License Law 3
All of the following are TRUE regarding pet deposits in North Carolina, EXCEPT: A. a reasonable non-refundable pet deposit may be charged to a tenant B. the landlord or property owner may make the deposit refundable C. a landlord or owner may prohibit pets including service animals so long as it done consistently D. a landlord or property manager can require a tenant with a service animal to provide a doctor's letter
C. a landlord or owner may prohibit pets including service animals so long as it done consistently Rationale: A property manager or landlord can prohibit pets and charge either refundable or non-refundable deposits. A service animal is not a pet and no deposit may be imposed nor can such animals be prohibited
A property manager may: A. advise the owner as to the tax consequences of rental income B. negotiate rents and obtain the owner's authority and approval after the fact C. allow unlicensed employees of the property management company to negotiate rents for long-term leases D. with the owner's permission, offer concessions as inducements to all prospective tenants
D. with the owner's permission, offer concessions as inducements to all prospective tenants Rationale: Concessions are inducements to attract or retain tenants. With the owner's permission this is permissible. Unlicensed employees cannot negotiate. Property managers do not give tax advice and if the property manager is negotiating rents, they should have authority and approval from the owner before the fact,not after the fact.
The "delivery of instruments" rule applies to all documents; however a lease is an "exception" to this rule. The property manager, however, must give written notice to the owner of the name of the tenant, the property address and the rental amount within how many days after lease acceptance? A. 7 days B. 30 days C. 45 days D. 60 days
C. 45 days
How are members of the NC Real Estate Commission chosen? A. they are elected by the public at large B. they are appointed by the Governor C. 7 are appointed by the Governor and 2 are appointed by the legislature D. 4 are appointed by the legislature and 3 are appointed by the governor
C. 7 are appointed by the Governor and 2 are appointed by the legislature
An unlicensed person who is managing their own rental property is subject to all of the following statutes, EXCEPT: A. Residential Agreements Act B. Security Deposit Act C. The NC Real Estate Commission rules regarding trust accounts D. The Vacation Rental Act
C. The NC Real Estate Commission rules regarding trust accounts Rationale: All owners, landlords and managers whether licensed on not must comply with the Residential Rental Agreements Act, the Security Deposit Act and the Vacation Rental Act. Only licensees are subject to the jurisdiction of the NCREC.
What is the maximum late fee that a landlord, owner or property manager may charge a tenant for delinquent rent? A. $15 or 5% of the rent, whichever is greater B. $15 or 5% of the rent, whichever is less C. $25 or 25% of the rent, whichever is greater D. $10 or 10% of the rent, whichever is less
A. $15 or 5% of the rent, whichever is greater
Which of the following statements is correct? I. The NC Real Estate Commission requires that rejected offers and trust account journals be kept at the real estate office and available for inspection for a period of three years II. The maximum time for a licensee to reinstate their expired license without additional education requirements is five years. A. I only B. II only C. Both I and II D. Neither I nor II
A. I only Rationale: All records must be kept for a period of three years. The maximum time for a licensee to reinstate their expired license without additional education requirements is 6 months.
Which of the following is correct regarding the handling of money by a provisional broker?I. Earnest money deposits and tenant security deposits received by the provisional broker must be delivered immediately to their broker-in-charge.II. An option fee or a due diligence fee, made payable to the seller, is not required to be immediately given to the broker-in-charge by the provisional broker and the provisional broker may hold onto these funds until they have an opportunity to turn these funds over to the seller. A. I only B. II only C. Both I and II D. Neither I nor II
A. I only Rationale: Provisional brokers must turn ALL monies over to their BIC immediately. It is true that the due diligence fee is made payable to the seller and does not get deposited into the trust account, but provisional brokers may not hold onto this money.
A licensee who is issued a disciplinary notice by the North Carolina Real Estate Commission: A. Is always entitled to a hearing B. Must request a hearing within 14 days of the notice C. Is not entitled to a hearing but may appeal the decision of the Commission if they disagree D. Is only entitled to a hearing if the license is being suspended or revoked
A. Is always entitled to a hearing Rationale: A licensee is always entitled to a hearing in regard to any disciplinary action by the NCREC
Earnest money given in the form of a check on an Offer to Purchase and Contract must be deposited by the BIC into an escrow account: A. No later than three banking days after acceptance of contract B. No later than 72 hours after receipt of money C. No later than three banking days from receipt D. No later than 72 hours after acceptance of contract
A. No later than three banking days after acceptance of contract
A tenant signs a two year residential lease. The landlord or owner subsequently sells or transfers the property eight months later. The new owner has issued the tenant a notice of lease termination. Can the new owner terminate the lease? A. No, the sale of property does not end a lease and the new owner must honor existing leases B. No, because the tenant's agreement was with the original owner and the original owner will remain the property manager regarding the lease C. Yes, because sale of a property terminates a lease D. Yes, provided that the new owner gives the tenant at least 90 days notice
A. No, the sale of property does not end a lease and the new owner must honor existing leases Rationale: Sale of a property does not end a lease and the new owner must honor all existing leases
A real estate agent has which of the following responsibilities for the Closing Disclosure? A. The agent is responsible for reviewing the Closing Disclosure for their client to make certain it is accurate and complete B. a broker directs the closing attorney to deliver the Closing Disclosures. C. a broker must correct the Closing Disclosure and notify all parties to the closing of any errors the broker finds D. a broker must provide the Closing Disclosure to the client no later than 48 hours prior to the settlement meeting
A. The agent is responsible for reviewing the Closing Disclosure for their client to make certain it is accurate and complete Rationale: A broker has an obligation to review the Closing Disclosure for its accuracy and completeness. Rationale: Typically the Closing Disclosure will be corrected by the lender, but may also be corrected by the closing attorney in certain transactions Rationale: The lender is responsible for compliance with delivery of the Closing Disclosure. The buyer's Closing Disclosure must be delivered to the buyer at least 3 business days prior to closing.
In verifying and reporting square footage, a real estate licensee may rely on which of the following measurements? A. The square footage determined by the listing agent and placed into MLS. B. The measurement as contained and verified in public records. C. The square footage as contained in a previous appraisal or survey in a past transaction concerning the property. D. The square footage as reported by the seller.
A. The square footage determined by the listing agent and placed into MLS. Rationale: Real estate licensees should not rely on the owner's representations or any past measurements contained in public records, appraisals or surveys from a previous transaction. They may rely on the measurements performed by other licensees, including the listing agent.
All of the following are true of a firm license, EXCEPT: A. every real estate brokerage that is employing licensees must have a firm license B. a firm license must be obtained by a qualifying broker C. a firm license is only required when an entity has been formed D. A firm license must be renewed every year by June 30th
A. every real estate brokerage that is employing licensees must have a firm license Rationale: A firm license is only required in NC when an entity is formed. Every entity must have a firm license, but a brokerage could operate as a sole proprietorship and as such would not be required to have a firm license
Real estate agents should carefully follow the guidelines set out in the Residential Square Footage Guidelines brochure. Which of the following is NOT true regarding these guidelines: A. the NCREC requires licensees to measure square footage B. On the first floor the ceiling must be seven feet high to count the square footage C. for reporting purposes, a basement is defined as an area below the entry level of the dwelling which is accessible by a full flight of stairs and has earth adjacent to some portion of at least one wall above the floor level D. if a water heater is located in a small closet immediately off of and accessible from the living area, it is to be included in the HLA
A. the NCREC requires licensees to measure square footage Rationale: NCREC does not require a licensee to measure a home. The Commission rules require a licensee to verify square footage if they are going to report it
Which of the following 3rd party checks may a broker have in their custody? A. the due diligence fee made payable to the seller and an earnest money check made payable to a 3rd party escrow agent such as the closing attorney B. any fees or monies that the buyer wants delivered so long as the broker is only acting as a courier C. only fees and monies that are connected with the purchase of the property, such as the home inspection, home warranty and other similar charges D. only the due diligence fee made payable to a seller
A. the due diligence fee made payable to the seller and an earnest money check made payable to a 3rd party escrow agent such as the closing attorney Rationale: These are the only 3rd party checks that should ever be in the custody of a licensee
Sam is selling a NC residential property that is being used as a vacation rental and is subject to the NC Vacation Rental Act. All of the following are true about the sale of this property, EXCEPT: A. the new buyer must honor all existing leases B. all of the leases for the vacation rental must be in writing C. the maximum time for accounting for and returning the security deposit on vacation rentals is 45 days D. Sam must provide the new owner with all leases on the property within 10 days of closing
A. the new buyer must honor all existing leases Rationale: On a vacation rental unit the new buyer must only honor leases for occupancy that occurs within 180 days of closing
Janice leased a property that was owned by an investor and managed by a licensed property manager. Janice was recently the victim of a domestic violence assault by her boyfriend who is also named in the lease. All of the following are TRUE, except: A.If request is made of the property manager they must change the locks and the owner must pay for the new locks on the property B. If requested the owner or property manager must change the locks within 48 hours or allow the tenant to do so C. Janice can be required to pay for the lock change D. Janice's boyfriend will remain liable on the lease, but the property manager nor owner do not have to give him access
A.If request is made of the property manager they must change the locks and the owner must pay for the new locks on the property Rationale: Victims of domestic violence have a right to have locks changed within 48 hours or they must be permitted to do so. The person who requested that the locks be changed can be required to pay those costs.
Which of the following is TRUE regarding tenant security deposits? A. Any licensee or property manager must place such monies into a trust account B. Any property owner, landlord or property manager must place security deposits in a trust account C. Only a licensed property manager is required to have a trust account D. A trust account is not required so long as the funds are securely held in an FDIC bank
B. Any property owner, landlord or property manager must place security deposits in a trust account Rationale: Tenant security deposits must be placed into a trust account regardless of whether the owner or landlord is or uses a licensed property manager. Even a private owner must place tenant security deposits in a trust account, although a private owner who is not a licensee is permitted to obtain a bond
When must a lease be in writing? A. All leases are required to be in writing by the NC Real Estate Commission B. Only leases for longer than 3 years are required to be in writing. Leases on property subject to the Vacation Rental Act which are for less than 90 days must also be in writing C. Only leases on property that is managed by a property manager D. Only leases on residential property must be in writing
B. Only leases for longer than 3 years are required to be in writing. Leases on property subject to the Vacation Rental Act which are for less than 90 days must also be in writing Rationale: The statute of frauds only requires leases to be in writing when they are longer than 3 years. The NC Vacation Rental Act also requires leases subject to that law which are less than 90 days to also be in writing.
All of the following properties are exempt from the NC Residential Rental Agreements Act, EXCEPT: A. an investor renting a beach house to an out of state resident for a period of 60 days B. a private homeowner who is renting out a single family residence without a property manager C. hotels and motels D. transient housing
B. a private homeowner who is renting out a single family residence without a property manager Rationale: the NC Residential Agreements Act applies to all owners and landlords even if they are not using a property manager or a licensee Rationale: A property rented out for vacation or recreational purposes for a period of 90 days or less is subject to the NC Vacation Rental Act not the NC Residential Rental Agreements Act
With regard to property management agreements, which of the following is NOT correct? A. a property management agreement is a personal services contract B. a property agreement is between the agent within the property management firm and the owner C. a property management agreement creates a general agency relationship D. A provisional broker cannot be a property manager
B. a property agreement is between the agent within the property management firm and the owner Rationale: A property management agreement is not with the licensed leasing agent. It is with the property manager (who must be a full broker) or the property management firm. Rationale: A provisional broker may work as an employee within a property management office, but only a full broker can act as the property manager
Under the NC Residential Rental Agreements Act all of the following can terminate a lease early by giving thirty days notice and without additional penalties for the remainder of the lease, EXCEPT: A. military personnel who receive a station change order 50 miles away B. an individual who has a forced job relocation D. family members of a serviceman whose death occurred while on active duty
B. an individual who has a forced job relocation Rationale: The NC Residential Rental Agreements Act does not create an exception for someone who is transferred by their employer unless that person is a military personnel
A builder is offering a $100 gift card to real estate agents if they simply bring a buyer to look at the model home. In this case: A. if an agent has an oral buyer agency agreement, they do not need to disclose to the buyer the possibility of receiving a gift card B. if an agent has an oral buyer agency agreement, they may disclose the existence of the gift card orally and if the buyer agency agreement is in writing they may disclose the existence of the gift card orally, but put the disclosure in writing prior to submitting any offer C. if the buyer is a customer, they must disclose the possibility of receiving a gift card D. the agent may not receive a gift card as this is a violation of RESPA
B. if an agent has an oral buyer agency agreement, they may disclose the existence of the gift card orally and if the buyer agency agreement is in writing they may disclose the existence of the gift card orally, but put the disclosure in writing prior to submitting any offer Rationale: An agent can receive gifts or bonuses with the consent of their client. Disclosure should occur prior to the writing of an offer. The receipt of such compensation needs to be put into writing when the licensee has a written employment agreement with the client.
A provisional broker decides to leave one firm and join a different firm. Which of the following statements best describes the agent's situation: A. the agent must notify the NCREC within five days of their move B. if the agent had a transaction in progress at the previous firm, the provisional broker may be paid directly by their former BIC. They do not have to have the money flow through their current firm C. the provisional broker's license is expired when the provisional broker is in between two firms D. if the provisional broker decides to work for the new firm as a commercial agent and continue working for the old firm as a residential agent, they are allowed to do so as long as both BIC's notify the NCREC
B. if the agent had a transaction in progress at the previous firm, the provisional broker may be paid directly by their former BIC. They do not have to have the money flow through their current firm Rationale: Whether the provisional broker will be paid will be determined by their independent contractor agreement with their previous firm. The previous firm can pay the money directly because that is the firm the agent was working for at the time the commission was earned. Rationale: Notification of affiliation and non-affiliation is required, but the time period is 10 days Rationale: The license would not be expired in between firms. The license would be inactive. Rationale: A provisional broker may only have one BIC at a time and cannot be affiliated with multiple BIC's. A full broker may have multiple affiliations with the consent of both BIC's.
The North Carolina Real Estate Commission may take which of the following action(s) against a broker-in-charge who has converted and embezzled trust account monies for his own personal use? l. Order the broker-in-charge to reimburse the trust account for the converted and embezzled funds. ll. Revoke the broker-in-charge's license. A. l only B. ll only C. Both l and ll D. Neither l nor ll
B. ll only Rationale: The NCREC does not not get involved in monetary disputes between licensees and consumers. NCREC would not order the licensee to pay damages, reimburse a consumer or return money to a trust account. Those actions may occur by a lawsuit or criminal prosecution, but the Commission's authority is limited to actions that affect the professional license, such as a suspension or revocation.
Which of the following individual(s) is/are required to have a NC real estate license? l. A leasing agent who is a regular salaried employee, exhibits units, fills in the blanks of preprinted forms, does not negotiate tenant security deposits and does not negotiate rental rates ll. The personal assistant of a real estate licensee who shows property to a buyer and who occasionally negotiates offers while the licensee is on vacation or is periodically out of town for the weekend A. l only B. ll only C. Both l and ll D. Neither l nor ll
B. ll only Rationale: Unlicensed assistants can never be involved in negotiating. Unlicensed leasing employees may show units and complete forms.
Which of the following would be considered commingling? A. a real estate licensee owns and manages his own investment property. He has placed all security deposits in a trust account, but places each month's rent in his personal checking account B. a property management company that manages several Homeowner Associations has an interest bearing account trust account set up for each Homeowner Association. Every 30 days the property management company removes any interest earned from the trust accounts and transfers these monies to their business checking account C. A broker who is a BIC is acting as a property manager for several investors. The broker also owns several rental properties. Each month the broker deposits rents from all of the units into their trust account D. a general brokerage firm keeps some of its money in their trust account to cover bank fees
C. A broker who is a BIC is acting as a property manager for several investors. The broker also owns several rental properties. Each month the broker deposits rents from all of the units into their trust account Rationale: Commingling is the mixing of a client's monies with those belong to the broker or firm. The broker should not place their own rent into the trust account which is designated for the holding of money belonging to another. Rationale: The rent is the licensee's own money and the licensee is not required to hold that money in a trust account Rationale: A broker earning interest on a trust account should remove the interest every 30 days so that their funds are not commingled with client funds Rationale: A brokerage is permitted to keep $100 or whatever the bank requires of their own money in a trust account without it being considered commingling
Joe, a licensee with an active and current real estate license. Joe is selling his house as a For Sale by Owner. All of the following are TRUE, EXCEPT: A. Joe is subject to discipline by NCREC in selling his own property B. Joe cannot represent a buyer who is interested in purchasing his home C. Because Joe is acting as a For Sale By Owner and owns the property he is not required to make disclosures regarding problems with the home D. Joe must disclose in all advertising and contracts that he has an active real estate license
C. Because Joe is acting as a For Sale By Owner and owns the property he is not required to make disclosures regarding problems with the home Rationale: A licensee is always under the jurisdiction of NCREC whether they are representing a client or not. Rationale: All licensees are prohibited from representing a buyer in a real estate transaction in which they have ownership in the property. Rationale: Joe's status as a licensee is a material fact and must be disclosed to any prospective purchasers.
If there is an earnest money dispute between the buyer and seller over the return or forfeiture of earnest money held by the broker, the broker is: l. Required to hold the money until the courts decide or the parties agree in writing ll. Allowed to turn the money over to the clerk of court after giving a 90 day notice to all parties A. l only B. ll only C. Both l and ll D. Neither l nor ll
C. Both l and ll Rationale: A broker must not release money from a trust account that is in dispute. When there is a dispute the broker must receive an agreement from the parties as to the distribution of funds or a court order. After 90 days the broker may deposit the money with the clerk of courts in the county where the property is located.
The owner of a property tells her listing agent that the home is 2,500 square feet. The listing agent enters this information into the local MLS. A buyer presents an offer which is subsequently accepted by the seller. The appraisal report for the buyer indicates that the home is only 1,500 square feet. The buyer is unhappy and reports the agents to the NC Real Estate Commission. Who would be most subject to disciplinary action and why? A. the listing agent because they have primary responsibility to ensure the accuracy of data. The listing agent would be guilty of negligent misrepresentation B. the buyer's agent because they represent the buyer and should have reasonably known the difference between 1,500 square feet and 2,500 square feet. The buyer's agent would be guilty of negligent misrepresentation C. Both the buyer's agent and the listing agent because it is reasonable that both agents should have known the difference between 1,500 square feet and 2,500 square feet. Both agents would be found guilty of a negligent misrepresentation. D. Neither agent because it is not reasonable to be able to tell the difference between a 1,500 square foot home and a 2,500 square foot home. Neither agent would be guilty of a negligent misrepresentation
C. Both the buyer's agent and the listing agent because it is reasonable that both agents should have known the difference between 1,500 square feet and 2,500 square feet. Both agents would be found guilty of a negligent misrepresentation. Rationale: Although the listing agent had primary responsibility to verify the square footage that they reported for the home, a difference of over a 1,000 square feet is something that the buyer's agent should have known
When a tenant dies who is the sole occupant of the lease the NC Residential Agreements Act provides that: A. This lease is automatically terminated upon the death of the tenant and the security deposit may be retained by the landlord or property manager B. The owner or property manager must pursue an eviction against the estate of the deceased C. The owner or property manager may file an Affidavit for Possession and must hold the tenant's personal property for 90 days D. The landlord or property manager may give a 90 day notice to terminate the lease and must account for and return the security deposit to the estate
C. The owner or property manager may file an Affidavit for Possession and must hold the tenant's personal property for 90 days Rationale: This is a special provision in the NC Residential Rental Agreements Act that is different than national real estate principles Rationale: Death of a tenant does not automatically end a lease Rationale: This is the general national concept, the NC Residential Rental Agreement Act provides differently
A large investment group is interested in purchasing commercial property in North Carolina. They have utilized the services of a properly licensed and active real estate agent from the state of California for many years. They have asked the agent to come to North Carolina to search for and write offers on any commercial properties that meet their needs. Given this information, which of the following statements is correct? A. since the California agent is representing the owners of the investment group and it is the investment groups own property no NC license is required B. an agent who wishes to conduct business in North Carolina is always exempt from pre-licensing classes, but must take the state portion of the NC Real Estate Commission examination C. an agent who wishes to conduct commercial business in North Carolina may do so as long as they affiliate with an in-state firm and they receive a limited non-resident commercial real estate license D. an agent who wishes to conduct commercial business in North Carolina may do so, but will be answerable to the real estate commission in the state in which they are licensed
C. an agent who wishes to conduct commercial business in North Carolina may do so as long as they affiliate with an in-state firm and they receive a limited non-resident commercial real estate license Rationale: A non-resident who is licensed in another stat and wishes to practice in NC may obtain a non-resident commercial real estate license Rationale: The licensee is handling the property of another and cannot practice real estate in NC without a license Rationale: Out of state licensees do not have an automatic exemption from prelicensing courses Rationale: a person with a limited non-resident commercial real estate license must submit to the jurisdiction of NC, not the state where they are licensed
The firm holding the earnest money is allowed, by the NC Real Estate Commission to write a check from the trust account to the attorney: A. 3 days before the anticipated settlement date B. 5 days before the anticipated settlement date C. no more than 10 days before the anticipated settlement date D. 1 day before the anticipated settlement date
C. no more than 10 days before the anticipated settlement date
A buyer makes an earnest money deposit of $1,500 on a $15,000 property and then withdraws the offer before the seller can accept it. The broker is responsible for disposing of the earnest money by: A. turning it over to the seller B. deducting the commission and giving the balance to the seller C. returning it to the buyer D. depositing it into his or her trust account
C. returning it to the buyer Rationale: A buyer may always withdraw an offer prior to the seller's acceptance. If the buyer withdraws their offer all due diligence fees and earnest money deposits should be returned to the buyer
A listing agent who was a BIC and a sole proprietor received a $500.00 weekend get-away to the North Carolina Mountains from their seller because of the outstanding service the listing agent provided. According to the NC Real Estate Commission Rules this would be acceptable because: A. any amount $500 or less is considered nominal B. the agent has a relationship with the client and is therefore allowed to accept gift monies for their services C. the agent may receive the bonus as long as it was provided for in a written agency agreement D. the agent may receive the bonus, but must notify prospective buyers even if they are represented by a different company
C. the agent may receive the bonus as long as it was provided for in a written agency agreement Rationale: Licensees may receive compensation in the form of bonuses with the permission of their client and their BIC. Here the sole proprietor is the BIC and can receive the bonus
When a broker is delivering 3rd party checks such as the earnest money made payable to a closing attorney and the due diligence fee made payable to the seller. If the contract is accepted and the broker is still in possession of the funds, which of the following is CORRECT: A. the checks must be delivered within 3 banking days B. the broker must always complete delivery of the checks once the offer is accepted C. the broker is acting as a courier and until the checks have been delivered they must follow the directions of the buyer D. the checks must first be deposited in the firm's trust account and then disbursed to the appropriate parties out of the account
C. the broker is acting as a courier and until the checks have been delivered they must follow the directions of the buyer Rationale: The broker when acting as a courier must follow the buyer's instructions until delivery of the checks has occurred Rationale: The checks must be delivered within 3 calendar days of contract acceptance Rationale: 3rd party checks are never deposited into the brokerage trust account
A landlord is renting a duplex rental unit. All of the following are TRUE regarding utilities connected to the property, EXCEPT: A. the landlord can charge separately for water, sewage and electricity B. the landlord must notify the tenant if water contamination exceeds the acceptable limit C. the landlord can disconnect the utilities if the tenant fails to pay the utility bills D. the landlord can collect for unpaid bills that remain at the end of the lease
C. the landlord can disconnect the utilities if the tenant fails to pay the utility bills
When is a broker allowed to draft their own lease agreement? A. when managing an immediate family member's property B. when managing corporate-owned property as an independent contractor C. when managing their own property D. when providing free property management services to their neighbor
C. when managing their own property Rationale: The drafting of leases and contracts is considered the unauthorized practice of law. Licensees only complete preprinted forms approved by the bar association. However, clients may draft their own contracts and agreements, and in this instance the broker is handling their own property, not representing another.
A real estate licensee may perform which of the following activities? A. Draft a legal document on behalf of a client B. Render their opinion on the legal title to real property C. Provide advice concerning how a buyer should hold title to real estate D. Fill in the blanks when completing a preprinted offer to purchase and contract for their client
D. Fill in the blanks when completing a preprinted offer to purchase and contract for their client Rationale: All of the other answers would be considered the unauthorized practice of law. Since NC is an attorney state, licensees do not engage in any of those activities. Licensees are permitted to fill in preprinted forms including the offer to purchase and contract. Rationale: The drafting of legal documents for another including contracts, leases and addendums is the practice of law and requires a law license. Rationale: Licensees should never render opinions as to legal title. Rationale: Licensees should not give advice on how to take and hold title to real estate.
All of the following are TRUE in regard to trust accounts and the earning of interest on such monies, EXCEPT: A. the accounts must be balanced and reconciled monthly B. An escrow account or trust account may be interest bearing so long as the client is informed and consents to the interest and it is paid in accordance with the client's agreement C. All interest that is being retained by the broker must be removed every 30 days D. It is illegal for the broker to retain the interest on trust accounts
D. It is illegal for the broker to retain the interest on trust accounts Rationale: A broker may have a trust account with the consent of the client and disperse the interest as agreed. Rationale: Trust accounts do not have to be interest bearing. If they are, the client must be informed that the account earns interest and consent to how the interest is disbursed Rationale: A broker is permitted to have their own funds in a trust account and it is not considered commingling, so long as the amount does not exceed $100 or whatever the bank requires
A tenant rents a residential property in an area that has no HOA and in which zoning allows for small businesses to exist in the residences. The landlord stated in the lease agreement that the property could only be used for residential purposes. The tenant wants to open a barbershop. Can the tenant operate the business out of the property? A. Yes, because the property is zoned for such use B. Yes, because the zoning negates any contrary lease provisions C. No, because the tenant did not inform the landlord of their intentions prior to signing the lease D. No, because the lease can prohibit certain activities even though they may be lawful and permitted under other laws and rules
D. No, because the lease can prohibit certain activities even though they may be lawful and permitted under other laws and rules Rationale: Landlords and tenants can place restrictions in leases that are more restrictive than zoning and HOA requirements. The lease evidences a mutual agreement by the parties as to use of the property
Which of the following properties are subject to the NC Vacation Rental Act? A. a summer vacation rental that is rented for 180 days B. a beach cottage that is leased by a North Carolina resident for a holiday weekend C. a 30 day property rented by an out of state contractor who is working on repairs to the property D. a mountain condo that is rented to an out of state resident for 2 weeks and visiting North Carolina with their family
D. a mountain condo that is rented to an out of state resident for 2 weeks and visiting North Carolina with their family Rationale: The VRA act applies to residential properties leased to out of state residents for less than 90 days and who are renting the property for vacation, recreation or leisure Rationale: The VRA act only applies to properties rented for less than 90 days Rationale: The VRA act only applies to out of state residents Rationale: The VRA act only applies to those renting property for vacation, leisure or recreation
The standard form NC Residential Rental Contract provides for all of the following, EXCEPT: A. lead based paint disclosure B. early termination by military personnel C. a provision that can require the tenant to obtain insurance and provide a renter's policy D. a provision that if the tenant breaches the lease the landlord is entitled to retain the security deposit
D. a provision that if the tenant breaches the lease the landlord is entitled to retain the security deposit Rationale: Regardless of how a lease ends there is no automatic forfeiture of a security deposit. It must be accounted for and only those deductions permitted by the Tenant Security Deposit Act are permitted.
Regarding BPO's (Broker Price Opinions) all of the following statements are correct, EXCEPT: A. a broker may conduct a BPO for a bank and charge a fee even if the broker has no reasonable chance of getting the listing B. a Broker Price Opinion is the same thing as a comparable market analysis C. a Broker Price Opinion is not an appraisal or an opinion of value D. a provisional broker is permitted to perform a Broker Price Opinion and collect a fee
D. a provisional broker is permitted to perform a Broker Price Opinion and collect a fee Rationale: Either a broker or a provisional broker may perform a BPO. However, a provisional broker may not charge a fee for doing so.
All of the following would be examples of a licensee committing mortgage fraud, EXCEPT: A. misrepresenting on a purchase contract the occupancy of the property to the lender B. encouraging the buyer and the seller to have separate agreements outside of escrow and closing C. providing a lender with a gift letter for the borrower's downpayment when the licensee has been told that the funds are actually a loan and must be paid back D. crediting a portion of the licensee's commission to the borrower's closing costs on the Closing Disclosure
D. crediting a portion of the licensee's commission to the borrower's closing costs on the Closing Disclosure Rationale: A licensee can always share commissions with a client so long as the client is not performing brokerage services.
All of the following could result in disciplinary action by the NC Real Estate Commission for unworthiness or incompetence, EXCEPT: A. failure of the agent to properly complete an offer to purchase and contract B. failure of the agent to diligently perform services they agreed to in a listing contract C. failure of the agent to review the Closing Disclosures of their clients D. failure of a property manager to provide a depreciation schedule
D. failure of a property manager to provide a depreciation schedule Rationale: Property managers do not provide depreciation schedules or tax information to the owners of property that they manage
All of the following would be considered an "eminently dangerous" condition which the landlord or property manager must remedy in a reasonable time, EXCEPT: A. lack of an operable toilet B. unsafe ceilings, floors or steps C. broken windows or locks D. inoperable smoke or carbon monoxide detectors
D. inoperable smoke or carbon monoxide detectors Rationale: Because inoperable smoke and carbon monoxide detectors pose a direct threat to health and safety both the NC Residential Agreements Act and the NC Residential Rental Contract requires these items to be repaired within 15 days of the receipt of notice of them being inoperable.
The primary duty of a property manger is to: A. evict disruptive tenants B. provide copies of leases to the owner every 5 days C. place tenants in apartments according to age D. manage the property in a manner consistent with the owner's instructions
D. manage the property in a manner consistent with the owner's instructions Rationale: The property manager is the agent of the owner. The property manager must fulfill fiduciary duties to the owner and is expected to maximize the net revenue consistent with the owner's instructions
According to the NC Good Funds Settlement Act, when is the settlement agent allowed to disburse money to the seller and the commission check to the broker? A. at settlement B. after settlement meeting C. after parties sign papers and the seller signs the deed D. once the transaction has been recorded
D. once the transaction has been recorded Rationale: No funds may be dispersed by the settlement agent (usually a closing attorney) until the deed has been recorded.
