Real Estate License Law: Scope, Prohibited Acts, and Enforcement
New York real estate license law lives primarily in Article 12-A of the Real Property Law, with the Department of State (DOS) exercising disciplinary authority. A candidate must know three layers: what activity requires a license, who may be licensed, and what conduct triggers discipline.
Licensable activity. With limited statutory exceptions, you may not, for another and for compensation, sell, buy, exchange, rent, or lease real property, or negotiate or attempt any of these, without a license. The exceptions are the tested material: attorneys acting in the practice of law, a party selling their own property, and certain officers/employees acting for a corporate owner are classic examples. Questions often present a person performing a single act for a fee; the trap is believing a "one-time" or "no commission" arrangement escapes licensure - negotiating for another for compensation is the trigger, not the frequency.
Prohibited conduct. Article 12-A lists grounds for discipline: fraudulent misrepresentation, demonstrated untrustworthiness or incompetence, commingling or conversion of escrow funds, paying commissions to unlicensed persons, and undisclosed dual agency. "Untrustworthiness" is deliberately broad - exam questions use it to catch conduct that is unethical but not technically fraudulent.
Enforcement mechanics. DOS may investigate complaints, hold hearings, suspend or revoke licenses, impose fines, and require restitution. A licensee must respond to DOS inquiries; failure to cooperate is itself a violation. Keep straight the difference between criminal penalties (courts) and license discipline (administrative).
Rule of thumb: ask two questions - "Was the person acting for another?" and "Was there compensation (or the promise of it)?" If both are yes, a license is required unless a specific statutory exception applies.