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Ultimate Licensee Study Guide

Ultimate Licensee Study Guide

Most Important Chapters on Test

  • Chapters: 2, 3, 5 & 15

Chapter 1: License Law and Regulations

  1. Activities That Don't Require a License

  2. Highest Real Estate License in NYS: Associate real estate broker

  3. Pocket Card: Must be shown on demand

  4. Earning Commission: When bringing about a meeting of the minds

  5. Definition of a Real Estate Broker: A person, firm, corporation, or LLC

  6. License Duration: Good for 2 years

  7. License Renewal in Grace Period: Must take continuing education

  8. After Grace Period: Must retake the state exam

  9. Licensure Exemptions: Lawyers, employees doing real estate for their employer, court orders

  10. Real Estate Salesperson Sponsorship: Must be sponsored by a broker

  11. Broker License Suspension: Suspends the sponsored licensees without a hearing

  12. Compensation for Sales People and Associate Brokers: Must come from their own broker

  13. Suing Establishment: Must sue your broker if the broker won't sue the client

  14. Official Record Retention: 3 years

  15. License Revocation Period: Revoked for 1 year

  16. License Law Violation: Classified as a misdemeanor

  17. Advertising Restrictions: Must accurately state property location

  18. Illegal Listing: Net listings are against the law in NYS

  19. Disclosure Statement Exceptions: No disclosure required for condominiums

Chapter 2: Law of Agency

  1. Property Condition Disclosure: Must be given before buyer signs purchase offer

  2. Buy Out Option: $500

  3. Commission Determination: Typically a percentage of the sale price or flat fee

  4. Commission Determination Responsibility: Determined between consumer and broker

Agency Concepts

  1. Agency Definition: Legal relationship between agent and principal

  2. Licensees Representing Clients: Brokers, associate real estate brokers, salespersons

  3. Agent Employment: Agents are employed by clients

  4. Buyer/Seller Agent Relationships:

    • Buyer hires buyer’s agent

    • Seller hires seller’s agent

  5. Fiduciary Duties:

    • Obedience: Follow lawful instructions

    • Loyalty: Prioritize principal's interest

    • Disclosure: Timely information for beneficial transactions

    • Confidentiality: Protect privileged information

    • Accounting: Responsible for value held for the principal

    • Reasonable Care: Diligence to avoid principal harm

  6. Types of Agents:

    • Universal Agent: Represents client in all matters

    • General Agent: Represents client in multiple matters

    • Special Agent: Employed mainly for specific tasks (most licensees)

  7. Agency Agreements: Expressed (written/verbal) or Implied (through actions)

  8. Listing Types:

    • Open Listing: Multiple brokers; seller retains rights

    • Exclusive Right to Sell: Broker earns commission regardless of seller's actions

    • Exclusive Agency: Seller can sell without broker fees

  9. Agency Disclosure Requirements: ADF must be provided at first substantive contact

  10. Dual Agency: Conflict of interest; preferred solution: Designated sales associate

Chapter 3: Ownership Interests, Rights, and Estates

  1. Riparian Rights: Rights to water for property bordering a river/stream

  2. Trade Fixture Example: Large attached display case

  3. Best Ownership Type: Fee simple absolute

  4. Property Transfer:

    • To daughter: Fee simple absolute

    • Life estate: Can rent property

    • Remainder interest: After life estate expiration

  5. Ownership Forms:

    • In Severalty: One person owns property

    • Tenancy in Common: Concurrent ownership without survivorship

    • Joint Tenancy: Concurrent ownership with right of survivorship

    • Tenancy by Entirety: Joint ownership for married couples

  6. Owner Rights Post-Divorce: Automatically converted to tenancy in common

Chapter 3: Liens and Easements

  1. Encumbrance Definition: Right of another over owner’s property

  2. Liens Definition: Financial claim tied to property

  3. Types of Liens:

    • Property Taxes: Always priority

    • Mechanics Lien: Claims attached to the property for unpaid labor/materials

  4. Easements: Right of another to cross over the land

  5. Common Easements:

    • Easement Appurtenant: Between two parcels

    • Easement in Gross: Utility easement, rights unrelated to land ownership

  6. Encroachments: Intrusions on another's property discovered usually via survey

Chapter 4: Real Estate Contracts and Leases

  1. Real Estate Lease: Conveys possession without ownership

  2. Types of Leases:

    • Tenancy for Years: Fixed start and end dates

    • Periodic Lease: Specific period without expiration

  3. Tenant Rights:

    • Implied covenants include habitability and quiet enjoyment

    • Sublease: Transfer less than all terms; sublessor primarily responsible

  4. Lease Types:

    • Gross Lease: Tenant pays fixed amount; landlord covers expenses

    • Net Lease: Tenant pays fixed rent plus expenses

    • Percentage Lease: Tenant pays rent based on profits

    • Graduated Lease: Rent increases at set dates

Chapter 5: Financing

  1. Mortgaging Definition: Pledging property as security for debt

  2. Mortgagor and Mortgagee:

    • Mortgagor: Owner/borrower

    • Mortgagee: Lender

  3. Foreclosure Process in NYS: Judicial foreclosure

  4. Amortization: Repayment of principal and interest over time

Chapter 6: Land Use Regulations

  1. Escheat: Property returns to the state without a will or heirs

  2. Eminent Domain: Government can take property for public use with compensation

  3. Zoning: Regulates land use and segregation of uses

  4. Zoning Board of Appeals: Grants variances and nonconforming uses

Chapter 7: Construction and Environmental Issues

  1. Building Codes: Ensure construction standards

  2. Certificate of Occupancy: Certifies the building is safe to live

  3. Environmental Hazards: Know regulations around asbestos, lead, and radon

Chapter 8: Valuation Process and Pricing Properties

  1. Appraisal: A finished product from the appraiser

  2. Market Value Factors: Includes buyer/seller motivations and market conditions

  3. Depreciation and Obsolescence: Concepts to understand value decrease

Chapter 9: Fair Housing

  1. Protected Classes: Groups that cannot be discriminated against in housing

  2. Key Laws: Civil Rights Act of 1866 and FHA amendments of 1988

Chapter 10: Insurance and Taxes

  1. Purpose of Property Insurance: Protection against physical damage

  2. Homeowners Policies: Various forms like HO3, H04, H06

  3. Ad Valorem Taxes: Based on assessed value of properties

Chapter 11: Municipal Agencies

  1. Zoning Ordinances: Passed by municipal governments for community planning

Chapter 12: Property Management

  1. Property Manager Role: Reducing risk and increasing NOI

  2. Management Agreement: Formal contract between owner and manager

Chapter 13: Mortgage Brokerage

  1. Mortgage Broker Licensing: Must be licensed by the division of financial services

  2. Commonly Managed Loans: Typically deal with nonconforming subprime loans

Chapter 14: Condominiums and Cooperatives

  1. NYS Attorney General: Reviews offering plans for co-ops and condos

  2. Co-op Ownership: Purchase of stock rather than direct ownership of property

Chapter 15: Commercial and Investment Properties

  1. IRV Formula: Net Operating Income, Capitalization Rate & Value

  2. Valuation Methods: ProForma statement to project future income potential

Chapter 16: Income Tax Issues

  1. Tax Deductions: Home loan interest and taxes are deductible

  2. Capital Gains Calculation: Based on the adjusted basis and sale price

Chapter 17: Property Management and Dynamics

  1. Management Agreement: Governs the relationship between manager and owner

Chapter 18: Mortgage Brokerage & Management

  1. NYS Department: Licenses mortgage brokers and managers