Before you read
Test yourself first: 5 questions
Question 1 of 5
Which of the following actions by a New York licensee would most likely be grounds for disciplinary action by the Department of State?
Answer: C. Commingling client trust funds with the broker's own funds violates New York's escrow handling rules and is grounds for discipline; the other actions are proper practice.
Question 2 of 5
A New York salesperson receives an earnest money deposit on behalf of the brokerage. What is the proper handling of those funds?
Answer: B. Client funds such as deposits must be held in the broker's escrow or trust account and never commingled with the broker's personal or business funds.
Question 3 of 5
When a New York salesperson receives an earnest-money check from a buyer, what is the salesperson's proper handling of that check?
Answer: B. A salesperson works under and on behalf of the sponsoring broker. Any deposit a salesperson receives must be turned over promptly to the broker, who is responsible for placing it in the brokerage escrow account.
Question 4 of 5
In New York, money a broker receives that belongs to another party (such as an earnest-money deposit) must be held in what type of account?
Answer: B. New York law requires a broker to deposit money belonging to others into a separate special escrow (trust) account, kept apart from the broker's own personal and business funds. Holding such money in a general operating account would be commingling.
Question 5 of 5
A New York broker takes an earnest-money deposit being held in escrow and uses it to pay the brokerage's office rent. This act is properly called:
Answer: B. Conversion is using funds entrusted to the broker for the broker's own purposes. It is more serious than commingling (merely mixing funds) and can result in license revocation and criminal liability.
Keep the streak going with more questions like these, each with a full rationale.
What you need to know
New York licenses are issued for a two-year term and must be renewed before expiration, with continuing education required as a condition of renewal. Because New York is not a community property state, marital property is generally handled under equitable distribution rather than community property rules.
Handling Escrow Funds and License Renewal in New York: FAQs
Is Handling Escrow Funds and License Renewal in New York on the real estate exam?
Yes. State License Law is a scored domain on the New York real estate licensing exam, and this topic appears in the state license-law portion.
Is this cheat sheet free?
Yes — every page on Cinna RE's resource library is free to read, print and share. The app adds practice questions, mock exams and a readiness score.
Does New York test this differently?
New York applies its own license law on top of the national portion. This page covers the New York rules specifically, which is what the state section of your exam tests.
