75-hour New York Prelicense Course
Chapter 1: The Real Estate Transaction
1 . Introduction
IMPORTANT: Please stop and read your
course supplement titled "IMPORTANT" by
clicking on the Documents link in the upper,
right corner of your screen.
Welcome to the 75-hour New York Prelicense course!
We're happy to have you join us for this brief
period of time. We know that once you’ve completed this course, you'll have a much clearer
and fuller knowledge of the laws governing New York real estate. If, at any time, you have
any questions or comments, do not hesitate to contact us.
If you are struggling to understand a concept, click the Instructor link in the upper, right
corner of your screen to email your instructor. If you have any questions about how the
course works or what you need to do next, please contact our Customer Service team using
the Help menu on your dashboard.
You are taking a 75-hour course. The New York Bureau of Educational Standards has
designated the amount of time you must spend on each topic for a total of 75 hours. To meet
this requirement, a minimum amount of time has been assigned to each chapter of the
course. The required time will be listed at the beginning of each chapter, and the actual time
you have spent in the entire course will be displayed at the bottom of your screen. You may
spend more time in a chapter, if needed, but you may not spend less. If you spend additional
minutes in one chapter, those minutes will show in your total time, but cannot be applied
towards minutes in any other chapter.
Click here to view an overview of the time requirements for this course: New York
Prelicense Time Requirements. This chart can also be found by clicking the Documents link
in the upper, right corner of the screen.
Your course is good for six months. If you do not finish the course in six months, you have
the option to process an extension. We recommend taking the course final two weeks
BEFORE the course expires. You can find your expiration date on your home page, next to
your course title. The State of New York requires that students complete their course within
one year from registration. If you do not complete your course in that time period, you will
need to re-register for the course and start the course from the beginning. Please contact
Customer Service for more information.
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2 . Important Course Information
Reminder About the New York Course Final Exam Proctor Policy
The State of New York requires that the Course Final Exams for this course be proctored.
You must use one of the proctors on the proctor list provided in your License Exam
Materials. There are two exams available. The State of New York requires that you must
pass ONE of these tests with a proctor present.
1. These are closed book exams. No materials of any kind are allowed during the final
exams except for a calculator.
2. When you are ready for your course final, view the proctor list and find the
location that works best for you. Then call or email us and we will schedule your
course final for you. You must complete this final before your course expires. We
recommend allowing two weeks for processing.
The New York Bureau of Educational Standards also requires that you agree to and sign a
course completion affidavit at the end of the course. When this screen comes up, you must
print the affidavit. You must sign it and then email, fax or mail this affidavit to us before your
certificate can be sent. We are not allowed to send certificates until we receive your signed
affidavit. Since we have to verify your proctor, you can send us the affidavit while we are in
the confirmation process with the proctor.
After verifying your proctor, and receiving your affidavit, your completion certificate will be
mailed to you within 48 hours. Please allow 5 - 7 days for mail delivery. Special overnight or
2-day delivery is available upon request. Refer to your course documents.
Difference between Course Final Exam and Licensing Exam: We suggest you complete
this state required course to qualify for the licensing exam. To complete this course, you must
pass a proctored COURSE FINAL exam. The LICENSING exam is proctored by the State of
New York. Complete information about the COURSE FINAL and the LICENSING exam
can be found in your course materials.
3 . Course Objectives
Upon completion of this course, participants will be able to:
State the purpose of the NY licensing law, the Department of State and the Board of
Real Estate.
Explain the rules for obtaining a license in New York, state the types of licenses and
their respective requirements.
Explain the New York real estate licensing exam requirements, procedures and
policies.
Define and explain the rules for license issuance, license information changes and
branch office management.
Define and explain the rules for license renewal, continuing education and reciprocity.
Identify at least five Department regulations including handling of kickbacks and
proper advertising.
Name three allowed and three prohibited activities for unlicensed assistants and list at
least five licensee activities that violate NY license law.
Explain the hearing process and list the penalties for violating the license law.
Identify and explain the four sections of a hearing decision.
Define the following agency terms: agency, principal, client, agent, fiduciary and
customer.
List the duties licensees owe to clients and to customers.
List and explain the types of real estate agencies allowed in NY and explain the NY
rules for commissions.
Name the federal antitrust statutes and explain these antitrust terms: price fixing,
boycotts, market allocation and tie-in agreements.
Define the agency terms and parties involved in agency and subagency relationships.
Define dual agency and explain the rules for disclosure and designated agency.
Explain the various single agency relationships and how they are used.
List the ways agency relationships may be terminated.
Define the different types of listing agreements.
Describe provisions that are typically found in listing agreement forms.
Explain how and when to use the agency disclosure forms.
Discuss other required disclosures, including the property condition disclosure.
Describe the difference between an employee and an independent contractor and
explain the elements of the independent contractor relationship.
Discuss laws governing independent contractors – both New York State Law and the
IRS Code.
Identify and explain property rights.
Describe the difference between real property and personal property and identify uses
of real property.
Define the different types of freehold and leasehold estates.
Explain different forms of ownership.
Describe ways businesses can own real estate and discuss condominium and
cooperative ownership.
Define a lien and discuss lien types.
Explain the different types of specific liens and discuss lien priority.
Describe easements and encroachments.
Describe essential elements of a deed, including legal descriptions.
Explain the different types of deeds.
Describe how deeds are transferred after death and discuss adverse possession and
accession rights.
Define a title closing and describe what happens at closing.
Discuss title and homeowner's insurance and explain the requirements of the real estate
Settlement and Procedures Act (RESPA).
Describe how the seller's and buyer's costs are handled at closing.
Explain prorations and discuss the Closing Disclosure form.
Describe different types of leasehold estates and identify the rights and obligations of
the parties.
Describe various aspects of standard lease provisions.
Explain how leases are terminated and identify types of leases.
List and explain different types of contracts and their classifications.
Describe the essentials of a valid contract and under what conditions the contract could
terminate.
Explain the provisions of a sales contract, including an installment sales contract, and
describe a lease with option to buy.
Discuss contract preparation, including which form to use, what data is needed for the
contract prep, and who prepares the contract.
Explain mortgage contingencies and issues surrounding down payments and describe
contract procedures.
Discuss the issues surrounding a mortgage, including mortgage clauses, payments,
fees, foreclosures, and how a property with an existing mortgage can sell.
Identify specific types of loans and explain their repayment plans.
Describe the aspects of a conventional loan, including advantages and disadvantages
and the need for private mortgage insurance (PMI).
Explain a number of loan options that can put a conventional loan within a borrower's
reach.
Discuss a number of government-backed loans; including FHA, DVA, RHS, and
SONYMA.
Describe the basic mechanics of money flow in the secondary mortgage market and
define the major players involved in its activities.
Explain the process and key determinants of mortgage lending underwriting; including
such decision variables as buyer income, LTV ratios, and quality of the collateral.
Describe the general nature of modern predatory lending practice and its most common
offenses.
Describe the significant forms of private and state environmental land use control
including deed restrictions, covenants, and the SEQR.
Define and describe salient forms of public land use control including sale disclosures,
taxation, eminent domain, building codes and permits
Describe the classifications of zoning and the various land use restrictions imposed by
each zoning type.
Identify the principal activities that comprise municipal planning and management
including master plan development and key zoning actions such as moratoria, housing
development approvals, and zoning appeals.
4 . Course Objectives
Participants will also be able to:
Identify and describe land use and site requirements necessary for construction
pertaining to building permits, codes, wells, waste, energy, and site use.
Describe the principal aspects and components of a building's structure including the
foundation, framing, flooring, roofing, and walls.
Describe further elements of building construction including insulation, mechanical
systems, heating, and A/C systems.
Describe further elements of building construction including plumbing systems,
electrical systems, and safety systems.
Describe principal long-standing environmental issues, their specific inherent hazards,
related legislation, and remediation methods.
Identify and describe the current environmental issues of asbestos, lead paint and
radon, and summarize related regulation and remediation efforts.
Identify and describe the current environmental issues of indoor air quality, mold,
formaldehyde insulation, and PCBs, and summarize related regulation and remediation
efforts.
Define and describe key environmental legislation and the current issues of
underground storage tanks, electromagnetic fields, and CFCs.
Describe and differentiate key valuation concepts, types of value, and principles of
value.
Describe the components of a residential market analysis including the types of
properties used to derive analysis results.
Explain the characteristics and mechanics of the sales comparison, income and cost
approaches to valuation.
Explain the general mechanics and steps involved in preparing a Comparative Market
Analysis (CMA).
Cite and describe principal federal fair housing laws, their central thrust, how they are
enforced, and the general responsibilities these laws impose on brokerage practice.
Describe additional fair housing laws, particularly New York's Human Rights Law, and
the central thrusts of this legislation.
Explain the nature of various forms of discrimination in lending and brokerage and
how testers contribute to enforcement of anti-discrimination laws.
Describe specific ways licensees can conduct their practice to avoid discrimination and
reduce their exposure to related liabilities.
Describe what a city, town council, planning board, zoning board and architectural
review board does.
Discuss functions related to building and planning departments.
Explain the role of various municipal employees.
Identify equations for, and compute real estate commissions, loan interest and points,
and property appreciation and depreciation.
Identify equations for, and compute mortgage payments and real property area and
length measurements.
Identify equations for, and compute mortgage underwriting ratios and ad valorem and
property transfer taxes.
Define property insurance and the major types of coverage.
Explain how to determine how much insurance a property owner needs.
Discuss alternative ways to purchase insurance and various policy topics such as
deductibles, cancellations, non-renewals and the agent's role.
Identify General Safety Concerns
Establish methods for Safety in the Office
Recognize methods for Safety on the road, at open houses, and in home offices
Understand licensee safety issues
Identify liability issues regarding accidents and injuries
Explain how to reduce risk for licensees
Discuss the purpose of taxation and how real estate taxes are assessed and calculated.
Describe the reassessment procedure in New York and equalization between taxing
jurisdictions.
Discuss special assessments and tax exemptions.
Explain how property owners can contest and appeal tax assessments, and the possible
outcomes.
Describe the principle documents that legalize the formation of condominium
dwellings including the declaration, articles of incorporation, bylaws, and offering
plan.
Identify the various legal instruments and procedures involved in offering, acquiring
and flipping a condominium unit.
Describe key issues that impact the buyer in a condominium purchase including CCRs,
closing costs, title insurance, taxes, and financial qualification.
Characterize the legal concept of a cooperative and describe the documents and
procedures involved in the legal organization of a cooperative.
Describe the co-op "board package," the buyer approval process, and the legal concept
of the "condop."
Identify and describe critical investment concepts that impact residential and
commercial property investment
Describe the various types of real property and their general investment characteristics
Contrast the advantages and disadvantages of investing in a specific type of investment
property.
Explain how to derive net operating income of an investment property.
Describe the steps used in deriving pre-tax cash flow, taxable income, and cash flow
after-tax for an investment property.
Describe the elements of an income property's operating statement and how it is used
to derive cash-on-cash return
Explain the general methods used to estimate an income property's operating results
using such tools as comparables, location characteristics, ratio analysis and cap rates.
Identify essential dynamics and characteristics of commercial leasing practice
including its purposes, advantages, rights issues, how space is measured, and common
area considerations.
Describe various ways leases are structured and how lease costs are established and
managed over a lease term.
Describe the central thrusts of principle lease clauses in commonly used commercial
leases.
Identify key tax issues relating to buying and selling residential homes, including
income tax liability and capital gain or loss.
Calculate profit or loss and capital gains on the sale of residential and commercial
property.
Define and describe Section 1031 tax-free exchanges and the qualifications the IRS
imposes on capital gains tax treatment.
Describe the impacts of deductible financing, points and depreciation on real property
tax liability.
Describe the requirements to become a mortgage broker and mortgage banker,
borrower disclosures and penalties for violations.
Discuss the differences between mortgage brokers and mortgage bankers, and their
roles in the lending process.
Describe the functions performed by a property manager and property management
agreements.
Discuss skills that are necessary to being an effective property manager.
Explain the obligations a property manager owes to an owner.
5 . Chapter Objectives and Key Terms
Objectives
In this first chapter, we will discuss the basics of a real
estate transaction and some important information about
licensing. At the end of this chapter, you will be able to:
1. State the purpose of the NY licensing law, the
Department of State and the Board of Real Estate.
2. Explain the rules for obtaining a license in New
York, state the types of licenses and their
respective requirements.
3. Explain the New York real estate licensing exam
requirements, procedures and policies.
Key Terms
Remember to pay particular attention to these terms when you see them in this chapter.
Article 12-A
Associate real estate broker
Exemption
Listing agreement
Real estate broker
Real estate salesperson
Sponsoring broker (Sponsor)
Let’s get started!
Click here to complete your New York Real Estate Licensing Law reading assignment:
Article 12-A
Article 12-A, Section 442-i
Please download and print the above document to be able to read the information and make
notes as you proceed through the course.
The New York Bureau of Educational Standards requires that you spend 50 minutes studying
the material in this chapter. Your course timer can be found in the upper right-hand corner of
your screen.
6 . The Real Estate Transaction
For most people, buying and selling property is the single most significant financial
transaction of their lives. A real estate transaction can be described as having four stages:
Listing the property.
Negotiating the purchase contract.
Financing the purchase.
Settling the transaction.
Let's look at each stage briefly and then we’ll describe them in more detail in later chapters in
the course.
Listing the Property
Sellers employ the services of a real estate broker to market their property through the use of
a listing contract or listing agreement. The contract stipulates a number of terms and
agreements between the broker and the sellers, including the price for which the property will
be offered and the length of the listing period.
Once the property is listed, the broker and his or her associates are authorized to act as
negotiators to market the property, with the purpose of finding a ready, willing and able
buyer. The seller can accept, reject or make counteroffers to any offer a licensee brings.
Since buyer brokerage is now a widely-used option, a licensee and a buyer may also enter
into a listing contract.
Negotiating the Purchase Contract
During the term of a listing, the sellers may receive a number of offers on their property.
When the licensee works for the seller, he or she must remember to impart all important
information to the seller regarding the potential buyer’s qualifications and the quality of the
offer being presented.
When the licensee has a buyer brokerage agreement with a purchaser, he or she must
represent the best interests of the buyer rather than the seller.
7 . The Real Estate Transaction
Financing the Purchase
There are some instances in which the sale of
a property is a cash sale. But in most cases,
buyers cannot make a purchase without
financing at least some part of the transaction.
Financing is a critical part of the transaction. It
is important for real estate licensees to have
good knowledge of the loan programs that are
currently available from local banks and other
lenders. They need to stay current on lender's
guidelines so that they can qualify both the
buyers and the property. It's a good idea for licensees to visit their local lenders to establish
good relationships.
At times it's difficult to get good financing at good rates. When these circumstances exist,
licensees may need to look to their sellers as a source of financing. Sellers can carry all or
part of the purchase price of the property in the form of a contract for deed or purchase
money mortgage.
Settling the Transaction
Closing, also known as final settlement, is the final step of the real estate transaction. At
closing, the buyer gets the deed to the property, the seller gets the proceeds from the sale, and
the broker gets his or her commission.
Before the closing actually takes place, the licensee must coordinate a number of activities;
including such things as an appraisal, title survey, and a home inspection if it is a federally
backed loan. In New York, the licensee may attend the closing along with the attorney or
alone, the representative of the lender, the seller and the purchaser.
The explanations above give you a general idea of how a real estate transaction proceeds,
along with the players in each step. As we mentioned earlier, we’ll be covering each of these
processes in much more detail as the course progresses.
Now let's take a look at how the license law works in New York.
8 . New York Department of State
The New York Department of State, Division of Licensing Services, plays an important role
for consumers, occupational licensees, applicants and the business community in New York
State.
The DOS is responsible for the licensure, registration and/or regulation of a number of
occupations, including real estate brokers and salespersons, apartment information vendors,
apartment sharing agents, real estate appraisers and home inspectors.
The mission of the DOS is threefold:
To protect the health, safety and welfare of consumers.
To provide efficient processing and examination services to license applicants.
To provide accurate information and qualified licensees to the business community.
The Division of Licensing issues licenses and enforces the real estate law.
Article 12-A of the New York Real Property Law gives authority to the Department of
State to regulate real estate brokers and salespersons. Real Property Law, Section 441-c,
allows the Department of State to revoke, suspend, fine or reprimand a real estate broker or
salesperson if that licensee is found to have:
Violated any provision of Article 12-A of the Real Property Law.
Engaged in fraud or fraudulent practices.
Demonstrated untrustworthiness or incompetence.
We’ll talk more about license law violations in a later chapter.
9 . Board of Real Estate
The New York State Board of Real Estate shares duties with the Department of State with
regard to real estate license law. Section 442-i of the Real Property Law established the New
York State Board of Real Estate and went into effect on January 1, 1996.
Membership
The Board consists of fifteen members:
The Secretary of State
The Superintendent of Financial Services
Thirteen appointed members
The appointed members are either real estate brokers or public members. A public member
cannot be a real estate broker. The members of the Board are appointed by the Governor and
the legislative leaders according to a specific set of rules.
At least five members of the Board must be real estate brokers. To qualify, a real estate
broker must be currently licensed as a real estate broker by the State of New York and must
have been engaged in the real estate business in the State of New York for at least ten years
prior to the appointment.
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.
In case of death or resignation, the person who appointed the vacating member will appoint
his or her successor.
Members of the Board receive no compensation for their service but are reimbursed for
actual and necessary expenses.
10 . Board of Real Estate
Appointments
The thirteen (13) members of the Board are appointed as follows:
The Governor appoints three (3) real estate brokers and four (4) public members.
The Senate Majority Leader appoints one (1) broker and one (1) public member.
The Speaker of the Assembly appoints one (1) broker and one (1) public member.
The Senate Minority Leader appoints one (1) member, which can be either a broker or
a member of the public.
The Assembly Minority Leader appoints one (1) member, which can be either a broker
or a member of the public.
Therefore, depending on the appointments by the Minority Leaders, the Board will be
composed of members in one of the following ways:
Seven real estate brokers and six public members
Six real estate brokers and seven public members
Five real estate brokers and eight public members
11 . Board of Real Estate
Meetings and Procedures
The Secretary of State is the Chairperson. A ViceChairperson and Secretary are elected from among the
other members of the Board.
A quorum for the Board is a majority of the entire Board;
i.e., eight members.
A majority of the members currently serving on the Board is required for the passage of any
resolution or approval of any matter before the Board.
The Board shall meet no fewer than three times per year at the call of the Secretary of State
or a majority of the members.
In addition, the Board shall hold public hearings each year in New York City, in Buffalo, and
in Albany. The purpose of the public hearings is to solicit public comment, suggestions, and
observations about real estate practice in New York.
If a member fails to attend three consecutive meetings, the member shall forfeit his or her
seat on the Board unless the Secretary of State, upon the request of the member, finds that the
member should be excused due to illness or death in the family.
12 . Powers and Duties of the Secretary of State
The Secretary of State has the duty to administer all licensing, examination, education, and
compliance provisions of Article 12-A; the rules of the Board; and the rules of the Secretary
of State.
In addition, the Secretary of State has specific authority to adopt rules and regulations
pertaining to the following matters:
Commingling money of a principal.
Rendering of accounts to clients.
Managing property for a client.
Broker's purchasing of property listed with the broker.
Inducing breach of contract of sale or lease.
Maintaining of records by licensees.
Handling of clients' funds.
Issuing no solicitation orders and cease-and-desist orders.
Administering and enforcing the provisions of Article 12-A and its rules.
The Secretary of State has the authority to do any of the following:
Enforce the provisions of Article 12-A, either upon any person's complaint or upon the
Secretary's own initiative.
Investigate any law violation.
Investigate the business, business practices, and business methods of any person
applying for or holding a license as a real estate broker or salesperson.
Approve or deny license applications and renewals.
Suspend or revoke a license, or impose a fine or reprimand, for violations of Article
12-A.
13 . Powers and Duties of the Board
Except for those things that are delegated specifically to the Secretary of State, the Board has
general authority to promulgate rules and regulations affecting real estate brokers and
salespersons in order to administer Article 12-A of the Real Property Law.
The Board is authorized to:
Prescribe the content of courses of study for the examination and education of real
estate brokers and salespersons.
Advise the Secretary of State on policies governing the administration of examinations.
Establish rules and regulations governing the approval, by the Secretary of State, of
schools to offer or conduct courses for qualifying and continuing education.
Study the operation of the laws and regulations affecting real estate brokers.
Make recommendations on related pending or proposed legislation, except for any
legislation and regulations related to non-solicitation orders and cease-and-desist
orders.
Advise and assist the Secretary of State in carrying out the provisions and purposes of
Article 12-A.
Make recommendations concerning the programs and activities of the Department of
State in connection with the enforcement of the provisions of Article 12-A.
Each year, the Board will submit a report to the Senate and Assembly Judiciary Committees
containing a description of the types of complaints received, the status of cases, and the
length of time from the initial complaint to any final disposition.
14 . Check Your Understanding
Print this screen, answer the questions, and then advance to the next screen to see the
answers.
1. During which stage of a real estate transaction must the licensee remember to impart
information to the seller regarding the potential buyer’s qualifications and the quality
of the offer being presented?
2. Why should real estate licensees have good knowledge of the loan programs that are
currently available from local banks and other lenders?
3. What is the mission of the Division of Licensing Services?
4. What are the duties of the Secretary of State?
15 . Check Your Understanding - Answers
1. During which stage of a real estate transaction must the licensee remember to impart
information to the seller regarding the potential buyer’s qualifications and the quality
of the offer being presented?
During the negotiation stage.
Why should real estate licensees have good knowledge of the loan programs that are
currently available from local banks and other lenders?
Financing is a critical part of the transaction. Licensees need to stay current on
lenders' guidelines so they can qualify both the buyers and the property.
2. What is the mission of the Division of Licensing Services?
The mission of the Division is threefold:
To protect the health, safety, and welfare of consumers.
To provide efficient processing and examination services to license
applicants.
To provide accurate information and qualified licensees to the business
community.
3. What are the duties of the Secretary of State?
The Secretary of State administers:
All licensing, examination, education, and compliance provisions of Article
12-A.
The rules of the Board.
The rules of the Secretary of State.
16 . Who Needs a License
New York requires any person to hold a real estate license
who performs and who receives a fee for performing
those activities that are outlined in the license law.
Categories of Licensure
The three categories of licensure in New York are:
Broker
Associate Broker
Salesperson
Let's look at each one in detail.
17 . Real Estate Broker
A real estate broker means any person, firm, limited liability company or corporation who
performs for a fee or the expectation of a fee, commission or other consideration any of the
following activities for another person:
Negotiates or attempts to negotiate the listing of real property.
Negotiates the sale of real property.
Negotiates leases.
Exchanges real estate interests.
Collects or attempts to collect rent for the use of real estate.
Negotiates a loan secured by a mortgage.
Engages in the business of a tenant relocator.
Sells condominiums or cooperatives.
Auctions lots or other real estate parcels.
Negotiates the sale of a parcel of subdivided land.
Sells a business whose real estate value is more than half the transaction value.
A broker has a responsibility to be fair and competent when dealing with the public. He or
she has a number of more specific responsibilities to clients, which we will talk about in
detail when we discuss agency relationships later in the course.
A broker is responsible for managing and supervising all affiliated licensees. This means that
brokers must see to it that their licensees comply with all the license laws. To help with this,
many brokers provide training to their licensees and provide detailed procedures manuals for
all the associates.
18 . Associate Broker
An associate real estate broker is a licensed real estate broker who chooses to work under
the name and supervision of a licensed real estate broker.
Performs all of the tasks a salesperson does under the name and supervision of another
individual broker. The advantages of becoming an associate broker is the (s)he now
can become a Vice President of a brokerage firm, train others and supervise them. As
of July 2008 any person who manages a broker’s office must be a minimum of an
associate broker.
May only receive commission payments from his or her sponsoring broker.
An associate broker retains his or her license as a real estate broker but practices real estate in
the name of a sponsoring broker, just as he or she would do as a salesperson. However, an
associate broker can also maintain a separate real estate broker’s license under an
individual, partnership, trade name, limited liability company or corporation.
An associate broker also has a responsibility to be fair and competent when dealing with the
public. And as an employee of the broker, the associate broker owes it to his or her employer
to carry out the duties of an agent and comply with the license law in the same manner as the
broker would.
19 . Salesperson
A real estate salesperson works on behalf of a licensed real estate broker to perform any of
the duties associated with real estate transactions that we talked about previously:
Listing property
Selling property
Exchanging property
Auctioning lots or other parcels
Collecting rents
Selling condominiums and cooperatives
Other real estate transactions
The sponsoring broker must supervise all of the activities of his or her salesperson. As an
employee of the broker, a salesperson owes it to his or her employer to carry out the duties of
an agent and comply with the license law in the same manner as the broker would. Just like
the broker and associate broker, a salesperson also has a responsibility to be fair and
competent when dealing with the public.
While a broker can collect commissions from the clients, a salesperson may not. The
salesperson can only receive commission payments from his or her sponsoring broker.
20 . Exemptions to Licensure
Not everyone who sells real estate must have a license;
there are some exemptions. Those who are exempt from
needing a license include:
An owner selling his or her own property.
A landlord renting his or her own property.
An attorney performing his or her duties as an
attorney.
An attorney admitted to the bar in New York.
A receiver or trustee in bankruptcy.
The administrator or executor of a deceased person’s estate.
A court-appointed guardian.
A resident property manager employed by one owner to manage or rent that owner’s
property; as long as the leasing of the property and the collection of rents are part of
that manager's regular duties.
Tenant associations and not-for-profit corporations authorized to enforce the housing code of
the City of New York or appointed by the court to manage city-owned residential property.
21 . License Qualifications
New York License Law specifically states that anyone who wants a license must demonstrate
a fair knowledge of the English language. Applicants cannot use any type of dictionary or
other language aid when taking the exam.
In order to become a licensed salesperson in New York, a candidate must meet these criteria:
Be at least 18 years old.
Be a United States citizen or a legal alien with permanent US residency.
Have never been convicted of a felony in New York or anywhere else; unless the felon
received an executive pardon, a certificate of good conduct from the parole board or a
certificate of relief from disabilities.
Successfully complete the 75-hour pre-license course approved by the New York
Department of State.
Pass the New York state licensing exam.
Obtain a sponsoring broker before obtaining the license.
To become a licensed broker, a candidate must meet these qualifications.
Be at least 20 years old.
Be a United States citizen or a legal alien with permanent US residency.
Have never been convicted of a felony in New York or anywhere else; unless the felon
received an executive pardon, a certificate of good conduct from the parole board or a
certificate of relief from disabilities.
Successfully complete the 120-hour course of study approved by the New York
Department of State.
Pass the New York state broker exam.
Submit proof of meeting one of these experience requirements:
Two full years of experience as a licensed salesperson.
Three years of equivalent experience in some other aspect of real estate, subject
to approval by the Department of State.
Proof of a license in a state which has a reciprocity agreement with New York.
We'll discuss the experience determination for brokers a bit later in this chapter.
To become a licensed associate broker, a candidate must meet all of the same qualifications
as someone applying for a broker's license. In addition, the associate broker candidate
must also obtain and submit the name of a sponsoring broker.
22 . Education Required for Obtaining a License
Salespersons
The Department of State requires a salesperson candidate to complete 75 hours of approved
course instruction. The salesperson’s course is made up of the following subjects and the
required number of hours devoted to each subject.
Subject Matter
Hours
License Law & Regulations
3 hours
Law of Agency
11 hours
Legal Issues
10 hours
The Contract of Sales and Leases
3 hours
Real Estate Finance
5 hours
Land Use Regulations
3 hours
Construction and Environmental Issues
5 hours
Valuation Process and Pricing Properties
3 hours
Human Rights & Fair Housing
4 hours
Real Estate Mathematics
1 hour
Municipal Agencies
2 hours
Property Insurance
1 hour
General Safety Concerns and Liability Issues
1 hour
Taxes & Assessments
3 hours
Condominiums and Cooperatives
4 hours
Commercial & Investment Properties
10 hours
Income Tax Issues
3 hours
Mortgage Brokerage
1 hour
Property Management
2 hours
Total:
75 hours
Exam
3 hours
23 . Education Required for Obtaining a License
Brokers
The Department of State requires a broker candidate to complete 120 hours of approved
course instruction – the 75-hour salesperson’s course plus an additional 45-hour broker
course. The candidate must submit proof of completing the salesperson's course before he or
she can enroll in the broker course.
The broker course is made up of the following subjects and the required
number of hours devoted to each subject.
NYS Real Estate Broker Curriculum
Chapter 1
Agency Law, License Law and Operating a Real Estate Office
16 hours
Chapter 2
Real Estate Finance
2 hours
Chapter 3
Real Property Investment
4 hours
Chapter 4
General Business Law
3 hours
Chapter 5
Construction and Development
3 hours
Chapter 6
Conveyance of Real Property
1 hour
Chapter 7
Real Property Management
4 hours
Chapter 8
Taxes and Assessments
1 hour
Chapter 9
Advanced Fair Housing and Fair Lending
3 hours
Chapter 10
Achieving Transactional Agreements through Transaction Analysis
6 hours
Chapter 11
Local Issues and Concerns
2 hours
Total
45 hours
Course Completion and Record Retention
Successful course completion is defined as a 90% attendance rate for a classroom course and
passing the final exam for the course.
Any organization or entity which conducts approved courses must keep the attendance
records, the final examinations and a list of students who successfully complete each course
for a period of ten years after completion. These documents must be available for authorized
representatives of the Department of State to inspect at their discretion at any time during the
ten-year period.
24 . Check Your Understanding
Print this screen, answer the questions and then advance to the next screen to see the answers.
1. How is an associate broker different from a broker?
2. How do licensees collect their commissions?
3. How old must a person be who wishes to become licensed in New York?
4. How many hours of instruction are required to become licensed in New York?
25 . Check Your Understanding - Answers
1. How is an associate broker different from a broker?
An associate broker must meet the same qualifications as a licensed broker;
however, an associate broker chooses to work under the name and supervision of
a licensed real estate broker.
2. How do licensees collect their commissions?
A broker can collect commissions from the clients. However, the licensees working
for the broker can only receive commission payments from their sponsoring
broker.
3. How old must a person be who wishes to become licensed in New York?
Salespersons must be 18 years old; brokers must be 20 years old.
4. How many hours of instruction are required to become licensed in New York?
Salespersons are required to complete 75 hours of instruction; brokers must
complete 120 hours.
26 . License Exams
Effective July 1, 2008, the Department of State, Division of
Licensing Services, began requiring all license candidates who
want to take a real estate examination to make an online
appointment. Walk-in locations have been eliminated.
All exam candidates should bring the following items:
1. A current form of government-issued identification that
has your signature and your photo. It can be any one of
these:
Driver's license
State-issued identification (ex. non-driver ID)
Military ID
United States Passport
United States INS issued ID
Certificate of US citizenship
2. The page you were requested to print when you scheduled your exam online. This page
is referred to as the "Summary of Your Submission" and includes all of your exam
information, including your candidate number
27 . Test Center Policies
The test center has a number of policies in place.
Examinees may use a calculator, but not a PDA. Calculators must be battery or solarpowered, silent, and nonprinting and may not have an alphabetic keyboard.
Applicants must turn off all cell phones, beepers and any other electronic devices
during the exam.
Examinees may not bring any dictionaries, books, other reference materials, large bags
or briefcases into the test center. Leave them at home or in your car.
Applicants may not eat, drink or smoke at the test center. If you bring food or
beverages, you will not be allowed entry into the test center until you discard them.
Only examinees may come to the test center - no visitors, guests or children.
Important: Center personnel will dismiss from the test any person who:
Uses notes, books, or other aids.
Gives or receives help.
Removes examination materials or notes from the test center.
Causes a disturbance.
Engages in practices contrary to the rules of proper examination conduct.
The Exam Supervisor at the Department of State will make any decisions about whether or
not to take disciplinary measures for any conduct listed above.
28 . Exam Specifics
The written exam is a multiple-choice exam. The exam questions are very similar to the
questions you will see throughout this course.
Salesperson Exam
All questions are based on the pre-licensing curriculum.
The exam has 75 questions.
Applicants will be allowed 1 ½ hours to complete the test. The time period starts as
soon as the exam proctor has finished giving the instructions.
Broker Exam
All questions are based on the pre-licensing and broker curriculum.
The exam has 100 questions.
Applicants will be allowed 2 ½ hours to complete the test. The time period starts as
soon as the exam proctor has finished giving the instructions.
Test Scoring and Reporting
The examinee must correctly answer at least 70 percent of the questions to pass the exam.
Exam results are reported as either passed or failed; numerical scores are not given. Passed
exam results are only valid for a period of two years.
Exam results will be available online as soon as possible after the Exam Unit receives the
exams and scores them.
29 . The License Procedure
Below are the steps for licensure:
1. Successfully complete the applicable coursework. The student must be in possession of
proof of completion in the event the DOS asks for it. Proof consists of an original
school certificate bearing the raised school seal, the course code number and an
original signature.
Candidates who have completed the coursework for licensure must take the following
steps:
2. Register on the Department of State, Division of Licensing Site:
https://www.dos.ny.gov/licensing/eaccessny.html. Follow the directions of creating an
account and DO NOT create an account if you currently have an online account.
3. Have a qualified broker to sponsor you. You will identify the broker who is sponsoring
you on your online application so make certain that the broker’s information is correct.
If you are applying using more than one broker, you will need to submit several
applications.
4. Upon registration, and examination, applications and costs may be accessed through
your registration page, and are further detailed on this page. https://www.dos.ny.gov
/licensing/forms.html. Applications are available in a variety of languages.
You may also go to: https://www.ny.gov/services/apply-professional-license.
5. Provide proof of having successfully completed the licensing exam. Proof consists of
the original exam admission slip marked "PASSED." Pay the appropriate fee.
Note that licensure fees are non-refundable so confirm that you have completed the steps in
the right order and that you are ready to apply.
30 . License Classes for Brokers
There are a number of different types of real estate broker licenses.
Individual Broker (Class 35): This license is for a broker who will be conducting
business using his or her personal name only. An individual broker may add the words
"Licensed Real Estate Broker" after his or her name for use on signage, business cards
or other advertising. An individual broker license does not allow the broker to
represent himself/herself as being associated with any firm or company.
Associate Broker (Class 30): As mentioned earlier, an associate broker is a licensed
broker who chooses to work under the name and supervision of another licensed
individual broker or another broker who is licensed to do business as an individual,
partnership, corporation or trade name. Individuals applying for an Associate Broker's
license must have the supervising broker sign the association statement portion of their
broker application.
Trade Name Broker (Class 37): A trade name broker conducts business as a sole
proprietorship, doing business under a name other than his or her personal name. In
order to do this, a broker applicant must file a business certificate with the Office of
the County Clerk where the business is located. The applicant must then submit a copy
of the business certificate with the application.
Partnership Broker (Class 33): A partner or partners in a partnership may apply for a
real estate broker license to conduct business under the partnership name. Each partner
who wishes to be licensed as a real estate broker must file an application and pay the
appropriate fee. A partnership certificate must be filed in the Office of the County
Clerk in the county where the business is located, and the partners must submit a copy
of that certificate with each application.
Corporate Broker (Class 31): An officer of a corporation may be issued a license to
conduct business as a real estate brokerage under the corporate name. Applicants must
be an officer prior to licensing. A copy of the corporate filing receipt must be
submitted with the application for new corporations only.
Limited Liability Company (LLC) or Limited Liability Partnership (LLP) (Class
49): A member or manager of an LLC or LLP who meets the qualifications for
licensure may be issued a license to conduct real estate brokerage under the limited
liability company or limited liability partnership name. The applicant must be a
member or manager prior to licensing. A copy of the articles of organization filed
with the Division of Corporations or the filing receipt must be submitted with this
application for new limited liability companies only.
31 . Determining Experience for Brokers
As we said earlier, a broker candidate must submit proof
of meeting one of these experience requirements:
Two full years (30 hours a week for 50 weeks per
year) of experience as a licensed salesperson.
Three years of equivalent experience in some other
aspect of real estate, subject to approval by the
Department of State.
Some combination of salesperson experience and
equivalent experience.
New York has established a point system to help
determine the experience a candidate needs. A certain
number of points is given for certain types of real estate activities. A total of 3,500 points is
equal to two years of full-time experience or three years' experience and 5,250 points.
The chart on the next screen shows the point values associated with various real estate
activities.
32 . Real Estate Broker Point System For Licensed Salesperson Activity Only
Category
Point
Value
RESIDENTIAL SALES:
1. Single Family, condo, co-op unit, multi-family (2-to-8-unit), farm (with
250
residence, under 100 acres)
2. Exclusive Listings
10
3. Open Listings
1
4. Binders effected
25
5. Co-op unit transaction approved by seller and buyer that fails to win Board of
100
Directors' approval
RESIDENTIAL RENTALS:
6. Rentals or subleases effected
25
7. Exclusive Listings
5
8. Open Listings
1
9. Property Management
lease renewal
rent collections per tenant/per year
2
1
COMMERCIAL SALES:
10. Taxpayer
400
11. Office Building
400
12. Apartment Building (9 units or more)
400
13. Shopping Center
400
14. Factory/Industrial warehouse
400
15. Hotel/Motel
400
16. Transient garage/parking lot
400
17. Multi-unit commercial condominium
400
18. Urban commercial development site
400
19. Alternative sale type transaction
400
20. Single-tenant commercial condo
250
21. Listings
10
COMMERCIAL LEASING:
22. New Lease-aggregate rental $1 to $200,000
150
23. New Lease-aggregate rental $200,000 to $1 million
250
24. New Lease-aggregate rental over $1 million
400
25. Renewal-aggregate rental $1 to $200,000
75
26. Renewal-aggregate rental $200,000 to $1 million
125
27. Renewal-aggregate rental over $1 million
400
28. Listings
10
COMMERCIAL FINANCING:
(includes residential properties of more than four units)
29. $1 to $500,000
200
30. $500,000 to $5,000,000
300
31. Over $5,000,000
400
MISCELLANEOUS:
32. Sale vacant lots, land (under 100 acres)
50
33. Sale vacant land (more than 100 acres)
150
34. Other (must be fully explained)
33 . Check Your Understanding
Print this screen, answer the questions and then advance to the next screen to see the answers.
1. How are exam scores reported, and what percentage is needed to pass the exam?
2. Besides individual and associate broker, name 2 classes of broker licenses available.
3. What are the experience requirements to become a broker?
34 . Check Your Understanding - Answers
1. How are exam scores reported and what percentage is needed to pass the exam?
Exam results are reported as either passed or failed; numerical scores are not
given. A score of 70% is passing.
2. Besides individual and associate broker, name 2 classes of broker licenses available.
(See screen 29 for other correct answers.)
Partnership Broker
Corporate Broker
3. What are the experience requirements to become a broker?
A broker candidate must submit proof of meeting one of these experience
requirements:
Two full years of experience as a licensed salesperson and 3,500 points.
Three years of equivalent experience in some other aspect of real estate and
5,250 points, subject to approval by the Department of State.
35 . Summary/Review
This concludes Chapter 1. Below is a summary which you can review before taking
your quiz.
Listing the Property - Sellers market their property using a listing agreement.
Negotiating the Purchase Contract - When the licensee has a buyer brokerage agreement
with a purchaser, he or she must represent the best interests of the buyer rather than the
seller.
Financing the Purchase - In most cases, buyers cannot make a purchase without financing
at least some part of the transaction.
Settling the Transaction - Buyer gets the deed to the property, seller gets the proceeds from
the sale, and the broker gets a commission.
New York Department of State
The DOS is responsible for the licensure, registration and regulation of a number of
occupations, whose mission is:
To protect the health, safety, and welfare of consumers.
To provide efficient processing and examination services to license applicants.
To provide accurate information and qualified licensees to the business community.
The DOS is allowed to reprimand a real estate broker if he or she:
Violated any provision of Article 12-A of the Real Property Law.
Engaged in fraud or fraudulent practices.
Demonstrated untrustworthiness or incompetence.
36 . Summary/Review
Summary (continued)
Board of Real Estate
Membership - The Board consists of the Secretary of State, the Superintendent of
Financial Services and thirteen appointed members (brokers or public members).
Appointments - Depending on the appointments by the Minority Leaders, the Board
will be composed of:
Seven real estate brokers and six public members
Six real estate brokers and seven public members
Five real estate brokers and eight public members
Meetings and Procedures - The Secretary of State is the Chairperson. A ViceChairperson and Secretary are elected from among the other members of the Board. If
a member fails to attend three consecutive meetings, the member shall forfeit seat on
the Board (may be excused due to illness or death in the family).
Powers and Duties of the Secretary of State
The Secretary of State has the duty to administer all licensing, examination, education, and
compliance provisions of Article 12-A; the rules of the Board; and the rules of the Secretary
of State.
Powers and Duties of the Board
Except for things delegated specifically to the Secretary of State, the Board has general
authority to promulgate rules and regulations affecting real estate brokers and salespersons in
order to administer Article 12-A of the Real Property Law.
37 . Summary/Review
Summary (continued)
Categories of Licensure
Real estate broker
Has a responsibility to be fair and competent when dealing with the public.
Is responsible for managing and supervising all affiliated licensees.
Associate real estate broker
Licensed real estate broker who chooses to work under the name and supervision of a
licensed real estate broker. Can maintain a separate real estate broker’s license.
Can only receive commission payments from their sponsoring broker.
Real estate salesperson
Works on behalf of a licensed real estate broker to perform any of the duties associated
with real estate transactions. Can only receive commission payments from sponsoring
broker.
Exemptions from needing a license:
An owner selling/landlord renting own property.
An attorney performing duties as an attorney/admitted to the bar in New York.
A receiver or trustee in bankruptcy.
38 . Summary/Review
Summary (continued)
License Qualifications
In order to become a licensed salesperson in New York, a candidate must:
Be at least 18 years old and permanent US residency.
Successfully complete the 75-hour pre-license course approved by the New York
Department of State and pass the New York state licensing exam.
Obtain a sponsoring broker before obtaining the license.
To become a licensed broker, a candidate must:
Be at least 20 years old and permanent US residency.
Successfully complete the 120-hour course of study approved by the New York
Department of State and pass the New York state broker exam.
Submit proof of one of these requirements:
Two full years of experience as a licensed salesperson and 3,500 points.
Three years of equivalent experience in some other aspect of real estate and
5,250 points, subject to approval by the Department of State.
To become a licensed associate broker, a candidate must meet all of the same qualifications
as for a broker's license and submit the name of a sponsoring broker.
Education Required for Obtaining a License
Salespersons - 75 hours of approved course instruction.
Brokers - 120 hours of approved course instruction – the 75-hour salesperson’s course
plus an additional 45-hour broker course.
License Exams
The examinee must correctly answer at least 70 percent of the questions to pass the
exam.
Passed exam results are only valid for a period of two years.
Exam results are reported as either passed or failed; numerical scores are not given.
License Procedure
Complete the license application.
Provide proof of having successfully completed the applicable coursework/ licensing
exam.
Pay the appropriate fee.
39 . Summary/Review
Summary (continued)
License Classes for Brokers
Individual Broker: for a broker who will be conducting business using his or her
personal name only.
Associate Broker
Trade Name Broker: conducts business as a sole proprietorship, doing business under
a name other than the personal name.
Partnership Broker
Corporate Broker: Applicants must be an officer prior to licensing. A copy of the
corporate filing receipt must be submitted with the application for new corporations
only.
Limited Liability Company (LLC) or Limited Liability Partnership (LLP): must
be a member or manager prior to licensing. A copy of the articles of organization filed
with the Division of Corporations must be submitted with this application for new
limited liability companies only.
Click here if you would like to open this summary as a pdf, which you can then print or save
to your device: Chapter 1 Summary
40 . Chapter Conclusion
In this chapter, we have discussed:
The steps in a real estate transaction.
The purpose of the NY licensing law.
Duties of the Department of State and the Board of Real Estate.
Three classifications of Real Estate Licensure and the requirements for obtaining each
license.
The responsibilities of each license category.
Who is required to be licensed?
Exemptions from licensure.
Qualifications needed to obtain a salesperson’s or broker’s license.
Educational requirements for licensure.
The license procedure.
In the next chapter we'll talk about a number of different license law rules and regulations.
Next up, a chapter quiz. Good luck!
41 . Chapter 1 Quiz