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

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

21. Buy Out Option: $500

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

23. 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