NY Real Estate Exam NY Real Estate Contracts & Closings 2 — Questions and Answers
Question 1: What is the role of a title company in a NY real estate closing?
- To conduct a title search, issue title insurance, and ensure clear title transfer from seller to buyer (Correct answer)
- To set the sale price
- To conduct home inspections
- To approve mortgage applications
Correct answer: To conduct a title search, issue title insurance, and ensure clear title transfer from seller to buyer
Title companies search public records for liens, judgments, and encumbrances, resolve title issues, issue title insurance protecting against future claims, and facilitate the closing process.
Question 2: What is a certificate of occupancy (CO) and why is it important in NY?
- A document from the building department certifying that a building complies with codes and may be legally occupied for its stated use (Correct answer)
- A deed proving ownership
- A mortgage approval letter
- A real estate license document
Correct answer: A document from the building department certifying that a building complies with codes and may be legally occupied for its stated use
In NY, especially NYC, the CO specifies the legal use and occupancy of a building. Changes in use, alterations, or new construction require an updated CO. Properties without proper COs can be difficult to finance or sell.
Question 3: What is a cooperative (co-op) apartment in New York?
- A form of ownership where buyers purchase shares in a corporation that owns the building, along with a proprietary lease for their unit (Correct answer)
- A regular condominium
- A rental apartment
- A government-subsidized housing unit
Correct answer: A form of ownership where buyers purchase shares in a corporation that owns the building, along with a proprietary lease for their unit
In a co-op, residents own shares of stock in the cooperative corporation rather than real property. The corporation owns the building, and shareholders have proprietary leases for their units. Board approval is required for sales.
Question 4: What is the difference between a co-op and a condo in New York?
- Co-op owners hold shares in a corporation; condo owners hold real property with individual deeds. Co-ops require board approval for sales; condos generally do not (Correct answer)
- They are identical forms of ownership
- Condos are always more expensive
- Co-ops are only in Manhattan
Correct answer: Co-op owners hold shares in a corporation; condo owners hold real property with individual deeds. Co-ops require board approval for sales; condos generally do not
Condos convey real property ownership with deeds, allowing easier financing and transfer. Co-ops involve corporate share ownership with proprietary leases, typically requiring board approval for sales and imposing stricter financial requirements.
Question 5: What is a flip tax in NYC co-ops?
- A fee charged by the co-op corporation when shares are transferred, typically paid by the seller as a percentage of the sale price (Correct answer)
- A tax on house-flipping profits
- A penalty for selling within one year
- A tax on renovation profits
Correct answer: A fee charged by the co-op corporation when shares are transferred, typically paid by the seller as a percentage of the sale price
Flip taxes (transfer fees) are common in NYC co-ops, typically ranging from 1-3% of the sale price. They generate revenue for the cooperative corporation and are usually the seller's responsibility per the building's proprietary lease.
Question 6: What are the NY attorney general disclosure requirements for new construction?
- The AG must approve an offering plan for new condominiums and co-ops with 10+ units before units can be marketed or sold (Correct answer)
- No AG approval is needed for new construction
- Only buildings over 50 stories need approval
- The AG reviews individual purchase contracts
Correct answer: The AG must approve an offering plan for new condominiums and co-ops with 10+ units before units can be marketed or sold
The NY Attorney General's Real Estate Finance Bureau reviews and approves offering plans for new condominiums, co-ops, and homeowner associations, ensuring adequate disclosure to purchasers about the project's terms, finances, and risks.
NY Real Estate Exam NY Real Estate Contracts & Closings 2
What is the role of a title company in a NY real estate closing?