303 Practice Exam - need to study

Diego, a North Carolina licensee, filled in the blanks on a standard legal form that was being used by his brokerage firm. Is this okay? A. No, because he's not an attorney, he shouldn't prepare contracts. B. No, he should have his client complete any forms. C. Yes, licensees can use standard pre-printed forms that were originally created or approved by an attorney. D. Yes, real estate licensees may draft contract language and fill in blanks on existing contracts as long as the contract addresses a real estate transaction.

C. Yes, licensees can use standard pre-printed forms that were originally created or approved by an attorney. (Licensees are allowed to fill in the blanks on standard pre-printed legal forms. Diego isn't violating any North Carolina laws by doing so.)

Which one of the following North Carolina business entities is required to have a real estate firm license in order to engage in real estate activities as a business? A. A general partnership B. A professional corporation C. A professional LLC D. A sole proprietorship

A. A general partnership

George is a developer interested in building a new subdivision. He needs to determine where to build and at what price the homes will sell most quickly. Which one of the following could he use to determine this? A. Absorption rate B. Debt/equity ratio C. Market rental rate D. Vacancy rate

A. Absorption rate (The market absorption rate can provide this information. When using absorption rates, it's important to consider historical averages for the market in to determine if rates are increasing (the market is slowing) or decreasing (the market is picking up).

Under North Carolina's license laws, NCREC has the power to discipline a licensee for ______. A. Any complaint about the licensee received from a bona fide client B. Behavior unworthy of a licensee, at the commission's sole subjective discretion C. Violating any rule adopted by the commission D. Violating any state or federal law

C. Violating any rule adopted by the commission

According to North Carolina Mountain Ridge Protection Act, the elevation that considers a mountain ridge as protected is ___________. A. 3,000 feet B. 4,000 feet C. 5,000 feet D. 6,000 feet

A. 3,000 feet (A mountain ridge is considered protected when the elevation is over 3,000 feet. This allows mountain views to be protected.)

BIC Antoine is working with licensed PB assistant Betty. What task(s) may Betty perform? A. Betty may perform all of these tasks. B. Coordinate and confirm appointments with property owners and inspectors, and assist licensees in assembling closing documents. C. Prepare promotional materials or ads without the approval of a supervising broker. D. Type a lease agreement and answer client questions about it.

A. Betty may perform all of these tasks.

Sam was putting up a basketball hoop by his driveway when one of the officers of the homeowners association walked by. "I'm so sorry," she said, "but you'll have to take that down. Basketball hoops in direct view of the street are prohibited." What is in place in Sam's subdivision that would prohibit this? A. CC&Rs B. Deed warranty C. Law D. Regulation

A. CC&Rs (Developers manage the visual and aesthetic details of a given neighborhood through covenants, conditions, and restrictions (CC&Rs).

Damien was fined $1,000 because he committed several license law violations when conducting timeshare project transactions. Once Damien pays his fine, where will the money end up? A. Civil Penalty and Forfeiture Fund B. Education and Licensing Fund C. NCREC members' salaries D. Real Estate Recovery Fund

A. Civil Penalty and Forfeiture Fund

Perry is a Georgia licensee with a North Carolina limited nonresidential commercial license. He affiliated with North Carolina resident broker Eric for a commercial real estate transaction. Whose job is it to supervise Perry during the transaction? A. Eric, as the resident broker, must supervise Perry. B. Eric's broker-in-charge must supervise Perry. C. No one. Perry is a fully licensed broker and doesn't require supervision. D. Perry's Georgia supervising broker must supervise him.

A. Eric, as the resident broker, must supervise Perry.

Mark is interested in leasing a building for his cabinet shop. He wants an office in the front and a large manufacturing space, a place to store his inventory, and loading docks in the back. He also wants to make sure that the space is adaptable and can accommodate changes in the company's needs over time. What type of space is he interested in leasing? A. Flex space B. Manufacturing C. Retail D. Warehouse

A. Flex space (Flex space is a combination of industrial and office space, often with an office or showroom in front and docks, a manufacturing lab, or a warehouse in back.)

Hart and his wife Hanna are leasing the property where they intend to build a permanent structure. What type of commercial lease do Hart and his wife have? A. Ground B. Lease purchase C. Proprietary D. Sale and leaseback

A. Ground (A ground lease is used when tenants lease the property where they intend to build. When the lease expires, any improvement to the property belongs to the landowner.)

What impact does the Clean Water Act have on wetlands use? A. It governs the use, maintenance, and development of wetlands. B. It prevents development of wetlands areas. C. It prohibits conveyance of any wetlands properties to private entities. D. It requires regular water quality testing in all wetlands areas.

A. It governs the use, maintenance, and development of wetlands.

Under what conditions may a PB in North Carolina continue to work on a pending transaction after leaving his former firm? A. It's illegal for PBs to work under two BICs simultaneously. B. The broker receives the approval of both the former BIC and new BIC. C. The last remaining activity is to attend the closing. D. The transaction is 95% complete.

A. It's illegal for PBs to work under two BICs simultaneously.

Winston-Salem broker Kathy told her first-time buyer client that she would rebate 15% of her commission in cash to the buyer after closing, a common and accepted practice at her firm. Kathy neglected to take one important step. What did she do wrong? A. Kathy didn't disclose the rebate to the buyer's lender. B. Kathy didn't get her firm's approval. C. Kathy didn't guarantee the rebate to the buyer. D. Kathy's rebate amount is illegal.

A. Kathy didn't disclose the rebate to the buyer's lender.

A tenant was skateboarding around the complex performing dangerous tricks and stunts. Although the sidewalks had been well maintained, the tenant flew head first into a pole, sustaining a concussion. Is the landlord likely to be found liable for the injury? A. No, because the injury wasn't caused by the condition of the property. B. No, because the tenant wasn't permanently injured. C. Yes, because the injury occurred on the property. D. Yes, if the landlord hadn't prohibited skateboarding.

A. No, because the injury wasn't caused by the condition of the property.

Commercial leases may contain an automatic renewal clause. If this is the case, what happens after the lease's original term has come to an end? A. The lease continues on a month-to-month basis. B. The lease is automatically renewed for the term stated in the original lease agreement. C. The tenant is given a window of opportunity in which to buy the rental property. D. The tenant is given one month to negotiate a new lease with the landlord.

A. The lease continues on a month-to-month basis. (Renewal of commercial leases may be automatic, but only on a month-to-month basis and usually requires the landlord's consent.)

Which of the following terminates the broker-in-charge eligibility for North Carolina brokers? A. Their broker's license becomes inactive. B. Their two-year maximum term as a BIC is over. C. They fail the BIC annual exam. D. They fail to act as a broker-in-charge for a brokerage office for a period of six months or more.

A. Their broker's license becomes inactive. (To keep eligible BIC status, brokers must keep their broker's license active, take the four-hour BIC update course, and avoid making any false, incomplete, or incorrect statements related to their application.)

North Carolina buyer Anthony has fallen in love with Renee's listing and, in an effort to ensure he beats out any other offers, he asks Renee the amount of the highest offer that she's received for the house. How should Renee respond? A. "Let me ask my seller client if I can share that with you." B. "Let me ask that buyer if I can share that with you." C. "No problem. The highest offer I've received right now is $5,000 below list price, so if you come in at the list price, you should be in good shape." D. "Sorry, I can't share that with you. Just present your highest and best offer."

B. "Let me ask that buyer if I can share that with you."

For HOAs created after 2010, transfer fees include ______. A. A one-time fee for preparing a resale certificate B. A one-time payment to an HOA when a unit is sold to its initial owner C. Fees for setting up a new (not initial) owner of a condo unit D. Payments used for preparing statements of unpaid assessments

B. A one-time payment to an HOA when a unit is sold to its initial owner

BIC Sydney is planning to attend broker Alyssa's closing on July 1 because Alyssa's license became inactive on June 30. Alyssa's done all the work on this transaction but simply forgot to take her CE. Which of the following statements is true? A. Alyssa is allowed to attend closing because she earned commission on the transaction. B. Alyssa is still entitled to the commission for performing brokerage services she earned prior to the date her license became inactive. C. Because Sydney wasn't the seller or buyer agent, she may not attend on Alyssa's behalf. D. Due to her inactive license, Alyssa has forfeited her commission earnings.

B. Alyssa is still entitled to the commission for performing brokerage services she earned prior to the date her license became inactive.

Esteban is the qualifying broker for Elite Realty, which is a licensed real estate firm in North Carolina. Elite is registered as a corporation for tax purposes. Which of the following roles must Esteban hold for Elite Realty? A. Esteban must also be the broker-in-charge. B. Esteban must be a corporate officer for the corporation. C. Esteban must be the majority shareholder in the corporation. D. There is no specific role that the qualifying broker must hold with the corporation, as long as he is an affiliated broker.

B. Esteban must be a corporate officer for the corporation. (In order to serve as a qualifying broker, brokers must serve specific functions within different company types. For a corporation, the qualifying broker must be a corporate officer.)

Which entity regulates and enforces the construction methods of manufactured homes? A. American National Standards Institute B. HUD's Manufactured Housing Program C. Uniform Construction Code D. U.S. Department of Transportation

B. HUD's Manufactured Housing Program (Construction methods of manufactured homes are federally regulated and enforced by HUD's Manufactured Housing Program.)

Jim's firm has set a policy that it will not share commission with non-member brokers. What must Jim be sure to do? A. Disclose the limitation up front to a prospective buyer-client. B. He must be sure to do all three of these things. C. Make sure the listing agreement specifies those conditions. D. Only work with buyer agents who are member brokers.

B. He must be sure to do all three of these things. (Jim could find himself facing misrepresentation charges or being in a commission dispute with a non-member broker if he doesn't do these things.)

Sergio is a North Carolina PB and is the buyer's agent for a transaction in which Maria (from a different brokerage) is the listing agent for George's property. Maria offered an incentive to the buyer's agent upon the sale of the property. From whom may Sergio be paid the incentive? A. George B. His own broker C. Maria D. Maria's BIC

B. His own broker

Which of the following statements is true about septic systems? A. There are many different types. B. They differ in the way they are installed. C. They do not require inspection. D. They do not require maintenance

B. They differ in the way they are installed. (Septic systems are often similar in type, but vary in the way they are installed. They do require periodic inspection and maintenance.)

To whom/which entity should a licensee who's been threatened with violence after refusing to violate fair housing law report the threat? A. HUD B. Law enforcement officials C. The governor D. The National Fair Housing Alliance

B. Law enforcement officials Threatening violence is a criminal act that should be reported to law enforcement.

North Carolina landlord Lola and tenant Tiffany both agreed to exclude three provisions of the lease agreement pertaining to Lola's statutory duties as a landlord. Legally, can they do this? A. No, only the property owner may waive Lola's statutory duties. B. No, the landlord cannot waive statutory duties. C. Yes, as long as they both agree to it writing. D. Yes, provided this is a separate arrangement between them.

B. No, the landlord cannot waive statutory duties. (Under the North Carolina Residential Rental Agreements Act, a landlord's statutory duties may not be waived under any circumstances.)

Who should be listed on an agency agreement between a client and a voluntary team with no business entity? A. Neither the team entity nor the affiliated brokerage firm B. Only the team's brokerage firm C. The team entity and the affiliated brokerage firm D. The team entity only

B. Only the team's brokerage firm (For voluntary teams with no business entity, only the brokerage firm should be listed on any agency agreements between clients and members of the team entity.)

What is a kickback? A. A bonus B. A cash rebate C. An illegal referral fee D. A referral fee paid by one licensee to another for referring business

C. An illegal referral fee (A kickback is anything of value, regardless of the amount, that an individual or company provides to a real estate professional in exchange for referring business.)

Which of the following is true about how the North Carolina Coastal Area Management Act affects developers? A. Developers may dredge in wetlands or otherwise disturb the water level as long as they pay a fee to the state for doing so. B. Developers may not build anything within 200 feet of a wetland boundary. C. Developers may only work on projects in coastal areas if they have a permit to do so. D. Permits are granted (or not) based on the projected income that the development will bring to the state.

C. Developers may only work on projects in coastal areas if they have a permit to do so.

A North Carolina tenant breached his lease but didn't commit a crime. How many days must a landlord give the tenant to remedy the situation before filling for a summary ejectment? A. 15 B. 30 C. Five D. Zero

C. Five (When a tenant breaks a rule outlined in the lease, the landlord may deliver written notice to quit to the tenant specifying the noncompliance. If the issue isn't remedied within five days, the landlord may file for a summary ejectment.

North Carolina broker Karyn has accepted compensation from a vendor for recommending its services to a client. Under what circumstances would Karyn NOT be required to disclose her acceptance? A. If Karyn accepted the item from another actively licensed individual, she needn't disclose it to anyone else. B. If Karyn's BIC approved the transaction, she needn't disclose it to anyone else. C. If what Karyn accepted is a token of insignificant or symbolic worth, she needn't disclose it to anyone. D. If what Karyn accepted was perishable, she needn't disclose it to anyone.

C. If what Karyn accepted is a token of insignificant or symbolic worth, she needn't disclose it to anyone. (All compensation must be disclosed fully, in a timely manner, to all relevant parties to be legally accepted by a licensee if it's of more than nominal value. However, nominal compensation does NOT need to be disclosed, which means that if 's of insignificant, token, or merely symbolic worth, Karyn wouldn't need to disclose it.)

Grant is a real estate professional. He can receive compensation (items of value) from an SSP for ______. A. Marketing the SSP B. Name-dropping the SSP C. Performing actual services D. Referring clients to the SSP

C. Performing actual services (Real estate professionals can receive compensation (items of value) from an SSP for performing actual services.)

What North Carolina agency is responsible for ensuring compliance with the federal Safe Drinking Water Act? A. Conservation Agency B. Division of Surface Water C. Public Water Suppliers Section D. Water Protection Agency

C. Public Water Suppliers Section (In North Carolina, the Public Water Suppliers section is responsible for ensuring compliance with the federal Safe Drinking Water Act.)

Of the following, which is NOT required to hold a North Carolina real estate firm license in order to practice real estate activities? A. Bearenstein Homes, an LLC B. Mason and Mason, a general partnership C. Sylvia Raulstad, a sole proprietor D. Wellington Dwellings, a corporation

C. Sylvia Raulstad, a sole proprietor

In North Carolina, failure to properly complete preprinted real estate contracts is an example of ______. A. A clerical error that's not considered improper conduct B. Avoiding the unauthorized practice of law C. Dishonest dealing D. Incompetence that endangers the public interest

D. Incompetence that endangers the public interest

A master deed, master lease, declaration, or any other document used to create a timeshare plan is also known as the timeshare ______. A. Agreement B. Covenant C. Estate D. Instrument

D. Instrument

Your investor client is interested in purchasing a commercial office building with at least five but no more than eight floors. What type of building is this client interested in? A. Campus or garden building B. Condominium office space C. High-rise/tower D. Mid-rise building

D. Mid-rise building

Ramon and Bill are victims of fair housing discrimination. They were refused an apartment because they're gay. Sexual orientation is not a specifically protected class under the Fair Housing Act. Which protected class extends protections to Ramon and Bill from discrimination in housing based on their sexual orientation? A. Familial Status. B. Marital Status. C. Religion. D. Sex.

D. Sex. (Sexual orientation, smoking, and age aren't specifically protected by the Fair Housing Act, though some court cases have held that discrimination based on sexual orientation is discrimination based on sex. National origin is specifically protected.)

Which of the following describes a situation in which a person performing a real estate brokerage activity in North Carolina must have a license? A. An individual performs a brokerage activity on behalf of someone else. B. An individual performs a brokerage activity to help sell someone else's property. C. An individual sells personally owned real estate. D. The individual performing the brokerage activity receives something of value in exchange.

D. The individual performing the brokerage activity receives something of value in exchange.

Unlike federal fair housing laws, in North Carolina, private owners who sell without a broker are not exempt from North Carolina fair housing laws. Which of these statements about this conflict is true? A. Private owners can follow either federal or state law as long as they're consistent. B. The owner is permitted to follow whichever law is least restrictive. C. The owner must follow federal law for any federally related transaction. D. The owner must follow the more restrictive state law.

D. The owner must follow the more restrictive state law.

Which of the following is NOT a piece of information required in the North Carolina real estate firm license application? A. The firm's primary physical office address B. The names and license numbers of the business entity's principals C. The qualifying broker's name and license number D. The register of deeds identification number

D. The register of deeds identification number

Absorption rates are very valuable market indicators, and savvy developers depend on them. What information do absorption rates provide? A. The average number of days a specific property remains on the market before selling B. The average selling price for a specific property type in a market C. The time it takes for the market to adapt to changes in buyer preferences D. The time it would take to sell all of a specific property type in a market

D. The time it would take to sell all of a specific property type in a market (The market absorption rate is the amount of time it would take to sell all of a specific property type within a particular market. The formula for calculating the absorption rate is: number of homes sold ÷ period of time.)

Which of these is illegal: disparate impact or disparate treatment? A. Disparate impact B. Disparate treatment C. These terms mean the same thing. D. They're both illegal.

D. They're both illegal.

North Carolina broker James needs to reinstate his license. It's been expired for a little less than a year. How much can he expect his reinstatement fee to be? A. A flat $50 B. Equal to the renewal fee at the time of his reinstatement application C. The renewal fee multiplied by the number of months his license has been inactive D. Twice the renewal fee at the time of his reinstatement applicatioN

D. Twice the renewal fee at the time of his reinstatement applicatioN

Stacy, a North Carolina licensee, inadvertently violated a rule NCREC had recently enacted. May the commission impose discipline under the circumstances? A. No. The commission doesn't have the power to impose discipline if the licensee can prove ignorance of a provision of the license law. B. No. There's always a six-month grace period for licensees after a rule is changed or newly enacted. C. Yes. The commission has the power to impose discipline on a licensee at any time, at its sole subjective discretion. D. Yes. Under the "violation of any rule" provision, licensees are subject to discipline for violating any rule adopted by the commission.

D. Yes. Under the "violation of any rule" provision, licensees are subject to discipline for violating any rule adopted by the commission.

An underground storage tank has been in place for 15 years. What is its remaining useful life, on average? A. 10 years B. 15 years C. Five years D. Zero years

D. Zero years ( The typical underground storage tank has a useful life of 15 years. This one is at the end of its useful life.)