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UPDATED NYS REAL ESTATE EXAM
QUESTIONS AND 100% CORRECT ANSWERS
“In NYS how old must one be to enter into contracts? - CORRECT ANSWER 18"
"What covers fully or personal property lost in a fire? - CORRECT ANSWER Replacement
cost" "What's 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 percent"
"Who hires the agent? - CORRECT ANSWER Principal or client"
"What is not a CMA (comparative market analysis) - CORRECT ANSWER An appraisal"
"What can't a salesperson do? - CORRECT ANSWER Collect money directly from a client or
customer"
"What should the agency disclosure form be submitted? - CORRECT ANSWER At the first
substantive contact"
"What is another name for transfer of title or real property? - CORRECT ANSWER
Conveyance"
"What is it called when the government dictates how the property can be used? - CORRECT
ANSWER Zoning"
"Who issues real estate licenses? - CORRECT ANSWER NY Department of State"
"Who oversees licensing and registration of mortgage bankers and brokers? - CORRECT
ANSWER NYS banking department"
"Which department oversees drinking water safely? - CORRECT ANSWER NYS department
of health"
"Who determines the commission? - CORRECT ANSWER Principal/client and the broker"
"What occurs when the agent represents the seller but also works in the best interest of the
buyer? - CORRECT ANSWER Undisclosed dual agency"
"A real estate salesperson is what type of agent? - CORRECT ANSWER Special"
"What clause in the deed describes the property? - CORRECT ANSWER Legal descriptions"
"What type of income is partnerships/investments? - CORRECT ANSWER Portfolio"
"What is the name of the policy that provides additional liability coverage beyond the primary
policy? - CORRECT ANSWER Umbrella policy"
"What type of maintenance is fixing a leaking 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 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 Right 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 that's smaller in amount? - CORRECT ANSWER Wraparound
mortgage"
"apportionments - CORRECT ANSWER adjustment of the income, expenses, or carrying
charges of real estate usually computed to the date of closing of title so that the seller pays all expenses to that date"
"asbestos - CORRECT ANSWER lung disease caused by exposure to asbestos"
"basement - CORRECT ANSWER space wholly or partly below grade, usually not used for
living accommodations"
"black book - CORRECT ANSWER offering plan for a coop or condo as accepted for filing by
the attorney general and used for marketing"
"boot - CORRECT ANSWER money or property given to make up any difference in value or
equity between two properties in an exchange"
"building-related illness (BRI) - CORRECT ANSWER symptoms such as hypersensitivity,
asthma, and allergic reactions caused by toxic substances and pathogens in a building that remain with the affected individual even when away from the building"
"bullet loan - CORRECT ANSWER short or intermediate term (3 to 5 years) interest-only loan
with a balloon payment at the end of the term ; as called an intermediate loan or conduit financing"
"casement window - CORRECT ANSWER a window that opens on hinges"
"CBS - CORRECT ANSWER memory aid for an appraiser's adjustments: Comparable, better,
subtract"
"chlordane - CORRECT ANSWER an insecticide banned in the 1980s"
"company dollar - CORRECT ANSWER funds remaining after the costs of sales, such as
commissions paid to sales associates, referral fees, and cooperating fees paid to other brokers, are deducted from gross commissions received by the company"
"CPA - CORRECT ANSWER Appraiser's memory aid in making adjustments: Comparable
Poorer, Add"
"datum - CORRECT ANSWER point from which elevations are measured; mean sea level in
New York harbor, or local ___________"
"double-hung window - CORRECT ANSWER a sash window with two vertically sliding
sashes; both single-hung and double-hung window sashes are controlled and held in place by springs or weights"
"electromagnetic field (EMF) - CORRECT ANSWER Invisible energy fields created by the
movement of electrical currents in high-tension wires and electrical appliances. EMFs may be responsible for occurrences of cancer, hormonal changes, and behavioral disorders"
"pier and beam foundation - CORRECT ANSWER Foundation style in which partly
submerged columns (piers) support the foundation slab, with an air pocket (crawlspace) between the slab and the ground."
"polychlorinated biphenyls (PCBs) - CORRECT ANSWER Potentially hazardous chemical
used in electrical equipment, principally transformers."
"potentially responsible parties (PRPs) - CORRECT ANSWER under Superfund, the
landowners suspected of contaminating a property"
"preapproval loan - CORRECT ANSWER a pending loan in which all of the underlying
documents are in file and there is a strong probability that there are no credit or income issues stopping the loan from closing"
"prepaid item - CORRECT ANSWER a bill paid by the seller for something the buyer will
benefit from: the coming year's property taxes, for example. Buyer will reimburse seller at closing for the unused portion."
"prequalification - CORRECT ANSWER refers to a pending loan in which a mortgage broker
believes that, based on a preliminary interview and a credit report, the borrower will probably (subject to verification) be able to meet the loan requirements of a lender--assuming the borrower is telling the truth about the borrower's financial situation and income status"
"primary residence - CORRECT ANSWER the location where a taxpayer has resided for at
least two out of the previous five years before the sale of the property; in addition, the residence must be used as the primary place of residence (when the taxpayer files an income tax return)"
"pro forma statement - CORRECT ANSWER financial statement showing what is expected to
occur, particularly with income property"
"sill plates - CORRECT ANSWER horizontal supports on top of the foundation"
"Social Security Tax - CORRECT ANSWER a tax of 15% required of every taxpayer; half of the
tax is withheld from an employee's paycheck and half must be paid by the employer"
"solar energy - CORRECT ANSWER use of solar collectors to convert heat from the sun into
usable heat and energy from a building"
"specific performance suit - CORRECT ANSWER A legal action brought in a court of equity in
special cases to compel a party to carry out the terms of a contract. The basis for an equity court's jurisdiction in breach of a real estate contract is the fact that land is unique and mere legal damages would not adequately compensate the buyer for the seller's breach."
"statutory lien - CORRECT ANSWER A lien imposed on property by statute—a tax lien, for
example—in contrast to a voluntary lien such as a mortgage lien that owners place on their own real estate"
"statutory redemption period - CORRECT ANSWER period after a tax sale in which the
delinquent taxpayer may regain the property by paying the back taxes, penalties, interest, and costs"
"subletting - CORRECT ANSWER The leasing of premises by a lessee to a third party for part
of the lessee's remaining term."
"subrogation - CORRECT ANSWER the substitution of one creditor for another with the
substituted person succeeding to the legal rights and claims of the original claimant"
"supervising broker - CORRECT ANSWER the one broker registered with the Department of
State as in charge of a real estate office, responsible for the actions of salespersons and associate brokers"
"Taking - CORRECT ANSWER Government restriction on use of property, to the extent that
the owner must be compensated for loss of value."
"tax certiorari - CORRECT ANSWER appeal in state court of a ruling by the local assessment
board of review"
"tax credit - CORRECT ANSWER a direct reduction in tax payable, as opposed to a deduction
from income"
"truss roof - CORRECT ANSWER Particularly strong roofing system composed of chords,
diagonals, and gusset plates; preassembled at a mill."
"without recourse - CORRECT ANSWER words used in endorsing a note or bill to denote that
the future holder is not to look to the endorser in case of nonpayment"
Article 12-A of the NYS Real Property Law - CORRECT ANSWER The section of the New York
Real Property Law pertaining to real estate salespersons and brokers.
- Primary purpose is to "Protect the Public"
- Requires a salesperson to be at least 18 years of age
- Requires a broker to be at least 20 years of age"
"Sponsor - CORRECT ANSWER A licensed real estate broker that holds the license of a
salesperson."
""Summary of Your Submission" - CORRECT ANSWER Obtained after your register for the
New York State Salesperson exam using eAccessNY. You must bring this with you when taking the State exam."
"Misdemeanor - CORRECT ANSWER A crime punishable by up to a year in prison and/or a
$1,000 fine."
"Listing Agreement - CORRECT ANSWER An employment contract between principal and
agent, authorizing the agent to perform services for the principle involving the latter's property."
"Pocket Card - CORRECT ANSWER A card issued by the Department of State to each licensee
which contains the photo, name and business address of the licensee, and, in the case of a real estate salesperson, the name and business address of the broker with whom he or she is associated and shall certify that the person whose name appears thereon is a licensed real estate broker or salesperson.
- Must be carried by the agent at all times when serving as a salesperson."
"Fiduciary - CORRECT ANSWER A person who on behalf of or for the benefit of another
transacts business or handles money or property not the person's own; such relationship implies great confidence and trust."
"OLD CAR - CORRECT ANSWER - Obedience
"Chain of Title - CORRECT ANSWER The sequence of historical transfers of title to a property.
It runs from the present owner back to the original owner of the property."
"Title - CORRECT ANSWER Legal term for a bundle of rights in a piece of property in which a
party may own either a legal interest or equitable interest."
"Closing Statement - CORRECT ANSWER A document commonly used in real estate
transactions, detailing the fees, commissions, insurance, etc. that must be transacted for a successful transfer of ownership to take place."
"Essential Element of a Contract - CORRECT ANSWER 1) Consideration
- Must be in writing
- Must have competent parties"
"Estate for Years - CORRECT ANSWER A leasehold estate for any specific period of time. An
estate for years is not automatically renewed."
"Express Contract - CORRECT ANSWER A contract in which all elements of a contract are
specifically stated (offer, acceptance, consideration)."
"Attorney Review Clause - CORRECT ANSWER A clause found in real estate contracts that
may allow buyers to walk away from an agreed upon sale for any reason."
"Mortgage Contingency Clause - CORRECT ANSWER A clause in a contract that states a
mortgage must be obtained in order for the contract to be binding."
"Eviction - CORRECT ANSWER A legal proceeding by a lessor landlord to recover possession
of real property."
"Holdover Tenant - CORRECT ANSWER A tenant who remains in possession of leased
property after the expiration of the lease term."
"Triple Net Lease - CORRECT ANSWER A lease commonly found in a building with a single,
long-term tenant."
"Mortgage - CORRECT ANSWER Legal agreement by which a bank lends money in exchange
for taking title of the debtor's property, with the condition that the conveyance of title becomes void upon payment of the debt."
"APR - CORRECT ANSWER The actual interest rate charged, including loan fees and points"
"Secondary Mortgage Market - CORRECT ANSWER The market where mortgage loans and
servicing rights are bought and sold between mortgage originators, mortgage aggregators (securitizers) and investors."
"Loan-to-Value (LTV) - CORRECT ANSWER A financial term used by lenders to express the
ratio of a loan to the value of an asset (property) purchased.
- Determined by using the Purchase Price or the Appraised Value, whichever is less."
"Satisfaction of Mortgage - CORRECT ANSWER A document acknowledging the payment of a
mortgage debt."
"Adjustable rate mortgage (ARM) - CORRECT ANSWER A mortgage loan with the interest
rate on the note periodically adjusted based on an index which reflects the cost to the lender of borrowing on the credit markets."
"Fixed Rate Mortgage - CORRECT ANSWER Accounts for the majority of mortgages."
"Title X - CORRECT ANSWER a Federal law that makes real estate licensees liable for the
disclosure of lead paint."
"Radon - CORRECT ANSWER A colorless, odorless gas that is emitted from soils, rocks and
water as a result of radioactive decay in certain areas of the country."
"Asbestos - CORRECT ANSWER A naturally occurring mineral fiber sometimes found in
older homes. It is hazardous to health when a possibility exists of exposure to inhalable fibers. Homeowners should be alert for friable asbestos and always seek professional advice in dealing with it."
"Asbestosis - CORRECT ANSWER A chronic lung disease caused by inhaling asbestos fibers."
"Lead - CORRECT ANSWER A material used in pipes and paint of many older homes."
"Clean Air Act (CAA) - CORRECT ANSWER Federal law designed to control air pollution on a
national level."
"The Offering Plan - CORRECT ANSWER A key document provided during the purchase of a
cooperative, which includes information required to be disclosed to the purchaser."
"Board Package - CORRECT ANSWER A series of documents submitted for the review by a
cooperative board."
"By-laws - CORRECT ANSWER The owner's rights and obligations for a condominium"
"House rules - CORRECT ANSWER Rules in a cooperative that cover common issues
including garbage disposal, maintenance, noise, pets, and conflict resolution."
"Condominium - CORRECT ANSWER Considered real property, which is conveyed by a deed"
"Maintenance - CORRECT ANSWER Monthly payments by a shareholder to a cooperative
corporation."
"Common Charges - CORRECT ANSWER Monthly payment by an owner of a condominium."
"Sponsor - CORRECT ANSWER The developer or owner organizing and offering for sale a
condominium or cooperative development."
"Leverage - CORRECT ANSWER The use of borrowed capital (mortgage) to increase the
potential return of an investment."
"Pro-forma Statement - CORRECT ANSWER An accounting statement that forecasts income
and expenses for a period of time, typically five or more years."
"Cap Rate - CORRECT ANSWER NOI / Purchase Price"
"Liquid - CORRECT ANSWER The ability to have cash readily available to support the
demands of running and maintaining real property"
"Gross Income - CORRECT ANSWER The total amount collected from rents and other income
producing opportunities."
"Capital Gain - CORRECT ANSWER A profit that results from the sale of a property where the
amount realized from the sale exceeds the purchase price."
"Boot - CORRECT ANSWER Cash received in a tax-deferred exchange"
"Tax Shelter - CORRECT ANSWER Any method of reducing taxable income resulting in a
reduction of the payments to tax collecting entities, including state and federal governments."
"Straight-line Depreciation - CORRECT ANSWER A method of calculating the depreciation of
an asset which assumes the asset will lose an equal amount of value each year.
- A residential property is depreciated over a 27.5 year period.
- A commercial property is depreciated over a 39 year period."
"1031 Exchange - CORRECT ANSWER - 45 days to identify a new property
- 180 days to close on a new property"
"Mortgage Broker - CORRECT ANSWER An intermediary who brings mortgage borrowers
and mortgage lenders together, but does not use its own funds to originate mortgages."
"Mortgage Banker - CORRECT ANSWER A company, individual or institution that originates
mortgages. Mortgage bankers use their own funds, or funds borrowed from a warehouse lender, to fund mortgages."
"General Agent - CORRECT ANSWER Someone authorized to transact every kind of business
for the principal (Example: Property Manager)."
"Operating Budget - CORRECT ANSWER An amount of money set aside by the owner for a
specific period for the property manager to manage the property effectively."
"Management Agreement - CORRECT ANSWER A contract between the owner of a property
and someone who agrees to manage it."
"Property Management Report - CORRECT ANSWER An accounting report issued
periodically by the property manager to the owner outlining all income and expenditures for that accounting period."
"What other capability should they possess (to enter into a contract)? - 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 is 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 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 taking 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 that's 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 severity"
"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 filled 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"
"What allows landlords to raise rents during the term of the lease? - CORRECT ANSWER
Escalation clause"
"What are tax advantages on investment properties called? - CORRECT ANSWER Tax
shelters" "What type of listing agreement is it where the listing broker gets commission for the sale of the
property even if the owners themselves sell the property? - CORRECT ANSWER Exclusive
right to sell"
"What's an implied clause in a deed? - CORRECT ANSWER Grantor owns the property and
has a right to convey it or right of quiet enjoyment"
"What does Regulation Z (TILA) require beside the disclosure of internet rates? - CORRECT
ANSWER Down payment"
"What does the secondary mortgage market do? - CORRECT ANSWER Buys and sells
mortgages"
"What agency issues real estate licenses? - CORRECT ANSWER NYDOS"
abstract of title - CORRECT ANSWER The condensed history of a title to a particular parcel of
real estate"
"abutting - CORRECT ANSWER neighboring land with a common boundary"
"acceleration clause - CORRECT ANSWER clause in a note or mortgage that can be enforced
to make the entire debt due immediately if mortgagor defaults"
"accession - CORRECT ANSWER acquisition of land by deposits from an adjoining stream;
also the acquisition of fixtures or improvements built on one's land by another"
"accessory (apartment) use - CORRECT ANSWER an additional apartment, usually small,
sometimes allowed in an area zoned for one-family homes, which might be used for elderly grandparents; or a small home business"
"equalization factor - CORRECT ANSWER A multiplier that adjusts for different
communities' tax assessment policies."
"filtering down - CORRECT ANSWER process by which housing units formerly occupied by
middle-and upper-income families decline in quality and value and become available to lower- income occupants"
exchange of real estate, or that leases (or offers to lease) or rents (or offers to rent) any real estate or the improvements thereon for others and for compensation or valuable consideration."
"recession - CORRECT ANSWER periods of low general economic activity"
"recognition agreement - CORRECT ANSWER a document signed by the borrower , lender,
and coop board. The signature by the coop acknowledges the lending party's lien interest in the shares covered by the unit. These agreements normally call for the cooperative to notify the lender of any default by the shareholder/borrower (ie. the nonpayment of maintenance fees)"
"red herring - CORRECT ANSWER preliminary offering plan for a cooperative or
condominium project submitted to the attorney general and to tenants and subject to modification"
"reduction certificate - CORRECT ANSWER a statement from the lender detailing the
amount remaining and currently due on a mortgage, usually sought when a mortgage is being assumed or prepaid (also referred to as an estoppel certificate)"
"rent stabilization - CORRECT ANSWER local regulations that stem from the adoption of the
Emergency Tenant Protection Act, and that limit maximum allowable rent increases"
"reverse discrimination (benign discrimination) - CORRECT ANSWER housing
discrimination, usually based on quotas, designed by a municipality to achieve a racial balance perceived as desirable"
"reversionary right - CORRECT ANSWER The return of the rights of possession and quiet
enjoyment to the lessor at the expiration of a lease."
"seisin - CORRECT ANSWER the possession of land by one who claims to own at least an
estate for life therein"
"Independent Contractor Relationship - CORRECT ANSWER A person that provides services
to another under terms specified in a contract or within a verbal agreement. An independent contractor is not an employee.
- The agent does not have to work in a specific location
- The broker cannot control the agent's work activities"
"Bundle of Rights - CORRECT ANSWER The premise that the ownership of real estate
consists of the ownership of various rights associated with it. These rights include the right to use and/or occupy, the right to sell in whole or in part, the right to lease, the right to bequeath and the right to do none of the foregoing.
- Includes the right to quiet enjoyment"
"Littoral Rights - CORRECT ANSWER The right of a property owner whose land borders on a
body of water, such as a lake, ocean or sea, to reasonable use and enjoyment of the shore and water the property borders on."
"Riparian Rights - CORRECT ANSWER The right of a property owner whose land borders a
natural water course, such as a river, to reasonable use and enjoyment of the water that flows past the property. This term literally means "riverbank""
"Specific Lien - CORRECT ANSWER A lien that only binds to a specific asset or property
(Example: mortgage)."
"Voluntary Lien - CORRECT ANSWER A contractual or consensual lien that is created by an
action taken by the debtor, such as a mortgage loan to buy real estate (Example: mortgage)."
"Tax Lien - CORRECT ANSWER A lien imposed by law upon a property to secure the payment
of taxes"
"Easement - CORRECT ANSWER A right to cross or otherwise use someone else's property for
a specified purpose."
"Encumbrance - CORRECT ANSWER Any right to or interest in the land interfering with its
use or transfer, or subjecting it to an obligation."
"Affirmative Easement Appurtenant - CORRECT ANSWER Parcels without access to a public
way may have an easement of access over adjacent land if crossing that land is absolutely necessary to reach the landlocked parcel and there has been some original intent to provide the lot with access."
"Full Covenant and Warranty Deed - CORRECT ANSWER A type of deed where the grantor
guarantees that he or she holds clear title to a piece of real estate and has a right to sell it to the grantee. This type of deed contains the strongest guarantee of title."
"Amortization - CORRECT ANSWER The process by which a loan principal decreases over
the life of a loan."
"Condemnation - CORRECT ANSWER Taking private property for public use, with fair
compensation to the owner; exercising the right of eminent domain."
