Glossary: Liens, Taxes and Government Powers +15New York · Real Estate · English

A Lien is a legal claim on specific property until a debt is satisfied. An Encumbrance is any right or interest interfering with use or transfer. An Involuntary Lien is imposed without owner consent (e.g., taxes, assessments). A Mechanic's Lien secures the price of labor and materials furnished for improvements. A Vendee's Lien secures a purchaser's deposit.

• ✓A lien attaches to property until the debt is satisfied
• ✓An involuntary lien (like taxes) is imposed without owner consent
• ✓A mechanic's lien secures payment for labor and materials on improvements

Assessed Valuation is the value placed on property as a basis for taxation, determined by the Assessor. Ad Valorem means according to valuation. Assessment is a charge to cover a proportionate cost of an improvement (street/sewer). A Special Assessment funds a public improvement benefiting the assessed property. A Tax Sale sells property after nonpayment of taxes. A Transfer Tax is charged on estate property.

• ✓Assessed valuation is the basis for property taxation, set by the assessor
• ✓Ad valorem taxes are levied according to valuation
• ✓A special assessment funds a public improvement that especially benefits the property

Police Power is the right of a political body to enact and enforce laws for public order, safety, health, morals, and welfare. Eminent Domain is the government's right to acquire property for public use by condemnation with fair compensation. Condemnation is the taking of private property for public use with compensation. Escheat is reversion of property to the State when the owner dies without a will and distributees or abandons it.

• ✓Eminent domain allows government to take property for public use with fair compensation
• ✓Condemnation is the exercise of eminent domain
• ✓Escheat reverts property to the State when an owner dies intestate with no distributees

A Zoning Ordinance specifies the type and use to which property may be put in specific areas. A Zone is an area set off for specific use. A Variance authorizes development not otherwise permitted by zoning. A Building Code sets structural requirements, and a Certificate of Occupancy (CO) certifies a building is fit for occupancy. A Setback is the distance from a line within which no building may be erected.

• ✓A zoning ordinance regulates the type and use of property in areas
• ✓A variance authorizes use not otherwise permitted by zoning
• ✓A certificate of occupancy certifies a building is fit for occupancy

No person, partnership, LLC or corporation may bring or maintain an action in any court for recovery of compensation for real estate services without alleging and proving they were a duly licensed broker or salesperson on the date the cause of action arose.

• ✓Must be licensed on the date the cause of action arose to sue for commission
• ✓Applies to buying, selling, exchanging, leasing, renting or negotiating loans
• ✓License is a prerequisite to maintaining a commission action

When a salesperson's association is terminated, the broker must notify the department. A successor broker must notify the department of the change with a fee. No salesperson shall perform any act within the article's prohibitions after termination until becoming associated with a licensed broker.

• ✓Broker must notify department when salesperson's association terminated
• ✓Salesperson cannot perform licensed acts until associated with a new broker
• ✓Successor broker must notify department of change

No violation by a salesperson shall be cause for revocation/suspension of the broker's license unless the broker had actual knowledge or retained the benefits of a wrongful transaction after notice. A broker is guilty of a misdemeanor for having an unlicensed salesperson associated with their firm.

• ✓Broker liable for salesperson violation only with actual knowledge or retaining benefits
• ✓Broker guilty of misdemeanor for employing unlicensed salesperson
• ✓Retention of benefits after notice of misconduct creates liability

Real Property is land and generally whatever is erected upon or affixed to it. Personal Property (Chattel) is any property that is not real property. Fixtures are personal property so attached to land or improvements as to become part of the real property. A Bill of Sale passes title of personal property from vendor to vendee.

• ✓Real property includes land and whatever is affixed to it
• ✓Personal property (chattel) is anything that is not real property
• ✓Fixtures are personal property attached so as to become real property

Riparian Rights belong to an owner whose land borders a natural watercourse like a river. Littoral Rights belong to an owner whose land borders a body of water like a lake, ocean, or sea. Water Rights allow use of water for irrigation, power, or consumption. Accretion adds land by nature; Erosion wears land away; Avulsion is sudden loss/addition; Alluvion applies to gradual water deposits.

• ✓Riparian rights apply to rivers/watercourses; littoral rights to lakes, oceans, and seas
• ✓Accretion adds land gradually; erosion wears it away; avulsion is sudden change
• ✓Adverse possession requires actual, open, notorious, exclusive, and continuous occupancy for the statutory period

An Easement is a right exercised by the public or individuals on, over, or through the land of others. A Right-of-Way is the right to pass over another's land under an easement or license. An Appurtenance is something outside the property that belongs to the land (e.g., right-of-way). An Encroachment is a building or obstruction that intrudes on a highway, sidewalk, or another's property. A Party Wall straddles the boundary line of two properties.

• ✓An easement is a right to use another's land
• ✓A right-of-way permits passage over another's land under easement or license
• ✓An encroachment intrudes upon or trespasses on another's property

An Acre equals 43,560 square feet. Metes and Bounds describes boundary lines with terminal points and angles. A Monument is a fixed surveyor's point establishing land location. A Survey measures a parcel and ascertains its area. A Plat Book contains public maps showing division of land into streets, blocks, and lots. Situs is the location of a property.

• ✓One acre equals 43,560 square feet
• ✓Metes and bounds describes boundaries by points, angles, and distances
• ✓A survey ascertains a parcel's measurements, boundaries, and area

Any violation of the article is a misdemeanor; a single prohibited act constitutes a violation. The Attorney General prosecutes. An offender may be liable for a penalty of not less than the sum received and up to four times that amount, recoverable by the aggrieved person.

• ✓Any violation of the article is a misdemeanor
• ✓Penalty up to four times the sum received recoverable by aggrieved person
• ✓Attorney General prosecutes criminal actions

The article does not apply to receivers, referees, administrators, executors, guardians, or other persons acting under court order/judgment, public officers performing official duties, or attorneys at law.

• ✓Court-appointed fiduciaries are exempt from licensing
• ✓Attorneys at law and public officers are exempt

No broker or salesperson may demand or receive a referral fee for finding a seller after a listing agreement is signed, finding a buyer after an offer is accepted, or finding a property after a buyer's agency agreement is signed, unless reasonable cause exists. Violations are deceptive acts under GBL 349.

• ✓No referral fee after listing/offer/buyer agreement signed unless reasonable cause
• ✓Violation constitutes deceptive act under GBL section 349

The Secretary of State may adopt nonsolicitation orders directing brokers to refrain from soliciting listings in a defined area subject to intense solicitation causing fear of declining values. Cease-and-desist zones allow owners to file statements to avoid solicitation. Orders cannot exceed five years.

• ✓Nonsolicitation order cannot be effective for more than five years
• ✓Cease-and-desist zones let owners file no-solicitation statements
• ✓New offices in nonsolicitation areas require prior DOS approval

Nonresidents may be licensed by conforming to the article. A nonresident broker with a definite place of business in a reciprocal state need not maintain a NY office. Nonresidents must file irrevocable consent designating the Secretary of State as agent for service of process.

• ✓Nonresident brokers with reciprocal-state offices need not maintain NY office
• ✓Nonresident must file irrevocable consent designating Secretary of State as agent
• ✓Military household members may be granted licenses with equivalent out-of-state credentials

Key defined terms include seller's agent, buyer's agent, dual agent (acting for both parties), designated sales agent (assigned to represent one client under a broker representing both), and broker's agent (cooperates with a listing/buyer/tenant agent but works for a different firm).

• ✓Dual agent acts as both buyer's and seller's agent in same transaction
• ✓Designated sales agent represents one client when the broker represents both
• ✓Broker's agent has no direct relationship with principal; no vicarious liability

A listing agent must provide the disclosure form and obtain a signed acknowledgment before entering a listing agreement. A seller's/landlord's agent must provide it at first substantive contact with a buyer/tenant. A buyer's/tenant's agent must provide it before entering an agency agreement and at first substantive contact with the seller.

• ✓Listing agent discloses before entering listing agreement
• ✓Seller's agent discloses to buyer at first substantive contact
• ✓Buyer's agent discloses before entering buyer agency agreement

The agent must provide a copy of the signed acknowledgment and maintain it for at least three years. If a party refuses to sign, the agent must set forth a written declaration under oath of the refusal and keep it for three years.

• ✓Signed acknowledgment must be retained for at least three years
• ✓If party refuses to sign, agent must make a sworn declaration of refusal
• ✓Advance informed consent to dual agency must be in writing

A seller's or buyer's agent owes fiduciary duties: reasonable care, undivided loyalty, confidentiality, full disclosure, obedience, and duty to account. In dealings with the other party, an agent must exercise reasonable skill, deal honestly, and disclose material facts.

• ✓Fiduciary duties: reasonable care, undivided loyalty, confidentiality, full disclosure, obedience, accounting
• ✓Dual agents cannot provide full range of fiduciary duties
• ✓Section applies only to residential real property (1-4 family, condo, co-op)

Any person who violates any provision of the article is guilty of a misdemeanor; a single prohibited act constitutes a violation. Criminal actions are prosecuted by the Attorney General. An offender who received money may be liable for a penalty of not less than the amount received and not more than four times that sum.

• ✓Violation of the article is a misdemeanor
• ✓A single prohibited act constitutes a violation
• ✓Penalty recoverable by aggrieved person: up to four times the sum received
• ✓Attorney General prosecutes criminal actions

The Secretary of State may enforce the article, investigate violations, and subpoena persons and records. Licensees must supply information on request. Fines for unlicensed §442-h violations: up to $150 first, $500 second, $1,000 third and subsequent.

• ✓Secretary may investigate and subpoena for enforcement
• ✓Licensees must supply requested business information
• ✓Unlicensed §442-h fines: $150 first, $500 second, $1,000 third+

An Appraisal is an estimate of a property's value by an expert appraiser. The Income Capitalization Approach estimates value by capitalizing productivity and income. The Sale Comparison Approach compares sale prices of similar properties. The Cost Approach adds land value (as vacant) to reproduction cost of the building less depreciation. Reconciliation is the final stage where the appraiser reviews data to estimate value.

• ✓The three appraisal approaches are income capitalization, sale comparison, and cost
• ✓The cost approach adds land value to reproduction cost less depreciation
• ✓Reconciliation is the final appraisal step estimating the property's value

Market Value is the most probable price a property should bring in an open market over a reasonable period with informed parties under no duress. Market Price is the actual selling price. Depreciation is loss of value from age, deterioration, or obsolescence. Economic (external) Obsolescence arises from outside economic forces; Obsolescence is loss from outdated design/construction. Reproduction Cost is the cost of exact duplication.

• ✓Market value is the most probable price in an open, informed, arm's-length market
• ✓Market price is the actual selling price, which may differ from market value
• ✓Depreciation results from physical deterioration, functional, or economic obsolescence

The provisions do not apply to receivers, referees, administrators, executors, guardians or other court-appointed persons acting under a court order; public officers performing official duties; or attorneys at law.

• ✓Court-appointed fiduciaries acting under court order are exempt
• ✓Public officers performing official duties are exempt
• ✓Attorneys at law are exempt

A nonresident may become licensed by conforming to all provisions, except a nonresident broker maintaining a place of business in a reciprocal state need not maintain one in NY. Nonresidents must file an irrevocable consent designating the Secretary of State as agent for service of process. Members of armed forces households may qualify with equivalent out-of-state credentials.

• ✓Nonresident broker in reciprocal state need not maintain NY place of business
• ✓Must file irrevocable consent designating Secretary of State as agent for process
• ✓Reciprocity depends on the other state offering same privileges
• ✓Military household members may qualify with equivalent credentials

It is not a material defect that an owner/occupant is or was infected with HIV/AIDS, or that the property was the site of a homicide, suicide, or other death, or a felony crime. No cause of action arises for failure to disclose these facts, and failure is not grounds for disciplinary action.

• ✓HIV/AIDS status and deaths on property are not material facts
• ✓No cause of action or discipline for failure to disclose these facts
• ✓Buyer may submit written inquiry, but seller may choose whether to respond

It is not a material defect that an owner/occupant is or was suspected to be infected with HIV/AIDS or a disease unlikely transmitted through occupancy, or that the property was the site of a homicide, suicide, death, or felony. No cause of action arises for failure to disclose these facts, and such failure is not grounds for disciplinary action.

• ✓HIV/AIDS status of occupant is not a material fact
• ✓Homicide, suicide, death or felony on the property is not a material fact
• ✓No cause of action for failure to disclose these facts
• ✓Not grounds for disciplinary action against agent/broker

Although not material, a buyer who considers such information important may submit a written inquiry when negotiating or making a bona fide offer. The seller may choose whether to respond, subject to privacy laws. This section preempts inconsistent local law.

• ✓Buyer may submit a written inquiry for important non-material information
• ✓Seller may choose whether to respond
• ✓Section preempts inconsistent local law

A Will disposes of one's property to take effect after death. Testate means a person dies leaving a valid will; Intestate means dying with no will (or a defective one), so the estate descends to distributees by law. Descent is the operation-of-law passing of an intestate owner's property to distributees. Probate establishes the will of a deceased person.

• ✓Testate = dying with a valid will; intestate = dying without a valid will
• ✓Intestate property descends to distributees as prescribed by law
• ✓Probate establishes/proves the validity of a deceased person's will

An Executor (male/entity) or Executrix (female) carries out a will's provisions; an Administrator is appointed by court when a person dies intestate. A Devise is a gift of real estate by will, received by the Devisee from the Devisor. A Bequest is what is given by a will; to Bequeath is to hand down by will. The Surrogate's Court (Probate Court) has jurisdiction over wills and estates.

• ✓An executor/executrix is named in a will; an administrator is court-appointed for intestacy
• ✓A devise is a gift of real estate by will to the devisee
• ✓Surrogate's Court has jurisdiction over proof of wills and settling estates

After public hearing and investigation, the Secretary of State may adopt a nonsolicitation order directing brokers and salespersons to refrain from soliciting residential real estate listings in a defined area where intense solicitations have caused owners to fear declining values due to changing neighborhood demographics. Orders cannot exceed five years but may be re-adopted.

• ✓Nonsolicitation order requires public hearing and reasonable investigation
• ✓Order cannot be effective for more than five years
• ✓May prohibit letters, postcards, calls, door-to-door, handbills
• ✓New offices in the zone need prior Secretary of State approval

The Secretary may establish a cease and desist zone allowing owners to file an owner's statement indicating they do not wish to be solicited. No broker/salesperson may solicit an owner on the current cease and desist list. Zones cannot exceed five years but may be re-adopted.

• ✓Owners may file statements to be placed on cease and desist list
• ✓No solicitation of owners on the current cease and desist list
• ✓Cease and desist zone cannot be effective longer than five years
• ✓List revised and reprinted at least annually by December 31st

The State Real Estate Board consists of the Secretary of State, Superintendent of Financial Services, and 13 additional members. At least five must be licensed brokers with 10+ years experience; the rest are public members. Members serve two-year terms and no member may serve more than 10 years in a lifetime.

• ✓Board has Secretary of State, Superintendent of Financial Services, plus 13 members
• ✓At least 5 members are brokers with 10+ years experience
• ✓Members serve two-year terms, max 10 years lifetime
• ✓Board must meet at least three times per year

The Board may promulgate rules affecting brokers/salespersons, except matters reserved exclusively for the Secretary of State (commingling, accounts, property management, broker's purchase of listed property, inducing breach, records). Secretary of State exclusively administers §§441 and 442-h and rules on handling clients' funds.

• ✓Secretary of State has exclusive authority over commingling and clients' funds rules
• ✓Board cannot regulate §§441 and 442-h matters
• ✓Board cannot promulgate continuing education requirements beyond §442-k subdivisions

An Acknowledgment is a formal declaration before an authorized officer that execution of an instrument is one's act and deed. A Notary Public takes acknowledgments and administers oaths for affidavits. An Affidavit is a sworn written statement. An Instrument is a written legal document affecting parties' rights. A Power of Attorney authorizes an agent to act on the signer's behalf.

• ✓An acknowledgment is made before an authorized officer confirming execution
• ✓A notary public takes acknowledgments and administers oaths
• ✓A power of attorney authorizes an agent to act to the extent indicated

Caveat Emptor means 'let the buyer beware' — the buyer buys at their own risk. Laches is delay or negligence in asserting legal rights. Duress is unlawful constraint forcing an act against one's will. Damages are the indemnity recoverable for injury. A Judgment is a court's formal decision on parties' rights. A Lis Pendens gives notice that litigation affecting title is pending. The Statute of Limitations bars actions after a set time.

• ✓Caveat emptor places the risk of examination on the buyer
• ✓A lis pendens gives notice of pending litigation affecting title
• ✓The statute of limitations bars actions after a defined time period

A Performance Bond guarantees completion of an endeavor per contract. A Completion Bond guarantees a subdivision development is completed. A Surety guarantees the performance of another. Equity is the owner's interest in real estate above liens against it. Gross Income is total income before expenses. Debt Service is the annual amount paid to repay borrowed money.

• ✓A performance bond guarantees contract completion; a completion bond guarantees subdivision completion
• ✓A surety guarantees another party's performance
• ✓Equity is the owner's value in property over and above the liens

Alienation is transferring property to another. A Conveyance transfers title of land. Conversion is change from one use to another. A Real Estate Syndicate is a partnership for a real estate venture with limited or unlimited liability. Plottage is the increased unit value created by assembling smaller parcels into one ownership. Partition is division of real property owned in undivided shares.

• ✓Alienation and conveyance both refer to transferring property/title
• ✓Plottage is added value from assembling smaller parcels into one
• ✓Partition divides real property held in undivided shares

Sellers must give written notice before accepting a purchase offer if no utility electric service is provided, or if the property is subject to an electric/gas utility surcharge (stating type, purpose, amount, and payment basis). Sellers with actual knowledge of uncapped natural gas wells must disclose before contract.

• ✓Written notice of no electric utility service required before accepting offer
• ✓Utility surcharge disclosure must state type, purpose, amount, and payment basis
• ✓Uncapped gas wells must be disclosed if seller has actual knowledge

No broker or salesperson shall demand or receive a referral fee for a referral relative to finding a seller after a bona fide listing is signed, finding a buyer after a bona fide offer is accepted, or finding a property after a bona fide buyer's agency agreement is signed, unless reasonable cause for payment exists.

• ✓No referral fee after listing agreement is signed (finding seller)
• ✓No referral fee after offer to purchase is accepted (finding buyer)
• ✓No referral fee after buyer's agency agreement signed (finding property)
• ✓Violation is a deceptive act under GBL section 349

When a purchase contract is presented for property partially or wholly within an agricultural district, the grantor must deliver a prescribed notice informing residents that farming activities (noise, dust, odors) occur. The notice must be signed by grantor and grantee prior to sale.

• ✓Agricultural district notice required for property in such districts
• ✓Notice must be signed by both grantor and grantee prior to sale
• ✓Failure to provide does not prevent recording of the deed

Electronic records and digitized paper documents satisfy requirements that instruments be original, in writing, signed, or notarized. Electronic recording is discretionary for each county clerk; no county is required to accept electronic recording.

• ✓Electronic records satisfy original/writing/signature/notarization requirements
• ✓Electronic recording participation is discretionary per county clerk

Key agency terms: Seller's agent represents seller; Buyer's agent represents buyer; Dual agent acts for both parties in the same transaction; Designated sales agent is assigned to represent one client when another is represented by the same broker; Broker's agent cooperates but does not work for the same firm and has no direct client relationship.

• ✓Dual agent represents both buyer and seller in the same transaction
• ✓Designated sales agent works under supervising broker for one client
• ✓Broker's agent has no direct relationship with the principal
• ✓Section applies only to residential real property transactions

A listing agent must provide the disclosure form to the seller/landlord before entering into a listing agreement. Seller's/landlord's agents provide it to buyers/tenants at first substantive contact. Buyer's/tenant's agents provide it before entering the agreement. A signed acknowledgment must be obtained and maintained for at least three years.

• ✓Listing agent provides form before entering listing agreement
• ✓Seller's agent provides to buyer at first substantive contact
• ✓Must obtain signed acknowledgment, kept at least 3 years
• ✓If party refuses to sign, agent sets forth a written declaration under oath

A broker may represent both buyer and seller only if both give informed consent in writing. A dual agent cannot provide the full range of fiduciary duties and gives up undivided loyalty. Advance informed consent to dual agency or dual agency with designated sales agents may be provided on the disclosure form.

• ✓Dual agency requires written informed consent from both parties
• ✓Dual agent cannot provide undivided loyalty
• ✓Advance informed consent may be indicated on the disclosure form
• ✓Designated sales agents each advocate for their respective client

A seller's/buyer's/landlord's/tenant's agent owes fiduciary duties without limitation: reasonable care, undivided loyalty, confidentiality, full disclosure, obedience and duty to account. In dealings with the other party, the agent should exercise reasonable skill, deal honestly and in good faith, and disclose facts materially affecting value.

• ✓Fiduciary duties: reasonable care, undivided loyalty, confidentiality, full disclosure, obedience, accounting
• ✓Agent does not represent the interests of the other party
• ✓Must deal honestly, fairly and in good faith with the other party
• ✓Common law of agency is not limited or altered by this section