New York Real Estate Law and Regulations
Licensing Under Article 12-A
The Department of State licenses salespersons and brokers under Article 12-A of the Real Property Law. A salesperson must work under a licensed broker and may never accept compensation directly from a client; a broker may operate independently, and an associate broker works under another broker. Pre-licensing coursework, the state exam, and biennial renewal apply, and licensees complete continuing education every two years that includes mandated fair housing, agency, and ethics hours. Practicing without a license, or paying an unlicensed person for brokerage services, is prohibited.
Disclosure and Conduct Rules
At the first substantive contact with a consumer, an agent must present the agency disclosure form (RPL §443) and obtain a signed acknowledgment. Sellers of one-to-four-family homes must deliver the Property Condition Disclosure Statement; since March 2022 the former $500 credit in lieu of disclosure is no longer available. Advertising must identify the brokerage, must not be false or misleading, and must never suggest a property is available only to a protected group. Escrow is a guaranteed test topic: a broker holding a deposit must place it in a designated special or escrow account, may not commingle personal or operating funds, may not convert funds, and must keep proper records. Rule of thumb: commissions flow through the broker, disclosures flow to the consumer first, and client money never sits in the operating account. Worked example: a salesperson accepts a $5,000 deposit check made out to her personally. That is improper - the check belongs to her broker and must be handled through the broker's escrow account.