NYS Real Estate — Study Guide (modular)

Study Modules

27

All 19 official syllabus topics

Practice Questions

—

Full bank + topic drills

Flashcards

—

All 19 topics covered

Math Drills

18

Calculations + formulas

Passing Score

70%

53 of 75 questions

🆕 New Modules — What Was Missing

☣️ Environmental Issues

Lead paint, asbestos, radon, mold, underground tanks, CERCLA, PCBs, disclosure requirements

NEWON EXAM

📊 Appraisal & Valuation

3 approaches to value, URAR, adjustments, depreciation, CMA vs appraisal, Uniform Standards

NEWON EXAM

📋 Contracts

Valid contract elements, listing types, buyer agreements, contingencies, statute of frauds

NEWON EXAM

🔑 Closing Process

RESPA, prorations, transfer taxes, TRID, closing disclosure, settlement costs

NEWON EXAM

🏦 Mortgages & Finance

Loan types, ARM vs fixed, FHA/VA/conventional, points, PITI, underwriting, secondary market

NEWON EXAM

🗺️ Land Use & Zoning

Zoning types, variances, nonconforming use, eminent domain, police power, deed restrictions

NEW

🏙️ Commercial Real Estate

Lease types, cap rates, NOI, gross vs net leases, commercial appraisal, 1031 exchanges

NEWCOMMERCIAL

🔧 Property Management

PM agreements, duties, management fees, maintenance, tenant relations, budgets

NEW

🏢 NY Landlord-Tenant

Rent stabilization, rent control, eviction process, warranty of habitability, security deposits

NEWNY

🛡️ Licensee Safety

Personal safety at showings, cyber security, client data protection, do-not-call rules

NEWNY

🏠 Property Insurance

HO policy types (HO-1 through HO-8), flood, title vs hazard, co-insurance, liability coverage

NEW

💰 Taxes & Assessments

Assessed value, equalization rates, STAR exemption, grievance process, special districts, tax foreclosure

NEWNY

📑 Income Tax Issues

Capital gains, Section 121 exclusion, depreciation recapture, 1031 exchange, estate/gift tax on real estate

NEWON EXAM

🏛️ Municipal Agencies

Planning boards, zoning boards of appeal, building dept, health dept, conservation councils, historic preservation

NEWNY

⛓️ Liens & Encumbrances

Mechanics liens, tax liens, easements, covenants, priority, attachment liens

NEW

Core Modules

⚖️ Article 12-A

Licensing law, exemptions, broker vs salesperson, trust accounts, violations

NYHEAVY

📢 Regulation 175

Advertising rules, blind ads, social media, team names, disclosure

NY

🤝 Agency Disclosure

Disclosure timing, dual agency, COLDAC fiduciary duties

NYHEAVY

🏛️ Fair Housing

Federal vs NY protected classes, prohibited practices, exemptions

8-12% OF EXAM

🔢 Math & Calculations

Commission, LTV, GRM, proration, discount points, transfer taxes, NOI, cap rate

10-15% OF EXAM

⚠️ Your Weak Spots

11 questions from your practice test where you went wrong — drill these first

DRILL FIRST

⚖️ ARTICLE 12-A — NY REAL PROPERTY LAW

What Is Article 12-A?

Article 12-A of the NY Real Property Law is the primary licensing law governing real estate brokers and salespersons in New York State. Administered by the NY Department of State (DOS), Division of Licensing Services. One of the most heavily tested NY-specific topics.

Core Rule

Anyone who negotiates any form of real estate transaction for another person AND for compensation must be licensed. No exceptions without an explicit exemption.

Broker vs Salesperson vs Associate Broker

Broker: Can work independently, employ salespersons, hold escrow funds, receive commissions directly from the public.

Salesperson: Must work under a licensed broker at ALL times. Cannot receive commissions from clients — only from their employing broker.

Associate Broker: Has broker qualifications but chooses to work under another broker. Operates as a salesperson.

License Requirements

Requirement	Salesperson	Broker
Age	18+	20+ (as of July 1, 2008)
Education	77 hours (75-hr course + 2-hr Fair Housing)	77 salesperson + 75 broker = 152 total hrs
Experience	None required	2 years as licensed salesperson
Exam	75 Qs, 90 min, 70% pass	Separate broker exam, 75% pass
Fee / Term	$65, 2-year license	$155, 2-year license
CE Renewal	22.5 hours every 2 years	22.5 hours every 2 years
Sponsoring Broker	Required to activate	Not required

Who Is EXEMPT From Licensing

Exempt Party	Why
NY Bar-admitted attorneys	Incidental to law practice; also exempt from CE
Property owners selling their own property	Acting for themselves
Court-appointed receivers/trustees	Acting under court authority
Employees managing property for ONE employer	Salaried, not independent
Not-for-profit affordable housing orgs	Specific statutory exemption

⚠️ Exam Trap

Attorneys are exempt from pre-licensing education and CE — but if they want to act as a broker for others AND receive compensation, they still need a license.

Prohibited Acts — Grounds for Revocation

Prohibited Act	Key Detail
Misrepresentation or fraud	In any transaction
Commingling funds	Mixing escrow with personal/operating funds
Conversion	Using client funds for personal use = criminal
Paying unlicensed persons	Cannot split commissions with unlicensed individuals
Acting as undisclosed dual agent	Must disclose and get written consent
Blockbusting / steering / redlining	Fair Housing violations
Advertising violations	Violating Regulation 175
Conviction of a crime	DOS discretion based on nature of crime

DOS Fine: Up to $1,000 per violation. The DOS can also suspend or revoke the license and refer criminal matters to law enforcement.

Trust / Escrow Account Rules

Commingling: NEVER mix client deposits with personal or operating funds. Automatic grounds for revocation.

Conversion: Using escrow funds for personal use = criminal liability + revocation.

Advance Fees: Money collected upfront (e.g., for advertising) = trust funds. Must be used only for intended purpose.

💡 Memory Aid

"Commingling = Combining (illegal). Conversion = Using client money as yours (criminal)."

📢 REGULATION 175 — ADVERTISING RULES

The #1 Rule

Core Rule

ALL real estate advertising in NY must clearly and conspicuously include the name of the licensed broker or brokerage firm. No exceptions.

⚠️ Blind Ads Are ILLEGAL

A blind ad is any advertisement that does NOT include the broker/brokerage name. Illegal in NY. Applies to print, digital, social media, signs, business cards — everything.

Key Rules at a Glance

Rule	Detail
Broker name required	ALL ads — print, digital, social, signs, cards
No blind ads	Public must know a licensed broker is involved
Salesperson cannot advertise independently	Must use broker's name
Team names	Team name does NOT replace broker name — broker must STILL appear
Social media	Same rules — broker name required on all posts/profiles
For Sale signs	Broker name required — salesperson name alone insufficient
Business cards	Must include broker/brokerage name
No misleading claims	Cannot misrepresent services, experience, or property details

🤝 NY AGENCY DISCLOSURE

When Must the Disclosure Form Be Given?

Core Rule

The Agency Disclosure Form must be provided at the first substantive contact — before any real estate discussions about a specific property.

To Sellers: Before entering into a listing agreement

To Buyers: At first substantive contact — when discussing buyer needs or showing homes

⚠️ Exam Trap

Buyer calls to ask about open house hours = NOT substantive contact. Buyer asks "what can I afford?" or "can I see this listing?" = IS substantive contact → form required.

Types of Agency Relationships

Type	Represents	Key Detail
Seller's Agent	Seller only	Fiduciary duty to seller; must disclose to buyer
Buyer's Agent	Buyer only	Fiduciary duty to buyer; must disclose to seller
Dual Agent	Both	Written consent from BOTH parties required
Designated Agent	One party each	Different agents in same firm represent each side
Transaction Broker	Neither/Both	Facilitates transaction without full fiduciary

Dual Agency: Cannot disclose seller's lowest price to buyer, or buyer's highest price to seller. Must be neutral.

Fiduciary Duties — COLDAC

Memory Aid

Care — professional skill | Obedience — follow lawful instructions | Loyalty — client first
Disclosure — all material facts | Accounting — account for funds | Confidentiality — protect client info

⚠️ Confidentiality Survives Closing

Even after the transaction closes, an agent CANNOT reveal confidential client information.

🏛️ FAIR HOUSING — FEDERAL + NY

Federal Fair Housing Act (1968) — Protected Classes

Memory Aid: FRHHNCS

⚠️ Exam Trap — NOT Federal Protected Classes

Age, marital status, sexual orientation — NOT in the federal FHA. Covered by NY state law only.

NY Human Rights Law — Additional Classes

NY-Added Class	Notes
Age	18+ protected
Marital Status	Single, married, divorced, widowed
Sexual Orientation	Including gender identity/expression
Military Status	Active duty, veterans
Domestic Violence Victim Status	Cannot discriminate against DV survivors
Lawful Source of Income	Cannot refuse Section 8 / housing vouchers

Civil Rights Act of 1866

Covers ONLY race — no other classes, NO exemptions whatsoever

Applies to ALL real property transactions — no exceptions

💡 Key Distinction

1866 Act = Race ONLY, NO exemptions. 1968 FHA = Multiple classes, some limited exemptions.

FHA Exemptions (Limited — Don't Apply to 1866 Act)

Owner-occupied buildings with 4 or fewer units ("Mrs. Murphy" exemption) — IF no discriminatory advertising

Single-family homes sold/rented by owner without a broker

Religious organizations — preference to members for non-commercial housing

Private clubs — non-commercial lodging for members

Senior Housing (HOPA): 55+ communities can exclude families with minor children IF 80% of units have at least one resident 55+

Prohibited Practices

Blockbusting / Panic Peddling: Inducing homeowners to sell by suggesting protected class members are moving in.

Steering: Directing buyers toward or away from neighborhoods based on protected class.

Redlining: Refusing loans/insurance based on neighborhood racial/ethnic composition.

Discriminatory Advertising: Using language showing preference or limitation based on protected class. Applies even to MHFA (internet listings).

🏢 NY LANDLORD-TENANT LAW

Warranty of Habitability

In New York, every residential lease contains an implied warranty of habitability — the landlord MUST maintain the property in a livable condition regardless of what the lease says.

Landlord must provide: Heat (68°F daytime, 62°F nighttime Oct–May), hot water, pest-free conditions, working plumbing, no toxic hazards

Tenant remedy: Withhold rent, repair and deduct, or terminate lease if landlord materially breaches

Constructive Eviction: If landlord's breach is so severe the tenant is forced to leave — tenant may be relieved of rent obligation

⚠️ Key Point

The warranty of habitability CANNOT be waived in a lease — even if a tenant signs a lease saying "tenant accepts as-is," that clause is void.

Rent Regulation — NYC-Specific

Type	Coverage	Rent Increases
Rent Control	Pre-1969 buildings; tenant in continuous occupancy since 1974	Very limited; set by Maximum Base Rent formula
Rent Stabilization	Buildings 6+ units built before 1974; some post-1974 with tax benefits	Set annually by Rent Guidelines Board
Market Rate	All other apartments	Negotiated between landlord and tenant

HSTPA (2019): Housing Stability and Tenant Protection Act eliminated most pathways to deregulation. Vacancy decontrol abolished.

Security Deposits — NY Rules

Max deposit: 1 month's rent (for residential, since HSTPA 2019)

Return deadline: Within 14 days of tenant vacating (with itemized statement if any deductions)

Interest: Must pay interest on deposits held in buildings with 6+ units

⚠️ Failure to Return

Landlord who fails to return deposit within 14 days forfeits right to make deductions and may owe double damages.

Eviction Process in NY

Step 1: Written notice to cure (fix violation) or vacate — based on reason for eviction

Step 2: File petition in Housing Court if tenant doesn't comply

Step 3: Court hearing — tenant has right to appear

Step 4: Warrant of eviction issued by judge — marshal executes

Self-help eviction is ILLEGAL: Landlord CANNOT change locks, remove belongings, or shut off utilities to force a tenant out

Notice Requirements

Non-payment of rent: 14-day written notice to pay or vacate
Holdover (lease expired): 30-day notice for tenancies under 1 year; 60-day for 1-2 years; 90-day for 2+ years

Lease Basics

Statute of Frauds: Leases over 1 year must be in writing to be enforceable in NY

Assignment vs Subletting: Assignment = tenant transfers all rights. Subletting = tenant retains interest, sublets to subtenant

Tenancy at Sufferance: Holdover tenant — legally a trespasser but must be evicted by court process

Tenancy at Will: No fixed term — either party can terminate with notice

🏗️ PROPERTY OWNERSHIP

Types of Ownership

Type	Owners	Key Features
Severalty	1 person/entity	Sole ownership. "Severalty" = SOLE (exam trap!)
Tenancy in Common	2+ (unequal OK)	Undivided interest, no survivorship, freely transferable
Joint Tenancy	2+ (equal only)	RIGHT OF SURVIVORSHIP — deceased owner's share passes to survivors
Tenancy by the Entirety	Married couples only	Like JT but only spouses; cannot be severed without both consenting

Joint Tenancy — Four Unities (TTIP)

Time (acquired same time) | Title (same deed) | Interest (equal shares) | Possession (whole property)

Break ANY unity = converts to tenancy in common.

Life Estate

Life Tenant: Has right to use/possess property during their lifetime. Cannot sell more than their life estate interest.

Remainderman: Receives full ownership when life tenant dies. BOTH must sign to mortgage a life estate property.

Pur Autre Vie: Life estate measured by someone else's life ("for the life of X")

Condominiums vs Cooperatives

Feature	Condominium	Cooperative (Co-op)
What you own	Individual unit + % of common areas	Shares in a corporation (proprietary lease)
Deed	Yes — real property	No deed — stock certificate
Financing	Individual mortgage on unit	Loan secured by shares (not a mortgage)
Board approval	Usually not required to purchase	Board approval typically required
Tax	Individual property tax bill	Share of building's property tax

💡 NY Exam Fact

NYC has many more co-ops than most US cities. The co-op board can reject buyers for most reasons (not protected class reasons).

📜 TITLE & TRANSFER

Valid Deed Requirements

A Deed Is Valid When ALL Of These Are Present

1. Grantor with legal capacity (18+, mentally competent)
2. Grantee identified
3. Words of conveyance ("grant," "convey," "transfer")
4. Legal description of property
5. Grantor's signature ONLY — grantee does NOT sign
6. Delivery AND acceptance

⚠️ You Got This Wrong (Q6)

Only GRANTOR signs. Grantee does NOT sign. Recording is at the COUNTY level, not state.

Types of Deeds

Deed Type	Warranties Given	When Used
General Warranty	Full — against ALL title defects ever	Standard residential sales
Special Warranty	Only defects created by THIS grantor	Commercial, foreclosure sales
Quitclaim	NONE — whatever interest grantor has, if any	Clearing title, family transfers
Bargain & Sale	Grantor owns but no warranty against defects	Foreclosure, tax sales

Title Insurance

Policy Type	Protects	Duration
Owner's Policy	Buyer/owner	As long as owner has interest
Lender's Policy (Mortgagee)	Lender only	Until loan is paid off

Covers: Forgery, fraud, undisclosed heirs, improper delivery, lack of capacity, errors in public records

Does NOT cover: Zoning violations, building code violations, survey matters, issues buyer knew about

Premium paid ONCE at closing (unlike annual insurance premiums)

⛓️ LIENS & ENCUMBRANCES

What Is an Encumbrance?

Any claim, lien, charge, or liability attached to real property that may lessen its value or burden the owner's rights. Property can still be sold subject to encumbrances.

Financial Encumbrances (Liens)

Mortgages, tax liens, judgment liens, mechanics liens, attachment liens

Non-Financial Encumbrances

Easements, deed restrictions (covenants), encroachments, licenses

Types of Liens

Lien Type	How Created	Priority
Property Tax Lien	Automatically — when taxes are due	HIGHEST — trumps all others
Mortgage Lien	Voluntary — signed at closing	By date of recording
Mechanic's Lien	Filed by contractor for unpaid work	Often dates back to "first furnishing"
Judgment Lien	Court judgment against property owner	By date of docketing
Attachment Lien	Placed during lawsuit (freezes property)	By date filed
Lis Pendens	Notice of pending lawsuit affecting title	Warns potential buyers

Easements

Easement Appurtenant: Benefits adjacent property (dominant estate). Runs with the land — passes to new owner.

Easement in Gross: Personal right — not tied to a parcel. Utility easements are easements in gross.

Easement by Prescription: Like adverse possession — acquired through open, hostile, continuous use for statutory period (10 years in NY)

Easement by Necessity: Created when parcel is landlocked — owner has implied right of access

⚠️ Dominant vs Servient Estate

Dominant estate = BENEFITS from easement. Servient estate = BURDENED by easement. The servient estate owner still owns the land — just can't block the easement.

Deed Restrictions / Covenants

CC&Rs (Covenants, Conditions & Restrictions): Private restrictions recorded in deed. Run with the land. More restrictive than zoning.

Restrictive Covenants limit use (e.g., "no commercial use," "must be single-family"). Enforced by other property owners in the subdivision.

Racially restrictive covenants are void under the Fair Housing Act — cannot be enforced.

🗺️ LAND USE & ZONING

Who Controls Zoning?

Key Rule — Heavily Tested

Zoning is LOCAL — city and county level ONLY. There are NO statewide or federal zoning laws. Federal environmental laws exist but are not zoning.

Police Power: Government's constitutional power to regulate land use for health, safety, and welfare. Zoning is an exercise of police power.

Eminent Domain: Government's power to take private property for public use. Must provide just compensation. Process = Condemnation.

Escheat: When property owner dies intestate with no heirs — property reverts to the state.

Taxation: Government's power to levy property taxes. Failure to pay = tax lien → eventual tax sale.

Types of Zoning

Zoning Type	Purpose
Residential (R)	Single-family, multi-family housing
Commercial (C)	Retail, offices, services
Industrial (M/I)	Manufacturing, warehouses, heavy industry
Agricultural (A)	Farming, open space
Mixed-Use	Combination of residential and commercial
Planned Unit Development (PUD)	Flexible zoning for large developments
Historic District	Preserves architectural character

Zoning Relief — Variances & More

Variance: Permission to deviate from zoning requirements. Area variance = dimensional (setback, height). Use variance = different use than zoning allows.

Nonconforming Use: A use that legally existed before zoning changed. Can continue but usually cannot be expanded or rebuilt if destroyed.

Conditional Use Permit (CUP): Allows a use in a zone where it's not normally permitted, subject to conditions.

Rezoning: Legislative action to change the zoning designation of a parcel. More complex than a variance.

Buffer Zone: Area separating incompatible uses (e.g., residential from industrial).

Environmental Review — NY SEQRA

SEQRA (State Environmental Quality Review Act): NY law requiring environmental impact review before approving major projects. Administered by lead agency.

Environmental Impact Statement (EIS): Full study required for projects with significant environmental impact.

☣️ ENVIRONMENTAL ISSUES

Lead-Based Paint

Federal Law — Heavily Tested

Seller/landlord of pre-1978 housing must: (1) Disclose known lead paint hazards, (2) Provide EPA pamphlet "Protect Your Family From Lead in Your Home," (3) Allow 10-day inspection period (buyer can waive). Agents must ensure compliance.

Applies to: All residential property built before 1978

Penalty for non-disclosure: Up to $16,000+ per violation

⚠️ NY Additional Requirement

NYC Local Law 1 requires landlords to inspect and remediate lead paint hazards in units with children under 6. Annual certification required.

Asbestos

Where found: Insulation, floor tiles, ceiling tiles, pipe wrap — common in buildings built before 1980

Risk: Only dangerous when disturbed (friable asbestos). Non-friable (intact) asbestos can often be left in place (abatement not always required).

Disclosure: Material fact — must be disclosed if known. Buyers can request inspection before purchase.

Removal: Must be done by licensed asbestos abatement contractor. Regulated by EPA under AHERA and NESHAP.

Radon

What it is: Naturally occurring radioactive gas from uranium decay in soil. Enters buildings through cracks in foundation.

Danger level: EPA action level = 4 picocuries per liter (pCi/L) or higher

Testing: Short-term (2-7 days) or long-term (90+ days) tests. Charcoal canister = short-term.

Mitigation: Sub-slab depressurization system — fan vents radon gas from under foundation to outside

💡 NY Disclosure

No federal radon disclosure law. NY recommends testing. Agents should disclose if they know of elevated radon — material fact.

Mold

Cause: Moisture intrusion. Most common: leaking roofs, plumbing, flooding, poor ventilation.

NY requirement: NY has mold disclosure requirements for residential property. Landlords must address mold in rental units.

Material fact: Known mold must be disclosed to buyers. Can affect financing (some lenders won't lend on moldy properties).

Underground Storage Tanks (USTs)

Risk: Leaking USTs contaminate soil and groundwater. Common at former gas stations, dry cleaners, industrial sites.

Regulated by: EPA and NYS DEC. Owners must register USTs and carry insurance.

Disclosure: Known USTs (active or abandoned) must be disclosed — material fact. Huge liability issue.

CERCLA — Superfund Law

CERCLA (Comprehensive Environmental Response, Compensation, and Liability Act): Federal law governing cleanup of contaminated sites.

Strict liability: Current property owner can be held liable for cleanup EVEN IF they didn't cause the contamination

Innocent Purchaser Defense: Available if buyer did a Phase I Environmental Assessment before purchase and had no knowledge of contamination

Phase I: Records review, visual inspection, no soil/water testing. If red flags → Phase II (actual sampling).

⚠️ Exam Point

CERCLA liability is retroactive and can attach to innocent current owners. The Phase I is the primary way to establish an "innocent purchaser" defense.

Other Environmental Hazards

Hazard	Key Facts
PCBs (Polychlorinated Biphenyls)	Found in old electrical equipment, transformers. Banned in 1979. Regulated by EPA.
Urea Formaldehyde Insulation	UFFI — used 1970s, banned 1982. Off-gasses formaldehyde. Must disclose if known.
Carbon Monoxide	Odorless gas from fuel-burning appliances. NY requires CO detectors in all residential units.
Electromagnetic Fields (EMF)	Power lines, substations. No federal disclosure law but may be material fact.
Wetlands	Regulated by Army Corps of Engineers (federal) and NYS DEC. Building restrictions apply.
Flood Zones	FEMA NFIP maps. Flood insurance required for properties in 100-year flood zones (SFHA) with federally backed loans.

📊 APPRAISAL & VALUATION

Value vs Price vs Cost

Market Value: The most probable price a property would sell for in an arm's-length transaction. What appraisers estimate.

Market Price: The actual price paid — may differ from value.

Cost: What it costs to build or reproduce — may be more or less than market value.

Three Approaches to Value

Sales Comparison Approach (Market Approach)

Compare subject property to recently sold similar properties (comparables/comps). Adjust for differences. Best for: Single-family residential. Most commonly used approach on exam.

Cost Approach

Value = Land Value + Reproduction/Replacement Cost of Improvements − Depreciation. Best for: Special-use properties, new construction, insurance purposes, churches, schools.

Income Approach (Capitalization Approach)

Value = Net Operating Income (NOI) ÷ Capitalization Rate. Best for: Income-producing properties (apartments, commercial). Heavily tested for commercial RE.

Sales Comparison — Key Concepts

Adjustments: If comp has a feature the subject LACKS → subtract from comp. If comp LACKS a feature the subject has → add to comp.

ARM's Length Transaction: Both parties acting independently, without pressure — essential for a valid comp.

CMA vs Appraisal: CMA (Comparative Market Analysis) is done by brokers/agents to suggest a listing price. An APPRAISAL is done by a licensed appraiser — required for most mortgage financing.

⚠️ Exam Point

Agents prepare CMAs — they do NOT do appraisals. Appraisers are separately licensed. An agent saying they "appraised" a property is technically incorrect.

Cost Approach — Depreciation

Type of Depreciation	Description	Curable?
Physical Deterioration	Wear and tear from age, weather, use	Often yes (deferred maintenance = curable)
Functional Obsolescence	Outdated features (old wiring, poor floor plan, only 1 bath in 4BR)	Sometimes
External/Economic Obsolescence	Outside the property — location factors (noisy highway, declining neighborhood)	NEVER — cannot cure

Income Approach — Key Terms

Gross Income

Potential Gross Income (PGI) − Vacancy & Credit Loss = Effective Gross Income (EGI)

Then subtract operating expenses

EGI − Operating Expenses = Net Operating Income (NOI)

Then capitalize

NOI ÷ Cap Rate = Value

Cap Rate: NOI ÷ Value. A higher cap rate = more risk, lower price. A lower cap rate = less risk, higher price (trophy properties).

GRM (Gross Rent Multiplier): Value ÷ Monthly Rent. Used for quick comparison of residential income properties.

Uniform Standards of Professional Appraisal Practice (USPAP)

USPAP is the national ethical and performance standard for appraisers. Adopted by all states. Administered by The Appraisal Foundation.

URAR (Uniform Residential Appraisal Report): Standard form for 1-4 unit residential appraisals. Required by Fannie Mae/Freddie Mac.

Independence: Appraisers must be independent — lenders cannot pressure appraisers to hit a target value (HVCC rules).

🔢 MATH & CALCULATIONS

Key Formulas

Commission

Sale Price × Commission Rate = Total Commission

LTV (Loan-to-Value)

Loan Amount ÷ Appraised Value = LTV %

GRM (Gross Rent Multiplier)

Sale Price ÷ Monthly Rent = GRM | GRM × Monthly Rent = Value

Cap Rate

NOI ÷ Value = Cap Rate | NOI ÷ Cap Rate = Value

Transfer Tax (NY)

$2 per $500 (or fraction) of sale price | Mansion Tax: 1% if price ≥ $1,000,000

Discount Points

1 Point = 1% of Loan Amount | Each point ≈ lowers rate by 0.125%

Down Payment

Sale Price × Down Payment % = Down Payment | Sale Price − Down Payment = Loan Amount

Proration (Daily Rate)

Annual Amount ÷ 365 = Daily Rate | Daily Rate × Days = Proration Amount

Practice Problems

1. Commission Calculation

A property sells for $485,000. The listing broker and selling broker agree to split a 6% commission equally. How much does the listing broker receive?

2. LTV Calculation

A buyer puts $37,500 down on a $250,000 home. What is the LTV ratio?

3. GRM / Value Estimate

Comparable properties in the area sell at a GRM of 175. A rental property generates $2,800/month in rent. What is its estimated value?

4. Cap Rate

A commercial property has a NOI of $72,000 per year and sells for $900,000. What is the cap rate?

5. NY Transfer Tax

A property sells for $620,000 in New York State. What is the total NY transfer tax owed by the seller? (Use $2 per $500 or fraction thereof.)

6. Discount Points

A buyer takes a $320,000 mortgage and pays 2 discount points. How much does the buyer pay in points?

7. Proration — Property Taxes

Annual property taxes are $6,570. Closing is on March 1. The seller has NOT yet paid taxes for the year. How much does the seller owe the buyer at closing (seller pays through Feb 28, 59 days)?

8. NOI Calculation

A 10-unit building has $1,800/month/unit potential rent. Vacancy rate is 5%. Annual expenses are $72,000. What is the NOI?

9. Value from Cap Rate

An investor requires a 7% cap rate. A property has an NOI of $56,000. What is the maximum price the investor should pay?

10. Broker Net — Working Backwards

A seller wants to NET $340,000 after paying a 5% commission. What must the property sell for?

🏦 MORTGAGES & FINANCE

Mortgage Basics

Mortgage: A loan secured by real property. Borrower = Mortgagor. Lender = Mortgagee.

Note: The promise to repay (the debt instrument). The mortgage secures the note.

PITI: Principal + Interest + Taxes + Insurance — the four components of a monthly mortgage payment.

Amortization: Gradual payoff of loan through regular payments. Early payments = mostly interest; later payments = mostly principal.

Loan Types

Loan Type	Key Features	Who Backs It
Conventional	Not government-backed; requires 20% down to avoid PMI; highest credit standards	Private lenders / Fannie/Freddie
FHA	3.5% down; more lenient credit; requires MIP (mortgage insurance premium)	Federal Housing Administration
VA	0% down; no PMI; for eligible veterans/active duty; funding fee instead	Dept. of Veterans Affairs
USDA	0% down; rural properties only; income limits apply	USDA Rural Development
Jumbo	Exceeds conforming loan limits (2024: $766,550 most areas); stricter requirements	Private lenders only

Fixed vs Adjustable Rate

Fixed Rate Mortgage (FRM)

Interest rate stays constant for life of loan. Monthly payment (P&I) never changes. Better for buyers expecting rates to rise.

Adjustable Rate Mortgage (ARM)

Rate tied to economic index (SOFR, Treasury). Adjusts periodically. Lower initial rate but uncertainty. Caps limit how much rate can change.

ARM Caps: Initial cap (first adjustment), periodic cap (each adjustment), lifetime cap (total change). "2/2/5" = max 2% first adj, 2% each adj, 5% lifetime.

Special Loan Types

Type	How It Works
Interest-Only	Borrower pays only interest for a period; principal doesn't decrease
Balloon Mortgage	Lower payments, then large lump-sum payment at end of term
Reverse Mortgage	For 62+ homeowners; lender pays owner; repaid when owner sells/dies
Bridge Loan	Short-term loan to bridge gap between buying new home and selling old one
Purchase Money Mortgage	Seller finances the purchase — seller acts as lender
Wraparound Mortgage	New mortgage "wraps around" existing one; seller remains responsible for original loan

Mortgage Clauses to Know

Due-on-Sale (Alienation) Clause: Entire loan balance due immediately if property is sold or transferred. Makes loan non-assumable.

Acceleration Clause: Lender can demand entire balance if borrower defaults.

Prepayment Penalty: Fee for paying off loan early — protect lender's interest income.

Subordination Clause: Existing lender agrees to take lower priority to allow new financing.

Defeasance Clause: Once loan is fully paid, lender must release the mortgage lien.

Secondary Mortgage Market

Fannie Mae (FNMA): Buys conventional mortgages from lenders, creates liquidity in the mortgage market.

Freddie Mac (FHLMC): Similar to Fannie Mae — buys conventional mortgages from smaller lenders.

Ginnie Mae (GNMA): Government agency — guarantees pools of FHA and VA loans.

Conforming Loan: Meets Fannie/Freddie standards and loan limits — can be sold on secondary market.

Foreclosure in NY

NY is a Judicial Foreclosure state: Lender must go through courts to foreclose. Process takes 12–24+ months typically.

Lis Pendens: Lender files notice of foreclosure action — alerts public to pending lawsuit.

Reinstatement: Borrower catches up on missed payments + fees to stop foreclosure (before judgment).

Redemption: Pay off ENTIRE loan balance + all costs to redeem the property. Much harder than reinstatement.

Deficiency Judgment: If foreclosure sale doesn't cover full loan balance, lender may sue for the difference.

📋 CONTRACTS

Valid Contract Requirements

CLOCA — Elements of a Valid Contract

Competent parties (legal age + mental capacity)
Lawful object (legal purpose)
Offer and acceptance (mutual assent / meeting of the minds)
Consideration (something of value exchanged)
Agreement in writing (for real estate — Statute of Frauds)

Statute of Frauds — NY

All real estate contracts in NY must be in writing to be enforceable. Includes: Purchase contracts, listing agreements, leases over 1 year, easements, option agreements.

Exception: Part performance doctrine — if buyer takes possession and makes improvements in reliance on an oral contract, court may enforce it.

Types of Listing Agreements

Type	What Broker Must Do	Commission Owed
Exclusive Right to Sell	Broker earns commission if property sells — by ANYONE including owner	Always (most broker-favorable)
Exclusive Agency	Broker earns commission unless owner finds buyer themselves	Unless owner sells alone
Open Listing	Owner can list with multiple brokers; only broker who produces buyer gets paid	Only procuring broker
Net Listing	Broker keeps anything above seller's net price. LEGAL in NY but considered unethical.	Whatever's above net

⚠️ Exam Point

Exclusive Right to Sell = broker earns commission even if the OWNER finds the buyer. This is the most common type and most protective of the broker.

Contract States

Void: No contract exists — missing essential element. Cannot be enforced by anyone.

Voidable: Valid but one party has right to cancel (e.g., minor signed, misrepresentation, duress).

Unenforceable: Contract exists but courts won't enforce it (e.g., not in writing, past statute of limitations).

Executory: Contract signed but not yet fully performed (typical state of purchase contracts before closing).

Executed: All obligations fulfilled — transaction complete.

Purchase Contract — Key Contingencies

Mortgage Contingency: Buyer must obtain financing or can exit without penalty. Most common contingency.

Inspection Contingency: Buyer can have property inspected; can negotiate repairs or exit based on findings.

Appraisal Contingency: Property must appraise at or above purchase price. Protects buyer from overpaying.

Title Contingency: Clear, marketable title must be delivered at closing.

Home Sale Contingency: Buyer's purchase contingent on selling their current home first.

Option Contracts

Option: Buyer pays for the RIGHT (not obligation) to purchase at a set price within a set time. Consideration required.

Optionor: Property owner (seller). Optionee: Potential buyer. Option money typically non-refundable if buyer doesn't exercise.

Right of First Refusal: Not the same as an option — gives holder the right to match any offer before the owner can accept it.

🔑 CLOSING PROCESS

RESPA — Real Estate Settlement Procedures Act

RESPA: Federal law governing residential real estate closings. Applies to loans from federally insured lenders.

Prohibits: Kickbacks, unearned fees, mandatory use of affiliated services (must disclose affiliations)

Loan Estimate: Given within 3 business days of loan application — shows estimated costs

Closing Disclosure (CD): Final closing costs — must be provided at least 3 business days BEFORE closing

⚠️ TRID (Know Before You Owe)

TRID combined the old GFE and HUD-1 into: Loan Estimate (LE) + Closing Disclosure (CD). 3 business days rule applies to both documents.

NY Transfer Taxes

Tax	Rate	Who Pays
NYS Transfer Tax	$2 per $500 (or fraction) of sale price = 0.4%	Seller (typically)
NYC Additional Transfer Tax	1% if residential and sale price ≥ $500K (NYC only)	Seller
Mansion Tax (NYS)	1% if sale price ≥ $1,000,000	Buyer
NYC Mansion Tax (tiered)	1%–3.9% based on price tier (NYC only)	Buyer
Mortgage Recording Tax	Varies by county; ~1.8% in NYC	Borrower (buyer)

Prorations at Closing

Proration: Dividing costs proportionally between buyer and seller based on closing date.

Property Taxes: If seller owes unpaid taxes → debit to seller, credit to buyer. If buyer will owe future taxes → debit to buyer, credit to seller.

NY 360-day method: Some NY exam questions use 360-day year (12 months × 30 days = 360). Read the question carefully.

Rents: Prepaid rent received from tenant → credit to buyer (they'll be the new landlord).

Closing Documents

Document	What It Does
Deed	Transfers title from seller to buyer
Closing Disclosure (CD)	Final itemized closing costs
Promissory Note	Buyer's promise to repay the loan
Mortgage / Deed of Trust	Pledges property as security for loan
Title Insurance Policies	Owner's and lender's title policies
Survey	Shows property boundaries
Certificate of Occupancy	Confirms property meets building codes

NY-Specific Closing Facts

Attorney Review: In NY, attorneys are customarily involved in all residential closings (both sides). Not required by law but universal in practice.

Contract of Sale: In NY, a formal contract of sale (prepared by attorneys) is signed after offer acceptance — different from many other states.

Abstract of Title: Historical record of all recorded documents affecting title — reviewed by buyer's attorney.

Recording: Deed and mortgage recorded at the County Clerk's office to protect against future third-party claims.

🏙️ COMMERCIAL REAL ESTATE

Types of Commercial Leases

Lease Type	Who Pays Operating Expenses?	Common For
Gross Lease	Landlord pays all expenses	Office, some retail
Net Lease (N)	Tenant pays base rent + 1 expense (usually taxes)	Retail
Double Net (NN)	Tenant pays base rent + taxes + insurance	Retail, commercial
Triple Net (NNN)	Tenant pays ALL: rent + taxes + insurance + maintenance	Freestanding retail, industrial
Percentage Lease	Base rent + % of tenant's gross sales	Shopping centers, retail
Graduated Lease	Rent increases at set intervals	Long-term leases
Ground Lease	Tenant leases LAND only; tenant builds and owns improvement	Long-term development

Commercial Property Types

Office: Class A (premium), Class B (average), Class C (older/functional). "Office vacancy rate" is a key market indicator.

Retail: Strip centers, power centers, regional malls, neighborhood centers. Anchored vs unanchored.

Industrial: Warehouses, distribution, flex/R&D, manufacturing. Measured in square footage, ceiling height, loading docks.

Multifamily: Apartment buildings 5+ units are treated as commercial for financing and appraisal purposes.

Special Purpose: Hotels, gas stations, churches — appraised differently; often require business value consideration.

1031 Exchange (Like-Kind Exchange)

Key Rule — IRC Section 1031

Allows an investor to defer capital gains taxes when they sell investment property and reinvest in "like-kind" property.

Rules: Must reinvest all proceeds. Replacement property must be equal or greater in value. Intermediary must hold funds (cannot touch money).

45-day rule: Must identify replacement property within 45 days of closing on relinquished property.

180-day rule: Must close on replacement property within 180 days of selling original property.

"Boot": Any cash or unlike property received in the exchange — taxable portion. "If you get the boot, you pay the tax."

⚠️ Primary Residence ≠ 1031

1031 applies to INVESTMENT property only. A primary residence does NOT qualify.

Key Commercial Math

NOI Calculation

Gross Income − Vacancy − Operating Expenses = NOI

Cap Rate / Value

Cap Rate = NOI ÷ Value | Value = NOI ÷ Cap Rate

Buyer's perspective: Lower cap rate = willing to pay more (trophy asset, less risk). Higher cap rate = more risk premium required.

🔧 PROPERTY MANAGEMENT

The Property Manager's Role

A property manager (PM) acts as a general agent for the property owner — authorized to perform multiple ongoing tasks related to managing the property.

Agency Type: General Agency (not special, not universal)

Must be: Licensed real estate broker or salesperson working under a broker (in NY) if they negotiate leases for others for compensation

Exception: On-site manager employed by a single owner to manage that owner's property is exempt from licensing

Property Management Agreement

Defines: Manager's authority, duties, fees, property description, duration, and reporting requirements

Management Fee: Typically a percentage of gross rents collected (common range: 5-12% for residential)

Operating Account vs Trust Account: Rents collected must be kept in a trust account separate from PM's operating funds

PM Duties and Responsibilities

Duty	Detail
Leasing	Market vacancies, screen tenants, execute leases (within license authority)
Rent Collection	Collect, record, deposit, disburse rents; pursue delinquencies
Maintenance	Routine maintenance, preventive maintenance, emergency repairs
Tenant Relations	Handle complaints, communicate policies, oversee move-ins/move-outs
Financial Reporting	Monthly income/expense statements, annual budget, owner reports
Compliance	Ensure property meets all codes — habitability, safety, Fair Housing

Operating Budget

Annual Operating Budget

Gross Scheduled Income − Vacancy Allowance = Effective Gross Income

EGI − Operating Expenses = NOI

NOI − Debt Service = Before-Tax Cash Flow

Capital Reserves: Set aside for major replacements (roof, HVAC, elevators). Not an operating expense — a balance sheet item.

Resident Manager (NY)

NYC: Buildings with 9 or more units must have a resident superintendent or must have a superintendent on 24-hour call within reasonable distance.

Superintendent's duties: handle maintenance, emergency repairs, and tenant issues.

🏠 PROPERTY INSURANCE

Why Property Insurance Matters for Agents

Agents must understand insurance basics because lenders require hazard insurance at closing, clients ask questions, and insurance status affects property value and saleability. You won't sell insurance — but you need to know the vocabulary and key concepts.

Homeowner's Policy Types (HO Series)

Policy	Coverage	Who Uses It
HO-1	Basic named perils (fire, lightning, windstorm, etc.) — narrow	Rarely used anymore
HO-2	Broad named perils — more perils than HO-1	Older/rural homes
HO-3	Special form — open perils on dwelling, named perils on contents. MOST COMMON residential policy.	Standard homeowners
HO-4	Contents only (renter's insurance) — no dwelling coverage	Renters/tenants
HO-5	Comprehensive — open perils on BOTH dwelling and contents	High-value homes
HO-6	Condo unit owner — covers interior unit, improvements, personal property	Condo owners
HO-7	Mobile home	Mobile/manufactured homes
HO-8	Older homes — covers repair/restoration cost, not replacement cost	Historic or older structures

💡 Exam Focus

Know HO-3 (most common, open perils on dwelling), HO-4 (renter's insurance), and HO-6 (condo). These are the most commonly tested.

Named Perils vs Open Perils

Named Perils: Policy only covers perils (causes of loss) specifically listed in the policy. If it's not listed, it's NOT covered.

Open Perils (All-Risk): Policy covers ALL causes of loss EXCEPT those specifically excluded. Broader coverage.

Common Exclusions (even in open perils policies): Flood, earthquake, war, nuclear hazard, intentional acts, normal wear and tear.

Flood Insurance

Standard homeowner's policies do NOT cover flood. Flood must be purchased separately through the National Flood Insurance Program (NFIP/FEMA) or private insurers.

Required by lenders when property is in a Special Flood Hazard Area (SFHA/100-year flood zone) with a federally backed mortgage.

30-day waiting period typically before NFIP policy takes effect — can't buy it the day before a storm.

Co-Insurance Clause

Key Concept — Often Tested

Most policies require the owner to insure the property for at least 80% of its replacement cost. If the property is underinsured below 80%, the owner becomes a "co-insurer" and bears a proportional share of any loss — even partial losses.

Formula: (Amount insured ÷ Required amount) × Loss = Insurance pays. Owner pays the remainder.

⚠️ Example

Home worth $400,000 to replace. Owner insures for $240,000 (only 60%, not 80% required). A $100,000 fire occurs. Insurance pays: ($240K ÷ $320K) × $100K = $75,000. Owner absorbs $25,000 shortfall.

Title Insurance vs Hazard Insurance

Title Insurance

Covers PAST defects in title (forgery, undisclosed heirs, recording errors). One-time premium. No renewal. Lender always requires a lender's policy.

Hazard Insurance (Homeowner's)

Covers FUTURE physical damage to property (fire, storm, theft). Annual premium. Lender requires this to protect their collateral.

Other Insurance Types

Liability Coverage: Included in HO-3 — covers bodily injury/property damage to others on your property (slip and fall claims).

Loss of Use / Additional Living Expenses (ALE): Pays for temporary housing if home is uninhabitable due to covered loss.

Umbrella Policy: Additional liability coverage above the limits of homeowner's and auto policies.

Mortgage Insurance: NOT homeowner's insurance. Protects the LENDER if borrower defaults (PMI for conventional; MIP for FHA). Doesn't cover physical damage.

💰 TAXES & ASSESSMENTS — NY

Property Tax Basics in NY

Property taxes in New York are levied at the local level — by counties, cities, towns, villages, and school districts. There are NO uniform statewide property tax rates.

Key Formula

Assessed Value × Tax Rate = Annual Property Tax Bill
Tax Rate often expressed as "mills" — 1 mill = $1 per $1,000 of assessed value

Market Value: What the property would sell for in an arm's-length transaction.

Assessed Value: The value the assessor assigns for tax purposes. May be lower than market value.

Assessment Ratio: Percentage of market value at which properties are assessed. In NY, "full value assessment" = 100%. Many localities assess below 100%.

NY Equalization Rate

Why It Exists — NY-Specific, Heavily Tested

Because different NY localities assess at different percentages of market value, the state calculates an "equalization rate" to compare assessed values across municipalities fairly. It allows the state to distribute school aid and calculate transfer taxes equitably.

Equalization Rate: A percentage set by NY State that compares the local assessed value to the full market value statewide.

Example: If a town assesses at 50% of market value, its equalization rate is 50. A $200,000 market value home has an assessed value of $100,000.

Set by: NYS Office of Real Property Tax Services (ORPTS)

NY STAR Program

School Tax Relief — NY-Specific

STAR (School Tax Assessment Relief) reduces school property taxes for eligible homeowners in NY.

Type	Eligibility	Benefit
Basic STAR	Primary residence; income under $500,000	Exemption on a portion of assessed value from school taxes
Enhanced STAR	Primary residence; owner 65+; income under ~$98,700 (2024)	Larger exemption — greater tax savings

New homeowners receive STAR as a credit on their state income tax return (not a direct reduction in their tax bill under the newer system).

Other Tax Exemptions in NY

Exemption	Who Qualifies
Veterans' Exemption	Eligible veterans; reduces assessed value
Senior Citizens Exemption	65+ with limited income; reduces assessed value
Agricultural District Exemption	Farmland in agricultural districts
Religious/Nonprofit	Churches, schools, nonprofits — full exemption
421-a / 421-g	NYC tax abatement programs for new residential construction

Grievance Process — Challenging Your Assessment

Step 1: File a complaint with the local Board of Assessment Review (BAR) during the annual grievance period (typically May in NY)

Step 2: If BAR denies, appeal to NYS Small Claims Assessment Review (SCAR) — for residential. Or Article 7 proceeding (Supreme Court) for commercial.

Grounds for grievance: Overassessment relative to market value, unequal assessment compared to similar properties, or factual error on the assessment roll.

⚠️ Important Deadlines

Grievance Day in most NY localities is the fourth Tuesday in May. Missing this deadline means waiting until next year.

Special Assessment Districts

Special Assessment District: A defined area where property owners pay an additional assessment for specific improvements that benefit that area (sidewalks, sewers, street lighting, BIDs).

Business Improvement Districts (BIDs): Commercial districts with additional assessments for marketing, sanitation, security.

Special assessments are a lien on the property — they must be disclosed and satisfied at closing.

Tax Foreclosure in NY

When property taxes go unpaid, the municipality can initiate a tax lien foreclosure. Property is sold at a tax sale to recover the unpaid taxes.

In Rem Foreclosure: NY's primary mechanism — foreclosure against the property itself (not the person). Court-supervised process.

Redemption Period: Owner typically has the right to redeem (pay off taxes + penalties) before the tax deed is issued.

📑 INCOME TAX ISSUES IN REAL ESTATE

Capital Gains on Real Estate

Capital Gain: Profit from selling a property = Sale Price − Adjusted Basis.

Basis: Original purchase price + improvements + closing costs paid + certain other additions.

Adjusted Basis: Basis after accounting for depreciation taken on investment property (depreciation reduces basis).

Short-Term Capital Gain

Property held 1 year or less. Taxed as ORDINARY INCOME (up to 37% federal rate).

Long-Term Capital Gain

Property held MORE than 1 year. Taxed at preferential rates: 0%, 15%, or 20% depending on income.

Section 121 Exclusion — Primary Residence

The Big One — Heavily Tested

Homeowners can EXCLUDE up to $250,000 (single) or $500,000 (married filing jointly) of capital gain from the sale of their primary residence — TAX FREE.

Requirements: Must have owned AND used the home as primary residence for at least 2 of the last 5 years before the sale.

Frequency: Can only use this exclusion once every 2 years.

Does NOT apply to: Investment properties, vacation homes, rental properties.

⚠️ Exam Trap

Section 121 is an EXCLUSION (never pay the tax) — NOT a deferral like a 1031 exchange. The 1031 defers; Section 121 excludes.

Depreciation on Investment Property

Depreciation: IRS allows investors to deduct a portion of the cost of income-producing property each year as a business expense — even if the property increases in market value.

Residential rental property: Depreciated over 27.5 years (straight-line method)

Commercial property: Depreciated over 39 years (straight-line method)

Land is NOT depreciable — only the improvements (building) can be depreciated

Depreciation Recapture

When you sell investment property, the IRS "recaptures" all the depreciation you claimed and taxes it at a special rate of up to 25% (Section 1250 recapture). This is separate from capital gains.

1031 Exchange (Tax Deferred Exchange)

Allows: Deferring capital gains AND depreciation recapture by reinvesting proceeds into like-kind investment property.

45-day rule: Must identify replacement property within 45 days of selling relinquished property.

180-day rule: Must close on replacement property within 180 days.

Qualified Intermediary (QI): Must use a neutral third party to hold proceeds — taxpayer CANNOT touch the money.

Boot: Any cash or non-like-kind property received = taxable. "If you get the boot, you pay the tax."

Does NOT apply to primary residence — investment/business property only.

Installment Sale

Installment Sale: Seller receives payment over time (seller financing). Capital gains are recognized proportionally as payments are received — spreads the tax liability.

Useful when seller wants to avoid a large lump-sum tax hit in one year.

Passive Activity Rules

Passive Activity Loss (PAL) Rules: IRS limits ability to deduct rental losses against ordinary income unless taxpayer is a "real estate professional" (750+ hours in RE activities).

$25,000 allowance: Active participants in rental RE (with under $100,000 income) can deduct up to $25,000 in rental losses against ordinary income. Phases out between $100K–$150K.

Estate & Gift Tax Considerations

Stepped-Up Basis: When heirs inherit property, their basis is "stepped up" to the property's fair market value at date of death — eliminating capital gains tax on appreciation during the decedent's lifetime.

Federal Estate Tax: Applies to estates above the exemption ($13.61M per person in 2024). Real property is included in the taxable estate at fair market value.

Annual Gift Exclusion: $18,000 per recipient per year (2024) — gifts below this amount are not taxable and can be used to gradually transfer property interests.

🏛️ MUNICIPAL AGENCIES — NY

Why Agents Need to Know Municipal Agencies

Real estate transactions in NY constantly involve local government agencies — for permits, approvals, zoning relief, subdivisions, and environmental review. Knowing who does what prevents delays and protects clients.

Key Municipal Agencies

Agency	Role	Agent Relevance
Planning Board	Reviews and approves subdivisions, site plans, master plans	Needed for new development, lot splits
Zoning Board of Appeals (ZBA)	Grants variances, special use permits, interprets zoning ordinances	Needed when buyer needs a variance
Building Department	Issues building permits, certificates of occupancy (C of O)	Every renovation or new construction needs permits
Health Department	Approves septic systems, well water, food service	Critical for rural/suburban sales
Tax Assessor / Receiver of Taxes	Sets assessed values, collects property taxes	Property tax information, STAR applications
County Clerk / City Register	Records deeds, mortgages, liens	All recordings happen here
Fire Department	Fire code inspections, CO detector compliance	Required inspections in many municipalities
Conservation Advisory Council	Reviews environmental impact of development, wetlands	Environmental sensitivity areas
Historic Preservation Commission	Reviews alterations to properties in historic districts	Must get approval before renovating designated properties
Landmarks Commission (NYC)	Designates and protects NYC landmarks and historic districts	Major factor in NYC property values

Certificate of Occupancy (C of O)

Critical for Sales — NY Exam Topic

A Certificate of Occupancy is issued by the Building Department certifying that a building or renovation complies with the building code and is safe for occupancy.

Required for: New construction, conversions, major renovations, change of use.

Temporary C of O (TCO): Issued when building is mostly complete but final items remain. Common in new construction closings.

No C of O = Problem: Work done without permits = open violations. Must be resolved before or at closing. Lenders may refuse to lend on properties with open permits.

⚠️ NY Exam Point

Illegal apartments (basement units, attic conversions done without permits) have no C of O for that use. Buyers must be warned — the unit cannot legally be rented and may affect financing.

Subdivision Process

Subdivision: Dividing land into two or more parcels. Requires Planning Board approval in NY.

Preliminary Plat: Initial map submitted to Planning Board for review and public hearing.

Final Plat: Approved and recorded map that legally creates the new lots. Must be filed in the County Clerk's office.

Environmental Review (SEQRA): Required for significant subdivisions — must assess environmental impact.

NY-Specific Agricultural District Disclosures

NY Agriculture and Markets Law: Sellers must disclose if property is in or near an Agricultural District. Buyers must acknowledge that normal farming practices (noise, odors, chemicals) may occur.

This disclosure protects farmers from nuisance complaints from new residential neighbors.

🔗 MORTGAGE BROKERAGE

Mortgage Originator Types

Type	What They Do	Who They Lend
Mortgage Broker	Intermediary — matches borrowers with lenders. Does NOT use own funds. Earns origination fee/YSP.	Multiple wholesale lenders
Mortgage Banker	Originates AND funds loans with own/warehouse funds. Usually sells loans on secondary market.	Own funds (then sells)
Correspondent Lender	Originates and briefly holds loans before selling to larger investors.	Own funds (briefly)
Portfolio Lender	Originates AND retains loans in own portfolio — does not sell.	Own funds, own risk
Retail Bank / S&L / Credit Union	Originates mortgages as part of broader financial services. Can portfolio or sell.	Depositor funds

In NY, mortgage brokers must be licensed by the NYS Department of Financial Services (DFS) under the Banking Law.

Truth in Lending Act (TILA) / Regulation Z

Federal Law — Consumer Protection

TILA requires lenders to clearly disclose the COST of credit so borrowers can compare loan options.

APR (Annual Percentage Rate): The true cost of borrowing, including interest PLUS fees (origination fees, points, mortgage insurance). Always HIGHER than the note rate. Use APR to compare loans.

Disclosure Timing: Loan Estimate within 3 business days of application. Closing Disclosure 3 business days before closing.

Right of Rescission: For refinances and HELOCs (NOT purchase loans) — borrower has 3 business days to cancel after signing.

⚠️ Exam Point

Right of Rescission applies to REFINANCES, not purchase mortgages. A buyer cannot rescind their purchase mortgage using this right.

HMDA — Home Mortgage Disclosure Act

HMDA: Requires lenders to collect and report data on mortgage applications — including applicant race, gender, income, and loan outcome. Used to identify discriminatory lending patterns (redlining, disparate impact).

Data is publicly available — used by regulators and fair housing advocates to identify lending discrimination.

Predatory Lending — NY-Specific

Heavily Tested — NY Has Strong Protections

Predatory lending = exploitative lending practices that harm borrowers, often targeting elderly, low-income, or minority borrowers.

Predatory Practice	Description
Loan Flipping	Repeatedly refinancing loans to generate fees, without benefit to borrower
Equity Stripping	Encouraging borrower to repeatedly tap home equity until they owe more than the home is worth
Excessive Fees	Charging points and fees far above market rates
Balloon Payment Abuse	Concealing large balloon payments from unsophisticated borrowers
Negative Amortization	Payments don't cover interest; loan balance GROWS over time
Packing	Adding unnecessary products (credit insurance, warranties) without borrower's knowledge

NY Banking Law Section 6-l: NY's "high-cost home loan" law provides additional consumer protections for mortgages with high rates or fees. Prohibits many predatory practices.

Qualifying for a Mortgage — Underwriting Ratios

Front-End Ratio (Housing Ratio)

PITI ÷ Gross Monthly Income ≤ 28% (conventional guideline)

Back-End Ratio (Debt-to-Income / DTI)

(PITI + All Monthly Debts) ÷ Gross Monthly Income ≤ 36-43% (conventional guideline)

FHA guidelines: 31% front-end, 43% back-end (with compensating factors allowed to 50%).

Credit score: Minimum 620 conventional / 580 FHA (3.5% down) / 500 FHA (10% down).

Do Not Call / CAN-SPAM Rules

National Do Not Call Registry: Agents CANNOT call numbers on the registry for solicitation. Must scrub lists before calling. Violations = fines up to $51,744 per call.

Exceptions: Prior business relationship (within 18 months), prior consent, or calling other businesses (B2B).

CAN-SPAM Act: Governs commercial email. Must include physical address, unsubscribe option, and honest subject lines. No deceptive headers.

🛡️ LICENSEE SAFETY

Personal Safety at Showings

⚠️ Exam Reality

The NYS syllabus dedicates a full hour to licensee safety — this content WILL appear on the exam. Know these protocols cold.

Showing Safety Rule #1: Always meet new clients at the office FIRST — never at an unfamiliar property. Photocopy their ID.

Sign-in sheet: Have all prospective buyers sign in at open houses. Collect identification.

Buddy system: Tell someone where you are going and who you are meeting. Check in after showings.

Position yourself: At showings, stay near exits. Let the client go first into rooms — don't corner yourself.

Trust your instincts: If a situation feels unsafe, leave. No sale is worth personal safety.

Vacant properties: Extra caution required. Ensure utilities are on. Check for squatters. Never show after dark if avoidable.

Open House Safety

Advise sellers to remove or lock up: prescription medications, jewelry, firearms, financial documents, and small valuables before open houses.

Secure the property after showings — check all doors, windows, locks, and ensure no one is hiding in closets, basement, or garage.

Have a charged cell phone at all times during showings and open houses.

Cybersecurity & Client Data

Wire Fraud (Closing Fraud): Cybercriminals intercept email communications and send fraudulent wire instructions. A major threat in RE transactions. Always CALL (don't email) to verify wire instructions before sending any funds.

Client data protection: All client financial information, personal details, and transaction documents must be kept confidential and securely stored.

Secure email: Use encrypted email or secure platforms when transmitting sensitive financial documents.

Social media: Do NOT post information about vacant properties, upcoming closings, or clients on social media — creates security and privacy risks.

Document retention: NY requires brokers to retain transaction records for 3 years. Secure disposal required after retention period.

On the Road Safety

Always keep your car fueled and in good condition — don't get stranded in unfamiliar areas.

Keep a phone charger in your vehicle at all times.

If you feel followed after a showing, drive to a public place or police station — do not drive home.

Seller Property Condition Disclosures

NY Property Condition Disclosure Act: Residential sellers must complete and deliver a Property Condition Disclosure Statement (PCDS) to buyers OR pay a $500 credit at closing instead.

The PCDS covers: Known defects in roof, structure, plumbing, HVAC, electrical, environmental hazards, and legal/physical use restrictions.

Material fact disclosure obligation: Even if seller chooses to pay the $500 credit, agents must still disclose known material defects. Agent liability is separate from seller's PCDS obligation.

⚠️ NY Exam Key Point

The $500 credit option does NOT release the seller or agent from liability for fraudulent concealment of known defects. It only substitutes for the written form.

🃏 FLASHCARDS

Cards

📖 Term — Click to reveal

👆 Click card to reveal answer

✏️ PRACTICE QUIZ — 100 QUESTIONS

Full Practice Exam

Covers all 19 official NYS syllabus topics. Randomized every time. Target 70% to pass this drill.

Questions marked with topic tags to identify weak areas after completing.

🎯 TOPIC DRILL MODE

Select a topic to drill just those questions. Great for targeted studying after identifying weak areas.

📋 SYLLABUS → APP MAP

Crosswalk between the NYS DOS real estate salesperson qualifying syllabus (77-hour curriculum outline) and modules in this app. Edit data/syllabus.js when the state publishes an updated outline.

Official PDF: NYS DOS salesperson syllabus — verify you are using the current version on dos.ny.gov.

⚠️ YOUR WEAK SPOTS