Engrade Practice Exam 1
b
A NC real estate listing agreement is required to be in writing under: I. Statute of Frauds II. NC Real Estate Commission Rules a. I only b. II only c. Both I and II d. Neither I nor II
b
A broker lists a property for sale at $18,000 with a 5% commission and obtains a verbal offer from a prospective buyer. The seller indicates to the broker that the offer is acceptable if submitted in writing. Before the offer can be put into writing, the purchaser backs out. The broker is entitled to: a. $500 commission b. no commission c. partial commission d. 7% commission as recommended by the local Board of Realtors
c
A buyer is to assume an existing loan of $80,000 at 9.5% with the approval of the lender. The interest on the loan, which is paid in arrears, would appear on the closing statement as: a. a single entry: debit to the seller b. a single entry: credit to the buyer c. a double entry: debit seller / credit buyer d. a double entry item: credit seller / debit buyer
c
A joist is: I. Long horizontal boards installed parallel to each other to support the load of the ceiling and the rafters above II. Long horizontal boards installed parallel to each other that are attached to the sill to support the floor and its associated loads a. I only b. II only c. Both I and II d. Neither I nor II
b
A key principle of an estate for years is that it will: a. be in writing, no matter what the term b. expire automatically without notice at the end of the period designated c. exist when a leasehold interest expires or terminates without the tenant vacating the property d. be renewable from year to year
a
A licensee's annual renewal pocket card must always be: a. carried on his person while doing business as a real estate agent b. kept with the licensee's important papers c. displayed in the supervising broker's office d. held by the NC Real Estate Commission
c
A provisional broker owes all of the following fiduciary duties, EXCEPT: a. to obey all legitimate instructions from the broker concerning the transaction b. to be loyal to the interests of the principal c. to prepare the deed for the transfer of title d. to disclose material facts concerning the sale
c
A seller signs two listing agreements on the same property at the same time for the same listing period with different firms. The seller signs an Exclusive Right to Sell Listing Agreement with ABC Realty, Inc. and an Exclusive Agency Agreement with XYZ Realty, Inc. If a ready, willing and able buyer is procured by ABC Realty, Inc., which of the following statements would be legally correct? a. seller would owe one commission to ABC Realty, Inc. b. seller would owe one commission to XYZ Realty, Inc. c. seller would owe two commissions, one commission to ABC Realty, Inc. and one commission to XYZ Realty, Inc. d. there would only be one commission and it would be shared by both firms
d
A typical residential property management agreement would impose all of the following duties upon a property manager, EXCEPT: a. cleaning and maintaining the common areas b. collecting rents due c. maintaining records and reporting to the owner d. establishing a depreciation schedule
a
According to NC Real Estate Commission Rules regarding the drafting of legal instruments, which of the following statements is correct? a. A broker acting as an agent in a real estate transaction shall not draft legal instruments; however, a broker may complete preprinted fill-in-the-blank forms if authorized or directed to do so by the parties. b. A broker, representing themselves as a principal in a real estate transaction, may not draft legal instruments for their own personal transactions. c. The language of preprinted forms can only be modified, rewritten or changed by the broker. d. The language of preprinted forms cannot be modified, rewritten or changed by the parties themselves.
d
According to the NC Real Estate Commission Rules, a NC listing agreement must contain which of the following items? I. Sales price and proposed financing terms II. Automatic extension clause a. I only b. II only c. Both I and II d. Neither I nor II
a
All of the following are requirements by the NC Real Estate Commission to obtain a limited nonresident commercial license, EXCEPT: a. satisfactory completion of the NC 40-question state licensing exam b. creation of a brokerage agreement and the signing of a declaration of affiliation with a NC resident real estate broker c. consent to be disciplined under the rules, statutes and regulations of North Carolina d. declaration of their residence in a state or territory of the United States other than North Carolina
b
Aunt Fran decides to sell her property to a church "so long as" the property is used for religious purposes. One year after the closing, the new owner uses the property for a nonreligious purpose. Which of the following statements are correct? I. This situation is classified as a defeasible fee II. This situation is classified as fee simple ownership III. Planning and zoning would be involved in enforcing the condition IV. Title would revert back to Aunt Fran (or her heirs). a. I and III b. I and IV c. II and III d. II and IV
b
Concerning the residential property disclosure statement, which of the following is TRUE? a. the listing agent should fill out the form on behalf of their seller principal b. the listing agent must reveal known material facts, even if the seller checked "no representation" c. the seller's completion of the form creates immunity for the real estate professionals from liability d. the purchaser is required to sign the form acknowledging receipt
a
Concerning the residential property disclosure statement, which of the following is/are TRUE? I. If the buyer does not receive the disclosure, then the buyer has 3 calendar days within which to rescind the transaction from either the date of contract or the date of receipt of the disclosure, whichever comes first. II. If a seller asks an agent how to complete the form, the agent should respond for the seller to always check "no representation" to avoid liability. a. I only b. II only c. Both I and II d. Neither I nor II
c
Encapsulation refers to the: a. process of sealing a landfill with three to four feet of topsoil b. way in which asbestos insulation is applied to pipes and wiring systems c. method of sealing disintegrating "friable" asbestos d. way in which asbestos becomes airborne
a
If "first substantial contact" occurs by telephone, the licensee is required to transmit the "Working With Real Estate Agents" brochure immediately, but in no event later than: a. 3 calendar days after the telephone conversation b. 3 business days after the telephone conversation c. 5 calendar days after the telephone conversation d. 5 business days after the telephone conversation
b
If a broker-in-charge designated one agent of the firm as the designated agent for the seller and another agent for the buyer in the same transaction, what is the status of the other agents who work for the same firm? a. designated agents b. dual agents c. single agents d. they have no agency relationship with any of the parties
a
If a person obtains property through a ground lease, which of the following rights does he/she typically receive? I. The right to build on it II. The right to explore for minerals a. I only b. II only c. Both I and II d. Neither I nor II
c
If a provisional broker does not take their 90 hours of postlicensing training within three years from the date on which they were initially licensed, their license is: a. suspended b. cancelled c. inactive d. expired
c
If a real estate agent has been found guilty of violating the NC Real Estate Licensing Law, the NC Real Estate Commission can: I. Fine the licensee II. Imprison the licensee III. Suspend or revoke the license IV. Reprimand or censure the licensee a. I and II only b. II and IV only c. III and IV only d. All of the above
d
If an owner of a building sold it, the present tenant's lease would: a. terminate automatically b. terminate in 30 days c. be renegotiated with the new owner d. be honored by the new owner until expiration
d
If dual agency is undisclosed, which of the following actions would most likely occur? I. A fine against the licensee for nondisclosure by the NCREC II. An order from the NCREC directing the licensee to return all commissions to the parties III. A civil lawsuit for damages caused to the client IV. A disciplinary action by the NCREC a. I and II b. I and IV c. II and III d. III and IV
d
If payment of license fees are returned unpaid or dishonored by check or credit card, the NC Real Estate Commission can discipline a licensee by taking all of the following actions, EXCEPT: a. denying the license b. suspending the license c. revoking the license d. fining the licensee
c
In a single real estate transaction designated agency is allowed in all the following scenarios in a firm, EXCEPT: a. provisional broker and provisional broker b. broker and provisional broker c. broker-in-charge and provisional broker d. broker and broker
c
In connection with an Offer to Purchase and Contract, earnest money is used: I. As evidence of the buyer's good faith II. As liquidated damages to the seller in the event of a breach a. I only b. II only c. Both I and II d. Neither I nor II
d
In regard to loan costs, FHA Mortgage Insurance Premiums (MIP) and VA funding fees, who can legally pay these items at closing? a. the borrower b. the seller c. the lender or they can be financed into the loan d. all of the above
d
Question 19 Radon poses the greatest potential health hazard to humans when it is: a. contained in insulation materials used in the 1970s b. found in high concentration on unimproved land c. emitted by malfunctioning or inadequately ventilated appliances d. trapped and concentrated in inadequately ventilated areas
c
Real estate brokers must retain for at least 3 years records of: I. Trust account journals II. Unaccepted offers a. I only b. II only c. Both I and II d. Neither I nor II
d
The NC Residential Rental Agreements Act covers all of the following, EXCEPT: a. basement apartment b. condominium unit c. apartment complexes d. transient occupancy
b
The initial maximum deposit in a NC trust account by a broker who is depositing their own funds is: a. $50, or whatever the financial institution requires b. $100, or whatever the financial institution requires c. $500, or whatever the financial institution requires d. $1,000, or whatever the financial institution requires
c
The major difference between an installment land contract and a purchase money mortgage is: a. seller financing only exists in a purchase money mortgage b. the buyer only obtains use and possession of the land with an installment land contract c. the time in which delivery of the deed is made d. installment land contracts are also known as seller carryback financing
c
The requirements of the Real Estate Settlement & Procedures Act apply to any real estate transaction that takes place: I. Involving 1 - 4 units II Involving a federally related mortgage a. I only b. II only c. Both I and II d. Neither I nor II
a
Under which of the following types of mortgage loans would a buyer have to produce a certificate of reasonable value? a. VA guaranteed loan b. VA insured loan c. FHA insured loan d. conventional loan
d
When is the developer of a timeshare project required to deliver the public offering statement to the purchaser? a. prior to the day of closing b. upon initial contact with the buyer c. within a reasonable time d. prior to the buyer's submission of an offer
d
When must the residential property disclosure statement be given to the buyer of residential property? a. upon first substantial contact b. when the buyer discussed with the lender the possibility of financing the property c. when previewing the property with a licensed real estate agent d. no later than the time the buyer makes an offer on the property
c
Which of the following best describes the owner's original basis in his/her property? a. the profit produced from the eventual sale of the property b. the cost of acquiring the home plus closing costs and the subtraction of all capital improvements c. for income tax purposes, the original cost (purchase price) of the property plus certain allowable closing costs d. the difference between the selling price and the selling expenses
b
Which of the following is NOT an essential element of a promissory note? a. a promise to pay b. lender's signature c. terms of payment d. amount of the debt
d
Which of the following is TRUE regarding an earnest money deposit in an offer to purchase and contract? I. Earnest money deposits are an essential element of a sales contract in NC. II. On the Settlement Statement the buyer will receive a debit for both their earnest money deposit and their due diligence fee. a. I only b. II only c. Both I and II d. Neither I nor II
d
Which of the following is not required for a contract to be valid and enforceable? a. legal purpose b. consideration c. mutual consent d. signature
a
Which of the following real estate sale ads placed in a newspaper by a broker is/are permitted? I. House for sale, 2,500 SF, 3 bedrooms, 2 baths, $80,000. Call ABC Realty at 222-1111. II. Lovely home on a beautiful landscaped lot has 2,500 SF assumable loan. Call 222-1111. a. I only b. II only c. Both I and II d. Neither I nor II
d
Which of the following statements are TRUE regarding agency? I. Oral buyer agency is allowed in NC; however, the written buyer agency agreement must be in writing no later than when a binding purchase contract is created. II. Oral buyer agency is binding and exclusive. a. I only b. II only c. Both I and II d. Neither I nor II
d
Which of the following statements are TRUE? I. A licensed provisional broker, selling his own property as a FSBO without the aid of a brokerage firm, must still deposit the buyer's earnest money in the firm's trust account. II. A broker must have a separate trust account for each sales transaction. a. I only b. II only c. Both I and II d. Neither I nor II
c
Which of the following statements are correct regarding construction loans? I. Construction loans have the highest risk to a lender. II. Construction loans have a longer repayment period than a home loan. III. Construction loans have a shorter repayment period than a home loan. IV. Construction loans carry a lower rate of interest than a home loan. a. I and IV b. II and IV c. I and III d. I and II
b
Which of the following statements is/are TRUE concerning a tenancy at sufferance? I. It is a freehold estate held at the will of both the landlord and tenant. II. It occurs where one had a lease for a specific term and holds over at the end of the lease without the consent of the landlord. III. The tenant has full rights to the property and cannot be evicted. IV. It is the lowest freehold estate known by law. a. I only b. II only c. III and IV d. II and IV
c
Which of the following statements is/are TRUE concerning footings? I. Footings form the base upon which the rest of the foundation rests. II. Footings are poured into trenches below ground level and are usually composed of masonry-type materials. a. I only b. II only c. Both I and II d. Neither I nor II
c
Which of the following statements is/are correct? I. If a breach of a sales contract occurs, the earnest money deposit would be considered liquidated damages. II. Specific performance is the legal remedy a buyer has to force a seller to honor a contract for sale. a. I only b. II only c. Both I and II d. Neither I nor II
c
Which of the following statements regarding written listing agreements in NC is INCORRECT? a. a written listing provides proof that the broker was hired by the seller b. the listing agreement must have a definite starting and ending date c. a written listing may include an automatic extension clause d. the broker must deliver to the seller a copy of the signed listing agreement
a
Which of the following would be considered a dual agency? a. the broker acting for both the buyer and the seller in the same transaction b. brokers cooperating with each other c. the broker representing different principals d. the broker listing a property for their client and selling the same property to a customer
c
Which party's signature is required on a deed of trust? a. the trustee b. the beneficiary c. the trustor(s) d. the grantee(s)
