ch 1-5 Flashcards
4 stages of real estate transaction
Listing
Negotiating purchase contract
Financing the purchase
Settling the transaction
Article 12-A regulates real estate people and section 441-C allows dept of state to punish them for?
breaking any provisions of Article 12-A
fraudulent behavior
being untrustworthy or incompetent
3 types of real estate licensee?
broker
associate broker
salesperson
What is a broker
a person, firm, llc, or corp who performs for a fee or compensation of any real estate activities defines by law
what is an associate broker
is licensed broker who works under name and supervisions of a broker. Can only receive commission payments from his sponsoring broker
what is a salesperson
works on behalf of broker to perform duties associated with real estate
when can salesperson receive payments
only receive commission payments from sponsoring broker
criteria to become licensed real estate salesperson
above 18 years old
be a citizen, legal alien with permanent resident in US, or work permit from immigration
never been convicted of felon unless executive pardon or certificate of good conduct from parole board
successfully completed 75 hr pre license course approved by NY Dept of State
Pass NYS licensing exam
obtain a sponsoring broker before obtaining the license
criteria to become licensed real estate broker
be atleast 20
be a US citizen or legal alien with perman US residency
never been convicted of felony unless received executive pardon or a certificated of good conduct from parole board
sucessfully completed 120 hr course of study approved by the NY Dept of state
pass NYS broker exam
submit proof of meeting one of these experience requirements
2 full years of experience as a licensed saleperson and 3500 points
3 years of equivalent experience in some other aspect of real estate and 5250 points subject to approval by the dept of state
Which stage of a transaction must the licensee impart info to the seller regarding the potential buyer’s qualifications and the quality of the offer being presented
during the negotiating stage
mission of the division of licensing services?
protect health, safety and welfare of consumers
provide efficent processing and examination services to license applicants
provide accurate info and qualified licensees to the business community
duties of the secretary of state?
administer:
all licensing, exams, education, and compliance provisions of article 12-A
the rules of the board
the rules of the secretary of state
difference between associate broker and broker
associate broker must meet same qualifications as a licensed broker: however an associate broker chooses to work under the name and supervision of a licensed real estate broker
how do licensees collect their commission
broker can collect commissions from the clients. licensees working for the broker can only receive commission payments from their sponsoring broker
licensee receives 2 things after pass everything
a license
a pocket card
how long is a license valid for?
2 years
Can a licensee hold more than one license at a time?
Yes. For example a broker may hold two broker’s licenses
a licensed broker may also become an associate broker with another firm
However any associate broker or salesperson who wants additional licenses must submit a statement to the dept from each sponsoring broker indicating acknowledgement of each licensure
whenever there is a change of broker or address the licensee must complete and submit the appropriate form to the dept of state within 5 days
how long does licensee have to complete and submit the appropriate form to dept of state if there is a change of broker or address?
5 days
What must broker file if associate broker or salesperson wants to leave
a termination of association notice with dept of state and $10 fee
What does associate broker or salesperson have to file if they want to leave?
change of association notice with a $10 fee
If licensee does not renew their license every 2 years what will department require?
required to retake and pass written exam
what must licensee do for renweal
can renew online at dept of state website using registration number and password obtained by calling the dept of state
renewal application must be signed by the broker confirming the fact that the licensee is sponsored by the broker
complete 22.5 hrs of continuing education during 2 year period (>3 hrs of that must include fair housing and discrimination in sale or rental of real property or an interest in real property)
(same course wont count more than once within 2 year cycle of renewal)
What DO NOT count as continuing education
prep class for test offerings in mechanical office and business skills sales promotion meetings
reciprocity states for new york
Arkansas colorado connecticut georgia mass mississippi nebraska oklahoma penn west virginia
other real estate professions need different licenses
apartment vendor apartment-sharing agent appraiser mortgage banker mortgage broker home inspector
account broker must keep for clients money
broker must keep a fed insured trust or escrow account to be used only for deposit of client monies and must make deposits as soon as possible
what payment can a broker not accept when acting as a property manager?
cannot accept commission, rebate or profit on expenditures made for the client without the client’s full knowledge and consent
when can a broker not by or sell himself
when a property is listed by broker he must inform the listing owner about his interest in the property
when broker buys for a client he must disclose his ownership interest to all parties in the transaction
broker must make clear which party he is acting. broker may not accept compensation from more than one party except with full knowledge and consent of all parties
important regulations
exclusive listing: another broker cannot talk to an exclusive client of another broker about that business
broker cannot accept services of employee of another broker without that others broker knowledge
when salesperson terminates job that broker must turn over listing info salesperson obtained during association
exclusive listing cannot automatically continue on beyond fixed termination date
broker must keep and maintain a file of agency disclosures, listings, offers, closing statements and other transaction related documents for 3 years
salesperson only can get compensated by their broker
ads must be clear and not misleading and must give brokers name and phone number
what happens when a licensee receives his or her license and pocket card
broker keeps the license and may display it if he chooses. the licensee must carry the pocket card with him or her and show it on demand
is every licensed broker requires to maintain a definite place of business in NY
yes except for nonresident brokers who are licensed and maintain a definite place of business in another state
is anyone exempt from continuing education requirement
does not apply to any broker who was licensed and engaged full time in the real estate business for atleast 15 consecutive years prior to july 2008. however any broker who had less than 15 years of real estate business experience as of july 2008 will be required to complete the 22.5 hours of continuing education prior to his or her 2010 renweal and every renewal period after
What is a net listing
a net listing is a contract in which the broker receives as commission all monies over and above a minimum sales price agreed upon by the broker and the seller
personal assistant may perform office things not described in the license law and only licensees may perform for example:
hold open houses show real estate discuss property with clients clarify listings contracts or transaction negotiate commissions or splits solicit business on the phone
common violations of NYS license law
making substantial misrepresentation when applying for a license
doing fraud
untrustworthy or incompetence
misrepresentation during real estate transaction
failing to provide correct disclosures
accepting compensation from more than 1 party without both parties consent
being a salesperson accepting a fee or commission from someone other than employing broker
paying someone that is illegal
offering property for sale without owners knowledge
failing to give duplicate documents to all appropriate parties
drawing up legal documents, giving legal opinions or performing title examination
failing to remit funds belonging to others in appropriate amt of time
entering into a net listing contract
failing to maintaining disclosures and other transaction related records for the designated 3 year period of time
discriminating
broker guilty of misdemeanor if employs non licensed salesperson
broker not subject to penalty if his employees commit violations if broker has no knowledge of violation and does not keep money
appeals
an appeal of a decision can be made to the secretary of state or it can be made judicially through a proceeding called an article 78 proceeding (appeal to supreme court)
violation punishments
revoke/suspend license for period of time need to return license and pocket card within 5 days
impose a fine of up to $1000 payable to the dept of state
issue a reprimand upon a licensee’s conviction of a violation, up to x4 the commission
is a misdemeanor, may be tried in criminal cour. conviction can result in fine up to $1000 and a 1 year prison sentence
sections of a hearing
COMPLAINT-this section describes what the dept of state thinks the respondent may have done. these allegations are the reason the dept started an investigation that led to the hearing..
FINDINGS OF FACTS- this section outlines what the court believes happened
OPINION AND CONCLUSION OF LAW- this section explains what violations the respondent committed and has references to the specific law that the respondent violated
DETERMINATION- this cites the penalty that the court is imposing on the respondent
name 4 activities that an unlicensed assistant may perform
get status reports on the loan progress
pull together documents for closing
write ads for a broker’s approval
place approved classified advertising
what happens if the department decided to deny a license app
dept will notify the applicant in writing nd the applicant can ask for a hearing within 30 days of receiving the denial notice
what is an agent
a legal relationship between a licensee and one of the following:
a seller
a buyer
a landlord
a tenant
empowered by contract to rep the interests of a client also known as the principal. The agents reps the principal in dealings with 3rd parties who are known as customers
5 duties of an agent
coald care obedience accountability loyalty disclosure confidentiality can be found guilty for negligence in court
agent crap
bound to inform client all facts that might affect client’s interests including known and should have known facts
could be held liable for damages if he or she failed to disclose such info
dont discriminate
agent should provide more service to client than to customer
can give advice to client just not legal advice
active and passive fraud
ACTIVE FRAUD: intentional misrepresentation of a material fact for the purpose of gaining an unfair or dishonest advantage over another person
PASSIVE FRAUD:intentional nondisclosure of material facts. intentionally fails to disclose or actively attempts to hide the fact
violation of a duty owed to a client or customer could result in?
rescission of listing agreement
forfeiture of any compensation that may have already been earned
disciplinary action by the NY license law authorities including license suspension or revocation
suit for damages in court
brokerage
when client enters into an agreement with a brokerage firm, the broker is the agent and the licensee that are affiliated with the brokerage firm are the agents of the broker and the subagents of the brokers clients
agency relationship
created when someone delegates to another person, the agent, the right to act on his or her behalf in business transactions with the third parties, customers.
principles that govern agency relationship
both parties must consent to relationship
both parties must agree to form the relationship
fiduciary relationship
oral or written agreement or even implied
3 types of agency relationships
EXPRESS AGENCY:Express agency is created by either an oral or a written agreement between the principal and the agent. It indicates their express intent for this representational status.
IMPLIED AGENCY:If a real estate agent takes on responsibilities that are normally those of an agent, but hasn’t signed an agency agreement, she may still be considered an agent via implied agency. By the same token, if the customer asks the agent for advice or actions that are normally those in agency, then an implied agency could be created.
Agency Ratification and Estoppel (ostensible agency) Estoppel - a person is prevented from asserting facts that are inconsistent with a previous position made by act, conduct or silence.
when is commission earned/paid
earned when following occurs: broker produces a ready buyer buyer has signed an offer to purchase seller has accepted offer both parties receive signed copies of agreement
commission paid after transaction has been consummated
commission is paid to broker who took action to start the chain of events resulting in the sale
most transaction are done by cooperating broker (both brokers receive a share)
sherman antitrust act of 1890
prohibit the following:
PRICE FIXING
GROUP BOYCOTTS (prevents others from fair competition)
MARKET ALLOCATION (agreement won’t do business is certain area)
TIE IN ARRANGEMENTS (require a buyer to purchase additional or unrelated products or services when making a product purchase)
sherman antitrust act punishment
individual fined up $350k up to 3 years in prison
corporation fined up to $10 mill
CRIMINAL ANTITRUST PENALTY ENHANCEMENT AND REFORM ACT: increases ind. penalty to $1 mill and 10 yrs prison and corp. $100 mill fine
clayton antitrust act of 1914
private individuals allowed to sue antitrust violators. if successful can recover 3x damages plus court and attorney costs
Federal Trade Commission (FTC)
power to judge whether particular trade practices are unfair and enforce compliance with sherman antitrust act and some of clayton act
what actions demonstrate exercising care when representing a buyer
helping buyer locate appropriate housing
evaluating property values and property conditions
determining financing alternatives
presenting offers and counteroffers with the buyers interests in mind
what exception exists to the duty of obedience when working with a client
an agent is not bound by the duty of obedience if the principls direction are illegal
an agents fiduciary responsibilities to a client usually end when the transactions closes. this is not true of which duty
confidentiality
sellers agent must disclose what kinds of things to the seller
purchase offer
who prospective buyers are and if the agent has a relationship with them in any way
ability of the purchaser to complete the transaction
ability of the purchaser to offer a higher price
purchasers intention to resell the property for a profit
what actions are not considered to be part of brokers authority
signing contracts for the seller
initialing changes to offer
permitting early occupancy
what obligations do licensees owe to their customers
honesty and fair dealing
reasonable care and skill
proper disclosure
if transaction doesn’t complete under which circumstances would the broker still be entitles to a commission
if transaction does not complete due to the sellers default
placing a listing in the mls..
does not automatically create or require subagency. seller can accept or reject subagency when created. or cooperating broker may reject offer and work as the buyers broker or agent
if cooperating broker accepts subagency..
cooperating broker has same fiduciary responsibilities to seller as listing broker. working for best interest of seller.
Must still deal honestly and ethically with all their buyer customers. Bound to disclose any pertinent info to the customer
dual agency
when firm or licensee represents both the seller and the buyer or the landlord and the tenant in the same transaction
Have to balance best interests of both principals. Could be vastly different if not opposite
Usually arises unintentionally when the actions of a broker or an agent create an implied agency with a buyer. or the appearance of dual agency can arise in the case of a client becoming a customer.
Dual agency must be disclosed to both the buyer and the seller. Must agree in writing to dual agency relationship
undisclosed dual agency
if dual agency relationship is not disclosed, according to section 443 of NYS Real Property Law, and agreed to in writing.(disclosure form) Agent has breached fiduciary responsibilities and violated NYS license law
(consensual dual agency only)
2 types of dual agency
SINGLE LICENSEE DUAL AGENCY occurs when a real estate licensee tries to rep the seller as a client and the buyer as a client in the same transaction
BROKER DUAL AGENCY occurs when 2 agents in the brokers firm rep both the seller and the buyer in the same transaction. the 2 parties are repped by 2 difference agent but the broker is a dual agent
real property law section 175.7
broker may accept a referral fee or other compensation from a party that he or she does not represent as long as the broker discloses the fact to all parties and gets their consent
designated agency
a broker may designate one or more licensees to act exclusively as the agent of the seller or landlord, and designate one or more licensees to act exclusively as the agent of the buyer or tenant in the same transaction. this arrangement must also be disclosed to both parties and the broker must obtain the written consent of both the buyer and the seller
single agency
agent can only rep 1 party in a single transaction but never both. fiduciary duties to one principal.
Has to disclose to listing broker that reps the buyer if buyer agent
An agency relationship is terminated when one of the following occurs
performance
expiration of agreement
termination of relationship by mutual agreement of the parties
termination of the relationship by one party
some reasons why an agency relationship may terminate involuntary
death or incapacity or either party agent abandonment condemnation of the property destruction of the property through renunciation of the client breach of the contract bankruptcy revocation of agent license
according to ny license law what types of property are not included in the def of residential real property
vacant land no dwellings
how does a cooperating broker accept a unilateral blanket offer of subagency
if a unilateral offer of subagency is in place the cooperating broker accepts it by showing the property to a buyer or customer
what obligation does a subagent owe to the seller and what obligation does the subagent owe to the buyer
the subagent owes the seller the same fiduciary responsibilities he or she would owe to any client. the subagent owes customer level services to the buyer-honesty fair dealing and the proper disclosure of pertinent facts that affect the value of the property
hen the agency relationship has been terminated, the licensee is no longer considered the principal’s agent and does not owe any further duties to the principal, except for the following?
Accounting
Mary has a listing agreement with Broker Tom. Mary tells Tom she wants him to use broker agents to help sell her property. Tom gets Larry, Gail and Bill, who all work for other firms, to help find a buyer for Mary’s property. Who would be vicariously liable for Bill’s actions?
Broket Tom
What do we call an agent who represents a seller exclusively in a real estate transaction?
Single agent
Types of Agency
Universal Agent - the principal empowers the agent to perform any and all actions that may be legally delegated to an agency representative.
General Agent - the principal delegates to the agent ongoing tasks and duties within a particular business or enterprise.
Special Agent - the principal delegates authority to conduct a specific activity, after which the agency relationship terminates.
puffing
Exaggerated comments about a property’s benefits are called puffing. An agent can offer an opinion as long as he or she does so with no intention to be deceptive.
self-dealing
It is also an intentional misrepresentation if a broker engages in self-dealing - when a broker lists the property, decides to buy it for himself and then collects the agreed-upon commission.
