract after signing it? - CORRECT ANSWER Down payment" "Who holds the earnest deposit money from the buyer from the signing of the contract until closing? - CORRECT ANSWER The Sellers Attorney" "Who signs the contract last? - CORRECT ANSWER The Seller" "The fullest interest I can have in my ownership of realestate is? - CORRECT ANSWER Fee Simple Absolute" "In a commercial environment it is understood that if you have cabinets, refrigerators, etc that are leaving when the lease is over, these are called? - CORRECT ANSWER Trade Fixtures" "Tenants in common is characterized by? - CORRECT ANSWER Rights of Inheritance" "Joint Tenants is characterized by? - CORRECT ANSWER Rights of Survivorship" "In NYS, husband and wife take ownership as? - CORRECT ANSWER Tenants Entirety" "What is it called when one person buys property for himself/herself? - CORRECT ANSWER Owner in severalty" "If I am turned down, because my application does not meet leeter of the building code, I am going to make my appeal to? - CORRECT ANSWER Zoning Board of Appeals (ZBA)" "If the ZBA grants my application, I am granted a ? - CORRECT ANSWER Variance" "Roof Rafters are _____ in orientation - CORRECT ANSWER Diagonal" "The pitch is what? - CORRECT ANSWER The slope of the roof" "Circuit Breakers and________ both serve the same function? - CORRECT ANSWER Fuses" "What is put on the outside of the studs to begin to weatherproof the house? - CORRECT ANSWER Sheathing" "The amount of current available in a structure? - CORRECT ANSWER Amps" "What is the minimum amperage for new construction in NYS? - CORRECT ANSWER 100-A" "The force or pressure of current is what? - CORRECT ANSWER Voltage" "What is the standard voltage in the US? - CORRECT ANSWER 110 V" "What is the "R-Factor"? - CORRECT ANSWER Resistance to heat" "The lower part of the roof, which includes the soffit and fascia is called? - CORRECT ANSWER Overhang, Eaves" "Bent pieces of metal to waterproof a house? - CORRECT ANSWER Flashing" "A BTU, British Thermal Unit, Is a measurement of what? - CORRECT ANSWER Heat Energy" "What is the name of refrigerant that was destroying the ozone layers of the atmosphere? - CORRECT ANSWER Freon" "An apartment building has a heating system which although is in good repair, does not meet the needs of its current tenants, is an example of what? - CORRECT ANSWER Functional Obsolescence" "Which term best identifies the most probable price for which specified property right should sell to a knowledeable buyer in a competitive market? - CORRECT ANSWER Market Value" "What is the study of recently sold properties, currently competiting listing, monthly expiered listings, buyer appeal market position, assets and drawbacks, area market, conditions recommended terms and market value range? - CORRECT ANSWER Comparative Market Analysis (CMA)" "What do you call people who get into real estate offices to make sure that all people are being treated the same way? - CORRECT ANSWER Testers" "If i have a disabled tenant who wants to make a modification, what do i do? - CORRECT ANSWER Allow them to make the medication at their own expense and then replace the modification upond vacating the unit all at their own expense." "What was the year of the first major federal housing legislation? - CORRECT ANSWER 1866" "What was the protected class in the 1866 Civil Rights Act? - CORRECT ANSWER Race" "What was the year of the first major legislation to directly affect property ownership rights? - CORRECT ANSWER 1866" "What would be an exception to the 1866 civil rights act? - CORRECT ANSWER A person renting out a room in their own home, which they actually live in, to the same sex." "What was the year of the second major piece of federal fair housing legislation? - CORRECT ANSWER 1968" "what would you call a financing situation where the buyer receives financial assitance with the down payment and closing costs, in exchange for some share of the equity? - CORRECT ANSWER Shared equity loan" "There is a type of mortgage where the monthly payment increases as your ability to pay more improves. What type of mortgage is this? - CORRECT ANSWER Graduated Payment Mortgage" "A transaction that involves the sale of property to free up the liquid assets that are trapped in the real estate and lease of the same property is called? - CORRECT ANSWER Sale-Leaseback" "The borrower is called - CORRECT ANSWER The mortgagor" "The lender is called - CORRECT ANSWER The mortgagee" "What lumps a first mortgage together with a new second mortgage in the form of owner financing? - CORRECT ANSWER Wrap-around mortgage" "What is the act of charging interest that is over the legal limit? - CORRECT ANSWER usury" "What regulates the advertising of consumer loans or the terms of lending? - CORRECT ANSWER Truth in Lending Act(TILA) Regulation Z" "A straight term mortgage consists of payments that include ________ only. - CORRECT ANSWER Interest" "which named "peril" is not covered on HO policy or a DP policy? - CORRECT ANSWER Flood" "from home to you purchase flood insurance ? - CORRECT ANSWER FEMA" "If i want higher limits of liability insurance on my house and cars, I would buy an? - CORRECT ANSWER Umbrella Policy" "If a property manager is giving attention to a potential problem before it becomes a problem, this is called? - CORRECT ANSWER Preventable maintenance" "If the property owner is fixing a leaking faucet, what kind of maintenance is this called? - CORRECT ANSWER Corrective maintenance" "What is a schedule of the projected income and expense for a real estate investment? - CORRECT ANSWER proforma-statement" "What details how you may "use" the rented space? - CORRECT ANSWER The use clause" "Commercial space is very often rented out using a _________lease - CORRECT ANSWER Net lease" "A residential lease is considered a - CORRECT ANSWER Gross Lease" "a lease for a large unfinished space - CORRECT ANSWER loft lease" "In what type of rental environment would you find a percentage lease? - CORRECT ANSWER Retail" "In a sublease, who is ultimately always responsible to be sure the lessor gets paid? - CORRECT ANSWER The Lessee" "What determines the asset in the past, present and future? - CORRECT ANSWER Time value of money" "what is the NOI if the property was acquired for $500K with a 10% ROI? - CORRECT ANSWER 500,000 X .1 = 50,000" "joe buys a building for 2,000,000 laying out 500K. The building generates 15K / month. What is CoCR? - CORRECT ANSWER 15K X 12/ 500k =.36" "a building has 10,000 rentable square feet and 8,000 usuable square feet. What is the loss factor? - CORRECT ANSWER 10,000-8,000/10,000=.20 or 20 %" "There is a building with a NOI of 40,000 that Jim wants to buy and his intended cap rate is 10 %. How much should jim pay for the building? - CORRECT ANSWER 40,000/.01=400000" "What is it called when lenders/insurance agents refuse to do business in a certain area based on the characteristics of the people living there? - CORRECT ANSWER Redlining" "Unless specified a lesser estate, transfer of title to real property in NYS creates what type of interest? - CORRECT ANSWER Fee Simple" "What is another name for transfer of title to real property? - CORRECT ANSWER Conveyance" "What is it called when the government dictates how a property can be used? - CORRECT ANSWER Zoning" "Who issues