Chapter 1: The Broker's Office: Operation, Management, and Supervision

Question 1

Apartment Sharing Agent

Answer 1

An individual who for a fee arranges and coordinates meetings between the current owners of real property, including apartment housing, who wish to share their housing with others.

Question 2

Appraiser and Licensure

Answer 2

Estimates the value of real property. If the transaction value is $250,000 or more, the person must have a license or certification.

Question 3

Home Inspector

Answer 3

An individual who inspects the condition of real property. Needs 100 hours of prescribed course work, 40 hours of supervised work and pass a NYS exam.

Question 4

Mortgage Banker

Answer 4

An individual or entity licensed by the New York banking department to engage in the business of making residential mortgage loans. You must get a license if making more than four mortgage loans per year.

Question 5

Mortgage Broker

Answer 5

An individual or an entity registered by the New York Banking Department to engage in the business of soliciting, processing, placing, or negotiating residential, mortgage loans. Real estate brokers and attorneys don’t need experience to get their license.

Question 6

What is the difference between a mortgage broker and mortgage banker?

Answer 6

A banker makes and services mortgage loans while a broker brings together a lender and a borrower for a fee paid by the lending institution.

Question 7

Which of the following people are exempt from getting their salesperson or brokers license without prior experience?

Answer 7

1. Attorneys admitted to practice in New York (they must get a license if other salespersons are working under them).
2. Public officers
3. Persons acting under the judgment or order of the court.
4. Tenant’s Associations and Non-Profit corporations (Authorized by the New York Department of Housing Authority or Community Renewal
5. Building superintendents or maintenance workers who are in charge of rent collection.

Question 8

General Requirements for Obtaining Licensure in Real Estate

Answer 8

1. English Language Requirement - A fair knowledge of English
2. Citizenship Requirement - A permanent US Citizen
3. Certificate of Relief from Disabilities - People who have been convicted of a felony must be in good standing.
4. Age Requirement - Broker must be at least 20, Salesperson at least 18.

Question 9

Individual Broker

Answer 9

People doing business under their individual name only. They must have an office address (even if it’s their home) and they cannot represent themselves as being with any firm or company.

Question 10

Associate Broker

Answer 10

Must be sponsored by a broker and have their supervising broker sign the association statement.

Question 11

Trade-Name Broker

Answer 11

Brokers that conduct business as a sole proprietorship using a name other than their personal name.

Question 12

Partnership Broker

Answer 12

A form of a business organization that is owned by two or more partners. A partnership certificate must be filed.

Question 13

Corporate Broker

Answer 13

An officer of a corporation issued a license to conduct business as a real estate brokerage under a corporate name. Each officer must be issued as a broker. Salespersons licenses are not allowed.

Question 14

Commingling

Answer 14

Mixing the funds or property of others with their business or personal funds. Brokers are prohibited from this.

Question 15

What two accounts must a broker have?

Answer 15

An office escrow account for client deposits and an operating account for business expenses.

Question 16

Conversion

Answer 16

When a broker uses deposit money which is not yet his, places it into the operating account and spending it. It is illegal and may be classified as a felony.

Question 17

Article 36-C of General Business Law

Answer 17

A broker does not need to establish separate escrow accounts for each transaction as long as he keeps adequate records of each individual deposit in the one escrow account.

Question 18

Escrow Account

Answer 18

Also called trust account, an account maintained by a broker in an insured bank for the deposit of other people’s money.

Question 19

Earnest money deposit

Answer 19

A deposit a buyer makes at the time of submitting an offer, to demonstrate the true intent to purchase; also called binder, good faith deposit or escrow deposit.

Question 20

Duncan and Hill Realty, Inc vs Department of State

Answer 20

Real Estate brokers may not insert detailed legal agreements into contracts and must alert buyers and sellers to see an attorney before signing a contract.

Question 21

Ready, Willing and Able

Answer 21

If a broker brings to the seller a buyer who is ready to buy, willing to buy and is able financially to buy under the terms and conditions of the listing contract, the broker is legally entitled to the commission.

Question 22

Acceptance

Answer 22

If the broker brings a buyer that the seller accepts, the broker is legally entitled to the commission. This is also known as meeting of the minds.

Question 23

Net Listing

Answer 23

When a seller authorizes a broker to obtain a specific amount for the property and then allows the broker to keep as a commission any money above this specified amount obtained from the sale. This type of listing is illegal in New York.

Question 24

Breach of Contract

Answer 24

When a party to a contract fails to complete the contract or fails to perform with no legal cause.

Question 25

Licensees must follow the following rules in handling purchase offers and other documents:

Answer 25

• Always give the seller a copy of the listing contract.
• Present all offers, whether they are written or not, to the seller.
  -Immediately deliver duplicate copies of all documents executed by the buyer, seller or both. The buyer must receive a copy of the offer and both must receive copies of the executed contract.
  -Copies of any other documents such as options, contracts for deed, or contracts for lease must be provided to the parties.
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Question 26

Blind Ads

Answer 26

Ads that do not indicate that the advertiser is a broker and/or that don’t include the name and telephone number. It must also include the exact name of the geographical area.

Question 27

Article 78 proceeding

Answer 27

The method for appeals against regulatory agencies or an appeal brought forth due to a ruling by a government agency.

Question 28

Article 12-A

Answer 28

The section of the New York Real Estate Property Law pertaining to real estate salespersons and brokers.

Question 29

What can happen to people who violated Article 12-A of the Real Property Law?

Answer 29

They are guilty of a misdemeanor and punishable by a fine of up to $1,000 and/or imprisonment for up to one year. Administrative discipline by DOS my include a reprimand to the licensee.

Question 30

Antitrust Law

Answer 30

Violations include any business activity in which there is a monopoly, a contract, a conspiracy, or a combination that negatively impacts an individual’s or a company’s ability to do business. For example, if brokers of a real estate board agree to charge a commission of nothing less than 15 percent of the purchase price of a property. The negative impact is called restraint of trade.

Question 31

Sherman Antitrust Act

Answer 31

Enacted July 2, 1890 to preserve a system of free economic enterprise and protect the public against the activities of monopolies, contracts, or other combinations that tend to be an unreasonable restraint of trade.

Question 32

Clayton Antitrust Act

Answer 32

Enacted October 15, 1914, supplements the Sherman Act and has the same general purpose as the Sherman Antitrust Act. It is designed to cover restraints on interstate trade or commerce not covered by the Sherman Act.

Question 33

Federal Trade Commission (FTC)

Answer 33

Formed through act of Congress in 1914. The FTC is an administrative body and has the broad power to declare trade practices unfair that conflict with basic policies of antitrust legislation.

Question 34

Rule of Reason

Answer 34

In antitrust lawsuits, courts have to determine if the restraints of trade are unreasonable and therefore illegal. If the activity is reasonable then it is allowable under this law, Rule of Reason.

Question 35

Per Se Illegality

Answer 35

Absolutely not allowable under the law.

Question 36

Price Fixing

Answer 36

When competitors in a group or an industry conpsire to charge the same or similar price for services rendered. This is illegal.

Question 37

Group Boycott

Answer 37

A conspiracy in which a person or group is persuaded or coerced into not doing business with another person or a group.

Question 38

Market Allocation Agreement

Answer 38

An agreement between competitors who are dividing or assigning a certain are or territory for sales.

Question 39

Tie-In Arrangements

Answer 39

Agreements between a party selling a product or service with a buyer that, as a condition of the sale, the buyer will buy another product from the seller or the buyer will not buy a product or use of another. For example, if a buyer brokerage firm, for example, tells a buyer that the buyer must use a certain mortgage company as a condition of the Exclusive Buyer/Purchaser Agency Agreement, this would be illegal.

Question 40

Parens Patriae Lawsuits

Answer 40

The right of the government to litigate and therefore protect in the name of the public good.

Question 41

Kickback

Answer 41

If brokers improperly pay any part of a compensation to anyone who is not licensed or who is not exempt from the license law.

Question 42

Uniform Irrevocable Consent and Designation Form

Answer 42

A document that allows a summons to be served upon out-of-state residents in New York.

Question 43

Apartment Information Vendor

Answer 43

An individual, who for a fee, engages in the business of furnishing information concerning the location and availability of residential real property including apartment housing.