Free New York Real Estate Practice Exam (75 Questions)

By definition, a dominant estate is a parcel of real property that has an easement over another piece of property.

Depreciation. Only the Cost Approach valuation process uses depreciation.

Water rights are appurtenant, meaning they run with the land and not with the original owner. In other words, if an oceanfront property is sold, the new owner gains the littoral rights and the seller relinquishes his or her rights. Read More Here

The correct abbreviation is CC&Rs (also written CCRs): covenants, conditions, and restrictions.

Restrictive covenants and deed restrictions overlap; they should not be treated as mutually exclusive answer choices to a simple synonym question. Restrictions may appear in deeds, other agreements, or a recorded subdivision declaration. Their enforceability depends on applicable law and the documents.

Source: California DRE title guide, pages 73–76.

A mortgagee is an entity that lends the mortgagor money. This entity is typically referred to as the lender.

The formula for finding commission is pretty simple. Just times whatever percentage you have by the total price of the house. In this case, they give us the rate and what the broker received so we have to adjust the steps. In order to find the commission, you can take $11,000 and divide it by the percentage which is .055 making your total $200,000. Alternatively, you can take the answers below and multiply each one by .055 and whichever matches the broker's commission is the correct answer.

The person who hires or appoints an agent is called the principal. In plain terms, the principals in a real estate sales transaction would be the buyer and the seller.

Depreciation is any loss in the value of a property over time from any cause. There are three main forms of depreciation: Economic Obsolescence, Functional Obsolescence, and Physical Deterioration.

The legal document that authorizes someone to act on behalf of another person, in business or for some sort of business transaction is a power of attorney. An attorney-in-fact is someone authorized to act on behalf of another person, the legal document that authorizes that person is called a power of attorney. Read More Here

The habendum clause is the statement in a contract that describes the rights and interests being given. It almost always begins with the words "to have and to hold."

A bit of a trick question. Crossing out part of a printed contract is actually allowed and legally enforceable as long as both parties and the original text is still readable.

Adverse possession is a legal principle under which a person who does not have legal title to a property acquires legal ownership based on the continuous occupation of the property. If successful in proving adverse possession, the person or parties are usually not required to pay the owner for the land. Read More Here

If demand increases more than supply does, we get an increase in price. If supply rises more than demand, we get a decrease in price. If they rise or decrease the same amount, the price remains the same.

A contingent property means an offer for the property has been accepted but there is a condition or “contingency” that is written into the contract and it must be met before the sale can go through. In order for the contract to be legally binding, the contingency must be met.

Remember DUST and your essential elements of value. Demand: This means the desire to buy and an ability to pay. Utility: The item satisfies a human need or desire; such as shelter, income, or recreation. Scarcity: Limited in supply, as supply diminishes, value increases. Transferability: Able to transfer from one owner to another.

A Listing agreement is a document in which a property owner contracts with a real estate agent to find a buyer for the owner's property. The owner executes the listing agreement to give a real estate broker the authority to act as the owner's agent in the sale of the owner's property, for which the owner agrees to pay a commission. A listing agreement is a personal service contract. That means that should the seller die, or either party becomes incapacitated, or the property is physically destroyed in an accident, the listing agreement is terminated.

Per 175.23 of the Real Property Law, a New York licensed real estate broker is required to keep for 3 years.

People who sell real estate need a license to do so. In New York, this license is issued from the State Department of State (NYSDOS).

Novation is the procedure in which an original contract is terminated and replaced with a new one. The legal process of novation makes it possible to transfer all contract benefits and liabilities from previous parties to a set of new ones. In plain terms, it’s a simple way to replace an old contract with a new one while maintaining most or all of its original properties. When you see any name transfers just think novation.

Tax liens are imposed by the federal, state, or local government based upon back property taxes that are due. Not only can these seriously impact your credit report, but until they're paid off, they can prevent you from selling the property. Tax liens are involuntary and usually specific. The important thing to remember is the government always gets paid first in terms of money distribution.

Commissions paid to real estate agents are negotiable, while many people believe that commission is always 6% it varies. That percentage is a percentage of the sale price of the home, also known as the selling price.

Each square, six miles by six miles, is called a township. Since each township is six miles by six miles, townships contain 36 square miles, each one forming a section.

The acceleration clause is a contract provision that requires a borrower to repay all of an outstanding loan if upon a breach of the contract.

The rectangular survey system consists of principal meridian lines that cover most states in the US, running north to south and baselines running east to west. These principal meridian lines are named or numbered to identify their location. Using those lines for references, quadrangles are formed, which are smaller squares identifiable by where they are located near the principal meridian and baseline. This process continues, creating a smaller and smaller grid that can be used to identify the specific location of any property.

When a property is owned by joint tenants, the interest of a deceased owner automatically gets transferred to the remaining surviving owners. For example, if three joint tenants own a house and one of them dies, the two remaining tenants each obtain a one-half share of the property. This is called the right of survivorship.

Fixtures are personal property attached to the land to count as real property. Window blinds are screwed into the house, therefore they are considered a fixture in this example.

In this situation, the new offer cannot be accepted unless the seller's counteroffer is withdrawn or hypothetically rejected. Remember, if a new offer is accepted two valid contracts could exist, so the first step must be to withdraw the counteroffer.

Real estate police power is the constitutional authority and inherent power of a state to adopt and enforce laws and regulations to promote and support the public health, safety, morals, and general welfare. The most common example of real estate police power is zoning.

It generally has to do with performance. Time is of the essence clause in real estate contracts refers to a clause that requires one party in a real estate contract to fulfill their obligations within a specific time frame.

A double net lease is when two additional costs will be added to your base rent. Usually taxes and insurance costs are added to your monthly payment.

Open listings are truly open. Sellers might consider an open listing if there are a lot of buyers in the marketplace. An open listing is when any agent or broker can participate in the listing and is entitled to a commission if he or she produces the sale. Since the listing agreement between the first agent wasn't met it had to be an open listing because another agent obtained a buyer.

A real estate agent is a professional who has passed the required real estate classes and licensing exams in the state where he/she intends to work. This is the starting point for most real estate professionals agents. Agents are also legally called a licensee or license holder.

Economic obsolescence refers to the loss of property value due to external factors, meaning things off the property affecting the properties value. A new noisy highway would be considered economic obsolescence because it is an external factor. Usually, in these circumstances, homeowners cannot do anything to prevent it. Read More Here

Don’t overthink this. He is no longer the listing agent, he MUST inform the caller that information. Anything else would be deemed unethical and potentially illegal.

The formula for finding commission is pretty simple. Just times whatever percentage you have by the total price of the house. So in this case take $250,000 and multiply it by .06 or 6%. Doing the math that gives you $15,000.00.

The term “ad valorem” is Latin for “according to value,” which means that it is flexible and depends on the assessed value of an asset, product, or service. An ad valorem tax is charged by state and municipal governments and is based on the assessed value of a product or property. The most common ad valorem tax is the property tax, which is charged on real estate and personal property.

Fee packing, equity stripping, and balloon payment abuses are all examples of predatory lending practices. Predatory lending typically refers to lending practices that impose unfair, deceptive, or abusive loan terms on borrowers. While these practices are wrong, unfortunately sometimes they are perfectly legal.

The fiduciary duty of confidentiality lasts forever. Confidentiality requires that you do not disclose any information learned about your clients, their business, financial or personal affairs or motivations. Again, this duty lasts forever.

The primary public land-use control is zoning. The primary private land-use control is deed restrictions or restrictive covenants, which limit what can be done on the property by the owner. Deed restrictions are limitations to the use of the property imposed by a past or current owner and are usually legally bound forever.

Consideration is anything of legal value that is offered in exchange by one party for something of value from another party. Common forms of consideration include money, property in exchange, work or a promise to perform. Without consideration, a contract is not valid.

States may require additional information, but federally at the minimum, all advertising for property or services must include the broker firm's name. This is all for all advertising, social media included.

A mechanic’s lien also called a construction lien is a lien placed on your property for nonpayment for work you had done on the property. It is a claim made against a property by a contractor or other professional who has supplied labor or materials for work on that property. They are designed to protect professionals from the risk of not being paid for services. A mechanic’s lien is involuntary and specific.

The term of office is two years. A member may be appointed for successive terms, but no member may serve more than ten years in his or her lifetime. A member may be removed by the member's appointing authority.

Cathlotics preferred would be discrimination since its catholicism is relgion. Religion is protected under Federal Fair Housing Law.

A unilateral contract is a contract in which only one party makes a promise to perform an action. An insurance contract or a reward contract are both examples of unilateral contracts. Unilateral contracts appear more often than you may think; one of the most common instances is a reward contract. Imagine you’ve lost your cat, Coco. You place an advertisement online offering a $250 reward to the person who returns Coco. By providing a reward, you’re offering a unilateral contract.

Zoning usually increases the marketability of the property. The idea is that when a community is organized, it is more attractive, safer and has fewer conflicts among people. However, it does not directly affect market value. For example, they can't implement zoning code to raise what people pay for properties, they can, however, implement zoning codes to help promote the local economy. Market value is never directly determined by the government.

Leo should use Contribution. Contribution is most commonly applied to determine how renovation and property changes may affect the property’s overall cost. In this case, since the owner wants a feasibility study, contribution would need to be used. Swimming pools are a common contribution example. It's worth noting the cost doesn't always equal the value to the home. For example, a pool could add $5000 to the value of a home but cost $10,000 to build.

Eminent Domain is a term used to describe the right of the government to takeover privately owned real estate usually despite the owners’ wishes. This often happens for land that is required for infrastructure like highways, major pipelines, railroads etc. The fifth and fourteenth amendments of the U.S. Constitution permit the government to exercise its power of eminent domain.

Percolation is the process of a liquid slowly passing through a filter. It's how coffee is usually made. For real estate, a percolation test is a test to determine the water absorption rate of soil in preparation for the building of a septic drain field or infiltration basin. The results of a percolation test are required to properly design a septic system.

Appraisals are the best way to determine fair value. The overall appraisal process is based on a number of factors, such as its cost, the income it generates or its fair market value as compared to similar assets.

First substantive contact is the earliest practicable opportunity during a conversation with a consumer. Generally that's when the customer begins to ask questions pertaining to the Real Estate Property. This can occur prior to entering into a listing agreement, prior to showing a property, or even at an open house.

Functional obsolescence refers to the loss of property value due to an obsolete design feature. Outdated plumbing would be considered functionally obsolete because it is outdated. Who determines what is obsolete or not? Usually the buyer or homeowners. If a neighborhood is filled houses with new bathrooms and/or new plumbing, and your's isn't, It would be considered functionally obsolete. Read More Here

Antitrust Laws are a collection of federal and state government laws that regulate the conduct and organization of business corporations, normally to promote fair competition for the benefit of consumers. While selling a house without a license is illegal and some of the other answers are too, the only clear antitrust violation is dividing territories. Which is when competing brokers agree to split territories, and divide interests accordingly. An example of this is if agencies meet up and agree to divide the town in to three separate areas to work in. This prevents competition which is bad for the consumer and a clear antitrust violation.

The term retroactive liability is used in connection with CERCLA and the Superfund. It means that all previous owners also can be held accountable for the hazardous waste site.

A cash reserve fund is an account set aside by an individual or business to meet any unexpected future costs, as well as the future costs of upkeep. Property managers use these funds for variable expenses.

The Environmental Protection Agency (EPA) is the federal agency responsible for dealing with environmental issues. The EPA was established in December 1970 by an executive order of United States President Richard Nixon. The agency enforces all federal environmental rules and regulations.

First find assessed value: $350,000 × 0.15 = $52,500.

One mill is $1 per $1,000 of assessed value. Convert 27.50 mills by dividing by 1,000: 27.50 ÷ 1,000 = 0.02750. This moves the decimal three places to the left.

Annual property tax = $52,500 × 0.02750 = $1,443.75. The 15% assessment rate and 27.50-mill tax rate are given for this practice problem; actual assessment rules and tax rates vary by locality.

Rounded to the nearest whole dollar, the answer is $1,444.

The agent is not entitled to any compensation. With exclusive agency listings agents only get paid if they sell the property. No fee is earned if the owner alone sells the property. Also if it was open listing, the agent would still NOT be entitled to any compensation. This scenario only works because it is an exclusive agency listing.

The correct answer is Voidable. The facts expressly give the buyer a legal right to avoid the agreement because of fraud. The agreement remains effective unless the protected party properly exercises that right.

A contingency is different: a binding contract may contain conditions affecting performance or contractual termination rights. The presence of a contingency does not automatically mean no valid contract exists until the condition is met.

Sources: California DRE contract classifications and binding agreements and conditional escrow.

Warehousing has to deal with loans and the secondary market. The term refers to the process where a bank or lender packages mortgage loans to consumers for the purpose of quickly selling those loans on the secondary market.

In real estate, commingling refers to the act of mixing the client’s funds with the broker’s own funds. Commingling can be both legal and illegal depending on the state and circumstance. Typically, from an agent’s perspective, commingling should be avoided at all costs. Commingling can be legal in some circumstances, but in most cases, as an agent or a broker, it’s best to avoid it.

Safe Drinking Water Act (SDWA) was established in 1974. It allowed greater control by EPA to control contaminant levels, take legal action against public water auth. for violations, and require periodic water testing and notification to state authority and homeowners if contaminated.

The answer is a single parent with a foster child aged 11and a son aged 19. Familial status is defined as one or more individuals younger than 18 living with a parent or guardian. It also includes pregnant women and anyone who is in the process of assuming custody of a child younger than 18.

Similar to a receipt, a bill of sale is a written instrument that attests to a buyer's purchase of property from a seller.

The Residential Lead-Based Paint Hazard Reduction Act was established in 1996. Real estate agents must be aware of this federal law providing homes before 1978 the following: an agreement of sale/lease with lead warning statement and statement allowing prospective buyers 10 days obtain certified inspection/assessment before purchase obligation or must disclose info. about existing lead paint to purchaser AND provide purchaser federal gov't prepared lead hazard brochure.

Regarding real estate licenses reciprocity, New York has reciprocity agreements with the following states: Arkansas, Colorado, Connecticut, Georgia, Massachusetts, Mississippi, Oklahoma, Pennsylvania, West Virginia.

In this case, the contract would be voidable by the buyer because of fraud. Voidable contracts have the necessary elements to be enforceable, so they appear to be valid, but can be rejected by one party if the contract is discovered to have any number of defects. Fraud is the act of intentionally deceiving another party for financial or personal gain.

The statute of frauds is a common law concept that requires written contracts for certain agreements to be legally binding. The statute applies to land sales and most purchases of goods over $500 (this includes real estate sales agreements). This is a bit of a trick question. There are some circumstances in real estate where a written contract is not required, so it is not ALL real estate contracts, but it is ALL real estate sales agreements.

In New York salespersons and brokers real estate licenses are good for two years from the date of issue. After that professionals must renew their licenses if you want to keep selling homes in the state.

The New York State Board of Real Estate was established pursuant to §442-i of the Real Property Law. It has fifteen members.

Correct answer: Alienation clause (due-on-sale clause).

A due-on-sale clause gives the lender an option to demand repayment after a covered transfer without prior written consent. It is a specific type of acceleration provision. Acceleration is the broader concept of making the remaining debt due early; it is not limited to payment default.

The clause does not automatically require payoff for every transfer. The loan terms, lender consent and applicable legal exceptions matter. Federal law protects certain transfers of covered residential property, subject to stated conditions.

Source: 12 U.S.C. § 1701j-3.

If a seller rejects a written offer made by a buyer, changes the terms of the offer, and has the new offer delivered to the buyer, this would be considered a counteroffer.

A comparative market analysis is an examination of the prices at which similar properties in the same area recently sold. Agents can use a comparative market analysis for their clients to help them determine a price when selling or buying a home.

The Purchase Agreement is a contract that legally binds two or more parties together, to specific obligations, that create a legally binding contract between the buyer and the seller. So in plain terms, a Purchase Agreement is the document buyers and sellers sign with all the terms and conditions of their transaction on it.

A creditor can consider age, if it's used to determine the meaning of other factors important to creditworthiness. For example, a creditor could use your age to determine if your income might drop because you’re about to retire. A creditor cannot consider age in any of the other situations listed.