Grounds include fraud, misrepresentation, untrustworthiness, and incompetency.
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
In New York, which agency is responsible for licensing real estate salespersons and brokers and for disciplining licensees for violations of Real Property Law Article 12-A?
Answer: A. Real estate licensing and discipline in New York are administered by the Department of State (DOS) through its Division of Licensing Services. Private trade associations like NYSAR do not issue or revoke licenses.
Question 3 of 5
A New York salesperson collects a commission directly from a buyer without the knowledge or authorization of her sponsoring broker. This conduct is BEST described as:
Answer: A. Under New York law a salesperson may accept compensation only from her sponsoring broker. Receiving compensation directly from a principal or other party is a license-law violation subject to discipline.
Question 4 of 5
The deliberate concealment of a material defect or the making of a substantial misrepresentation to induce a sale in New York is most accurately characterized as:
Answer: C. Substantial misrepresentation and fraudulent concealment fall under the broad 'untrustworthiness or incompetency' standard the Department of State uses to discipline licensees, in addition to any civil liability.
Question 5 of 5
Which of the following actions by a New York licensee is MOST likely to constitute prohibited discriminatory conduct subject to discipline?
Answer: B. Steering on the basis of a protected class is a fair-housing violation and constitutes prohibited, disciplinable conduct. The other actions are ordinary, lawful professional practices.
Keep the streak going with more questions like these, each with a full rationale.
Must-know rules
- The DOS may deny, suspend, or revoke a license for violations of RPL Article 12-A.
- Grounds include fraud, misrepresentation, untrustworthiness, and incompetency.
- The DOS may impose a fine in lieu of or in addition to suspension/revocation.
- Disciplinary action typically follows notice and an administrative hearing before the DOS.
- Mishandling of escrow/trust money and unauthorized practice are common bases for discipline.
- Unlicensed activity and improper sharing of commissions with unlicensed persons are prohibited.
- Aggrieved parties may pursue civil remedies and report violations to the DOS for enforcement.
New York License Discipline, Penalties & Recovery Fund: FAQs
Is New York License Discipline, Penalties & Recovery Fund 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.
