“New York Ethical Business Practices and Legal Matters” Questions only (no answers)
Answers will be revealed with proper subscription

1. Someone forms a scheme with another with the intention of defrauding a third party. This is known as
a. collusion.
b. commingling.
c. concealment.
d. conversion.

2. A licensee who drafts an addendum to a complicated sales contract could be accused of the unauthorized practice of law.
a. True
b. False

3. What is Concealment?
a. The deliberate exclusion of a particular business or group from the benefits of competition and inclusion.
b. A concerted refusal by two or more people to deal with a particular person or company.
c. Occurs when a licensee fails to disclose information that is material to a decision to a party to whom the licensee has such a duty.
d. Defamation of another’s character or reputation through that which is spoken or heard.

4. A buyer’s agent has actual knowledge of structural damage to the floorboards of a home due to termite infestation. He informs his client that there are no termites in the home. The buyer signs a contract to purchase the property. Could the licensee be susceptible to claims of fraud?
a. No, because he is protected by the “as is” clause in the purchase agreement.
b. No, because he said there were no termites, which could be true at present.
c. Yes, because he knowingly made a potentially untrue statement that could be seen as an inducement to buy.
d. Yes, unless there are visible signs of termites, in which case the buyer should have recognized it.

5. A listing agent knows that the state wants to build a freeway ramp through the neighborhood next year, and the home will be leveled. He decides not to disclose this, assuming the buyer would be reimbursed market value when the state appropriates the house. Could the listing agent be susceptible to claims of fraud?
a. No, because the buyer should have done her due diligence.
b. No, because he has no evidence that this will happen for sure.
c. No, because this is not related to the condition of the property.
d. Yes, because he knowingly withheld material information.

6. Jay is being transferred. Using the ABC Realty website to look at photos of listed houses, he makes an offer on one. The seller accepts and settlement is handled with a long-distance conference call. When Jay arrives in town, nothing looks familiar. ABC determines that its website was linking to photos of another house. This could best be described as an example of
a. actual fraud.
b. bait and switch.
c. culpable negligence.
d. puffing.

7. Which of these situations would LEAST LIKELY be considered an example of fraud?
a. Licensee Bonnie knew that buyer Ben used doctored W-2s to apply for a mortgage loan.
b. Licensee Brent did not disclose that his seller clients were getting divorced.
c. Licensee Lori did not tell buyer Bob about a lien on the property she had listed.
d. Licensee Sally advertised a lower list price to get interested buyers through the door.

8. When showing a listing, a licensee is asked about the condition of the basement. Without having seen the basement, the licensee says that, to the best of her knowledge, the basement is free of dampness. In fact, the basement leaks steadily whenever it rains. This is most likely an example of
a. actual fraud.
b. bait and switch.
c. negligence.
d. no error since she had never been in the basement.

9. Licensee Sandy learns that various family members are fighting over the property that she has been asked to list. She is told that a distant cousin has filed a lawsuit to gain title, but the occupant of the house assures her that the deed is in his name. If Sandy markets this property for sale, she could be accused of
a. conversion.
b. false advertising.
c. fraud.
d. inadvertent negligence.

10. __________ occurs when a licensee mixes client funds with brokerage funds.
a. Concealment
b. Failure to account
c. False or misleading advertising
d. Commingling

11. Of these, which is LEAST LIKELY to be considered an example of puffing?
a. “Best view in the city”
b. “Exquisite décor that will make your friends jealous”
c. “Feel like royalty in this palatial beauty”
d. “Priced to sell; likely to go quickly in this popular neighborhood”

12. Broker Lucy of Lucky Real Estate meets her friend Ethel, broker of Uptown Realty, for lunch. Lucy mentions that Find-em-Cheap Realty just opened a branch office in her neighborhood and she is not too happy about it. “I bet they’d drop their so-called discount program if we told them we won’t show any of their listings,” Lucy said. This is an example of
a. boycotting.
b. price-fixing.
c. territory allocation.
d. tying in.

13. Which of these phrases would LEAST LIKELY be evidence of a conspiracy to commit an antitrust violation?
a. “If you list with us, just be aware that we will use only YES Title for the closing.”
b. “Let’s do something about her discount fee policy.”
c. “We would like you to consider using our in-house mortgage broker to get your loan.”
d. “You can have the listings north of Broad Street, and I’ll take the ones south of Broad.”

14. Which was the first federal law to prohibit business practices considered to be harmful to consumers?
a. Clayton Antitrust Act
b. Federal Trade Commission Act
c. Sherman Antitrust Act
d. Unfair or Deceptive Acts or Practices Law

15. Commission rates are negotiated between client and broker.
a. True
b. False

16. Antitrust laws are in place to ensure that
a. all monies in financial transactions are accounted for.
b. competition in the marketplace is fair and unrestrained.
c. licensees have a minimum level of education and training to protect the public.
d. no one is discriminated against because of race, sex, or national origin.

17. Antitrust laws are in place to ensure that licensees have a minimum level of education and training to protect the public.
a. True
b. False

18. Jack and Jill, licensees from two different brokerage firms, discover that they are both trying to list the same house. The argument that followed stemmed from Jack scolding Jill for offering to take the listing at 6%. Jack’s employing broker’s policies are to take only 7% listings. What type of violation might this situation be considered, if any?
a. agency law
b. antitrust law
c. license law
d. no violation

19. Spencer is interested in listing his house with licensee Terry because she is very successful. Terry knows that to show well, the walls need to be painted and the carpet needs to be replaced. She tells Spencer she will take the listing as long as he uses Ultimate Remodeling to do the work. Did Terry do anything wrong?
a. No, if Spencer is okay about using Ultimate, Terry did not do anything wrong.
b. No, she did not do anything wrong as long as she doesn’t accept a fee from Ultimate.
c. No, she does not have to accept the listing if she does not want to.
d. Yes, Terry could be guilty of promoting an illegal tie-in arrangement.

20. A licensee who tells homeowners that property values are declining because the ethnic or racial makeup of the neighborhood is changing could be found guilty of
a. blockbusting.
b. price-fixing.
c. steering.
d. stigmatizing.

21. If you have a client who questions your firm’s commission fee, you should tell him that your firm charges the standard commission rate.
a. True
b. False

22. Criminal penalties under federal laws for antitrust violations by individuals can include the following EXCEPT
a. conviction of a felony.
b. fines up to $350,000.
c. fines up to $10 million.
d. prison for up to 3 years.

23. Steve is one of three brokers accused of boycotting. What did Steve and his fellow co-conspirators do?
a. They agreed to charge the same commission for specific services.
b. They decided to avoid showing clients homes listed by Easy Realty.
c. They divided up their town into four quadrants so that each could focus on their specific area.
d. They included a clause in their listing contracts requiring clients to use Thomas Title Co.

24. Individuals may NOT file a lawsuit for antitrust violations against a business; only administrative agencies or the government may do that.
a. True
b. False

25. The National Do Not Call Registry regulations require companies to update their internal do not call list _______________.
a. Every 30 days.
b. Every three months.
c. Once a year.
d. Never.

26. Which federal law requires companies to take measures to secure and dispose of sensitive personal information of consumers?
a. CAN-SPAM Act
b. Do Not Call Act
c. Fair and Accurate Credit Transaction Act
d. Gramm-Leach-Bliley Act

27. Any solicitation done via e-mail must include instructions for
a. contacting the Federal Trade Commission with complaints about the licensee.
b. filing a complaint for a fair housing violation.
c. opting out of receiving future e-mails.
d. steps necessary to collect damages for spam.

28. Someone who calls a phone number that is on the National Do Not Call Registry to solicit business can be fined up to $40,000 per violation.
a. True
b. False

29. Consumer Connie completes an application for a mortgage loan. The application includes her income, assets, and debts. This would be considered nonpublic personal information.
a. True
b. False

30. ABC Real Estate Company bought an e-mail list from a vendor and sent out 5,000 e-mails soliciting business. To comply with provisions of the CAN-SPAM Act, ABC must process any opt-out request it receives for at least ________ after the e-mails are sent.
a. 10 business days
b. 30 days
c. 45 days
d. 60 days

31. How often must a consumer register with the Do Not Call to keep a phone number on the National Do Not Call Registry?
a. just once
b. every three months
c. every year
d. every three years

32. A broker has an established business relationship with a former client for up to _______ after a transaction closes. This allows the broker to solicit business over the phone even if that consumer is on the National Do Not Call Registry.
a. 90 days
b. 6 months
c. 1 year
d. 18 months

33. Who manages the National Do Not Call Registry?
a. Department of Housing and Urban Development
b. Federal Housing Agency
c. Federal Reserve Board
d. Federal Trade Commission

34. You can contact a former client for up to _____________ after a transaction closes even if that client is on the National Do Not Call Registry.
a. 9 months
b. 12 months
c. 18 months
d. 24 months

35. The National Do Not Call Registry is managed by what federal entity?
a. Department of Housing and Urban Development
b. Federal Housing Agency
c. Federal Reserve Board
d. Federal Trade Commission

36. The National Do Not Call Registry regulations require companies to update their internal customer lists every
a. 30 days.
b. 45 days.
c. 3 months.
d. 6 months.

37. The Controlling Access to Non-Solicited Phonecalls And Mail Act is intended to monitor and curb the use of
a. disclosure of consumer contact information.
b. established business relationships.
c. spam communications.
d. tying arrangements.

38. When showing a listing, a sales agent is asked about the condition of the basement. Without having seen the basement, the agent states that, to the best of her knowledge, the basement is free of dampness. In fact, the basement leaks steadily whenever it rains. The agent most likely has committed
a. fraud.
b. intentional misrepresentation.
c. misrepresentation.
d. no error; this is protecting the homeowner’s interest.

39. Broker Zane could be liable for the actions of affiliated licensees. This liability is referred to as
a. actual liability.
b. misplaced blame.
c. scapegoating.
d. vicarious liability.

40. —————- is another term for constructive fraud.
a. actual misrepresentation
b. breach of tort
c. intentional fraud
d. negligent misrepresentation

41. A broker deposits a buyer’s $500 earnest money check into the broker’s personal checking account. The broker is guilty of
a. commingling.
b. commixing.
c. condemnation.
d. conversion.

42. Real estate licensees may be treated as employees, not independent contractors, for the purpose of
a. avoiding Social Security taxes.
b. filing income taxes.
c. obtaining personal errors & omissions insurance.
d. suing an employer for harassment.

43. ___________________ is reserved for the exclusive regulatory authority of the secretary of state.
a. A broker’s personal purchase of property
b. The handling of funds belonging to a brokerage
c. Managing property for a client
d. Promulgating rules or regulations affecting brokers and salespersons

44. Which statement is TRUE regarding vicarious liability?
a. It means that affiliated licensees are solely responsible for their own actions.
b. It is a situation involving misplaced blame.
c. It is another term for scapegoating.
d. It occurs when someone is held responsible for the actions of another.

45. The secretary of state’s office is investigating ABC Brokerage for possible violations of Article 12-A. The following affiliates of the brokerage each received a subpoena related to the investigation. Which affiliate of the brokerage is NOT guilty of a misdemeanor?
a. Andy failed to obey the subpoena because she was too busy with her current transaction.
b. Barry provided subpoenaed transaction records against the broker’s wishes.
c. Maurice refused to answer a legal question related to the investigation.
d. Robin refused to be examined as part of the inquiry without reasonable cause.

46. Two times, Timothy, who does not have a real estate license, has been found to have violated license law by performing acts only permitted by a real estate licensee. For these two violations, he could receive a fine not to exceed ________ for the second violation.
a. $200
b. $250
c. $500
d. $750

47. _________________ has occurred when a broker deposits earnest checks from several transactions into a brokerage business account.
a. Commingling
b. Combining
c. Compounding
d. Conversion

48. Conversion is converting funds to your own personal use. It is considered.
a. appropriate in some cases.
b. acceptable, but it is not a best practice.
c. stealing because the funds belong to someone else.
d. unethical but not illegal.

49. Property manager Miguel deposited rent money into his property management company’s operating account. This act is referred to as
a. commingling.
b. compensation.
c. consideration.
d. conversion.

50. _________is when a broker could be liable for the actions of affiliated licensees.
a. Actual liability
b. Second-hand liability
c. Vicarious liability
d. Virtual liability

51. The secretary of state is authorized to investigate and prosecute violations of New York license law by persons not licensed and may impose all EXCEPT which of the following fines?
a. a fine not to exceed $150 for the first violation
b. a fine not to exceed $500 for the second violation
c. a fine not to exceed $1,000 for the third
d. a fine not to exceed $1,500 for four or more violations

52. Broker Debbi has committed negligent misrepresentation. Another term for this is
a. actual misrepresentation.
b. breach of tort.
c. intentional fraud.
d. constructive fraud.

53. Jasmine does not have a real estate license, but she performed acts only a licensee is permitted to perform. Acting on behalf of the ________________, the attorney general may commence an action or proceeding in a court to obtain a judgment against Jasmine.
a. NYS Board of Real Estate
b. deputy secretary of state
c. Division of Licensing
d. secretary of state

54. The secretary of state has regulatory authority over matters pertaining to
a. a broker’s personal purchase of property.
b. the handling of funds belonging to the brokerage.
c. managing property for a client.
d. promulgating rules or regulations affecting brokers and salespersons.

55. Abner does not have a real estate license, but he has been performing acts that require a license. For his four violations, he could receive a fine not to exceed ________ for each violation.
a. $500
b. $750
c. $1,000
d. $1,500

56. Which is TRUE about the provisions of Article 12-A?
a. Anyone who commits an act prohibited by the article is guilty of a felony.
b. Criminal actions for violations of the article are prosecuted by the attorney general or his deputy.
c. During an investigation of a violation of the article, applicants and licensees must provide information as requested to the Real Estate Board.
d. The Real Estate Board has the power to enforce the provisions of the article and to investigate any violation.

57. Clayton, an offender of a provision of Article 12-A, received compensation as the result of the violation. As a result, the court could determine he is liable for up to _____ times the sum he received.
a. 2
b. 4
c. 6
d. 8

58. Broker Bill deposited a buyer’s $600 earnest money check into his personal checking account. Bill broker is guilty of
a. commingling.
b. condemnation.
c. conversion.
d. pooling.

59. If an offender of any provision of Article 12-A received any commission, compensation, or profit as a result of the violation, he is liable to a penalty of not less than the amount received by him and not more than ____ times the sum he received, as determined by the court.
a. 2
b. 3
c. 4
d. 5

60. _______________ occurs when a property manager deposits security deposit money into his property management company’s operating account.
a. Commingling
b. Conversion
c. Intermingling
d. Merging

61. Broker Jack has deposited earnest checks from several transactions into the brokerage business account. This is an example of
a. commingling.
b. compensation.
c. consideration.
d. conversion.

62. Clay runs a brokerage with 15 salespersons, three licensed assistants, and two unlicensed office workers. Because he is an employer, he must adopt
a. the model sexual harassment prevention policy.
b. a sexual harassment prevention policy.
c. the US Department of Labor sexual harassment prevention policy.
d. the US Department of State Office of Civil Rights sexual harassment policy

63. Selma, an elderly widow, was selling her house, which sits a lovely two-acre lot on the outskirts of town. Prospective buyer, Bud, was very interested in the house. As an environmental worker, Bud was very familiar with sewer systems and had decided he wanted to buy a house that was connected to a city sewer system. Selma had mistakenly told her listing agent, Lisa, that the house was on the city sewer system, although the property had a septic system instead. Lisa indicated on the listing that the house was on the city’s sewer system and she told this to Bud as well. Bud found out after he purchased the house that it had a septic system. Who has the primary responsibility for verifying the status of the sewer system?
a. Buyer Bud
b. Listing agent Lisa
c. Lisa, Bud, and Selma all share the responsibility equally
d. Seller Selma

64. Under Article 12-A, the Real Estate Board has the power to
a. investigate issues related to required transaction records.
b. investigate property management complaints.
c. promulgate rules or regulations affecting brokers and salespersons.
d. prosecute a licensee for commingling money of a principal.

65. The secretary of state has exclusive regulatory authority over which matters?
a. broker’s supervision of affiliated salespersons
b. broker’s purchase of property listed with him, breach of contract of sale or lease
c. payment of escrow money belonging to a principal
d. property management of broker-owned properties

66. Susanna is a broker representing a seller. She was showing a listing and the agent for the prospective buyer asked about the condition of the basement. Without having seen the basement, Susanna states that, to the best of her knowledge, the basement is free of dampness. However, the basement leaks when it rains. Susanna most likely has committed
a. fraud.
b. intentional misrepresentation.
c. misrepresentation.
d. no error; this is protecting the homeowner’s interest.

67. The attorney general, acting on behalf of the _______________, may commence an action or proceeding in a court to obtain a judgment against an unlicensed person in an amount equal to that imposed as a fine?
a. secretary of state
b. deputy secretary of state
c. Division of Licensing
d. NYS Board of Real Estate

68. A material fact is
a. likely to influence a decision.
b. considered a client’s confidential information.
c. one that is open and obvious.
d. is not the responsibility of an agent to disclose.

69. _________________ is converting funds to your own personal use. It is considered stealing because the funds belong to someone else.
a. Commingling
b. Combining
c. Conversion
d. Interfusing

70. In New York State, every employer is required to adopt
a. the model sexual harassment prevention policy.
b. a sexual harassment prevention policy.
c. the US Department of Labor sexual harassment prevention policy.
d. the US Department of State Office of Civil Rights sexual harassment policy

71. Which is NOT one of the Sections in the REALTOR® Code of Ethics?
a. Duties to Clients and Consumers
b. Duties to Other REALTORS®
c. Duties to the Public
d. Duties to Real Estate Licensees

72. Constructive fraud is also known as
a) concealment.
b) false representation.
c) negligent misrepresentation.
d) puffing.

73. At what point can agent Alfie include the designation of “REALTOR®” on his business card?
a) as soon as he affiliates with an employing broker
b) as soon as he closes his first successful real estate transaction
c) as soon as he joins the National Association of REALTORS®
d) as soon as he passes the state real estate license examination

74. Which of the following is obligated to follow the National Association of REALTORS® code of Ethics?
a) Licensees who are not members of the National Association of Realtors
b) Both members and nonmembers must follow the NAR Code of Ethics.
c) Only members of the National Association of REALTORS®
d) Nobody is obligated to follow the NAR Code of Ethics

75. Negligent misrepresentation is also known as
a) concealment.
b) false representation.
c) constructive fraud.
d) puffing.

76. After the weekly business meeting of River Realty, two licensees decide it makes sense to be more focused in their prospecting. Licensee Beth decides to stay on the north side of town, and Licensee Ben decides to stay on the south side of town. What type of antitrust violation might this situation be considered, if any?
a) boycotting
b) tie-in arrangement
c) market allocation
d) no violation

77. Gary is one of three brokers recently convicted of illegal boycotting. What did Gary and his fellow co-conspirators do?
a) They agreed to charge the same commission for specific services.
b) They divided up their town into four quadrants so that each could focus on their specific area.
c) They decided to avoid showing clients homes listed by Discount Dan.
d) They included a clause in their listing contracts requiring clients to use AAA Co. as their home inspector.

78. At a local convention of real estate licensees, broker Quinn mentioned that he was going to have to raise his commission rates or close his office. Quinn could be found guilty of
a) allocation.
b) price-fixing.
c) securities violations.
d) nothing; he did not violate any rules or laws.

79. A group boycott is illegal only if its intention is to drive a competitor out of business.
a) True
b) False

80. A _____________ exists when a person or group has exclusive control over a product or service within a given region.
a) group boycott
b) market allocation
c) monopoly
d) tie-in agreement

81. The National Do Not Call Registry regulations require companies to update their national customer lists every
a) 45 days.
b) 60 days.
c) 3 months.
d) 6 months.

82. Which statement about the CAN-SPAM Act is FALSE?
a. It applies only to business-to-consumer communication.
b. It applies to both computers and wireless devices.
c. It gives recipients the right to opt out at any time.
d. It includes fines of up to $16,000 per violation.

83. Someone who violates Do Not Call provisions is subject to a fine of up to _______________ per violation.
a) $16,000
b) $20,000
c) $30,000
d) $40,000

84. The National Do Not Call Registry limits phone calls by political organizations and charities as well as commerce-related businesses.
a) True
b) False

85. What is Spam?
a) The use of any electronic messaging system to send unsolicited bulk messages indiscriminately.
b) A consumer’s right to terminate future electronic communication from business and commercial entities.
c) A consumer’s personal financial information that would not be easily obtainable by the general public, such as credit reports, bank accounts, and transactions.
d) Solicited emails received from a recognized source.

86. Which is FALSE about the provisions of Article 12-A?
a) Anyone who commits an act prohibited by the article is guilty of a misdemeanor.
b) Criminal actions for violations of the article are prosecuted by the attorney general or his deputy.
c) During an investigation of a violation of the article, applicants and licensees must provide information as requested to the attorney general.
d) The Real Estate Board has the power to enforce the provisions of the article and to investigate any violation.

87. A licensed salesperson’s license runs the property management company he owns. His services include collecting rents and preparing leases on behalf of property owners. He receives his commissions directly from the property owners. Is this licensee in violation of license law?
a) No. Only a salesperson’s license is needed to provide property management services and if the licensee owns the company, he is permitted to manage it.
b) Not necessarily. If the salesperson is working toward getting his broker’s license, he may provide property management services to his property owner clients.
c) Not necessarily. If the salesperson has completed his coursework and passed his exam to become a broker, he may provide property management services to his owner clients while his broker’s license application is pending.
d) Yes. Someone must have a broker’s license to run a company providing property management services for clients and licensees may not receive commissions other than from their brokers.

88. The ___________ may commence an action or proceeding in a court to obtain a judgment against an unlicensed person in an amount equal to that imposed as a fine when acting on behalf of the secretary of state?
a) attorney general
b) deputy secretary of state
c) Division of Licensing
d) NYS Board of Real Estate

89. Matters pertaining to which of the following are reserved for the exclusive regulatory authority of the secretary of state?
a. broker’s personal purchase of property
b. handling of funds belonging to the brokerage
c. managing property for a client
d. promulgating rules or regulations affecting brokers and salespersons

90. A buyer was looking for a new house. Because of his job as an environmental worker, he is very familiar with sewer systems. He found a house that interested him and let the listing agent know he only wanted to buy a house that had a connection to a city sewer system. Based on information from the seller, the listing indicated the house was on the city system, and the listing agent told the buyer that. However, the property had a septic system instead, which Bud discovered only after the closing. Who has the primary responsibility for verifying the status of the sewer system?
a) buyer
b) listing broker
c) listing broker, buyer, and seller share the responsibility equally
d) seller

91. Every employer in the State of New York is required to implement
a) the model sexual harassment prevention policy.
b) a sexual harassment prevention policy.
c) the US Department of Labor sexual harassment prevention policy.
d) the US Department of State Office of Civil Rights sexual harassment policy

92. Carly committed an act prohibited by Article 12-A. Which is TRUE about this situation?
a) She is guilty of a misdemeanor.
b) Her criminal actions will be prosecuted by the Real Estate Board.
c) During the investigation of her violation, Carly must provide information as requested to the attorney general.
d) The deputy attorney general has the power to investigate the violation.

93. Should Broker Michael disclose material facts to buyer Annette?
a) Yes, because the information is likely to influence her decision.
b) No, because material facts are considered a client’s confidential information.
c) He is permitted to, but it is not required since material facts are facts that are open and obvious.
d) This type of information is not the responsibility of an agent to disclose.

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