1. A New York broker receives a $12,000 deposit by certified check. The contract of sale contains a clause stating the deposit will be 'held in escrow by the listing broker.' The buyer's attorney subsequently sends a letter demanding the broker hold the funds in an attorney escrow account instead. Under New York DOS regulations, the broker should:
- A. Immediately transfer the funds to the buyer's attorney's escrow account upon receipt of the written demand
- B. Transfer the funds only if the seller's attorney also consents in writing to the change of escrow holder
- C. Refuse the transfer and continue holding the funds in the broker's escrow account per the contract terms, unless all parties agree in writing to a different arrangement ✓
- D. Contact the DOS for a ruling on which escrow holder is proper before taking any action
The escrow arrangement is governed by the contract of sale. If the contract designates the listing broker as escrow holder, the broker cannot unilaterally transfer funds to another party — including an attorney — based solely on a unilateral demand from the buyer's attorney. Any change to the escrow holder requires written consent from all parties to the transaction. The broker should continue holding the funds per the contract until such mutual consent is obtained.
2. Under New York law, once a residential real estate transaction has closed and the agency relationship has ended, which of the following obligations does a former seller's agent CONTINUE to owe to the seller?
- A. The duty of obedience, requiring the agent to follow any post-closing instructions from the former seller
- B. The duty of confidentiality, preventing the agent from disclosing information the seller shared in confidence during the agency ✓
- C. The duty of loyalty, requiring the agent to prioritize the seller's interests over those of future clients
- D. The duty of active disclosure, requiring the agent to inform the former seller of any market changes affecting the property's value
Under New York agency law, the duty of confidentiality survives the closing and termination of the agency relationship. A former seller's agent may not disclose information that was communicated in confidence by the seller — such as the seller's minimum acceptable price or personal circumstances — even after the transaction is complete. Other duties such as obedience, active loyalty, and ongoing disclosure end when the agency terminates.
3. Under New York Banking Law Section 6-l governing high-cost home loans, which of the following practices by a lender is expressly prohibited with respect to a high-cost home loan?
- A. Requiring the borrower to maintain a homeowner's insurance policy with a minimum coverage equal to the replacement cost of the dwelling
- B. Financing any credit life, credit disability, credit unemployment, or credit property insurance as part of the loan principal ✓
- C. Including a due-on-sale clause that accelerates the loan upon transfer of the property to a third party
- D. Requiring an independent property appraisal by a state-certified appraiser before underwriting the loan
New York Banking Law Section 6-l expressly prohibits, in connection with a high-cost home loan, the financing of single-premium credit life, credit disability, credit unemployment, or credit property insurance into the loan principal. This practice artificially inflates the loan amount, increases the cost of credit, and is a hallmark of predatory lending. The other options listed — insurance maintenance requirements, due-on-sale clauses, and independent appraisals — are standard, permissible lending practices.
4. Under the New York Property Condition Disclosure Act, which of the following sellers is expressly exempt from the requirement to provide a Property Condition Disclosure Statement to a buyer?
- A. A seller conveying a one-family home who has never lived in the property
- B. A court-appointed receiver selling a one-family home as part of a foreclosure action ✓
- C. A seller of a two-family home who lives in one unit
- D. A seller of a three-family home who has owned it for less than one year
Under New York Real Property Law §463(2), certain transfers are exempt from the Property Condition Disclosure Act, including transfers by court-ordered sale, transfers by foreclosure, and transfers by fiduciaries such as executors, administrators, and receivers. A court-appointed receiver selling property pursuant to a foreclosure action falls within the statutory exemption. A seller who has never lived in a one-family home, or sellers of two- and three-family homes that are owner-occupied, generally must provide the disclosure statement.
5. Under New York Real Property Law, if a buyer of a one-to-four family home never receives the Property Condition Disclosure Statement from the seller—not even at closing—and the seller does not provide the $500 credit, what is the legal consequence for the seller?
- A. The transaction is void and title does not transfer until the PCDS is delivered.
- B. The seller is subject to a $500 civil penalty payable to the state.
- C. The buyer is entitled to a $500 credit against the purchase price, and the failure to deliver the PCDS may constitute grounds for the buyer to seek rescission or damages for any undisclosed defects. ✓
- D. The seller's real estate license is automatically suspended by the DOS pending an investigation.
Under the former version of NY RPL § 465, if a seller failed to deliver the Property Condition Disclosure Statement before the buyer signed the contract, the buyer was entitled to a $500 credit against the purchase price at closing; the transfer was not void and title was not affected. However, non-delivery of the PCDS by itself did not automatically create rescission or damages remedies for undisclosed defects; those would depend on separate proof such as fraud, active concealment, or a willful statutory violation causing actual damages. Under current New York law, the $500 credit option has been eliminated, so sellers generally must provide the disclosure statement, and remedies turn on the statute and any independent claims.