Full List of Terms
Acknowledgement
In order for the deed to be eligible for recording, it must be _______ . The grantor must appear before a public office and state that the singing of the deed was done by the grantor and was a voluntary act.
Special Use Permit
In order to obtain a variance for a specific use for as property, the application of ______ is essentially automatic and that the use is already prepared for in the code.
How many days in advance of closing does the lender have to deliver the closing disclosures to the buyer and seller?
In person: 3 business days Email or mail: 6 business days
What is equity build up?
Increase in the property's value beyond what the investor originally invested as a down payment
What are "indirect costs"?
Indirect costs are generally other expenses that help move the project toward completion.
In addition to itemizing all borrower-paid and seller-paid closing costs, page two of the Closing Disclosure also tells the borrower when each amount is paid by listing it under ______.
"At closing" or "before closing"
What type of policy insures a home and contents against the perils in the HO-1 and other additional perils, such as falling objects, weight of ice, snow, sleet, and damage from water or steam discharge?
"Broad form Policy" (HO2)
Fiduciary Duties
"O.L.D C.A.R" (Obedience, Loyalty, Discolsure, Confidentail, Accounting, Reasonable Skill & Care)
The Loan Estimate warns the client if the loan includes this potentially risky feature.
"Prepayment Penalty"
What agency duties survive the termination of an agency agreemen?
- Agents must account for all money and other property received during the relationship until it has all been accounted for. - Agents must still keep confidential information confidential. This duty never ends.
What is it called to pay the cost to replace or rebuild a property?
Insured value
Specific North Carolina Requirements
- Seller must record within 5 days of execution - Buyer must be given 30 days to cure default prior to forfeiture of interest
Agents can only represent buyers in a commercial listing if:
- The agent owns less than 25% interest. - The buyer agrees after the agent has provided full written disclosure of the ownership interest.
Characteristics of Land Installment Contracts
1) Buyer provides down payment 2) Seller retains title 3) Buyer makes payments 4) Seller transfer title upon full payment
What are the three approaches to value when an appraiser is being done?
1) Sales Comparison 2) Cost 3) Income Capitalization
Deficiency judgement
A court order stating that the borrower still owes the lender money.
Accord and satisfaction
A settlement agreement between the parties, often in the form of some compromise, that annuals and discharges the original agreement.
The location submarket includes:
A specific neighborhood, city, or region Urban, suburban, or rural A type of geography (some examples are ocean front, mountain, or desert)
Judith is buying a home with a well. Who should inspect the property's well?
A state-certified lab
What are tie-in arrangements? What law does it violate?
A tie-in arrangement occurs when the providing of one service is made dependent on the customer or client obtaining another. For instance, an agent cannot tell a seller, "I can only offer this commission rate if you use the title company/inspector/mortgage broker I recommend." These types of arrangements are a violation of anti-trust laws.
Allows the seller to choose a single option (of three provided) regarding entering into other vacation rental agreements
Additional Vacation Rentals
A loan with a rate that fluctuates based on the economic index with which it's associated
Adjustable rate
What is an agency contract?
Agency contracts are always between the brokerage and someone else, and not between the licensee and the client/customer. The licensee instead is acting as a representative of the brokerage.
What does the fiduciary duty of loyalty intail?
Agents must act in their clients' best interest at all times—above the interests of all others, including the agent's own.
Areas designated for raising and grazing animals and/or growing crops
Agricultural
Marketable Title Act
Aims to extinguish all defects in the title by providing that if a chain of title can be established for 30 years without conflicts, claims outside this chain are extinguished.
How many square feet are in an acre?
An Acre = 43,560 square feet
Someone who acts on behalf of someone else
An Agent
Overlay Districts
An ______ is a zoning device that superimposes one zoning area over another.
What is an accord item?
An accrued item is an expense owed by the seller but credited to the buyer. A prepaid item is something the seller has paid for but not yet used, such as fuel oil in a tank.
General Agency
An agency limited to one particular field. Relationship w/ B.I.C Perform acts for particular activity Property manager
Special Limited Agency
An agency that is limited to one well-defined task one time Listing agents and buyer brokerage
Buyer Daphne and seller Kurt signed a sales contract with a definite closing date of May 15. Daphne then learned that she needed to move the closing date to June 15. What document should she use to make this change?
An amendment
Under the "Summaries of Transaction" section on page three of the Closing Disclosure, amounts listed for the borrower's transaction are calculated to result in ______.
An amount due from the borrower, which will match the cash to close amount
Under North Carolina law, what is the maximum amount of a security deposit a landlord can charge for a standard one-year lease?
An amount equal to 2 month's rent
What is a backup offer?
An offer made on a property that's already under contract is a back-up offer; this offer only becomes effective if the current contract on the property falls through.
Sallie, a seller client, introduced you to another licensee named Don at an open house as "my real estate agent." Don proceeded to ask you questions about the property and set up a time for you to meet with his client, who Don said might be interested in Sallie's property. What kind of authority has been created here?
Apparent authority
A commitment fee is calculated based on the undisbursed loan amount and is usually paid ______.
At closing
Which type of framing involves a single system of wall studs run from the foundation through the first and second floors to the ceiling support?
Balloon framing
What are common foundation types?
Basement, slab on grade, and crawl space
Nancy encourages residents to sell now and avoid declining house values that are likely to accompany minorities moving to the area. What violation of fair housing is this?
Blockbusting
Coral is preparing a report pursuant to the terms of a property management agreement. This report shows actual results from operating the property versus what had been projected. What report is she preparing?
Budget comparison statement
CERCLA (Superfund) Comprehensive Environmental Response Compensation & Liability Act
CERCLAS is a federal law Liability of owner as well as others in the chain of title When heavily contaminated the government steps in
What is the housing debt-income ratio for FHA loans?
Calculation: ([Principal + interest + taxes + insurance + association fees] ÷ monthly gross income) × 100
What are Open Listings also referred to as?
Co-listings
Partitioning the Property
Co-owners may also bring legal action to have the property partitioned. This means a judge will determine how the property may be split so that each co-owner can be sole owner of a part of the property proportional to the fractional interest that individual owns. If it's not possible for the property to be physically divided that way (and it's often not), the court may order the property to be sold, and the appropriate shares of the proceeds be distributed to each co-owner. Tenants by the entirety don't have a right to partition, since the form of ownership assumes the married couple are one legal entity, but joint tenants and tenants in common can go this route.
Nonjudicial foreclosure under power of sale
Common in title theory states, does not require the lender to bring a lawsuit against the defaulting borrower to obtain a judgement to foreclose.
Lenders must show that they serve the community's low- to moderate income housing needs.
Community Reinvestment Act
Foreclosure
Conducted without the consent of the property owner who incurred the diet that resulted in a lien.
Which federal entity regulates interstate land sales?
Consumer Financial Protection Bureau (CFPB)
Cassie is helping her buyer client, Gus. As they discuss preparations for closing, she cautions Gus, "Make sure you review the Closing Disclosure as soon as you receive it and ______."
Contact your lender immediately if you find errors or have any questions
Right to determine how others may use the property
Control
An agreement or promise made between the parties of a leasing contract
Covenant
How do you calculate DCR?
Debt Coverage Ratio = Net Operating Income / Annual Debt Service
When looking at an income property appraisal, what is the term used to describe the process of calculating the projected net operating income for a property over the next year, then apply a capitalization rate?
Direct Capitalization
What are "direct costs"?
Direct costs generally include materials and payments to workers
What are the disadvantages of using the MLS?
Disadvantages: - Must pay a fee for the service and for each user - Might have to share commissions with other brokers - Some clients may have privacy concerns about having their property listed on the MLS
The tenant is required to leave when the agreed-upon period is up.
Estate for Years
Personal Property
Everything that's not real property
What's the best definition of personal property?
Everything that's not real property
What duties do you owe to your client?
Fiduciary duties
Investment strategies are another submarket. As we mentioned earlier, these may include:
Fix and flip Buy and hold Wholesale
Mold can develop from:
Flooding Sewage backup Leaks (plumbing, roof) Damp crawl spaces or basements Poorly ventilated dryers
What are constructed on top of footings?
Foundation walls
An earthquake causes the hillside overlooking several homes to collapse. This is an example of what influencer of property values?
Geographic
What should an agent do if first substantial contact is over the phone or email?
If your first substantial contact is via email or phone, you must provide the brochure to the consumer within the three days following the phone call or email exchange. Remember that you must also explain the brochure, which may be done via phone or email.
Which physical characteristic of land addresses the concept that the geographic location of a piece of land is fixed and can never be changed?
Immobility
Which economic characteristic of land contains the concept that a land's value can be affected by the changes made to it, such as construction of a home or shopping center?
Improvements
What is an "index lease" with commercial properties?
In an index lease, sometimes known as a variable lease, the payments change at pre-determined intervals according to changes in an economic index (such as the Consumer Price Index, Government Cost of Living Index, or some other index agreed upon by the contracted parties).
NCREC determined that three banking days after receipt from the client is the deadline by which that deposit must be made into a escrow account EXCEPT in the following situations:
Trust funds received by provisional brokers (those who haven't finished their 90-hour post-licensing education) or nonresident commercial brokers must be delivered to the appropriate (affiliated) North Carolina broker-in-charge immediately upon receipt. The BIC still has until the third banking day to make the deposit, these licensees may not hold trust funds any longer than necessary. Trust funds held for time shares need to be deposited into the trust or escrow account immediately. Once deposited, a 10-day period begins in which the funds still belong to the purchaser rather than the developer. The funds will remain in the account for 10 days, allowing the purchaser the option to cancel. When earnest money or tenant security deposits are given to a broker in non-cash form for a pending offer to buy or lease, the funds must be deposited no later than three days after the offer is accepted (rather than receipt). When a broker takes possession of option money or a due diligence fee in the form of a check or other negotiable instrument made payable to the seller or a third party escrow agent, the broker can hold the instrument and either give it to the party to whom it's written or return it to the buyer according to the buyer's directions. It wouldn't be appropriate for the broker to deposit it, because it's not made payable to the brokerage. The broker may NOT keep the money/fee for more than three banking days after the option or other sales contract is accepted.
Your client wants you to help him sell his property as soon as the person executing his grandmother's trust conveys it to him. What type of deed is to be used?
Trustee's deed
Lenders must disclose the terms and conditions of loans.
Truth in Lending Act
Tenents in common
Two or more people may take title to property as tenants in common. Each co-owner has an undivided interest in the whole property (known as unity of possession), regardless of how many co-owners there are and the amount of each co-owner's fractional interest in the property's value. Fractional interests may be uneven. If two or more people buy a property and don't specify how they'd like to take ownership, it defaults to tenancy in common. Transferring Interest Each tenant in common has the right to transfer her interest in the property to another, without requiring permission from the other co-owners. However, transferring the entire property does require agreement from all co-owners. Right of Inheritance Tenants in common have a right of inheritance, but not a right of survivorship. The fractional interest of a tenant in common who dies will pass to that individual's heir as named in a will or according to the state's laws of descent. The heir will become tenants in common with the other co-owners.
What is the typical security deposit for weekly tenants? What is the typical security deposit for monthly tenants? What is the typical security deposit for year tenants?
Two weeks' rent for weekly tenants One-and-one-half months' rent for monthly tenants Two months' rent for yearly tenants
Discount Points
Type of prepaid interest that borrowers pay to lower a loan's interest rate
Insured conventional loan
Typically is a conventional loan in which the borrower has a down payment of less than 20 percent and therefore borrows at least 30 percent of the property value. In these cases, insuring repayment of the top portion of the loan to the lender is necessary in the event the borrower defaults.
What are the agencies responsible for wetland regulation?
U.S. Army Corps of Engineers, which oversees navigation and water supply. Environmental Protection Agency (EPA) directs wetland protection at the chemical, physical, and biological levels. U.S. Fish and Wildlife Service manages fish and wildlife game species and threatened and endangered species. National Oceanic and Atmospheric Administration (NOAA) protects the nation's coastal resources. Natural Resources Conservation Service (NRCS) manages wetlands impacted by agricultural activities.
Ready, willing and able
Under the listing contract the broker is entitlement to commission determined by two tests. 1) ready willing and able test. If the broker brings a buyer to the seller who is ready to buy, is willing to buy, and is able (financially) to buy under the price, terms, and conditions of the listing contract, or such other price terms and conditions as our leader agreed-upon, the broker is legally entitled to commission.
Lyra was just awarded all of the profits her previous listing agent made from reselling Lyra's old house. The listing agent most likely was found guilty of ______.
Undisclosed self-dealing
The agent must give back any profits from reselling the property if the agent engaed in ___________
Undisclosed self-dealing
What is Undue Influence?
Undue influence exists when an act of persuasion overcomes another individual's free will and judgment.
What is unintended duel-agency?
Unintended dual agency exists when, for instance, you represent the seller, a buyer customer asks you for advice, and you provide it. In that case you'd have acted in an agency capacity to an unrepresented party—the buyer. If you realize you may have created unintended dual agency, you must disclose that fact to both parties.
The cost per unit of measure of each component part of the structure is multiplied by the number of units of that component part.
Unit-in-place
Agency that holds the most authority of any agent type; unusual role in real estate.
Universal Agency
Types of General Liens
Unlike a specific lien, which only attaches to a specific property, a general lien attaches to a debtor and may include all of that debtor's assets. These include: - Judgement liens - Writ of attachment - Homestead exemtion - Property tax Liens - State and Federal Tax liens
Why do deeds need to be recorded?
Until a deed is recorded, ownership may legally be questioned. Deeds must be recorded at the office of register of deeds, and recordation of lien satisfaction (like when a mortgage is paid off) is needed in order to clear that property's title from the encumbrance of that mortgage lien. Documents that impact ownership interest generally need to be recorded, but in North Carolina, the Conner Act specifies a short list of documents that must be recorded, including deeds. North Carolina statute requires that contracts and memorandum of contracts (which would be entitled "Memorandum of a Contract for Deed") be recorded in the office of the register of deeds within five business days after the contract has been signed. In accordance with the Conner Act, whoever records the deed first owns the property. This type of policy makes North Carolina a "pure race state."
When is an offer considered legally revoked?
Until a notice of revocation is given to the offeree (or offeree's agent), an offer is NOT considered legally revoked.
If the responsible parties refuse to clean up hazardous contamination, the EPA can hire its own contractors and seek damages in court for _______.
Up to three times the cost of cleanup
Buyers Romy and Steven are looking over closing documents and don't know if the Loan Estimate matches everything on the Closing Disclosure. Usually, amounts shown on the Closing Disclosure that don't exactly match the figures on the Loan Estimate will be due to _______.
Updates to reflect the terms of the borrower's legal obligation when the loan closes
Upon determining a violation has occured of the NC Timeshares act, the commission has the power to:
Upon determining a violation has occurred, the commission has the power to: Suspend or revoke a time share salesperson or project broker's license. Suspend or revoke a developer's certificate of registration of a time share project. Reprimand or censure a time share salesperson, developer, or project broker. Fine a time share developer $500 for each violation of the Time Share Act.
When/ how do appraisers use a Gross Rent Multiplier (GRM)? Why?
Use the gross rent multiplier (GRM) by dividing the sale price of a comparable property by that property's monthly or annual gross rent to arrive at a single number, which is your GRM.
Which appraisal step will an appraiser perform next after estimating the value of the land if it were vacant?
Use three approaches to estimate the value of the property.
Trustee
Usually an attorney, holds the rights conveyed by the buyer/borrower in trust for the beneficiary, who is the lender.
Improvements
Usually, the term improvement refers to making something better. In the real estate world, improvements are structures such as buildings, sheds, barns, fences, roadways, etc.) that are placed on land. The condition and types of improvements on a property can impact value either positively or negatively. Improvements can also positively or negatively impact the value of surrounding properties or an entire community. For example, something as simple as a rundown house in a neighborhood can have an adverse impact on the value of neighboring properties. Proximity to commercial or industrial properties can adversely impact the value of entire neighborhoods or communities.
VA loan
VA Guaranteed Loan is from Dept of Veterans Affairs. -Though VA approved lender -when discharges, vet gets Certificate of Eligibility -VA guarantees 50% of loan to lender -Each year a new loan limit is set -buyer pays a Funding Fee to VA -can be 100% loan (no down payment) -CRV = Certification of Reasonable Value (versus appraisal). If less than sales price, vet can pay diffence -at closing vet pays Prepaid Items of tax & insurance -assumable to another vet or non vet -Release of Liability - new buyers gives this to VA to release old owner from liability when assuming -Substitution of Entitlement - only a vet can give this to VA when assuming. The old owner vet can get another VA load in future. (ie best to let another vet assume)
Which term describes the price at which you'd expect a property to sell after suitable exposure to the market, assuming no exceptional factors influence the transaction?
Value
A contract may be cancelled for one of a number of reasons. What type of contract is it?
Voidable
What is Voluntary Alienation? What are the types of it?
Voluntary alienation: Conveyance of real property with the owner's consent. Deed: The owner conveys interest in real property to another party as part of a real estate transaction. Will: Real and personal property are conveyed to the devisee(s) according to the deceased's written instruction.
What is a description of how an exterior wall on a house is built?
Walls consisting of 2 x 4 studs, a top plate, and a bottom plate are attached to the subfloor, which is attached to the foundation top plate.
An insurance score is used to help determine _______.
What insurance premiums will be over time
When should North Carolina broker Brody use Standard Form 340-T, Response to Buyer's Offer, for his client Caroline?
When Caroline wishes to reject an offer
What must an agent do when a buyer/or seller completes and signs an offer to purchase?
When a buyer completes and signs an offer to purchase, the broker must provide that buyer with an exact and complete copy of the signed offer. When the seller accepts the buyer's offer and signs it, the broker must promptly provide the seller with an exact copy of the signed purchase offer. Once the buyer communicates the seller's written acceptance to the buyer, the contract becomes legally binding. Then, the broker must promptly deliver a copy to the buyer, proving that the contract is complete and legally binding.
What is the NC-1099NRS Form regarding purchases from non-resident sellers?
When a buyer purchases a property from a non-resident seller (which might be an individual or an entity, such as a trust or partnership), the state requires that form NC-1099NRS be completed and submitted to the North Carolina Department of Revenue (NCDOR) North Carolina requires that buyers complete and submit the form 15 days from the date of closing after purchase from a non-resident. The form requires: Seller's contact information identification number the property address closing date sale price.
What are financial leverage ratios used for?
When a company is referred to as "highly lveraged" that means that the company has a significant amount of the debt compared to the value of their equity. Which is: (properties value - total liabilities)
When a firm practices seller agency only, what does this mean when working with sellers?
When a firm practices seller agency only, all licensees affiliated with that firm are agents of the seller client, and must make it clear to buyers that they represent the seller and can't advise the buyers.
Judgement Lien
When a judgment has been entered against a debtor, the creditor may file for a judgment lien. This type of lien covers all real estate owned by the debtor and property purchased by the debtor after the judgment was entered.
Non-conforming use
When a previously un-zoned area receives a zoning designation or an area is rezoned, any existing buildings or developments that don't comply with the new zoning ordinances are often grandfathered in. They are then designated as being non-conforming. These properties, while legal for a time, are often subject to rezoning at some point. If the property is sold, the new owner would not be able to continue the non-conforming use.
Protection agreements
When a seller enters an agreement to compensate the agent although not obligatory the seller to an employment model.
What is apparent authority?
When a third party perceives you to have as a principal's agent. Apparent authority (aka ostensible authority by estoppel) occurs when a client, either by words or conduct, leads a third party to believe that you're the client's agent.
Defeasible Fee Estate
When a transfer of real estate is qualified by something the new owner can or can't do, a defeasible fee estate exists. An example might be that a seller might prohibit the deforestation of the land. If a buyer disregards this prohibition and begins deforestation, the original owner can initiate legal proceedings to retake the property.
What do agents not have to do at a real estate auction?
When agents work at a real estate auction: - They don't have to provide the "Working with Real Estate Agents" brochure. - They don't have to disclose dual agency. - They don't have to disclose to buyers that they represent the seller's interests.
When borrowers apply for a mortgage loan, mortgage brokers and/or lenders must give the borrowers:
When borrowers apply for a mortgage loan, mortgage brokers and/or lenders must give the borrowers: A Loan Estimate (LE) of settlement costs, which lists the charges the buyer is likely to pay at settlement. This must be provided within three days of loan application. A Closing Disclosure (CD), which is a disclosure of the actual settlement costs and is provided to the borrower three days prior to signing closing documents.
Can someone petition rezoning?
When current zoning prohibits a desired use, the property owner may petition for rezoning. An amendment to an existing zoning ordinance may be permitted when an error is discovered or a drastic community dynamic has changed
Annexation
When something is added to real property, it is called _________
First Substantial Contact
When the client or customer signs that they received the brochure and that it was received with him.
Open listing
When the seller list of property with the assistance of one of my brokers. The broker generating the sale is entitled to the compensation. If, however, the owner sells the property, the owner owes no commission.
What are questions that a listing agreement should answer?
When will the listing agreement begin and end? Use firm dates. How will you be compensated, and under what terms? The agreement should spell out specific payment or terms, often expressed as a percentage of gross sale price that is to be paid when the property is sold. Some brokerage firms charge a flat fee, rather than a commission percentage. How will the cooperating agent's commission be paid? What will the list price of the property be? Does the seller give permission to: - Post the listing on the MLS? - Install a lockbox? - Install a "for sale" sign on the property? - Reveal the existence of other offers?
North Carolina broker Tabitha is preparing a representation agreement for her seller clients, the Brands. In it, she'll disclose the conditions of her compensation to make the receipt of her compensation legal. In order to ensure that she has fully disclosed the compensation she'll receive, what information must she include?
Who's paying the compensation, what type of compensation it is, and its value
If a property has window treatments, what are they considered to be?
Window coverings and curtain or drapery rods are personal property. However, they are standard inclusions unless noted as exclusions.
How can a lender with a lien that's in second position get into the first position?
With a subordination measurement
How would one generally calculate livable square footage for a townhome?
With townhomes, because owners share the wall, when taking measurements of one unit, you'll need measure from the center of the shared wall, or walls.
When should Brokers must deliver a copy of any offer or written contract, agency agreement, offer, lease, rental agreement, option, or other transaction-related documents to their customers or clients?
Within three days of the broker's receipt of that executed document. This is known as the North Carolina delivery of instruments rule.
Your buyers are going through due diligence on an older home in Hendersonville they hope to purchase with wooden beams throughout. You notice that there a lot of small holes burrowed in the beams. This could indicate the existence of what kind of pest?
Wood-boring beetles
Broker Amir is in a disclosed dual agency situation with buyer Kim and seller Saul. Saul tells Amir he can let Kim know that he is in a bit of a rush to sell, because he is moving back to Maine to take care of his aging parents. Can Amir disclose this information to Kim?
Yes, but only if Saul provides these instructions in writing to Amir
Is an agent entitiled to commision with an Exclusive Right to Sell/Right to Buy Contract?
Yes, one broker represents the buyer/seller and is entitled to a commission no matter who brings the buyer or locates the property.
You represented Chloe a few years ago when she sold her home. Now she is a party to a transaction, and you are not representing her because she is a buyer who is making an offer on one of your listings. Do you owe Chloe the duty of confidentiality?
Yes, the duty of confidentiality survives the termination of your brokerage agreement.
Melissa listed a property at 12 Main Street. Her clients told her that the furnace and roof on the home were both one month old, so Melissa included this information in her listing and used it as a selling point for potential buyers. The house was sold to the Millers, a young couple who found out after they closed that both the furnace and the roof were at least 10 years old. The Millers threatened to sue Melissa for misrepresentation and omission. Is Melissa guilty of either?
Yes, this is negligent misrepresentation.
Nadia just bought a house that was one of Gary's listings. She found cracks in the basement walls and had them inspected. Turns out that the foundation of the house was damaged and needed major repairs. Gary told his broker, "I had no idea there were cracks in the basement walls." Is Gary guilty of anything?
Yes, this is negligent omision.
Stacy, a North Carolina licensee, inadvertently violated a rule NCREC had recently enacted. Will the commission impose discipline under the circumstances?
Yes. Under the "violation of any rule" provision, licensees are subject to discipline for violating any rule adopted by the commission.
What are the general details of a listing that agents have access to on the MLS?
You can view property details, historical sales data, tax records, demographic information, maps to property locations, statistical data for property sales over time, and other valuable information.
You may not use the fair housing logo without the accompanying statement "_________________________"
You may not use the fair housing logo without the accompanying statement "Equal Opportunity Housing."
You are the broker-in-charge of a firm that represents sellers only. You like to cooperate with EZ Realty because the brokerage represents buyers as buyer agents, but you don't enjoy working with Realty First, because those agents don't represent buyers. Licensees from Realty First want to be subagents of the listing brokerage, which can leave you liable—and you don't want that. What duty do you owe the seller?
You must get their permission in writing that it's okay to limit their list of potential buyers.
What should you tell a Prospective Buyer that you brought to the listing but don't have a agency agreement with them?
You must tell these buyers, upon first contact, that without an agency agreement, the buyers are unrepresented and shouldn't reveal confidential information that they don't want sellers to know because without representing them, you are hence working as a seller's sub-agent. Agents must include their license number in this disclosure. If first substantial contact happens over the phone or via email, agents must disclose pertinent representation information orally and mail or transmit the written disclosure no later than three days after first contact.
How do you explain and clarify your measurement procedures when advertising to the public?
You'll use declarations to explain and clarify your measurement procedures.
Master Plan
_________ determines what the city, multiplicity, or county contains by making a survey of the community's physical and economic assets.
Severance
_________ is the act of removing something that would be considered real property.
Municipalities
a city or town that has corporate status and local government. - These types of liens are first to be paid if the property is sold
What is specific performance?
a lawsuit filed to force the other party to perform according to the contract terms. No other property or monetary damages equal specific performance.
What is partial performance?
a portion of what a party agreed to has been completed. No other property or monetary damages equal specific performance—only meeting the terms of the original contract qualifies.
Easement by necessity
an easement that usually involves access to a road. An implied easement, like an easement by necessity, doesn't require a written document like an express easement.
What is operation of law?
an individual acquires rights or liabilities automatically due to law, not through an agreement or act of their own.
If an inspection reveals repairs that need to be made, buyers should obtain estimates from how many contractors?
at least two reputable contractors.
Mold
can grow without the presence of light and often expand within the home without the owner having any idea. Molds can grow virtually anywhere there is a presence of moisture, a food source, and mold spores.
ANSI standards of measurement like things to be _________, requiring that both finished and unfinished measured areas must be attached to one another. Other structures that belong to the entire property but aren't attached to the main residence, such as a guest house, would not be part of the total measurement calculation.
contiguous
Property Report
discloses specific information about the land before a purchase contract or lease is signed by the purchaser or lessee.
According to North Carolina license law, agents must avoid any conduct that is improper, fraudulent, or _______.
dishonest
If your lease has terminated, but you refuse to leave the property, you'd be a party to an
estate at sufference
Maybe you decide to sign a lease for an unspecified period of time, with the stipulation that either party may terminate the lease by giving notice to the other. This type of estate is an _________
estate at will
If you sign a lease for a period of 12 months, this is an _________
estate for years
If you sign a 12-month lease that converts to a month-to-month tenancy at the end, you'd have an _______
estate from period-to-period
What is the Total Debt-Income ratio for FHA loans
gross income) × 100 Total debt-to-income ratio (aka back-end ratio)
For income-producing residential property, which straight-line method would an investor use to calculate the property's annual depreciation allowance?
income- producing residential properties: 27.5 depreciable basis / depreciation schedule = depreciation allowance
North Carolina Leaking Petroleum Underground Storage Tank Cleanup Act
is a mechanism that helps tank owners pay for cleanup costs above the deductible amount. To access the LUST Trust Fund, commercial tank owners are required to show that they have the ability to pay for any deductibles that may be related to their facility.
Principals must act _______ in all dealings with their agents and must diligently fulfill all of their obligations under the contract.
must act in good faith
Seller agents or seller subagents ___________ in writing to prospective buyers at first substantial contract.
must disclose agency status
Per 21 NCAC 58A .0116, Handling of Trust Money, if the borrower's earnest money is being held in a brokerage trust account, that earnest money must not be disbursed to the closing attorney any earlier than ____ days before the settlement meeting.
must not be disbursed to the closing attorney any earlier than 10 days before the settlement meeting
Can developements been permitted in a floodway?
no.
Estate in Severalty
owned by one person; sole ownership
What is alienation?
refers to the transfer of ownership (or title) away from the current owner
Restrictive/protective covenants
restrictions in a deed placed on the use of land by the grantor. Such _______ are widely used by the developers of residential subdivision.
A __________ eviction occurs when a landlord evicts a tenant for behavior that is within the agreed-upon terms of the lease agreement, such as asking for repairs or complaining. This is illegal is NC.
retaliatory eviction occurs when a landlord evicts a tenant for behavior that is within the agreed-upon terms of the lease agreement, such as asking for repairs or complaining.
Controls money availability and what banks can charge for that money
the Federal Reserve System
Highest and best use
the legal and feasible use of a property that would return its highest value.
What is impossibility of performance?
the property is destroyed or made the subject of eminent domain. The parties can't legally or practically do what they've agreed to do, so they're released from the contract.
Flood Hazard area
this is subject to certain federal laws and regulations including whether improvements can be made in that area, the location of the improvements, as well as the elevation. Female issues apps that design hazard o FEMA issues that designate certain hazard flood areas.
Certificate of Occupancy
this permits the occupation of the structure by tenant or the owner. Some cities require that a certificate of occupancy, based upon a satisfactory inspection of the property be insured prior to occupancy by a new owner or tenant of any structure.
The EPA recommends testing a well annually for microorganisms, and once every ______ for harmful chemicals and elemental contaminants.
two to three years
When does a North Carolina real estate license expire if renewal requirements aren't met?
ur license will expire on June 30 if you don't complete the annual requirement for renewal.
What is an abatement activity?
Lead-based based programs also review the safe removal of lead-based paint, otherwise known as abatement activities.
The legal relationship between the parties who sign the lease; grants possession, but not title, to the tenant, and is for a limited period of time
Leasehold estate
A thin layer of brick over wooden walls
Masonry veneer
Interest
Money paid for using someone else's money
Express Agency
NCREC requires all agency relationships to be in writing
North carolina title theory
North Carolina is a "title theory" state in regards to financing but a "pure race" state is regards to recordation.
Right to occupy the property
Possession
Conservation Land Trust
Preserve habitats and water quality, and maintain recreation areas and historic sites
What is price-fixing? What are examples of it?
Price fixing is a conspiracy between business competitors to set their prices to buy or sell goods or services at a certain price point. The U.S. Department of Justice (DOJ) identifies other types of price fixing, including: - Agreements to establish or adhere to uniform price discounts - Agreements to eliminate discounts to all customers or certain types of customers - Agreements to adopt a specific formula for computing selling prices - Agreements on terms and conditions of sale, including uniform freight charges, quantity discounts, or other differentials that affect the actual price of the product - Agreements not to advertise prices or to refuse to sell the product through any bidding process Price-fixing is a violation of the sherman act.
Plat
Property map (metes, bounds)
The process appraisers use to find an appraised value for a property requires them to _______ the values found by the different valuation approaches.
Reconcile Reconciliation is the step appraisers use to arrive at the final opinion of value that's supported by their data gathering and analysis.
Abstract of title
Record of title history
Recording
Recording the deed or registering the document on public record is to protect the grantees title and is crucial in order to obtain title in North Carolina
Consideration
Refers to anything of value offered as an inducement to contract, such as money, action, or forbearance, under law. green
Assignment
Refers to the transfer of legal rights and obligation by one party to another. A contract is generally assignable anytime.
A rundown home, overgrown with weeds and in desperate need of repairs, is driving down property values on the block. What economic principle is at work here?
Regression
Two identical homes are located in different parts of town. They are both high-quality homes with many custom features, beautiful yards, and swimming pools. However, one property is worth $15,000 less than the other because it has a lower-quality property next door to it. What economic principle is at work here?
Regression
When a property's value is dropping because the neighboring property's yard is filled with trash, it's an example of ______.
Regression
Which of the following is a significant drawback to an FHA loan as compared to conventional financing?
Required mortgage insurance must remain in place for the life of the loan.
North Carolina Residential Property Disclosure Act
Requires sellers to furnish purchasers with a statutorily prescribed Residential Property and Owners' Association Disclosure Statement. The seller must answer questions regarding the property with one of three answers: yes, none known, or no representation. The statement must be provided to a buyer no later than the time at which the Offer to purchase and Contract is signed by the buyer. Four page document If the disclosure statement is not delivered prior to the time a buyer makes an offer the buyer has the right to cancel any resulting contract within these limitations:
Your buyer client is interested in making an offer, but wants to make sure the property isn't in a designated special flood hazard area. Which section of the North Carolina exclusive right-to-sell listing agreement would provide this information?
Seller representation section
When both supply and demand increase, what does price do?
Stays the same (equilibrium)
Which entity issues appraiser licenses in North Carolina?
The North Carolina Apprisal board
Third Party
The person in a transaction other than the principal and his agent.
How can a homeowner test for radon?
They can hire a professional to perform the test, or she can buy a test kit and submit it to a lab for analysis.
Why are most residential central air conditioning systems called split systems?
They include two separate components: one located outdoors, one indoors.
"A person who sells or offers to sell on behalf of a developer a time share to a purchaser."
Time Share Salesperson
Property that was never built on or that was built on but was brought back to its natural state
Vacant land
Ventilate the space between the brick and sheathing
Weep holes
North Carolina Communication and Offer Rules
When the acceptance of the offer is communicated to the other party and/or their agent, the contract becomes binding in North Carolina Never later than 3 days
Which loan type describes financing that wraps the new buyer's mortgage around the seller's existing mortgage?
Wrap around mortgage
The following instruments must be delivered to relevant parties within three days of the broker's receipt of the executed document:
Written agency agreements Contracts Offers Leases Rental agreements Options Other related transaction documents
When looking at an income property appraisal, what is the term used to describe the process of applying an expected rate of return to income from the entire holding period to find the current property value.
Yield Capitalization
What is substantial performance?
one party has met most, but not all of the contract's terms, and may be required to pay damages for the unmet terms.
Conditions
restrictions that provide for a reversion of title if they are violated are called ______.
What are the three levels of CERLA?
strict, joint and several, and retroactive.
What is a "certified check"?
"Certified check" means a check with respect to which the drawee bank certifies by signature on the check of an officer or other authorized employee of the bank that (i) the signature of the drawer on the check is genuine and the bank has set aside funds that are equal to the amount of the check and will be used to pay the check or (ii) the bank will pay the check upon presentment.
This is the amount the borrower is expected to bring to closing.
"Closing Costs"
What does "closing funds" mean?
"Closing funds" means the gross or net proceeds of the real estate transaction, including any loan funds, to be disbursed by the settlement agent as part of the disbursement of settlement proceeds on behalf of the parties.
What does "closing" mean?
"Closing" means the time agreed upon by the purchaser, seller, and lender (if applicable), when the execution and delivery of the documents necessary to consummate the transaction contemplated by the parties to the contract occurs, and includes a loan closing.
What does "collected funds" mean?
"Collected funds" means funds deposited and irrevocably credited to a settlement agent's account used to fund the disbursement of settlement proceeds which account is a trust account, escrow account, or an account held by a company or its subsidiary which is licensed and supervised by the North Carolina Commissioner of Banks.
On the Loan Estimate this section allows the borrower to determine if loans from different lenders or different interest rates are preferable.
"Comparisons"
What is compensation for a broker defined as?
"Compensation" for a licensed real estate broker is defined as commission, rebates, or any other valuable consideration of more than nominal value. "Nominal" means that it is "of insignificant, token, or merely symbolic worth.
What does the "disbursement of settlement proceeds" mean?
"Disbursement of settlement proceeds" means the payment of all closing funds from the transaction by the settlement agent to the persons or entities entitled to that payment.
You just given your seller client Bernard the two North Carolina disclosure forms. He asks, "What if there's something wrong with my property that I don't know about?" How should you respond?
"Do the best you can. Because North Carolina is a 'let the buyer beware' state, it's their responsibility to do their duediligence" - You can not however lie about a material fact and I cannot breech north carolina laws of agency by concealing or not telling all parties material facts.
The _______ section contains the seller's existing mortgage loan payoff amount that must be paid to complete the transaction.
"Due from Seller at Closing"
This section of the Loan Estimate shows the total amount the client should expect to pay each month on the mortgage.
"Estimated Total Monthly Payment"
Which is the most widely used policy, recommended by lenders, which covers a home for all risks of physical loss except listed exclusions, and covers loss of contents for many of the same perils.
"Homeowners (HO3)
In North Carolina, what does the the term "legal instruments" intail?
"Legal instruments" in this context includes: Offers Sales contracts Options Leases Promissory notes Deeds Deeds of trust Other legal instruments by which the rights of others are secured
On the loan estimate this section allows consumers to research the lender and loan officer using the Nationwide Mortgage Licensing System.
"Lender Licensing"
On the Loan Estimate, this shows the consumer how much they will pay for the lender to make the loan, including third-party services.
"Loan Costs"
In light of economic conditions, borrower credit and property value are what lenders consider. Property value is important because it factors into the loan-to-value (LTV) ratio calculated by the lender. What value would the lender use to calculate LTV? $100,000 appraisal value $90,000 sale price
$90,000 sale price because the lender typically uses the lesser of the two values
Most widely used policy, which lenders recommend because it covers the home against all risks of physical loss except listed exclusions
(HO3)
Condominium unit owner policy
(HO6)
Tenant or cooperative owner policy (rental insurance)
(Ho4)
Total Housing Ratio
(Monthly housing expenses / gross monthly income) x 100
What should agency representation contract agreements include?
- Amount of compensation you'll receive or how the amount will be calculated - How and when the compensation is considered earned (and owed to you) - How compensation will be split with or provided to cooperating licensees (those who bring the other party to the transaction) - How you'll split your compensation with your brokerage
When a buyer expresses interest a rural property, it helps to be able to find evidence of an underground storage tank. What are clues that one may be present?
- Plate covering an oil fill area - Oil line (crimped-off rusty pipe) - Records of soil tests
What's the purpose of UST funds?
- To reduce pollution and contamination caused by leaking tanks - To prevent dangerous conditions stemming from the presence of vapors
Executor
A person appointed in a will to carry out the provisions of that will is an _______.
What establishes public view standards?
Aesthetics
Zoning Amendment
An actual change the zoning code itself is known as an ________.
What does the fiduciary duty of reasonable skill and care intail?
Because of their extra knowledge and skills, agents must use the same level of skill and care that any other agent would use in the same transaction. Here are a few examples of the skills expected of an agent: Provide reliable information on transaction-related matters. Give professional advice about a property's selling price. Uncover and disclose material facts related to the property in question. Advertise properties effectively. Help their clients prepare contracts.
The Samuelsens are selling their 30-year-old ranch in the country, and their potential buyer isn't represented by an agent. What forms do they need to supply?
Both the RPOADS form and the MOG form
What are the two paths of an agent to earning a commission?
Contractual obligation or being the purcuring cause of sale.
In the appraisal process, what step comes after "gather and analyze data," but before "estimate value of the land"?
Determine highest and best use
"Any person or entity which creates a time share or a time share project or program."
Developer
Anita's property appraised at $370,000. It is assessed at 40% of appraised value, and the tax rate is 80 mills. What are Anita's semi-annual property taxes?
Divide mills by 1,000 (80 ÷ 1,000 = .08). Assessed value is 40% of appraised value, so multiply .4 by $370,000 = $148,000. Multiply this by the mill rate (.08) to get annual taxes of $11,840. Divide this by two to get semi-annual property taxes of $5,920.
Which of the following best describes a marketable title?
Ensures the title to property is free and clear of liens and only subject to loan payoff and any taxes owed
The increase a property's value beyond what the investor originally invested as a down payment is called _______.
Equity build up
A type of possession in which a tenant stays after the right to possess has terminated
Estate at sufferance
The lease automatically renews, month-to-month or year-to-year, for example.
Estate from period-to-period
What is express authority?
Express authority is created by an agency agreement specifically outlining what actions clients authorize you to perform on their behalf.
Nearby industrial odor is an example of which type of depreciation?
External depreciation
Material Facts
Facts about the property itself (defects) Facts relating directly to the property (surrounding influences) Facts that relate directly to the ability of the agents' principal to conclude the transaction, including foreclosure, short sale approval, and inability to obtain financing.
Handling of Trust Money
Firms only need trust accounts if they hold money belonging to others Earnest money always goes to a trust account The brokerages Escrow agent (attorney)
What is a "full service lease"?
Full-service leases, which are referred to as FSs, are leases in which the base rent, nets (TIM), utilities, and janitorial services are included in one lease amount. The lease amount is based on the price per square foot.FS leases are considered gross leases.
Provision on Offer to Purchase Standard 2-T form where seller must execute and deliver the property's general warranty deed.
Good Title, Legal Access
What are "good funds"?
Good funds need to be immediately available once deposited to be considered "good."
What is a Gross Lease? Hint: its used with commercial properties
Gross Lease - Landlord pays expenses for (TIM) expenses & makes them apart of the rent payment or base rent - "Modified Gross leases" are called (MG) - FS leases are considered gross leases.
What does a counter-offer do?
It terminates the previous offer
As an agent, do you have to disclose if a sex offender lives by a listing?
No , because it's not a material fact; however, as an agent you do have to disclose if directly asked or point them to the sex offender registry.
Jane met with buyer Alexis the next day. Alexis wasn't sure she wanted to enter into a buyer agency agreement. Can Jane enter into a oral-buyer agency agreement with Alexis?
North Carolina licensees are allowed to engage in non-exclusive oral agreements with buyers, but compensation and services must be discussed, and a CMA prepared. In addition, the oral agreement must be put in writing before an offer is made.
In what state(s) can a North Carolina broker's trust account be located?
North Carolina only
As a real estate licensee in North Carolina, if you advertise or otherwise market a property using lies, deceit, misrepresentations, or other unethical practices, what act or law have you violated?
North Carolina's Unfair and Deceptive Trade Practices Act
When must offers be delivered by?
Offers must be delivered within three days of receipt
Homeowner Sophie moves around the country a lot for her job and has bought and sold several homes over the last decade. If she sells a home for more than she paid for it, how often may she claim the capital gains exclusion?
Once every two years
Improvements
Permanent, man-made attachments that include things such as fencing, buildings, and walkways
In which type of framing are the framing members much larger and spaced much farther apart?
Post-and-beam
Enabling Acts
Provide legal basis for the local cities and counties to develop a long range plans for growth.
The part on the Offer to Purchase Standard 2-T form where the buyer understands and acknowledges that the property is being sold in its current condition unless another agreement has been made.
Repair/Improvement/Agreement
The records that need to be retained by the brokerage during the retention period of 3 years are:
Sale contracts Leases Agency agreements Option contracts Offers Trust or escrow records Earnest money receipts Disclosure documents Closing statements Brokerage cooperation agreements Declarations of affiliation Broker price opinions and comparative market analyses Property measurement documentation Advertising for marketing properties Any other records relating to a transaction
Which approach to finding property value is most commonly used when appraising single-family homes for lending purposes?
Sales comparison approach
Usually made from insulated drywall or plywood and nailed directly to wooden studs
Sheathing
Your buyer is purchasing a home that's been foreclosed on. She may receive this type of deed.
Sheriff's deed
Changes in demographics and population growth are examples of which type of real estate value influencer?
Social
Calculate prorations based on a 360-day year
Statatory year proration
Usually owes loyalty to the seller's agent, not the buyer
Sub-agent
A covering that serves as the basis for wall placement and flooring
Subfloor
Real estate is a _______, unlike stocks or bonds.
Tangible Asset Class
This is used when a prospective tenant wants to hire an agent to find property to lease. It's usually used in a commercial property scenario
Tenant representation contract
When are Tenant Representation Contracts used?
Tenant representation contracts are used when a prospective tenant wants to hire a real estate broker to find a property to lease or rent. They're almost always used in commercial real estate brokerage, and are rarely encountered in residential leasing.
What is a baseline in a township?
The baseline is the EW line
What type of seller usually uses a contract for deed (installment contract)?
The contract for deed is usually used in a seller-financed transaction.
Beneficiary
The lender
Strict foreclosure
The lender files a foreclosure petition with the court after the mortgagor is in default.
Hypothecation
The lender requires the additional security of the property itself as collateral for the loan. When a borrower pledges property as security for the loan without surrendering possession.
Breaches agency duties
The listing contract can be terminated by the injured party if either agent or principal breaches agency duties.
Trina's property is listed with Avalon Homes. The market is a little slow, and Trina's listing is a high-end home, where sales are even slower. She's had several showings, but no offers. The term of the listing agreement is nearly over. What happens when the termination date is reached?
The listing expires and is automatically terminated.
What is a loan commitment to a seller?
The loan commitment finalizes the loan terms to the buyer, including a closing deadline.
Agent
The party (firm) who acts on behalf of the principal.
Charlie the appraiser reviews specific influencers of value for a property, such as ______.
The value of comparibles in the area
What types of closing documents need to be recorded?
Those that regard the ownership of the property
When the loan has been paid in full, how is this documented with a Deed of Trust?
Trustee executes deed of reconveyance.
The transaction may be declared voidable if an agent engaged in ____.
Undisclosed duel-agency
Physical characteristics of land include its immobility, indestructibility, and ______.
Uniqueness (nonhomogeneity)
Addendum
Use of specific forms to add terms to the contract
A contract to do something that is illegal or is a legal impossibility. What type of contract is it?
Void
If a seller is concerned about an appraisal, what can a buyer do to address this need when structuring the offer?
Waive the appraisal
Excise Tax
________ tax is paid by the seller. The amount of tax is based on the consideration received by the seller in the sale of the real property by deed. The statute requires the amount of the excise tax to be $1 per $50o.
North Carolina lead-based paint hazard management programs review renovation, repair, painting and ______ activities.
abatement
What does "loan documents" mean
"Loan documents" means the note evidencing the debt due to the lender, the deed of trust or mortgage to secure that debt to the lender, and any other documents required by the lender to be executed by the borrower as part of the loan closing transaction.
What does "loan funds" mean?
"Loan funds" means the gross or net proceeds of the loan to be disbursed by the settlement agent as part of the disbursement of settlement proceeds on behalf of the borrower and lender.
The form states whether or not this amount is adjustable. If it's adjustable, additional information is included with the amount shown.
"Monthly Principal & Interest"
What are a agency's fiduciary duties? How do you remember them?
"OLD CAR." Obedience: Agents must obey all of their clients' lawful instructions. Loyalty: Agents must put their clients' interests ahead of all others, including their own. Disclosure: Agents must disclose all facts pertinent to the transaction. Confidentiality: Agents must keep any confidential information their clients share confidential. Confidentiality is a duty that survives the termination of the agency relationship—it lasts forever. Accounting: Agents must promptly account for all monies, property, and paperwork entrusted to them by their clients. Accounting, too, survives the agency relationship. Reasonable skill and care. Agents must provide clients with quality, knowledgeable, and prudent service, and live up to the trust their clients have placed in them. Breaking a law of agency also breaks a law or provision of North Carolina law.
On the Loan Estimate this section lists certain borrower rights related to obtaining a loan and how it may be handled in the future.
"Other Considerations"
Itemized amounts for taxes, prepaid items, and lender credits.
"Other Costs"
What does "teller's check" mean?
"Teller's check" means a check provided to a customer of a bank or acquired from a bank for remittance purposes, that is drawn by the bank, and drawn on another bank or payable through or at a bank. (1995 (Reg. Sess., 1996), c. 714, s. 1.)
What phrase do many real estate contracts contain that reminds the parties to avoid unnecessary delays to the transaction, and to adhere to all contract dates?
"Time of the Essence"
What does "timely manner" mean?
"Timely manner" means that the disclosure is made with sufficient time for a reasonable person to make decisions based on the disclosed facts.
A property appraises at $320,000. If the assessment rate is 100% and the tax rate is $1 per $100, what are the semi-annual property taxes?
$1 ÷ 100 = .01 tax rate; $320,000 × .01 = $3,200. Divide by two to get semi-annual taxes: $1,600.
Another closing appointment is approaching. These clients are purchasing a $160,000 home. If they have a down payment of 25% and the bank charges two points at closing, how much are they paying in points?
$2,400
A homeowner sells his house for $325,000 more than he bought it for. When he files his income taxes, how much of this profit may he exclude from his capital gains if he's filing as a single taxpayer?
$250,000
The capital gains exclusion for couples filing jointly who have lived in their primary residence at least two of the five years immediately preceding the sale of the home is up to $500,000. What is the capital gains exclusion for single taxpayers?
$250,000
A lender is charging Clem, the borrower, two points to buy down the interest rate on his loan. Clem's borrowing $250,000. What's the dollar value of the points he'll pay?
$250,000 x .02 = $5,000
Rachel just sold her home and paid $18,427 in closing costs. Her brokerage fee, which is included in that figure, was 6%. She netted $230,063. What were her non-brokerage fee-related closing costs? Round to the nearest dollar.
$3,518
A buyer is purchasing a property for $500,000. He has a down payment of $50,000 and is financing the rest. What's the amount of the loan origination fee if the lender charges one-and-a-half points?
$6,750
Total Debt Income Ratio
(Total of monthly debt obligations ÷ monthly gross income) x 100
Caveat emptor
(let the buyer beware) The seller has no obligation to the buyer beyond avoiding intentionally fraudulent acts, including misrepresentation.
Who is a transactional principal?
- A client who is represented by a real estate professional - A party to a transaction (i.e., the buyer or seller, whether or not they're represented by an agent)
If you are acting as a limited service agent, you must act within the guidelines of a written brokerage agreement by providing:
- A disclosure stating that you are acting as a limited service agent - A list of the specific services that you will provide - A list of the services that you will not provide - A summary of the rights and obligations that you are required by law to provide to the client - Any additional required disclosure statements as part of the transaction and state law
Co-op ownership
- A non-profit cooperation corporation owns the land, buildings and all rights and interests in corporation. - Individual shareholders (unit owners/residents) don't own real estate, and don't receive a deed for the unit; instead, they own corporate shares, which are considered personal property. - Residents each have a proprietary lease (a lease from the corporation) for the units they occupy. The lease provides unit owners with the right to use the property, to live there, and to share in the benefits of living there. - Residents usually pay a monthly or annual maintenance fee to the board of directors that manages the cooperative. The board is responsible for all corporate financial and policy decisions but may choose to hire an outside management company. - People vote to allow someone to buy the share which means that they can discriminate, thus meaning that the fair housing act doesnt come into play.
What are important material facts to ask the seller about during the walkthrough?
- Age of the roof, electrical upgrades, sewer line, plumbing, HVAC equipment, and windows The seller's ownership of the property: If the seller isn't the owner, before you can list and market the property, you will need to have a copy of a power of attorney, trust, or other documents to prove the seller's legal right to sell. - Any outstanding loans that will not appear on the tax record: This is to help you prepare a seller's net sheet later, a fact you might mention so you don't come off as nosy. - Whether a recent appraisal has been done, and, if so, the purpose of the appraisal and the result. - Any improvements, remodeling, or repairs, which you'll compare with tax records: Also ask if these were permitted. If work were performed and permits weren't obtained, this is a material fact that must be disclosed to potential buyers. If the seller discloses, or it appears that unpermitted work was done, as the listing broker, you're responsible for contacting the local building code inspector to verify the status of the permits and whether any action must be taken before listing the property. - Septic system capacity (Any septic system issues should be either resolved before listing the property or disclosed to the buyer.)
What are the main points detailed in the North Carolina Real Estate Commission (NCREC) Rule 58A.0104 that addresses agency agreements and disclosures?
- All agents must give potential sellers and buyers at "first substantial contact" the NCREC brochure called "Working with Real Estate Agents." - Seller agents and sub-agents must disclose their agency status in writing to any prospective buyers. Again, this happens at "first substantial contact." - Buyer agents must disclose their agency status to sellers or sellers' agents at the first meeting.
Under North Carolina's license law, licensees have the following duties regarding land use:
- Avoid misrepresentation regarding permitted land use. Recognize potential land use problems. - Discover and disclose any land use problems. Licensees are responsible for knowing and educating consumers about dues and assessments associated with a subdivision, recognizing obvious signs of flooding on a property or red flag flood areas, and having keen knowledge of planned major highway or public transportation changes.
What should an agent cover when discussing the "working with real estate agents brochure" during first substantial contact?
- Discuss their options for an agency relationship with you. - Decide together what agency capacity you'll have. - Give the person a copy of this brochure, which your brokerage should have on hand. The brochure includes an area for both the agent's and consumer's signatures, as well as a disclosure about seller sub-agency, which should be checked if appropriate. After the consumer signs, the agent keeps and files the signed section, and the consumer keeps the brochure. If the consumer doesn't want to sign, clarify that the brochure isn't a contract and doesn't create an agency agreement. If the consumer still doesn't want to sign, hand over the brochure anyway and keep the acknowledgment page with a note that the consumer wouldn't sign.
Livable square footage, or finished area, is defined by American National Standards Institute Standard as:
- Enclosed areas - Areas suitable for year-round use (requires permanent heat source, continual power source [i.e., not a space heater]) - Areas containing walls, floors, and a ceiling similar to the rest of the house - Walls and ceiling must be finished, floors must be covered with installed covering, such as carpet, vinyl, wood, tile, laminate, or stamped and stained concrete. (A cement floor or exposed or painted concrete, even with an area rug over it, wouldn't qualify.) - Areas accessible from the rest of the living area - Spaces lacking stairs or direct access, or accessible only by a ladder (e.g., lofts) aren't considered living areas.
What are the 3 main things that agency agreements with principles include?
- Expiration date - Licence number - Terms of the agency - Consent or no consent to Duel Agency - State law requires that the listing contract contain specific non-discriminatory language that states that the broker will conduct brokerage activities without respect to a party's membership in a protected class.
Timeshare ownership
- Fee simple absolute title for portion of year - Timeshare estates are pieces of real estate owned by multiple unrelated individuals who, in addition to their ownership rights, each hold the right to occupy the dwelling unit in one- to two-week intervals during the year. If there were 52 owners, each owning the right to use the unit for one week a year, each would own 1/52 of the property. A timeshare estate can be sold or passed down to heirs. Such an estate may be held as either of the following: Tenancy in common (in which a separate agreement must be executed to establish the specific time period for use) An interval ownership (which is an estate for years in which the buyer has ownership of and title to the unit for the time selected and the number of years designated upon purchase) The majority of the timeshare market is fee simple: 70% fee simple, 30% right-to-use.
Deeds must be in writing, and must contain essential elements to be valid, including:
- Grantor (must be of legal capacity)/grantee - Act of conveyance (granting clause) - Consideration - Legal description - Habendum clause - Limitations and "subject to" clause - Signature of the grantor (must be notarized) - Acknowledgment/recording - Delivery and acceptance
Agents' disclosure responsibilities when working with buyers include:
- Having an express oral or written buyer agency agreement in place - Providing the "Working with Real Estate Agents" brochure, explaining it to the buyer and getting a signature when appropriate - Disclosing in writing that the agent is working as a seller's agent or sub-agent (if the buyer doesn't choose buyer's agency) Agents and consumers can agree orally on a buyer's agency agreement, but it's best to get the agreement in writing before the relationship progresses too far. The written agency agreement addresses dual agency and allows the agent to get written permission from the buyer.
If disturbed asbestos is found in a home you are listing, you should advise the seller of the following options:
- Hiring state-licensed remediators to encapsulate the shingles before listing to avoid asbestos removal problems - Listing the damaged asbestos shingles on the property condition form and selling the property in as-is condition at a lower price - Hiring state-licensed technicians to remove the asbestos shingles
As you do an in-person inspection/walkthrough of the seller's property, do the following:
- Identify personal property and fixtures—what the seller wishes to sell, as well as those items that will be excluded from the sale. - Identify any property defects, such as encroachments or material defects that are obvious, like water or smoke damage, cracks in a foundation, etc. - Suggest any needed repairs or improvements, as well as staging and landscaping to make the property more attractive to buyers. - Measure the property's square footage. - Discuss the marketing plan and brokerage fee.
What does caveot emptor mean in the state of north carolina? What is a agent's responsibility to the seller in terms of this?
- North Carolina is a "caveat emptor" state, which translates to "let the buyer beware," and means that the buyer is responsible for performing due diligence on the property - The seller isn't responsible for disclosing property defects, or for protecting the buyer; however, sellers must tell the truth about the property when asked, and they can't conceal problems. - Sellers must provide the disclosures to potential buyers before or no later than when the buyers make an offer. Agents must: - Let seller clients know that they have to fill out these disclosures and provide them to potential buyers. - Ensure that buyers receive these documents no later than the time when those buyers make an offer. - Agents aren't responsible for verifying the information in these disclosure forms.
What is Abstract of Title?
- Provides a summary of the title history. - Contains a legal description of the property. - Summarizes any records related to the title. An attorney: - Reviews the chain of title carefully to ensure it is -unbroken and clear. - Updates the abstract of title with an abstract continuation. - Provides a written certificate of title opinion that the title is clear.
What are examples of Interferring with Exclusive Agency agreements?
- Provides unauthorized information to a prospective purchaser or tenant. - Fails to obtain permission to show the property from the listing broker and contacts the owner directly. - Takes an offer directly to the client without the listing broker's knowledge and consent. - Uses the showing of a property as an opportunity to make unsolicited, derogatory remarks about the listing broker. - Directly calls, mails, or contacts a homeowner who is currently in a listing agreement. - Directly encourages a buyer to break a buyer agency agreement (for instance, at an open house). - Contacts owners of a listing that has been listed for several months to encourage them to break their agreement. - As a buyer's agent, mails the seller of the home the buyers are purchasing promotional or "helpful" items during the transaction, such as moving tips, checklists, or utility phone numbers. - As a listing agent, provides another agent's buyer with information or promotional items. In order to respect the exclusivity of the listing broker's relationship, you must be able to determine with certainty whether an exclusive listing exists.
Agents' disclosure responsibilities when working with sellers include:
- Providing notice about which party you represent, if any, upon first substantial contact (usually at the listing presentation) - Reviewing and discussing the brochure as early as possible during the presentation—definitely before the consumer reveals confidential information - Stopping the presentation, reviewing the brochure contents, and letting the consumer decide whether or not to pursue agency representation if confidential information is revealed inadvertently - Telling the consumer that nothing is confidential unless an agency relationship is in place
What are the resonable skills and care expected of an agent?
- Providing reliable information on transaction-related matters - Giving professional advice about a property's selling price - Keeping sensitive client information confidential - Uncovering and disclosing material facts related to the properties in question - Advertising properties effectively - Helping clients prepare contracts
What does the The North Carolina Residential Property Disclosure Act require of sellers of residential property containing between one and four units to provide the following disclosures?
- Residential Property and Owners' Association Disclosure Statement (RPOA) for the owner to disclose property defects. - Mineral and Oil and Gas Rights Disclosure (MOG) for the seller to disclose whether the property's mineral, oil, or gas rights have been severed from the property.
What are floodplains?
- Store floodwaters, prevent erosion, and even help maintain water quality. - Provide wildlife habitats, have aesthetic value, and are used for recreational purposes. - Development in a floodway should be avoided.
What isnt required when working as an agent at an auction?
- The "Working with Real Estate Agents" brochure isn't required. - Dual agency doesn't have to be disclosed. - Agents don't need to disclose to any potential buyers that they represent the seller.
What documents will you want to be sure you have ready to go prior to the pre-listing meeting:
- The Working with Real Estate Agents brochure - The Residential Property and Owners' Association Disclosure Statement - The Mineral and Oil and Gas Rights Mandatory Disclosure Statement - The residential lead-based paint disclosure (if applicable) - The Protect Your Family From Lead in Your Home pamphlet (if applicable)
What does the The Interstate Land Sales Full Disclosure Act state in order to protect citizens from fragulent activity?
- The act regulates land sales across state lines - Developers have to register any subdivisions that have 100 or more non-exempt lots with the CFPB - The developer has to give a buyer a disclosure document called a property report - The buyer has a seven-day period after receiving the report to cancel the purchase agreement. If the developer doesn't provide the disclosure, the buyer can rescind the contract
As a Superfund, what were the two primary purposes of CERCLA?
- To respond to spills that may endanger public health or the environment - To clean up abandoned or uncontrolled hazardous waste sites Under CERCLA, landowners can be held responsible for the cleanup costs of hazardous waste, even if they didn't cause the waste. The EPA, upon determining that hazardous contamination has occurred, is authorized to begin remedial action, which includes trying to identify the responsible parties (current and former owners and operators, generators of the hazardous substance, and those who arranged for the disposal of the hazardous substance on the site).
What are the two forms of terminating a contract?
- Unilateral rescission: Fine, if the other party is not going to meet his obligations, I'm going to terminate. - Mutual rescission: Okay, this contract isn't working out for either of us. Let's put it in writing that we've agreed to call it quits.
What is allowed if as a agent, you have ownership in a listing?
- You may NOT represent the buyer if it's a residential listing. May represent the buyer of a commercial listing if: - The agent has less than a 25% interest in the property. - The buyer agrees to representation after the agent has provided full written disclosure of the ownership interest.
When a breach of contract occurs, parties can:
-Accept partial performance. - Rescind the contract unilaterally. - Sue for damages. - Sue for specific performance - requires the parties to make good on the promises they made. - Accept liquidated damages. Generally, the earnest money deposit serves as the seller's liquidated damages. - Mutually rescind the contract.
North Carolina real estate broker Spencer obtained his original license on August 1, 2019. On what date will his license expire?
06/30/20
There are exceptions to the rule that earnest money must be deposited in a trust or escrow account no later than three banking days after the broker received it. What are they?
1) Any money received by a provisional broker must be delivered to the appropriate affiliated broker. 2) Brokers who are holding the money can deliver it either to the named payee or return it to the buyer.
A license placed on inactive status in this situation can be reactivated by meeting some additional requirements. These are:
1) Complete all of the post-licensing education. The courses must be taken during the two years immediately prior to requesting reactivation. 2) Satisfy any continuing education requirements (which take effect during the second year of licensure). 3) File an activation form with the commission.
What are three of the responsibilities to the public the Department of Transportation must uphold?
1) Create safe and efficient pathways for vehicles and pedestrians. 2) Prepare financing for roadway maintenance. 3) Coordinate transportation infrastructure.
As you know, the definition of real property includes interests, benefits, and rights. Can you identify what the rights are? Which five of these illustrate rights associated with real property?
1) Enjoyment 2) Disposition 3) Possession 4) Control 5) Exclusion
If a licensee intends to advertise or otherwise operate under a different name than the licensed name, the licensee must:
1) File an assumed name certificate with the secretary of state's office. 2) Notify the commission in writing of the use of the assumed name.
What are the two standard types of commercial leases?
1) Gross lease - Landlord pays expenses for (TIM) expenses & makes them apart of the rent payment or base rent - "Modified Gross leases" are called (MG) 2) Net lease - Net's (TIM) expenses are billed separately to tenants and not included in rent - 3 types of net leases: Net/double leases: -Tenant pays 2 of the 3 (TIM) expenses Triple Net Lease: - Called "NNN" - Tenant pays all 3 (TIM) expenses - Keeps rent low for tenants Absolute Net Lease: - Dont not protect tenants in the event of eminent domain or something simular - Basically an "NNN" leases
What are the two closing disclosures supplied by a lender? When do they need to be provided?
1) Loan Estimate 2) Closing Disclosure. The rule also requires that you get three business days to review your Closing Disclosure and ask questions before you close on a mortgage
What two factors do you need to calculate appreciated value?
1) Original Value 2) Appreciation Rate Original Value x Appreciation Rate = amount appreciated - Then add amount appreciated to OG value and you will get it's appreciation value - If you are trying to find then next year appreciation value, simply do this calculation again with previous calculation year and add new year;s value to previous appreciation value
What are the two programs that the North Carolina's Division of Public Health, Health Hazards Control Unit (HHCU) has regarding lead based paint? When do they use these programs?
1) Safe removal of lead-based paint (abatement activities) 2) Renovation, repair, and painting projects (LHMP-RRP) These programs are uses to inspect homes and daycare facilities built before 1978. - Homeowners performing repairs are exempt from this requirement. - Firms and individuals who are not exempt and continue work without the certification are subject to fines of as much as $750 per day.
Which two documents constitute a contract between the buyer and the seller?
1) The agreement of sale, as signed by the parties 2) Any associated addenda signed by the parties
What are the ways in which an agency relationship may be terminated?
1) The client's goals were met during the agency agreement term (i.e., the sale is completed). This is called termination by performance. 2) The specified term in the agency agreement expires. 3) The client and agent mutually agree to dissolve the relationship. 4) The relationship ends through termination by force of law (aka operation of law): - The client or the firm's broker-in-charge becomes incapacitated or dies. - The property is destroyed for any reason, making the property unmarketable. - The client or the firm's broker files for bankruptcy. 5) The client revokes the agreement prior to the expiration date. Clients can revoke an agency relationship with no penalty if they lack confidence in the agency or believe the agent is untrustworthy. A client who revokes the agreement for no specific reason or without good cause may be in breach of contract and may still owe commission. 6) The agent renounces the agreement prior to the expiration date.
What 5 documents are suggested to gather from a seller upfront?
1) Title or deed Verifies that the seller actually owns the property and is entitled to sell it, as well as identifying which parties must sign the listing contract. The deed also provides a legal description of the property. A metes and bounds description, which usually contains the amount of lot acreage, which will help you to verify the lot size. 2) Status and Amount Due on Existing Mortgages Has a direct bearing on whether or not you'll actually want to list the home, the listing price, and the net to seller. If there isn't enough equity in the home, the sale proceeds may not be sufficient to pay off the mortgage and could result in a short sale. In addition, the sales price needs to be enough to cover any outstanding mortgages, as well as brokerage fees and seller closing costs. If there aren't sufficient proceeds to pay off the exiting mortgage, the seller either won't be able to convey marketable title or will have to make up the deficiency of funds. 3) Survey Assists in identifying property boundaries, and may verify lot acreage. 4) CC&Rs Many subdivisions have restrictive covenants, conditions, and restrictions (CC&Rs) that govern the use of the property. Having this information available can assist you with answering questions from buyers about permitted uses 5) HOA Documents Includes dues & assessments. Unpaid assessments and homeowners association (HOA) dues are material facts that must be disclosed to buyers.
In order to adjust the sale prices of the comparable properties, the appraiser must apply the elements of comparison in this order:
1. financing terms and cash equivalency, 2. conditions of sale, 3. market conditions, 4. location, and 5. physical characteristics.
Sellers must provide homebuyers with _______ days to conduct a risk assessment for lead-based paint or lead-based paint hazards.
10
North Carolina licensees must notify NCREC in writing of any name or address change within ______.
10 days
Lenders must receive all transaction documents __ to __ days before closing in order to meet the three-day Closing Disclosure delivery deadline.
10 to 14 days
A 20-unit apartment building sold for $5 million. The property can gross $400,000 in annual gross income. What is the GIM?
12.5x $5,000,000 / $400,000 = 12.5
Under the terms of the North Carolina Vacation Rental Act, certain provisions apply to the voluntary transfer of property if it's used as a vacation rental. One such provision says that if a planned vacation rental agreement ends more than ______ days after closing, the tenants have no rights to enforce the agreements unless the buyer agrees in writing to honor them.
180 days
Bob and Mary are financing $160,000 for a new home. Their lender will approve an interest rate of 6%, if Bob and Mary pay two discount points at closing. How much is this?
2 points = 2% of the loan $160,000 x .02 = $3,200
Tyrell and Barb bought a commercial investment property in 2009 during the real estate market downturn. Through what year will they be able to depreciate the investment?
2048 It's an commercial investment property which means the adjustable depreciation schedule is 39 years.
A duplex is selling for $550,000. Each unit can gross $2,500 in monthly rent for the owner. What is the GRM?
210x 2 units, each $2,500 $550,000 / $5,000 = 110
John wants to do a 1031 tax exchange with a property he just sold. How many days does he have to identify a new property for the exchange?
45 days
Bundle of Rights
5 Bundle of Rights: 1) Control 2) Possesstion 3) Dispoition 4) Exclusion 5) Enjoyment
An underground storage tank has been in place for 5 years. What is its remaining useful life, on average?
5-10 years before potentially leaking
How many acres are in 1 section?
640 acres
Cory is a North Carolina licensee. He's required to complete ______ hours of continuing education every year.
8 hours
If the GIM in an area is 8X and the estimated annual rent is $24,000, what is the estimated property value?
8X x $24,000 = $192,000
What type of Ad, "Omits material information or contains statements that are important and are likely to mislead consumers acting reasonably."
A Deceptive Ad, "Omits material information or contains statements that are important and are likely to mislead consumers acting reasonably."
What is a "fixed lease" with commercial properties?
A Fixed lease, which is sometimes known as a flat lease, the base rent is kept the same for the duration of the lease.
Covenant
A ____ is a promise in editor that exists in a deed of benefit property that is sold.
Specific Liens
A _____ lien is a lien against a single property. Mortgages, real estate taxes and assessments, mechanic's liens, and commercial real estate broker liens are all types of _____ liens.
Title Insurance Policy
A ______ . is an indemnity (protection) contract that protects the purchaser or mortgagee against loss resulting from a defect in the title that is covered in the policy and is in existence when the policy becomes effective.
Success fee
A ______ or a buyers agents compensation that may be received from the seller if the seller or sellers agent has offered compensation to the buyers agent.
Client Bette asked licensee Frank about a home equity line of credit versus home equity loan. Which of the following offers an brief overview of what a home equity line of credit is?
A borrower borrows against the equity in the house and pays back the amount withdrawn plus interest.
Which of the following is true about a home equity line of credit?
A borrower can use the funds as needed, repay them, and borrow them again.
Deed in lien of foreclosure
A borrower in default simply conveys the title to the property to the lender to avoid record of foreclosure.
A broker working as a property manager could be relieved of the three-day delivery requirement if he gets the property owner's advance written consent to:
A broker working as a property manager could be relieved of the three-day delivery requirement if he gets the property owner's advance written consent to: - Enter into these agreements and retain them on the owner's behalf, using pre-printed forms that have met the owner's approval, which he does not alter unless legally necessary. - Send the owner a summary of the relevant information (identifying the property, the name, phone number, and home address of each tenant, and the rental rates) within 45 days of the execution. If a property owner directly requests the rental or lease agreement at any time, however, it will need to be delivered within five days of the request.
What does it mean when a brokerage only offers buyer agency?
A brokerage that only offers buyer agency generally doesn't list properties for sale. Once an affiliated broker signs an express buyer agency agreement, all agents with that brokerage become agents of the buyer.
A strip of land, such as a green area or park, that's used to separate property dedicated to one use from property dedicated to another use. What is this called?
A bufffer
Torrens System
A change in the status of the property, such as a transfer of ownership or placement of a lien on the property, requires that the old registration certificate be destroyed and replaced with a new one.
A closing statement detailing the receipt and disbursement of all money relating to the transaction must be delivered by when?
A closing statement detailing the receipt and disbursement of all money relating to the transaction must be delivered no later than at closing. If not done so, this is a violation of license law.
What is a "debit" on a closing statement?
A closing statement includes the parties' debits and credits. A debit is a charge (an amount a party has to pay)
Formaldehyde
A colorless gas that is omitted by many common construction materials and consumer products found within the home.
Commercial Broker Liens
A commercial real estate broker lien allows the broker to place a lien on commercial property for the payment of commission.
What do contracts often include in order for an agent to ensure that they are compensated for completing the terms of their agency agreement duties.
A commission protection clause also known as an extender, safety or over ride clause.
Contingency
A condition upon which the contract is based (ex: sale of house, appraisal, financing) An unmet contingency relieves the parties from liability In NC, buyers have the due diligence period to satisfy the concerns
Conditional use
A conditional use applies when changing the zoning would have an adverse impact on the adjacent properties. The local planning board will consider how the conditional use affects any of the surrounding properties prior to granting a permit.
What is an executory contract?
A contract in progress; one or more terms of the contract remain undone.
What is an executed contract?
A contract in which all the parties have met all terms of the contract.
What is an invalid contract?
A contract in which one or more of the essential elements is missing.
What is a valid contract?
A contract that contains all the essential elements.
Executed contract
A contract that has been fully performed by the parties.
Valid contracts
A contract that is binding and enforceable.
Implied Contract
A contract that is implied from the conduct and actions of the parties.
What is a voidable contract?
A contract that may be cancelled by one or more parties for one of several reasons. It may be missing an essential element and thus invalid; it may contain a mistake or a misrepresentation, or it may have been created or executed by a party under duress.
What is a void contract?
A contract with no legal force or effect.
What is a land contract?
A contractual agreement in which the buyer pays the seller the purchase price over time in a series of installments until the buyer has paid the contract in full, and the seller turns over the deed to the buyer
You represent Benjamin, who is listing his condo. A broker from another firm, Tanya, reaches out to you because she has a buyer who's interested in Benjamin's condo. You and Tanya need to sort out some of the finer points of your agency relationship before you can start negotiations. What type of contract do the two of you need?
A cooperation agreement between brokers
What is a "credit" on a closing statement
A credit shows up as an amount in the credited party's favor—either an amount a party has already paid, an amount that must be reimbursed, or an amount that is promised (e.g., the borrower's promised payment to the seller shows up as a credit for the seller).
What is a sign that an underground storage tank once existed on the property?
A crimped-off rusty pipe that seems to go nowhere or a plate covering an oil fill area outside.
A deceptive ad, according to the FTC's Deception Policy Statement, is one that either contains a statement or omits information that is:
A deceptive ad, according to the FTC's Deception Policy Statement, is one that either contains a statement or omits information that is: Likely to mislead reasonable consumers Material (important to the consumer's decision as to whether to buy or use the product)
Grantee
A deed must contain words demonstrating that it is the grantor's intention to transfer title to the named grantee, or one reviving the title to the real property.
Legal description
A description of land recognized by law.
Breach of contract
A failure, without legal excuse, to perform any promise that forms the whole or part of a contract.
Discount Points
A fee charged by the lender at settlement that results in increasing the lender's effective yield on the money borrowed. One discount point equals one percent of the loan amount.
Fee Simple Estate
A fee simple estate is also known as a "fee simple absolute." Fee simple estates convey all the rights of ownership (otherwise known as the bundle of rights) possible, including use, disposition, and inheritability. This is the ownership you're likely most familiar with, because most titles are held as fee simple estates. This type of ownership endures for an indefinite period of time.
Asbestos
A fibrous mineral with strengthening characteristics & heat resistance asbestos have been a popular choice for installation, gaskets, siding, roofing, flooring. Due to health related concerns, the use of asbestos as an installation was effectively banned in 1978.
Building codes
A form of control of land use for the protection of the public.
What is slab on grade?
A foundation
What type of gain is considered long term?
A gain on a property owned for more than 1 year
What type of capital gain is considered short term?
A gain on a property owned one year or less
What requires local or state approval before material modifications, restorations, or demolition?
A historic district
What is an (HO7) "For Mobile Homeowners" insurance policy?
A hybrid policy that covers both the building, and the contents, on a 'risk of direct physical loss' basis.
A contract that is missing one or more essential elements. What type of contract is it?
A invalid contract
What does a Land Survey Plat include?
A land survey plat includes a scale drawing of a parcel's boundaries.
Statute of Frauds
A law in effect in all states requiring that every deed must be written in order to be valid.
What is the statute of frauds?
A law requiring contracts conveying ownership in real property to be in writing to be enforceable
What is a mortgage?
A legally binding document that is a lien against the property
Due-on-sale clause
A lender frequently adds a due-on-sale clause (also called an alienation clause) to the note to prevent future purchaser from assuming the loan without the lender's permission.
What is the best way to describe a dual agent's role in a transaction?
A messenger between both parties
Which of the following is a key consideration and starting reference for a metes and bounds description?
A metes-and-bounds description begins from a reference point called a point of beginning (POB). From the point of beginning, the legal description gives the direction and the distances of the boundaries.
How many feet are in a mile?
A mile = 5,280 feet
What is a (HO8) "Market Value Policy"?
A modified version of HO-1 that provides actual cash value coverage in place of replacement cost coverage (used often with older homes and in other situations where the replacement value of the property exceeds its market value).
What is a bilateral contract?
A mutual contract that involves an exchange of promises or other consideration between two parties.
Protection period
A negotiable item in the listing contract that protects the agent for a period of time after expiration of the listing from sales to prospects the agent recruited.
What is a Net Listing?
A net listing is an agreement in which the seller specifies a price desired for the property and agrees to pay the broker any amount received above that price as commission. Net listings can be written for exclusive right-to-sell, exclusive agency, or open listings. In North Carolina, net listings aren't illegal, but are discouraged due to the inherent conflict of interest they present.
What is a non-agent?
A non-agent is known as a facilitator or transaction broker and act as "middle men" in transactions; this role is not allowed in North Carolina.
What is a section?
A one-square-mile square formed in the use of the rectangular government survey system
Color of title
A part of adverse possession where someone has a document (will, deed, devorce decree) that appears to give them a title to the property but actually does not
Prepayment penalty
A penalty in the event the mortgage is paid off faster than at the amortization rate stipulated.
What is a "percentage lease" with a commercial property?
A percentage lease is commonly used with retail properties, such as shopping centers and malls. The tenant pays a base rent plus an additional charge that's a percentage of the tenant's gross sales. In order to give the tenant necessary time in a new venture to begin turning a profit, often the tenant begins by only paying the base rent, with the percentage rent kicking in after a specific amount of gross sales are met. This is called the break-even point or break point, and it's calculated by dividing the base rent by the established percentage. The percentage charged is stepped up gradually as the tenant's business grows. Base rent + percentage of gross sales = percentage charged in a lease For example, Angelina's Pizzeria pays $300 monthly rent to her landlord, as well as 7% of her profit.
What is a plat map?
A plat map, also known as a "plat," shows you how a tract of land is divided into lots in your county. It is drawn to scale and records the land's size, boundary locations, nearby streets, flood zones, and any easements or rights of way.D
What are Mortgage Backed Securities (MBS)?
A pool of mortgages sold to investors MBSs are created when several such loans, which usually have similar characteristics, are grouped, or pooled, together, and then sold. The majority of MBSs are sold to government agencies or government-sponsored enterprises; others are sold to security firms or to private firms. For example, when one goes to get a loan from a Bank for $500,000 + interest of a 30-year loan, the loan is essentially sold to a private investment bank which is then sold to other investors. This way, the investors make money from the interest and the banks make money from servicing the loans (orgination fees, taxes, discount points)
What is a government-sponsored enterprise?
A private company the U.S. Congress created to make certain borrowing easier and cheaper
Mortgage note
A promissory note that is blacked by a mortgage or a deed of trust pledging the property as collateral for the loan
Eduardo wants someone who can help him with his 50-unit apartment complex. He needs certain tasks done on an ongoing basis, such as rent collection, tenant selection, and budget management. Which of the following contracts is appropriate for Eduardo?
A property management contract
Who can request a CLUE report?
A property owner
How does a property owner apply for a variance?
A property owner who wants a variance has to apply to the local zoning administration (zoning board of appeals) to have the adjustment granted.
What type of profit is granted and to whom from a tax deed sale at an auction?
A property with unpaid taxes is sold at auction. The winning bidder gets complete ownership of the property.
Rescission
A recission renders the contract null and void, returning the parties to their original positions. Buyers original position would be to have the refund of any money she advanced on behalf of the transaction. Examples: (size of home, number of acres in a tract of land, or a given zoning classification.)
Which of the following describes a subdivision plat? A collection of subdivision regulations and zoning ordinances A map that defines zoning districts A record in the county clerk's office that can serve as the legal description on a deed A record of the previous owners of a tract of land
A record in the county clerk's office that can serve as the legal description on a deed
What type of insurance is the (Ho4) "Tenants or cooperative owner policy (rental insurance) ?"
A relatively inexpensive policy that provides coverage for the loss of personal property
Disclosure of information
A requirement that the broker present all offers to the seller. It is the seller's prerogative to decide whether to reject or accept an offer. When presenting the offer the broker should provide the principal with knowledge of all circumstances surrounding the offer. An offer must be presented even though the seller may have several offers under consideration at the time an additional offer is made. The broker must continue to present offers during the term of the listing contract until the property sale is closed
What can sewage backups cause?
A sewage backup can spread bacteria, viruses, and parasites. They're dangerous because of the many ways they can transmit diseases, and because they're often widespread and nearly impossible to completely clean up. Raw sewage is mainly gray or black water containing organic waste and wastewater produced by household and industrial sources.
Exclusive right to sell
A situation in which the agent is to be paid his commission regardless of who sells the property, even the seller. It entitled the Brokerage your commission if they were in a situation in which the agent is to be paid his commission regardless of who sells the property, even the seller. It entitles the broker tour commission if they were the procuring cause of sale but not if the owner sells the property himself. The contract entities the broker to the commission if the property is sold during the listing time.
Net listing
A situation in which the seller, when listing the property, specifies a net amount of money he must receive from the sale.
Special Assessments in North Carolina
A special assessment is a tax that's levied against a property to pay for a specific kind of improvement that benefits that property. Special assessments are usually payable in annual installments over a period of years; property owners must also pay interest on their portion of the assessment. Special assessments aren't tax deductible for income tax purposes, but the related annual interest charged is tax deductible. The front-foot basis is often used to compute assessments for improvements, such as street paving and the installation of sidewalks. Using this method, property owners pay a designated dollar amount per linear foot of the property that's along the street. In North Carolina, all local municipalities have the authority to levy special assessments against properties. These fall into one of two categories: Traditional special assessments New special assessments
Most construction that is proposed near a floodway requires __________.
A special floodplain permit
Special use
A special use designation is needed when the desired use does not conform to an area's zoning, and is granted when the owner of the property intends to use it in a way that's otherwise prohibited by zoning ordinance. For example, a special use permit may be granted to a small business, like a doctor's or dentist's office in a residential neighborhood, or a restaurant in an industrial area.
What is a special use permit?
A special use permit, also called a conditional use permit, is granted for a use that's not in compliance with the zoning ordinance. The conditionally allowed uses of property in a zone are those that provide a service that's in the public interest (such as a church in a residential area)
Township
A square, 6 miles by 6 miles and is, therefore, 36 square miles in area. Each township is divided into 36 sections.
A standard homeowners policy includes what four types of coverage?
A standard homeowners policy includes four types of coverage: Structure (e.g., the building itself) Personal property/belongings (e.g., furniture, clothing) Liability (e.g., bodily damage to others) Temporary living expenses (e.g., displacement due to fire or other insured disasters)
What is an express contract?
A stated (written or oral) agreement between two parties to specific terms.
The Simpsons are buying a five-acre tract that has always been part of a larger parcel. When the owners of the large acreage decided to subdivide it, they needed to have a legal description created for the five-acre lot. What was used as the starting point for creating that legal description?
A survey
A title defect is discovered after closing. It could be a lien that got buried under a stack of paperwork, or even a person claiming to be the property's rightful owner. If that happens, the title insurance company will either pay the debt or take the claimant to court to battle it out in front of a judge. When a covered party, such as the property owner or lender, gives the title company the right to pursue the party who caused the loss, it's called _______________.
A title defect is discovered after closing. It could be a lien that got buried under a stack of paperwork, or even a person claiming to be the property's rightful owner. If that happens, the title insurance company will either pay the debt or take the claimant to court to battle it out in front of a judge. When a covered party, such as the property owner or lender, gives the title company the right to pursue the party who caused the loss, it's called subrogation.
What is marketable title?
A title free of encumbrances (easements, restrictive covenants, mortgages, violation of zoning ordinances). Ensures the title to property is free and clear of liens and only subject to loan payoff and any taxes owed.
What defines a subdivision?
A tract of land divided into lots or plots and used for building purposes.
Mortgage
A two-party instrument between lender and the borrower. The borrower gives a piece of paper (mortgage) to the lender in return for the borrowed funds.
A contract in which consideration (such as a promise) is only given by one party to the other.
A unilateral contract
What does a property owner need to prove in order for a USE variance to possibly be approved?
A use variance allows the owner to use the land for a purpose that the existing zoning would otherwise prohibit. To get a use variance approved, the owner has to show that the current zoning restrictions are causing unnecessary hardship, and can do so by meeting four criteria: - The property's economic benefit or use is eliminated due to current zoning restrictions. Financial evidence of the economic loss must accompany this claim. - The hardship must be unique to the specific property not something endemic to the neighborhood. - The requested variance must not alter the essential character of the neighborhood. - The claimed hardship must not be self-inflicted.
A contract that includes all necessary elements and is signed by all parties. What type of contract is it?
A valid contract
A North Carolina licensee made a false promise to a seller whose decision to list with the licensee was influenced by that promise. This is ______.
A violation of license laws that involves false promises.
Void contract
A void contract is defective and has been declared void. An automatically void contract is one that is absolutely unenforceable and has no legal force or effect.
Writ of Attachment
A writ of attachment (or order of attachment) is issued by a clerk of court or a judge, and is intended to bring a defendant's property within the court's jurisdiction to ensure it's available to be used to satisfy a judgment against the defendant. It's generally issued early early in the judicial process—even before a judgment has been entered by the court, and allows a sheriff to seize assets. - Not for morgagers--ex) car payment
Deed
A written instrument that transfers an interest in real property when delivered to and voluntarily accepted by the grantee.
Non-negotiable note
A written promise to pay a specified sum of money according to specified terms to a particular individual or corporation.
To which of the following borrowers might a lender be most likely to recommend an FHA loan?
A young couple with only a few thousand dollars saved for a down payment and relatively low credit scores
Abby was working in North Carolina as a nonresident commercial broker, and was affiliated with broker-in-charge, Marcie. Abby's client gave her an earnest money check to be deposited in the firm's trust fund. How long does Abby have to get Marcie the check?
Abby must get the check to Marcie immediately.
Martha made an offer to buy Drake's home, and he accepted it. Under the terms of the agreement, Martha was supposed to make an earnest money deposit of $10,000, but she only put down $5,000. Drake accepted the lesser deposit, and the sale was ultimately finalized. This is an example of ______.
Accepting partial performance
Provision on the Offer to Purchase Standard 2-T form where seller must provide access to the property and leave utilities on for due diligence, verification of repairs, and final walk-through.
Access to property
What is the use called that's subordinate to the main use of a single-family home, such as a mother-in-law suite or tool shed?
Accessory
According to the North Carolina Residential Rental Agreements Act, landlords must:
According to the North Carolina Residential Rental Agreements Act, landlords must: Inform the tenant if water contamination levels exceed a safe level Ensure common areas are maintained and safe Comply with housing codes, including installation and maintenance of smoke detectors and carbon monoxide detectors Keep the property in habitable condition Keep utilities such as electric and plumbing in working condition Promptly repair any "imminently dangerous condition"
Easement by Prescription
Acquired through years of exclusive and adverse use.
What are the three major net expenses for a commercially leased property?
Acronym: TIM Property taxes Property insurance Common area maintenance (CAM)
What are the differnt types of license status other than provisonal, non-provisonal, broker, and BIC?
Active Inactive Expired Revoked Suspended Surrendered
The physical removal of the tenant, accomplished by legal process
Actual Eviction
The amount added to a home's basis for improvements is the ______. This includes all costs for material and labor, except the homeowner's own labor, and all expenses related to the improvement.
Actual cost of improvements
The type of Notice that's been expressly given directly to a party
Actual notice
What's the term for a notice given directly to and received by a person?
Actual notice
What are the advantages of using the MLS?
Advantages: Broader market exposure for listed properties Broader exposure may lead to more offers, faster sales, and better sales price Access to a wider range of property listings Authorization to show any listed property within the MLS pool MLS data can be used to generate a comparative market analysis (CMA)
Greta is helping her client Bill with an offer to purchase. Bill has some specific requests that he wants to include, but the standard form doesn't address his needs. What should Greta do?
Advise Bill to consult with an attorney who can help him complete the offer to purchase according to his wishes.
The owner of a six-unit apartment building is worried that there may be some electrical issues. The owner's leasing agent, Katrina, meets with him to discuss his concerns. What's her responsibility to the owner?
Advise him to consult an expert
Statutory redemption period
After the sale of the property on the courthouse steps a borrower has a different type of redemption right known as the statutory redemption period. The statutory redemption period is strickle after the final foreclosure sale and is often referred to as the upset bid period. In NC, the highest bid on the courthouse steps must stand for a period of 10 days subject to an upset bid of at least 5% more than the brightest bid with a monument amount of $750.
How is agency created?
Agency is created by signing specific written contracts, called agency agreements or employment agreements. You can also enter into an agency agreement unintentionally through your actions, which is not recommended.
What is agency?
Agency is voluntary, contractual relationship between a brokerage and another party. It gives the agent (acting on behalf of the brokerage) the legal authority to act on behalf of the contracting party.
NC "Working with real estate agents" brochure
Agent must provide buyer with brochure at first substantial contact Substantial contact = The sharing of private information Consent to dual-agency Brochure must be discussed in order to proceed with fiduciary duties. Document client receipt on the tear off flap Client does not have to sign Broker keeps panel
What does the fiduciary duty of disclosure intail?
Agents must disclose all information that could influence the principal's decision to buy or sell (material facts). These are facts that you don't have to ask an expert about to discover; they're facts that you can find and verify on your own. If a buyer knows that you represent the seller—you've made it clear—but the buyer still tells you, "I just have to have this house. I don't care about the price." This is a material fact that you must relay to your seller client.
What must agents do first when working with a potential buyer are a sub-agent?
Agents must disclose, in writing, that they represent the sellers' interests, and they must include their license number in this disclosure. They must remind the buyer not to disclose confidential information. They must not solicit confidential information from the buyer.
What does the fiduciary duty of accounting intail?
Agents receive funds as part of their real estate transactions, such as checks, and also receive certain types of transaction-related documents. Agents must safeguard these documents and moneys, and make sure that the appropriate people receive copies, when applicable. They must maintain records of all transactions, and give an accounting of funds to their clients. Agents must also comply with all accounting rules under general license law and by following generally accepted accounting principles (GAAP)
Whether the principal signs an agreement with a sole practitioner broker or an affiliated broker, _______.
All brokers affiliated with the firm owe the principal the same duties
Executory contracts
All contracts that have ot been fully performed (because things still need to be done as required by the contract)
Constructive Notice
All the world is bound by the acknowledgement of the existence of conveyance of title.
What are the requirements for public use planning and zoning ordinances?
All zoning and public land use planning ordinances and regulations must meet the following standards: Be part of a comprehensive plan. Serve the public by promoting public health, safety, and general welfare. Support the land use plan for which it was intended.
Debt that is paid off by making regular, periodic payments
Amortized
What type of Ad, "Causes or is likely to cause substantial consumer injury that couldn't be reasonably avoided and that isn't outweighed by the benefits."
An Unfaire Ad, "Causes or is likely to cause substantial consumer injury that couldn't be reasonably avoided and that isn't outweighed by the benefits."
Court Injunction
An action of the court that requires the violation to be discontinued, even to the extent of ordering an unlawful structure agreement.
In order for a North Carolina brokerage firm's license to remain active, it must have _____.
An actively licensed qualifying broker For a North Carolina business entity other than a sole proprietorship to operate as a brokerage within the law, it must be licensed as a firm, and it must have a qualifying broker with an active license at the helm. If the qualifying broker's license lapses, then the firm's license will become inactive.
What is an adendum?
An addendum is a supplemental document that's attached to the original contract before contract acceptance. It explains or expands upon points in the contract and indicates additional requirements that aren't clear in the contract. An addendum is executed with and is considered part of the original contract once it's signed by the parties involved. Ex: How inspections will take place on the property being purchased if the buyer desires inspections.
What is sub-agency?
An agency relationship between a listing agent and an agent who brings the buyer. If the buyer isn't represented, the agent who brought the buyer to the transaction becomes a subagent of the listing agent.
What is the definition of an agent?
An agent is someone who acts on another's behalf upon request.
The Right of First Refusal
An agreement that should the owner decide to sell or lease, he will offer it to the named party first. There is no obligation for his owner to ever decide to sell, but rather an agreement that if he does, he will offer it to the recipients of the agreement first.
What is an amendment?
An amendment is a modification made later to the terms of an already-accepted contract. For example, if your buyers need to extend the closing date beyond the contracted date, this would require an amendment to the original terms. Once signed by the parties, an amendment becomes a part of the sales contract. Ex: A common amendment to the sales contract is an extension of the contract period. This often happens if sellers need additional time to make required repairs, or it may be the result of buyer financing issues.
Mortgage insurance premium (MIP)
An annual mortgage insurance premium prorated monthly and paid with the monthly mortgage payment.
What must a real estate licensee who intends to conduct a real estate auction have in adition to a real estate license?
An auctioneers license
Encroachment
An encroachment occurs when part of an improvement to the land (a building, fence, tree, etc.) extends over that property line into the next property. A property's lot size and enjoyment and use can be impacted by encroachments, which can be determined by an on-site land survey. Finally, encroachments can also lead to title problems, which can create a roadblock for property sales and other transfers.
What is an escalation clause?
An escalation clause is a clause in a lease or contract that guarantees a change in the agreement price once a particular factor beyond control of either party affecting the value has been determined.
Express Contract
An express contract is one in which the parties to the contract have definitely expressed all the terms and conditions as agreed upon between them. An express contract can be either oral or written.
A contract that is based on the actions or behaviors of the parties, not on words.
An implied contract
What does an Improvement Survey Show
An improvement survey shows not only the property lot lines and boundaries, and dimensions, but also other elements such as the location of any buildings or other hardscapes, such as driveways or patios.
Who is allowed to perform real estate activieis without a license? WHo are the exemptions?
An individual owner who's selling or leasing personally owned property. A business entity that's selling or leasing owned real estate when doing so as part of the regular course of business. This exemption includes the company's officers and employees (who represent the entity, not a client). A person who's acting as an attorney-in-fact under a power of attorney granted by an owner during the authorization process as is required for final consummation of performance of any contract for the sale, lease, or exchange of real estate. An attorney at law who is an active member of the North Carolina State Bar, but only when performing an act or service that constitutes the practice of law. Attorneys generally may NOT engage in real estate brokerage practice without holding an active real estate license. A person who's acting as a receiver, trustee in bankruptcy, guardian, administrator, or executor, or any person who's acting under a court order. A trustee who's acting under a written trust agreement, deed of trust, or will. This includes the trustee's regular salaried employees. Salaried employees of broker-property managers as long as the employees' duties are limited to certain activities. Permitted activities include exhibiting units and providing lease information to prospective tenants, accepting lease applications, accepting security deposits and rental payments made payable to the property owner or property manager, and executing leases using pre-printed forms. The employee isn't allowed to negotiate payments or leases. A housing authority and any of its regular salaried employees with regard to the sale or lease of property that's owned by the housing authority,or to the subletting of property which the housing authority holds as a tenant.
What is an option contract?
An offer to purchase a specific piece of real estate but without the obligation to buy it
Appriasal
An opinion or estimate of a property's value found for a specific purpose, for a specific person, as of a specific date, and based on proven facts
An unfair ad, according to the FTC's Unfairness Policy Statement, is an ad or business practice that:
An unfair ad, according to the FTC's Unfairness Policy Statement, is an ad or business practice that: Causes or is likely to cause substantial, unavoidable consumer injury Is not outweighed by the benefit to consumers
Anna manages an apartment complex for her landlord, Katherine. Anna's friend Kevin is looking for an apartment, and without asking Katherine's permission, Anna rents him a two-bedroom apartment that she's had trouble renting for the one-bedroom rate. Which of these statements is true?
Anna has breached her fudiary duties to katherine
How is the efficiency of a furnace or boiler measured?
Annual fuel utilization efficiency (AFUE) measures how efficiently a heating system uses the fuel it burns.
What is constructive notice?
Another example of constructive notice is the recording in county registries of deeds, mortgages, liens, divorce papers, and other kinds of documents that are considered public information
What law does group boycotting violate?
Antitrust law
What does the Federal Trade Commission consider to be an unfair ad?
Any ad or business practice that causes or is likely to cause injury
What is an an acceptable fee according to the Real Estate Settlement Procedures Act?
Any flat fee based on actual services disclosed and performed for a client, regardless of the success of the transaction, with the settlement service provider.
The Sale & Lease of Pre-1978 Homes require:
Any house built before 1978, requires: Prior to signing a purchase or leave agreement, the buyer needs an: 1) addendum 2) booklet 3) Disclosure of knowledge 4) Copies of any reports (that must be given in paper copy)
Is an agent entitiled to commision with an Open List/Open Buyer Agency Contract?
Any number of brokers or agents can represent the client. Whoever finds the buyer or property earns the commission; if the client finds the buyer or property on his or her own, no commission is earned.
Carbon Monoxide
Anything that burns natural gas and/or fuel, produces carbon monoxide
What does one have when a third party perceives a lincensee to be working as an agent of the principal based on words or actions of that principal, and so believes that you have the authority to act as an agent.
Apparent authority
After owning their home for five years, Charlie and Wendy now have $125,000 in equity built up. How would they have determined the equity value?
Appraised value - amount owed = equity
North Carolina real estate broker license applicant Penelope completed her required pre-licensing education on April 1, 2020. Based on this, Penelope must apply for her license before ______, or her pre-licensing education credit will expire.
April 1, 2023 To obtain a NC real estate license, the applicant must satisfactorily complete North Carolina's 75-hour broker pre-licensing course at a commission-approved school within the three years preceding the date the application is made.
Allen and Lewis are friends who each recently purchased real estate. Allen purchased a patio home in a small town an hour from the city, while Lewis purchased a condo in a really hot area near the city center. Although they paid similar amounts for their properties, Lewis' condo is worth much more two years later. Which economic characteristic does this demonstrate?
Area preference
What are improvements with regard to property?
Artificial attachments to land that include items such as fencing, buildings, and walkways
Jeanetta leases an apartment from Quad City Leasing. Jeanetta has filed a complaint with the state real estate licensing division stating that Marissa, Quad City's property manager, breached her fiduciary duty of loyalty to Jeanetta. What are her fudiary duties and to whom?
As a property manager, Marissa owes fiduciary duties to her client and the apartment community.
_____ can be found in tiles, flooring, shingles, ducts, insulation, and wall paint in older homes. Can cause cancer and lung disease.
Asbestos
Friable
Asbestos can be either friable or non-friable. Friable is the more concerning for that form and refers to asbestos that will become air-born parcels if it is disturbed.
Mary agreed to buy her mother's house when her mother planned to move to a senior living community. They signed a purchase agreement, but when Mary had to move because of work, she signed her rights in the contract over to her sister, Tina. Mary may still owe money if Tina can't come up with the agreed-upon funds. What's happening in this scenario?
Assignment
The substitution of tenants, putting the responsibility for the lease contract in the new tenant's hands (although it doesn't fully relieve the former tenant from liability should the new tenant fail to pay); requires landlord's written permission
Assignment
Title Assurance in North Carolina:
Assurance for a buyer and lender that a title is marketable and can be successfully transferred is generally accomplished through a title examination and title insurance. During a title examination, an NC licensed attorney will perform a title search to ascertain a chain of title and will offer a title opinion to a title insurance company. Based on that opinion, the title insurance company may offer the buyer a title commitment. Title searches will go back at least 30 years, and in accordance with the Marketable Title Act, if a seller has a 30-year unbroken chain of title, it is a marketable title that may be transferred. Once a title commitment is offered, the buyer and lender may each purchase a separate title insurance policy (Owner's policy and Lender's policy, respectively) to protect them against losses suffered due to any problems with the quality of the title. An action of quiet title may also protect against title defects as a means of clearing them by lawsuit. Title assurance may also be attained using the Torrens system. This is used in only a few states, including North Carolina, and is a title registry system that the state guarantees, so it only needs to go back to the last search.
Easement Appurtenant
Attached to a specific parcel of land and grants the right to use adjoining property.
If taxpayers rent their second home out for up to 14 days per year, they can _______.
Avoid paying taxes on the rental income
Real estate Land Trust
Avoid probate, provide privacy, and ensure ease of conveyance
Carla is shopping for a new heating system. She sees a label on the system that says it's 100,000 BTUs. What does a BTU measure?
BTU, or British thermal unit, is a measure of system capacity, i.e., the area a system will heat or cool.
What must sellers and landlords provide because of the North Carolina's Residential Lead-Based Paint Hazard Reduction Act?
Based on these regulations, sellers and landlords must do the following: - Provide the information pamphlet "Protect Your Family From Lead in Your Home."Disclose any known information about lead-based paint or related hazards. - Include an attachment to the contract or lease that includes a lead warning statement and says that the seller or landlord has complied with all notification requirements. - Provide any records and reports on lead-based paint and/or lead-based paint hazards that are available to the seller or landlord. - Give potential homebuyers a 10-day period to conduct a risk assessment for lead-based paint or lead-based paint hazards.
What must you do before you can begin working as a buyers agent?
Before you can show homes to buyers: - Have an express oral or written buyer-agency agreement. - Provide the "Working with Real Estate Agents" brochure, explain it to the buyer, and have the buyer sign where appropriate (consent to duel-agency?) - Disclose, in writing, that you'll be working as a seller's agent or subagent (if the buyer doesn't choose buyer's agency)
Requires a formal arrangement with the lender to divide payments into smaller chunks, what feature of loan payment is this?
Bi-weekly Payments
Ezra's lease on his condo includes an option to purchase. He told his landlord, Sherm, that he's ready to purchase the condo, and they've negotiated a purchase price and closing date. What kind of contract is this?
Bilateral Once the optionee exercises his option to purchase the property, this becomes a bilateral contract with obligations for both parties.
When must the Estimate form (formerly known as Good Faith Estimate [GFE]) be supplied to a borrower?
Borrowers must receive this form within three business days after submitting their application and must acknowledge that they received the Loan Estimate.
What is "Bracketing"?
Bracketing is a process in which an appraiser determines a probable range of values for a property by comparing a group of comparable sales to the subject.
A british measure of heat that measures the systems capacity
British thermal unit; a measure of heat energy called a BTU, which measures system capacity
When are commissions owed to agents if the agency expires?
Broker is owed a commission if a contract is signed within a certain number of days after agency expiration and the brokerage was responsible for making the original connection between buyer and seller. If a listing agreement has a protection period, no commission is owed to the original broker if a valid, written brokerage agreement is subsequently entered into with another licensee.
The part on the Offer to Purchase Standard 2-T form where these are legally binding statements that buyers make regarding their responsibilities in the purchase.
Buyer Representations
North Carolina broker Vinnie must provide a signed copy of the offer to purchase and contract agreement to which parties?
Buyer, seller, other parties agent, the lender, closing attorney
What is one of the best ways to protect the buyer's earnest money?
By having a home inspection contingency in the contract is one of the best ways to protect the buyer's earnest money—not to mention mitigating the risk of purchasing a property that becomes a huge money pit.
How does a title insurance company prove that a seller has ownership rights to a property?
By performing a title search to create a chain of title or abstract of title
How does the Fed maintain a balanced economy?
By regulating the flow of available funds and interest rates
Petition for legal ownership, opportunity to redeem property, notice of eviction if property is not redeemed
By writ of entry
Calendar year proration
Calculate prorations based on a 365-day or 366-day year
All itemized amounts from this page are totaled to determine the estimated amount the buyer will need to bring to closing.
Calculating "Cost to Close"
How do you most generally calculate livable are square footage?
Calculating each rectangular livable area, use 10ths of a foot for each length and width. Then add all the rectangular areas together to get the unrounded finished square footage. Then round to the nearest whole square foot.
What's the LTVR if a home at $360,000 financed with a $40,000 down payment?
Calculations: Loan Amount: $360,000 Down Payment: $40,000 $40,000 + $360,000 = $400,000 total PP $400,000 x .10 = $40,,000 in Value $400,000 x .90 = $360,000 in Loan = 90/10 LTVR
What is the LTVR if a property's sale's price is $300,000; financing $180,000?
Calculations: Purchase Price: $300,000 Loan Amount: $180,000 $300,000 - $180,000 = $120,000 $300,000 x .40 = $120,000 in Value $300,000 x .60 = $180,000 in Loan = 60/40 LTVR
What's the LTVR if a property is valued at $500,000 payment, financing $350,000?
Calculations: Purchase Price: $500,00 Loan Amount: $350,000 $500,000 - $350,000 = $150,000 $500,000 x .30 = $120,000 in Value $500,000 x .70 = $350,000 in Loan = 70/30 LTVR
What's the LTVR if the Purchase price of a home is $600,000 and financing $480,000?
Calculations: Purchase Price: $600,00 Loan Amount: $480,000 $600,000 - $480,000 = $120,000 $600,000 x .20 = $20,000 in Value $600,000 x .80 = $480,000 in Loan = 80/20 LTVR
NC Sediment Pollution Control Act
Can't build, excavate or construct Affecting sediment State waters
What does the fiduciary duty of confidentiality intail?
Can't share any information that can damage their client's bargaining position, unless the client agrees in writing to that information being shared. Phrases such as "motivated seller" or "seller needs a quick sale" are common in real estate advertising; these are fine as long as the seller agrees to them.
Breeja sold her investment property for $330,000. Her adjusted basis in the property was $253,000. The difference between this sale price and the adjusted basis is ______.
Capital gain
Payden sold his home and made a nice profit. His real estate agent told him he can offset his capital gains from what home costs?
Capital improvements
Myra is preparing a monthly report pursuant to the terms of a property management agreement. This report details actual income received from rent and other fees, along with actual expenses paid. What report is she preparing?
Cash flow report
Electromagnetic Fields (EMFs)
Caused by electrical currents Electrical wires produce healthy EMFs Part of the buyer's due diligence
Two-by-eight-inch boards laid horizontally on top of the top plate of the wall
Ceiling joists
Which document is used to establish the path and proof of ownership?
Chain of title
Amendment
Changing terms of existing contract All changes should be dated and initialed by all parties
Someone who has agency representation with the real estate licensee
Client
The completion of the legal process results in the title being transferred from the seller to the buyer. This is called the ________.
Closing
What is a cluster?
Cluster: This is a division of large tracts of land into smaller, similarly zoned parcels for new developments of single-family homes, townhomes, apartments, or condos, often leaving a portion open for a playground, park, walking path (i.e., subdivisions).
Radon
Color atlas, odorless gas that occurs naturally from decaying uranium deposits. Releases radio-active has that will eventually rise through the cracks until reaches house. State considers a level of 4.0 picocuries to be the maximum safe level.
What is commingling
Commingling real estate is when money pooled from multiple investors is mixed, or commingled, with personal funds or the money of others.
How is renewal of a license done?
Completing eight hours of continuing education between July 1 and June 10 (of the following year), consisting of the following: 1) If the licensee is NOT broker-in-charge eligible, four hours of a General Update course, updated each year by the commission 2) If the licensee IS broker-in-charge eligible, four hours of a Broker-in-Charge Update course 4) Four hours of approved electives 5) Paying the license renewal fee as set by the commission 6) Providing the commission with an email address (if the licensee has one)
Contains the names of insurance companies that have covered the property and policy numbers; also shows prior claim information, including dates, loss types, and loss payments
Comprehensive Loss Underwriting Exchange (CLUE) report
What tasks do a closing attorney need to do After the Settlement Meeting?
Confirm good funding of the buyer's loan. Record deed or trust with the office of the register of deeds. Arrange payoff of existing loans or liens Disburse payment to the seller's lender. Issue the final title update. Distribute proceeds of the sale, including the brokers' commissions. Files form 1099-S with the IRS (and NC 1099-NRS, if necessary).
What is consideration?
Consideration is the giving of something of value in exchange for something of value.
Zoning Ordinance
Consists of two parts: 1) the zoning map, which divides the community and the various designated districts 2) the text of the ornaments, which sets forth the type of use permitted under each zoning classification and specific requirements for compliance.
A situation in which the tenant is prohibited from quiet enjoyment of the premises, and vacates (in such cases, the tenant is evicted for all practical purposes because enjoyment of the premises is not available)
Constructive Eviction
The type of Notice given to the world by recorded documents, whether or not the party has personally examined them
Constructive Notice
Nurse Sandra was fed up with her landlord entering her apartment without giving her proper notice. She works nights and sleeps during the days, but three times this month her landlord Jade has woken her up. She has decided to break her lease and move out. This is an example of ______.
Constructive eviction
Quick Claim Deed
Contains no warrantees whatsoever but is simply a deed of release. Ex: ______ deeds transfer property between family members. Examples include when an owner gets married and wants to add a spouse's name to the title or deed, or when the owners get divorced and one spouse's name is removed from the title or deed.
At what point in a brokers career are they required to satisfy continueing ed requirements?
Continuing education requirements take effect during the second year of licensure. Real estate licenses must be renewed annually before June 30. If the renewal requirements aren't met, the license will expire on June 30.
This is used when a property manager or owner wants to employ an agent to find an acceptable tenant.
Contract to procure tenant
When are Contracts to Precure Tenants used?
Contracts to procure tenants are used when property owners want to employ a broker to find an acceptable tenant, but not to perform any ongoing services.
What is a Tortious Interference Lawsuit in Real estate?
Contractual interference is grounds for a tortious interference lawsuit. For a plaintiff to win a tortious interference claim, the following elements must exist: - A valid contractual agreement between the plaintiff and a third person - The defendant's knowledge of the contract - The defendant's intent to interfere with the contract - The defendant's actual and improper interference - Damage to the plaintiff, who relied on the contract as a business expectancy, i.e., financial gain The defendant must have intended to interfere with the contract between the plaintiff and a third party.
Which economic principle pertains to how a change in a property affects its value as a whole?
Contribution
Nonconforming loans
Conventional loans are referred to as "conforming" or "nonconforming". Conforming conventional mortgage loans are those that comply with FNMA/FHLMC guidelines and are made using standardized loan forms.
Each appraisal approach relies on something different to determine value. What does the cost approach measure?
Cost to rebuild the property
What is the (Ho6) "Condominium unit owner policy"?
Covers the "unique walls" in ownership and is often referred to as "walls-in coverage" because it only protects the individual unit and damage to the contents of the apartment, cooperative or condominium; provides personal liability coverage for the insured when people are injured or suffer property damage in the insured's unit. The condo association's master policy covers the building's common areas.
Planned Unit developments (PUDS)
Create a neighborhood of cluster housing and supporting business establishments.
Federal Housing Administration (FHA)
Created during the depression of the 1930s, was to make home ownership available to more people, to import housing construction standards, and to provide a more effective and stable method of financing homes.
More serious breaches of duties, such as embezzlement, may be subject to what type of punishment?
Criminal prosecution
An unrepresented ______ who's a party to a transaction is known as a principal.
Customer
Someone who's working with a real estate licensee, but is NOT represented
Customer
Dana just passed her North Carolina broker license exam. What must she do to become an active licensee?
Dana's license is inactive until she's affiliated with a broker-in-charge.
Amortized
Debt that is paid off by making regular, periodic payments
What are the financial leverage ratios commonly used by investors?
Debt-to-asset ratio = total debt / total assets Debt-to-equity ratio = total debt / total equity Debt-to-capital ratio = total debt (total debt / total equity)
Taxpayers who own a first and second home can do what?
Deduct all of the interest paid on debt not to exceed $1.1 million for both the first and second homes combined
What type of deed grants ownership of a property without the exchange of money or other consideration for it.
Deed of gift
Types of Land Use Controls:
Deed restrictions (which apply to a specific property or properties) CC&Rs (conditions, covenants, and restrictions - which apply to an entire subdivision) Subdivision/homeowners association regulations Liens Easements
What is the definition of a resident in North Carolina?
Defines a resident as anyone who lives in North Carolina during the tax year, not on a temporary or transient basis. Under this statute, anyone living within North Carolina for more than 183 days in the year is considered to be a resident.
North Carolina's ______ rule states that brokers must deliver copies of all offers to their clients or customers immediately, and never more than three days after the date the broker received the offer.
Delivery of instruments The delivery of instruments rule applies to offers, as well as to any written agency agreement, contract, lease, rental agreement, option, or other transaction-related document.
Price levels are an indicator of _______.
Demand
Mario lives in a state that requires an abstract of title for property conveyance. The chain of title is broken approximately 50 years prior to the current date. Which of these properly identifies the status of Mario's title?
Depending on his state's laws, Mario may have marketable title.
When a North Carolina developer selling time share units receives earnest money deposits or down payments, what must be done with that money?
Deposit the money into a trust or escrow account no later than three banking days after it's received and hold it the escrow account for 10 days or until the purchaser cancels the contract.
Each physical brokerage office in North Carolina must have a _____.
Designated broker-in-charge
Who is exempted and why from providing the North Carolina's Residential Lead-Based Paint Hazard Reduction materials ?
Disclosures about lead paint don't have to be made in the following circumstances: - Housing for the elderly or the disabled (unless a child younger than six also lives there) - Housing that doesn't have any bedrooms (such as efficiencies, dorms, studio apartments, and rentals of individual rooms) - Housing that's being sold at a foreclosure - Housing that has been found to be lead-based paint-free by a certified inspector - Housing being leased for 100 days or fewer with no option to renew or extend - Renewals of existing leases if the disclosures were made previously
Type of prepaid interest that borrowers pay to lower a loan's interest rate
Discount Points
A fee charged by the lender to give the borrower a lower interest rate
Discount points
What is steering?
Discrimination and violates federal and state fair housing laws. Steering is when you encourage buyers or tenants away from or toward specific areas based on their membership in a protected class, such as race or national origin.
Right to determine how, when, and whether the property is to be sold, leased, mortgaged, or transferred
Disposition
For duel-agency, what is required to keep confidential? When can confidential information be shared?
Dual agency requires that information about price, terms, motivation for pursuing a transaction, and previous offers made remain confidential unless one party instructs the dual agent in writing to disclose specific information. Without express, written permission, disclosing anything to one party that could put the other party at a disadvantage is prohibited in dual agency.
What must duel-agents due in order to ensure that each party in a transaction is treated equally?
Dual agents must make "every reasonable effort to represent Buyer and Seller in a balanced and fair manner" and "encourage and effect communication and negotiation between Buyer and Seller."
In duel-agency transactions, an agent owes their clients all fiduciary duties exept:
Dual agents owe all fiduciary duties to each client in the transaction, with the exception of loyalty, because undivided loyalty to both parties is a legal impossibility. However, all confidential information regarding price, terms, motivation, and previous offers must remain confidential
What is Duress?
Duress includes the use or threat of force, such as blackmail or bodily harm
If the buyer moves in before closing, the seller must get a landlord's policy for non-owner-occupied coverage, and the buyer must obtain renter's insurance
Early possession
How Easements are Created
Easements can be created through written documents, granted by implication, and created by operation of law.
What is Consumer Financial Protection Bureau (CFPB)'s three-pronged approach mission to protecting consumers?
Education, enforcement, research
What is the formula for estimating depreciation using the age-life method?
Effective age ÷ Total economic life = Accrued depreciation
The contract becomes legally binding once the last party's written acceptance is communicated to the other party. This is called the _____ date.
Effective date
What is something other than mold or gas lines that should be checked or inspected after flooding?
Electrical boxes. Cables also need to be inspected after flooding. Any and all wiring or cable products that have been exposed to or submerged in contaminated floodwater should be examined by a qualified electrical contractor to determine if the cable is safe for continued use.
What is used to provide documented proof that buildings and improvements are properly raised to minimize flood damage?
Elevation certificate
Imagine that broker Ellen was holding trust funds for buyer Mike, and he and seller Sonja were in a dispute because the transaction didn't end amicably. Now let's say that in the middle of the dispute, Mike went silent. After months of sleuthing, Mike still couldn't be located. How should Ellen handle the funds in this situation?
Ellen can disburse the funds to Sonja after she's made a reasonable effort to contact Mike with no success. After a broker has made a reasonable effort to contact the absent party, the funds may be considered abandoned and can be disbursed to the other party in accordance with the written agreement.
What is the Real Estate Settlement Procedures Act (RESPA) (1974)
Enacted by the U.S. Department of Housing and Urban Development (HUD). Prohibits illegal kickbacks and referral fees. Covers loans on one-to-four-family residential properties (including loan assumptions, refinances, home improvement loans, and equity lines of credit). The lender must provide the borrower with a written disclosure of estimated settlement costs.
Right to (legally) use the property however the owner desires
Enjoyment
Community Land Trust
Ensure property is available for affordable housing
Lenders must not discriminate based on protected class.
Equal Credit opportunity act
Financial or "equitable" interest in the property
Equitable title
Your clients, the Nguyens, have signed a contract for deed to purchase a property. What rights do the Nguyens receive?
Equitable title and possession of the property When a contract for the sale of land is executed, equitable title passes to the buyer. When the conditions on the sale contract have been met, legal title passes to the buyer with the deed.
A home equity line of credit (HELOC) is based on the homeowner's available ______.
Equity
Rob purchased a property five years ago for $200,000. He put down $50,000 and financed $150,000. Today, the property is valued at $250,000. What is this an example of?
Equity build up
What do wetlands provide that warrants their protection?
Erosion control Flood and storm water control Habitat for fish and birds Surface and groundwater protection Natural beauty Pollution treatment
n addition to the Loan Estimate and the Closing Disclosure, a lender must provide consumers with the following additional disclosures after loan consummation:
Escrow closing notice: Lenders must provide this disclosure before canceling an escrow account for any consumer who has such an account (for example, if the loan requires that borrowers put insurance and property tax reserves in a lender escrow account). Mortgage servicing transfer: Lenders must disclose to borrowers whether they'll service the loan or sell/transfer/assign it to another lender prior to the change. Partial payment notices:Lenders must disclose to borrowers whether they'll accept periodic payments that are less than the full amount due. This disclosure also includes whether partial payments are applied to a consumer's loan right away or whether the lender holds the payments in a separate account until the consumer pays the remainder of the full amount due
Who is the threshold in a listing?
Esentially defined as the person who first showed the property to the buyer
The tenant's previously lawful possession continues without permission.
Estate at Sufference
A type of leasehold estate in which the duration of the lease is unknown at the time it is created
Estate at Will
A fixed termination type of lease that may be for a day, week, month, year, several years, or any definite period of time; when the specified date occurs, the lease terminates automatically
Estate for Years
What are the types of leasehold estates (used to landlords & tenants)?
Estate for years Estate from period-to-period Estate at will Estate at sufferance
Which type of cooling system is least effective in a humid climate?
Evaporative coolers
A taxpayer can claim a capital gains exclusion _______.
Every two years
Right to refuse others access to your property
Exclusion
Judicial deed
Executed by an official authorized by the court to conduct the sale and transfer the title.
Your client is selling his late mother's home. This is likely the type of deed he'll use to convey ownership.
Executers deed
Special deed types are:
Executor's deed: From the executor of a deceased person's estate to a buyer Sheriff's deed: Usually used in foreclosures Beneficiary deed: Similar to an executor's deed but recorded prior to the decedent's death as a means of estate planning Trustee's deed: A trustee conveys property according to the terms of a trust Deed of release: Usually used when a borrower pays off a mortgage and the lender releases interest Deed of gift: No consideration is exchanged for the transfer of property
The time period during which the property is subject to vacation rental agreements as defined by the Vacation Rental Act
Existing Vacation Rentals
Duel Agency
Exists when a real estate firm attempts to represent both the buyer as well as the seller in the same transaction.
What is expressed authority?
Express authority is defined in writing, as with an agency agreement that details what the agent can and cannot do
Express Easement
Express easements are created through written documents that typically outline the easement's terms, location, and purpose. Some go so far as to draw out specific dimensions. When legal disputes occur, courts do not tend to favor express easements. In fact, in North Carolina, an easement must be recorded in order to be binding against a purchaser of a servient estate.
Is an informal method to make additional payments to the principal, what feature of loan payment is this>
Extra principle payments
Someone who does not represent either party in the transaction
Facilitator/transaction broker
A broker who prepares a sales contract improperly and fails to adequately protect the broker's client's interests both:
Fails to exercise the skill, care, and diligence the broker owes a principal under agency law. Violates real estate license law by acting incompetently, since competence means the broker must be able to properly complete approved standard forms.
Prohibits discrimination based on race, religion, color, familial status, sex, disability, and national origin in the sale or rental of residential real estate
Federal Fair Housing Act of 1968
Fannie Mae, Freddie Mac, and the Federal Home Loan Bank are regulated by the ______.
Federal Housing Finance Agency
Why are Federal and state laws regarding advertising and prospecting in place?
Federal and state laws regarding advertising and prospecting are in place to protect consumers from unwanted solicitations.
Ready, willing and able buyer
Fiduciary duties of a listing agent.
Financial leverage ratios use the balance sheet, income statement, and cash flow statement to determine the percentage of ______________________ for business operation.
Financial leverage ratios use the balance sheet, income statement, and cash flow statement to determine the percentage of debt used for business operation.
What is investment leverage
Financing most of an investment and putting very little cash in
Finn wants to know how much he'll net on the sale of his property. His property sold for $385,000. He paid a real estate commission of 6%, his other closing costs totaled $3,837, and he must pay off a loan balance of $127,715. What's his net?
First, multiply sales price by 94% to subtract the 6% commission: $385,000 × .94 = $361,900. Then subtract his closing costs ($3,837) and loan balance ($127,715). ($3,837 + $127,715) = $131,552. Subtract $131,552 from $361,900 = $230,348.
If a property has window treatments, what are they considered to be?
Fixtures
On the Offer to Purchase form, this provision names items that are permanently attached to the property, and items that won't transfer with the property.
Fixtures and exclusions
Metal or rubber strips installed to prevent water from seeping into the structure
Flashing
What's the term for the material that is installed near the edges of the eaves, around roof corners, and at the base of the chimney in order to prevent water from seeping into the home?
Flashing
Why can flooding be hazardous?
Flooding can create all sorts of hazardous situations, such as disrupting water purification and sewage disposal systems, causing garbage and toxic waste sites to overflow, and contributing to chemical spillage of chemicals stored above ground.
What are floodplains? Can someone develope on them?
Floodplains are areas of low-lying property adjacent to a water source, such as a river or lake. Because of the risk to the environment should the floodway become compromised, it's illegal to store materials that are buoyant, flammable, or explosive, or that could cause harm to humans, animals, fish, plants and other forms of aquatic life in the floodway.
The area of a floodplain where water flows during a flood
Floodway
Which structural component is described as "the concrete base that supports the foundation of a building"?
Footing
What type of listing most often is compensated with a flat fee?
For Sale by Owner
Lenders that violate Regulation Z could face two certain penalties.
For intentional violations, they could face fines up to $5,000 and/or imprisonment up to 12 months. For unintentional violations, they could face fines of two times the finance charge, up to a maximum of $1,000.
For tax years 2018 to 2025, a borrower can write off the interest on a home equity loan only if ______.
For tax years 2018 to 2025, a borrower can write off the interest on a home equity loan only if ______.
An investor has calculated that the depreciable basis of the residential property he owns is $250,000. What is the depreciation allowance for this property?
For this residential property, the investor will be able to depreciate $9,091 per year for 27.5 years ($250,000 ÷ 27.5 years = $9,091).
Which type of heating system takes cool air and passes it through the heat source using a fan or blower?
Forced air
Foreclosure process that describes a Notification of pending auction, public auction, notice of eviction
Foreclosure by Advertisement
Foreclosure by petition to enter, repossession, notice of eviction
Foreclosure by entry and possession
What is formeldehyde?
Found in urea-formaldehyde foam insulation (UFFI)in homes built in the 1960s and '70s. Was uses for (particleboard, some plywood paneling, some fiberboard, etc.) Can cause asthma attacks; eye, skin, and respiratory irritations; and possibly cancer.
A form of depreciation or loss in value caused by defects in design is called _______.
Functional obselesense
Forgiven debt from a short sale must generally be reported as income to the IRS. This means the buyer may be out a house, out any proceeds from the sale, and later face a whopping tax bill. What was put into place to relieve this burden?
Further Consolidated Appropriations Act
Agency that handles all dealings for a specific piece of client property.
General Agency
As a real estate professional, you'd most likely want your buyer to receive this type of deed for the most trouble-free title.
General Warranty Deed
Paulo is a property manager for several large properties. Which type of agent is he in relation to the landlord/client?
General agency
What type of agency do you have if you're authorized to conduct an ongoing series of transactions for the property owner.
General agency
What type of real estate agency relationship usually exists when a licensee has the broad responsibility of handling all of the details of a specific property?
General agency
What are common deed types:
General warranty deed (also called full covenant and warranty deed), offering the most protection for the grantee Special warranty deed (also called a bargain and sale deed) that may come with or without covenants of warranty Quitclaim deed, with no warranties
What are Government-Sponsored Enterprises?
Government-sponsored enterprises (GSEs) are private companies such as Fannie Mae, Freddie Mac, and the Federal Home Loan Bank, created by the U.S. Congress to make borrowing easier and more cost effective. - They're regulated by the Federal Housing Finance Agency Here are the perks: - They have a line of credit with the U.S. Treasury. - They don't have to register their securities with the Securities and Exchange Commission (as MBS issuers do). - They're not required to pay local or state corporate income taxes (as other private corporations do).
A loan in which the payments are adjusted (usually up) at specified periods over the life of the loan
Graduated payment
Easement in gross
Granted to a specific individual or business, rather than being attached to the property itself.
When/ how do appraisers use Gross Income Mulitplier (GIM)? Why?
Gross income multiplier (GIM) is essentially the same as GRM, but it uses all sources of income from the property rather than only rent. The multiplier is found from a comparable property by dividing the sales price by the property's annual gross income from all sources. You can then apply the multiplier to the subject property's income to determine value. Larger properties generally have multiple income sources—such as laundry, vending machines, or parking meters
What is an example of group boycotting in a real estate sense?
Group boycotting involves two or more businesses conspiring against another. In the real estate profession, this can occur, for instance, when two or more brokers or agents refuse to cooperate and split commissions with another one, or when several brokerages in a certain area agree to stop running advertisements in a local newspaper. Some additional types of group boycotting include: - Boycotting a competitor - Boycotting a supplier or vendor - Discussing or agreeing to the different treatment of a competitor as a group Often, group boycotting involves brokers agreeing to not show the listings of limited services firms, hoping to drive them and their competitive pricing out of the market. In whatever form it takes, group boycotting is a violation of antitrust law.
A fixed-rate mortgage in which the monthly payments increase over time with no negative amortization
Growing Equity
What's special about HOA liens? What type of liens placed on a property do they supersede and which ones do they not supersede?
HOAs set forth restrictions that, if not followed, can create liens on the property. HOA liens are called super liens and supersede all other liens (except property tax liens).
What are the federal Fair Housing Violation Penalties?
HUD may impose the following maximum penalties: No prior offenses: $21,039 One prior offense in the previous five years: $52,596 Two or more prior offenses in the previous seven years: $105,194 In addition, the U.S. Department of Justice can investigate "pattern of practice" concerns and impose penalties of as much as $50,000 for a first offense or $100,000 for subsequent offenses.
If a taxpayer rents his second home for more than 14 days in a calendar year, what happens?
He has to report all of his rental income that exceeds the 14 days
North Carolina broker Ronnie opened a new trust account. What kind of account must Ronnie ensure he gets in order to comply with rules about the level of advance notice Ronnie must provide to withdraw funds?
He must get a demand deposit account, which allows the depositor to withdraw the funds at any time.
North Carolina broker Cal was working with buyer Olive, who'd made an offer on seller Smith's house. Olive offered $245,000, with $2,000 in due diligence fees and $8,000 earnest money. She planned to obtain a conventional loan for $175,000 of the purchase price, and asked for a June 8 settlement date. After Olive signed the offer, by when must Cal provide Olive with a copy?
He must provide it to her immediately after she signed it.
Jim is selling his North Carolina farmhouse, but he wants to keep the antique range in the kitchen. On the listing contract, how should he indicate that the range doesn't go with the property?
He should note that it is an item that doesn't convey.
The FTC pays extra attention to two types of advertisements. What are they?
Health and safety claims Ads that are difficult for consumers to evaluate
How can an agent help protect their buyer clients from mechanic liens?
Help protect your clients: - Get a lien waiver signed by the contractors. - Ask for receipts from the current homeowner. - Obtain a municipal lien search that has a permit history for the property. - Always get title insurance.
North Carolina broker Angie is advertising a residential property for sale. What information MUST be included in her ad?
Her affiliated brokerage firm's name
Details of a qualified mortgage by Rebuttable Presumption
Higher priced loan because the lender assumes more risk Subprime loan (usually offered to consumers who have insufficient or marginal credit history) Lenders are presumed to have verified the borrower's ability to repay the loan The borrower in default must show income/assets were insufficient to meet living expenses at the time the loan was granted
North Carolina broker-in-charge Caleb has let his broker's license expire. What does that mean for his BIC status?
His BIC-eligible status terminates, and he'll need to start the process of gaining eligibility over again. If the broker's BIC-eligible status does terminate for any reason, like a failure to renew, the broker will need to take the 12-hour broker-in-charge course and apply for eligible status again, just as if it were the first time.
North Carolina broker Chad has drafted an ad he'd like to post for his new listing. Whose consent does he need to do so?
His broker-in-charge
A _______ clause provides you with protection except in cases where you're found negligent.
Hold harmless
A tenant who refuses to leave after the expiration of a lease
Holdover tenant
Loan taken against the equity in a home
Home Equity
Bindy received a loan based on the amount of equity she had in her house. She used this lump sum to fund her daughter's college education. What type of loan did she get?
Home equity
What type of loans are do not require the Loan Estimate Form and Closing Disclosure form to be supplied to?
Home equity lines of credit Reverse mortgages Mortgages secured by a manufactured home Mortgages secured by a dwelling that's not attached to real property (land)
What is the most basic type of home owners insurance policy?
Homeowners 1 (HO1) Insures a home and its contents against standard listed perils. Very few insurers sell this as most offer more comprehensive policies.
What is the (Ho2) "broad type" of homeowners insurance policy?
Homeowners 2 (Ho2) Insures a home and contents against the perils in the HO-1 and other additional perils such as falling objects, weight of ice, snow, sleet, damage from water or steam discharge.
What is the (Ho3) "Special form" type of homeowners insurance policy?
Homeowners 3 (Ho3) Most widely used policy, recommended by lenders, covers home for all risks of physical loss except listed exclusions such as disasters that include floods, earthquakes, war, or nuclear accidents. Coverage for loss of contents is also covered for many of the same perils.
The amount added to the home's basis for improvements is the actual cost of the improvements. This includes all costs for material and labor, except ______, and all expenses related to the improvement.
Homeowners own labor
Lead poisoning
Homes built before 1978 often contain lead-based paint. Results in damage to the central nervous system and not often diagnosed until many years after exposure. sources of lead contamination include paint, soldering material used in water pipes, and lead dust from soil.
Homes built between 19___ and 19___ may have insulation that contains asbestos. In addition, asbestos may be present in certain wall paints, ceiling tiles, vinyl flooring, and even in the insulation around hot water and steam pipes.
Homes built between 1930 and 1950 may have insulation that contains asbestos. In addition, asbestos may be present in certain wall paints, ceiling tiles, vinyl flooring, and even in the insulation around hot water and steam pipes.
What are the common types of heating systems?
Hot water, steam, forced air, electric, and radiant
Examples of Special Use Property types:
Hotels and motels Entertainment (theatre, theme park, etc.) Golf courses Mini warehouse/public storage Medical facilities
The _______ allows communities and facilities that meet certain criteria to provide housing for older persons.
Housing for Older Persons Act of 1995
What should you do as an agent if you relize that you just comitted unintended duel-agency?
If a buyer customer asks you for advice, and you provide it. As soon as you realize that you may have created unintended dual agency, you must disclose it to both clients. You must make your role clear, and you must get both clients' agreement in writing.
What should you do as an agent if a buyer refuses to have a home inspection?
If a buyer refuses to have an inspection performed, get that refusal in writing to protect yourself later.
Testate/testator
If a person dies and leaves a valid will, they died _____. The deceased is the is the ______.
Intestate
If a person dies without leaving a valid will, the property is distributed to the heiress by descent according to laws called _______ succession statutes.
Due Diligence Date
If cancelled before 5:00 PM on Due Diligence Date: - Seller keeps due diligence fee - Buyer gets earnest money deposit back If cancelled after 5:00 PM on Due Diligence Date: - Seller keeps due diligence fee - Seller keeps earnest money deposit
The 3-Day Deposit
If check: BIC may hold and count the 3 days from acceptance of contract If cash: BIC must deposit immediately
Termination of Co-Ownership
If co-owners wish to change the way they hold title, there are a few ways to do this: Joint tenants may terminate the joint tenancy and become tenants in common by agreement. The deed must reflect the change. Tenants in common may not become joint tenants, since the four unities required of joint tenancy won't exist. One or more of the joint tenants or tenants in common can buy out the others. This would create ownership in severalty if only one owner is left. In a joint tenancy, if there are multiple co-owners remaining, the buy-out creates a tenancy in common.
Subject to a loan
If property is sold and title is conveyed subject to the lien of an existing loan. The lender can still foreclose against the property in the event of a default in loan payments. In taking title subject to a loan, the new purchaser does not become liable for payment of the note
Foreclosure
If the borrower does not make the payments as required, or fails to fulfill other obligations as set forth in the mortgage or deed of trust, they are in default on the loan. The lender's ultimate power is to foreclose. Foreclosure is the liquidation of title to the real property pledged to recover funds to pay off the debt.
Defeasance clause
If the buyer/borrower lives up to the agreement he made with the beneficiary.lender by repaying the loan in full, the trustee will return all the rights conveyed. This obligation on the part of the trustee is contained in a clause called the defeasance clause, which relates to the borrowers right to defeat, or pay off the mortgage.
What is the option period for a valid option contract?
If the contract doesn't state the length of the option period, a court will require the optionor to make the option period for a "reasonable time."
What should an agent do with a buyer or seller at first substantial contact regarding duel-agency?
If their brokerage allows dual agency, agents should discuss this option with consumers when they review the "Working with Real Estate Agents" brochure. Agents must determine whether or not the consumer authorizes dual agency if the situation arises. Working as a listing agent: At the beginning of an agency relationship, the licensee and the transaction principal sign a listing agreement. Working as a buyer's agent: Agents must review dual agency with potential buyers at the time they discuss agency options. If the express buyer agency agreement is oral, agents should still determine whether the client agrees to dual agency in case the situation arises. Any oral agreements MUST be put in writing no later than at the time an offer is presented.
Self-help eviction
Illegal eviction in which the landlord has taken matters into his own hands, and evicts the tenant without using legal procedures
Question 11 North Carolina broker Bertrand was helping his client Ernesto with purchasing a time share. How long after Ernesto gave Bertrand his earnest money check must the check be deposited?
Immediately because Trust funds for a time share need to be deposited into the trust or escrow account immediately. A 10-day period follows in which the funds belong to the purchaser rather than to the developer. During that time period, the funds remain in the account and the purchaser has the option to cancel.
What type of agency occurs when an agent's behavior creates an agency agreement through behavior?
Implied agency
What is implied authority?
Implied authority is the opposite of express authority, and defines the actions agents take that aren't explicitly defined in writing but are reasonable to take to achieve the principal's goal.
Implied Easement
Implied easements arise when there is no document granting the easement. This type of easement usually exists when land can't be used or enjoyed unless the easement exists, such as situations when it's necessary for property owners to cross someone else's property to access their own.
North Carolina Lead-Based Paint Hazard Management Program
In North Carolina if you self administered the removal of lead-based paint, you need to include it in the disclosure.
Homestead
In North Carolina, a portion of a residence owned by a qualifying owner may be designated as a homestead, which is exempt from taxation. There are specific residency, age, and income requirements.The amount of the homestead that can be excluded is the greater of $25,000 or 50% of the appraised value of the residence
In North Carolina, what creates a legally binding real estate contract?
In North Carolina, creating a valid, legally binding real estate contract requires three steps: The offer must first be made, then accepted (in writing), and, finally, that acceptance must be communicated to the last offeror.
Tax Liens in North Carolina
In North Carolina, property tax liens attach to the property every January 1. This doesn't mean that taxes must be paid immediately, but if the property changes hands, the tax lien stays with the property and the new owner is responsible for that tax bill. As long as a tax lien is in force, the taxing authority has a legal claim to the property and, if necessary, may force a sale of the property and use the sale proceeds to satisfy the tax debt. Before that happens, though, the taxing authority offers the taxpayer a number of potential remedies to help get the debt paid. When property taxes do become delinquent, one of two things may happen: a tax sale or a tax foreclosure. According to the Machinery Act, if a property tax lien is made against a property, that lien takes priority over all other liens—even if other liens were attached to the property before the tax lien.
Real Estate Taxes and Assessment Liens
In North Carolina, property tax liens attach to the property every January. This doesn't mean that taxes must be paid immediately. Property owners can pay their taxes at any time from September 1 to January 5 of the following year without incurring a penalty.
Let's say that a seller knows that her house has extensive termite damage. If the property's in a full seller disclosure state, she must put the buyer on notice about the damage. What happens in a caveat emptor state?
In a caveat emptor state, she doesn't need to say anything unless the buyer directly asks. The seller may not, however, paint over evidence of damage or lie if the buyer asks if the house has ever had termites. While sellers can't lie outright or actively conceal a problem—and must honestly answer prospective buyers' questions when asked—they aren't obligated to point out the home's flaws or defects to buyers ... even though sellers must fill out North Carolina's disclosure forms—sellers don't actually have to disclose anything.
When is an acceptance considered communicated in a duel agency arrangement?
In a dual agency arrangement, acceptance is considered communicated as soon as one of the parties tells the dual agent that party accepts the other's offer.
What is the ceiling hight requirement for a room to be considered livable area?
In a finished area, ceiling heights must be at least seven feet. But if the finished area's ceiling is beamed, the height may be six foot, four inches, under the beams. With sloped ceilings, at least half of the ceiling over the finished floor area must be at least seven feet high. If at least half of the ceiling height is less than seven feet, the room can't be calculated in the living area. If at least half of the ceiling height is at least seven feet, all of the space that is at least five feet high can be included in the square footage for living area.
What is an "escalated lease" with commercial properties?
In an escalated lease, the base rent increases or decreases to correspond with changes in the landlord's ownership costs (taxes, insurance, and maintenance costs increase or decrease, for example). The terms for the escalation should be defined in the lease.
What is a "ground lease" with commercial properties?
In ground leases, the tenant leases the property without improvements and builds to suit the business needs. The lease term is designed to be long enough for the tenant to recoup the investment for the construction costs. When the lease expires, the improvements (buildings) belong to the landowner. Generally, a type of net lease is used in a ground lease agreement, so the tenant pays a base rent plus taxes, insurance, maintenance, and repairs. A net ground lease typically has a term of just less than 50 years.
In most states, a contractor has anywhere from ___ days to ___ months to file a lien against a property for unpaid work regardless of the owners' relationship to the contractor
In most states, a contractor has anywhere from 90 days to six months to file a lien against a property for unpaid work regardless of the owners' relationship to the contractor
Serious likeness/death/Registered sex offender
In north carolina, not considered a material fact and need not be disclosed unless the agent is asked a direct question regarding it.
Lien Priority
In north carolina, the phrase ""first in time, first in line" applies most often times the first creditor to record a lien on property is the first to get paid. Like most things in life, there are a few exceptions, though. Tax liens usually take priority over all other lien types. Purchase money deed of trust and future advances deed of trusts have special priority in some situations. If more than one judgment is recorded within 10 days after the court term ends, all judgments have equal priority, even though some may have been rendered prior to others. Private agreements may determine lien priority where a first lien is made subordinate to junior liens.
What does principle mean? What are the principle parties?
In real estate, this term has two meanings. 1) A principal is a client—someone who's represented by a real estate professional. 2) May also refer to a party to a transaction (e.g., the buyer or seller, whether or not that person is represented by an agent).
what do you do when a finished area attaches to an unfinished area, like a house with an attached garage or storage room?
In that case, the shared wall belongs to the finished area. Because the entire wall belongs to the finished area, the finished area measurements will begin at the interior surface of the garage. To do this, start measuring at the exterior corner to one interior wall finish to get the width, and then the adjacent interior wall finish to get the depth. You're computing the garage's total square footage. Subtract that from the total square footage computed for the house to get the finished area's square footage.
Agency relationships when brokerages cooperate
In this arrangement, the agent who procures the buyer can be either the buyer's agent or the seller's subagent. If no buyer agency agreement exists, then the agent is a subagent to the seller. A seller's subagent owes loyalty to the seller and the seller's listing firm.
How would you calculate square footage with stairs whose stair treads and landing edge around two sides of an opening?
In this case, only the treads and landing will be calculated in the second story's square footage, but the remaining area of the opening won't.
How would you calculate square footage if a partition separates a finished area from an unfinished area, like a door dividing a finished area from an unfinished storage space?
In this case, you would extend the measurement to the partition that is closest to the unfinished area, like a stud or a framing member in the common wall.
Exclusive agency
In this type of listing, the property is listed exclusively with one broker. If the broker effects a sale of the property, he is legally entitled to the commission agreed-upon.
Title theory
In title theory (granting theory), a disinterested third party actually holds legal title to the property in security for the loan through a deed of trust.
What North Carolina contract creates an agency relationship between licensees and the brokerage that employs them?
In-house brokerage employment contract
What are In-House brokerage employment contracts?
In-house brokerage employment contracts create an agency agreement between a licensee and that licensee's employing firm and they also lay out the specifics of a licensee's employment.
What is the The Consumer Credit Protection Act (1968)?
Includes Truth-in-Lending Act (Implemented by Regulation Z). Requires full disclosure of terms/conditions of any credit offers.
In North Carolina, failure to properly complete preprinted real estate contracts is an example of ______.
Incompetence that endangers the public interest
The part on the Offer to Purchase Standard 2-T form where the buyer agrees to hold the seller harmless for loss caused by the buyer's or buyer's contractors' activities on the property.
Indemnity
A factor is applied to the subject building's original cost that represents the costs of construction up to the appraisal date.
Index
With which of the four methods used to find the reproduction cost of a structure does the appraiser apply a factor to the subject building's original cost that represents the costs of construction up to the appraisal date?
Index method
Deed restrictions
Individual _______, or limits on land use, exist in the form of covenants or in the form of conditions.
Examples of Industrial Property types:
Industrial parks Manufacturing Warehouses
Seller must disclose each tenant's name and address to the buyer within 10 days of closing
Information Provided by Seller
The type of Notice a reasonable person could obtain by making inquiries
Inquiry Notice
What is another name for the contract for deed?
Installment contract
Areas designated for hospitals, jails and prisons, courthouses, college campuses, and public schools
Institutional
Private mortgage insurance (PMI)
Insurance provided by a private carrier that protects a lender against a loss in the event of a foreclosure and deficiency.
A numerical rating that summarizes the likelihood of individuals filing an insurance claim during the time that they're covered by a particular insurer
Insurance score
Usury
Interest charged in excess of the legal limit that is set by law.
Which of the following is a true statement about deducting interest on mortgages taken out in tax years between 2018 and 2025?
Interest on the first $750,000 of mortgage debt is deductible for married couples filing jointly or $375,000 for married couples filing separately.
What market indicator is expressed as the number of months it takes to sell homes at the current rate of sales?
Inventory rates. Inventory rates express how long, on average, homes are staying on the market before they sell. "Sell," in this case, means going under contract, not closing.
What is Involuntary Alienation? What are the types of it?
Involuntary alienation: Conveyance of real property without the owner's consent. Adverse possession: Private individuals claim ownership of someone else's property by using it as their own for an extended period of time. Court-ordered partitioning of property: A court decides how property owned by tenants-in-common will be divided. Descent: Through the probate process, the court determines who inherits the deceased's real and personal property. Eminent domain: The government takes private land for public use. Escheat: The state takes ownership of property that belonged to a person who died intestate with neither heirs nor creditors, and uses it for the public good Foreclosure: The lien holder lays claim to the property and forces a sale. Natural processes: Loss or acquisition of real property through natural causes, such as erosion, accession, accretion, avulsion, and reliction. Regulatory taking: The government regulates private property to the detriment of the landowner, resulting in diminished use or value.
Neglegent Misrepresentation
Involves an unintentional act that results from the failure to exercise reasonable care. If an agent does not know the information, or the information they are conveying is false, this is ________.
The Four Tests of Highest and Best Use
Is it legally allowable (or permissible)? Is it physically possible? Is it financially feasible? Is it the most profitable use of the site?
Before a lender will consider a short sale, the seller will need to prove that the current hardship situation ______.
Isn't self-imposed
What's the purpose of a typical subordination agreement?
It allows a junior mortgage to move to first lien position
What advantage does the 1031 tax-deferred exchange offer?
It allows investors to defer capital gains taxes when selling a property, provided they buy another property.
What makes a sale contract important?
It establishes the parties' right and obligations, so all ambiguities should be eliminated.
North Carolina broker Pam opened a new trust account. In order for Pam to comply with NCREC regulations, what must be true about the financial institution?
It is a federally insured depository institution located in North Carolina.
What is detailed in the Coastal Zone Management Act (CZMA)?
It is designed it to "preserve, protect, develop, and where possible, to restore or enhance the resources of the nation's coastal zone." The act encourages coastal states to develop and implement coastal zone management plans.
What purpose does the license law provision that prohibits violating any rule serve?
It makes licensees responsible for following all rules and license laws, even when the rule or statute is new and/or isn't specifically mentioned as prohibited conduct.
What is the Unfair and Deceptive Trade Practices Act?
It prohibits real estate licensees from unfair or deceptive acts, which are defined as: - Giving a misleading opinion or make false inducements - Failing to disclose material facts - Using misleading advertising - Misrepresenting facts I t also decrees that people who have been harmed by an unfair or deceptive act may be entitled to three times the amount of actual damage inflicted.
What is the Uniform Electronic Transactions Act, or UETA?
It was enacted to give electronic signatures, records, and contracts legal recognition equal to that of paper records and signatures. As long as a party can prove that an electronic version of a record or signature was the act of the individual, then the electronic version is just as binding as a physical paper version
NCREC has determined through an investigation that Gayle has been practicing real estate without a license. Since the commission doesn't have authority over unlicensed people, how will it handle the situation to prevent Gayle from continuing her unlawful practice of real estate?
It will seek injunctive relief in a superior court.
What is a Debt Coverage Ratio (DCR) used for?
It's a benchmark used to determin an income-producing properties ability to cover it's monthly mortgage payments: Formula: Net Operating Income / Annual Debt Service - Determins how much more of Net Operating Income comes in to cover Annual Debt Service - DCR of less than 1 usually indicates negative cash flow - Lender usually require a DCR between 1 and 1.35
Virginia is finally living her dream—she bought a coffeehouse in a charming college town. After she closed on it, her attorney sat down with her to discuss various business licensing and legal requirements she'll have to meet. Virginia was surprised to learn that her five-table establishment is affected by the Americans with Disabilities Act. What must be true about the coffeehouse?
It's a commercial enterprise open to the public
When is it okay to recieve kickbacks?
It's only okay when the materials are not in exchange for referrals or when they don't defray any cost that she would normally have to pay.
What makes someone your client and not your customer?
It's the agency relationship between the two of you. For example, Jean is selling her house to Marcus. You represent Jean, and Marvin is working with Marcus, though there's no agency agreement between Marvin and Marcus. In this case, Jean and Marcus are principals (parties) to the transaction. Based on your agency relationship, you'll act on your client's (Jean's) behalf. Jean is the principal in her fiduciary relationship with you, and you're the agent. Marcus isn't a principal in his relationship with Marvin, because there's no agency agreement between them. But, remember, Marcus is still a principal to the transaction. Without entering into an agreement with Jean, you wouldn't be her agent and she wouldn't be your client. Instead, Jean would be a customer, and while she'd still be a principal to the transaction, she would NOT be a principal in an agency relationship with you.
Joint Tenency
Joint tenancy creates an equal, undivided interest between the co-owners. In North Carolina it must be intentionally created with the title. Also, it can only be created if conditions called the four unities are present: Possession: Each owner will enjoy undivided possession of the property. Interest: Customarily, ownership is divided equally among the owners. However, North Carolina is one state that allows unequal ownership interest as long as it is clearly stated in the title. Time: Ownership interest is acquired at the same moment. New owners cannot be added at a later time unless a new joint tenancy is created. Title: Each of the joint tenants acquires title to the property from the same source (i.e., a deed). Transferring Interest: If new person comes in, initial joint tenants remain and new person becomes tenent in common. Joint tenents will always be joint tenents -- if right of surviorship is detailed in the title at purchase then it is in effect if one of the joint tenents dies. Otherwise, it will go to heirs if tenent dies.
Form the floor and ceiling supports
Joists
Judicial foreclosure
Judicial foreclosure common in lien theory states, requires the lender to bring a lawsuit against the borrower and obtain a judgement for the amount of the debt the borrower owes. When the judgement is obtained, the lender request the court to issue an execution instructing the sheriff to take possession of the mortgaged property and sell it for cash to the highest bidder at public auction.
What's another name for a nonconforming loan?
Jumbo loan
North Carolina licensee Dennis received his initial real estate license in October. He must complete his first required CE courses by ______.
June 10 of the second full year following original issuance
Rob and Jill obtained a mortgage from Taylor Bank & Trust in 1998. In 2014, they obtained a second mortgage from Quail Loans. What is the loan with Quail Loans considered?
Junior mortgage
The primary purpose of the Real Estate Settlement Procedures Act is to ensure that buyers ______.
Know all settlement costs up front
This round steel column is filled with concrete and rests on a base plate called the column footing pad.
Lady colum
What real estate closings must be reported to the Internal Revenue Service using Form 1099-S? What information does the IRS require to be included in this form?
Land (either improved or unimproved), including air space Any permanent structure, such as residential, commercial, or industrial Condominium units, including fixtures and common elements (including the land) Shares in a cooperative IRS requires following info to be included: Sales price and date of closing The seller's Social Security number Address or legal description The buyer's portion of the property tax credited to the seller
Installment Land Contracts
Land contract, land sales contract, contract for deed Not just for land Purchasing a home on the layaway plan - No transfer of deed until the last payment is made (example of equitable title)
Which of these is the best definition of real estate?
Land, plus all things permanently attached to it naturally or artificially
What are "anchor retailers" with commercial properties?
Large anchor tenants (Macy's, Target, etc.) don't do percentage leases because those types of leases don't create an advantage to large retail stores. Anchor tenants actually draw traffic (and other tenants) to the site through name recognition, major advertising campaigns, and the quantity and variety of goods they offer. Instead of a percentage lease, an anchor retailer may get a rent subsidy.
If an adjustment is needed for a specific feature, when should an appraiser make this adjustment?
Last after adjusting for all other factors
What are rules that govern brokerage relationships called?
Laws of agency
Federal law requires disclosures about what potential hazard in residential properties built prior to 1978?
Lead
In North Carolina, what requires it's own disclosure?
Lead base paint which is done through the Lead-Based Paint Hazard Addendum, North Carolina Association of REALTORS® (NCAR) Form 2A9-T and MUST be attached to the offer to purchase and contract.
Sellers, landlords, and real estate agents are required to include a ______ in the contract or lease if the real estate was built prior to 1978.
Lead warning statement
Judd is the seller in an installment sales contract. What type of title does he retain until the buyer has paid the full purchase price?
Legal
Ownership interest in the property that's enforceable by law. What type of title is this called?
Legal title
What are five additional essential elements to a valid real estate contract?
Legally competent parties Offer and acceptance Consent Legal purpose Consideration
In order to act in good faith to third parties, do sellers have to disclose material facts?
Legally no, but a seller cannot lie or attempt to cover up damages as this is considered misrepresentation.
Do Not Call Registry
Legislation was passed to allow cost consumers to seek protection from calls by signing up on the do not call registry.
On page two of the Closing Disclosure, _______ is a rebate from the lender to the borrower that offsets some closing costs, usually in exchange for a higher interest rate
Lender Credits
Mortgagee
Lender who receives the mortgage is the mortgagee.
What is the Community Reinvestment Act (1977)
Lenders must offer affordable loans to their communities' low- to moderate-income individuals. Lenders must prepare a statement that shows how they've invested in low-income and rehabilitation efforts. The statement must: Include the community's geographic boundaries. Identify reinvestment credit offered. Include comments from the public about how the lender is doing in meeting the community's needs. Involves federal regulatory review by a federal financial agency, such as: Comptroller of the Currency Federal Reserve's Board of Governors, Federal Deposit Insurance Corporation (FDIC) Office of Thrift Supervision Lenders must publicly post that they are subject to this review, and make the results of that review public.
What is a Loan to Value Ratio (LTVR)? What does it calculate, why is it used?
Lenders use a loan-to-value ratio (LTVR) calculation to compare a property's value to the amount of the borrower's desired loan. This ratio helps lenders determine a loan's risk to them, and they use it to either approve or deny a loan. - The higher the LTVR, the riskier the loan. - LTVR = (loan amount ÷ home value) × 100
Lettie is an affiliated real estate agent in North Carolina. What does this mean?
Lettie works under the supervision of a broker-in-charge.
Which of the following is part of the Other Disclosures section?
Liability After Foreclosure
NCREC's formal, public condemnation of the licensee's actions, but license privileges are retained.
Licence censure
A temporary halting of license privileges, meaning a licensee may not practice activities requiring licensure for a time defined by NCREC.
Licence suspention
The permanent removal of a license, meaning the licensee may no longer practice real estate activities that require licensure.
License revoction
What is an affiliated broker?
Licensees are called associated or an affiliated agents whether they are paid as employees or as independent contractors. All affiliated licensees within a brokerage become agents who represent the client whenever the firm enters into an agency agreement with someone. In other words, if a broker signs a listing agreement with a client, all of the brokers affiliated with that firm become that client's agent.
What is the overarching theme addressed by statutory duties in most states?
Licensees may not take any action that might be detrimental to the client's legal interests.
What must licensees in their first year do in order to perform real estate?
Licensees who are in their first year of practicing real estate) must associate with a brokerage to legally perform real estate duties. A non-provisional broker, however, can decide to set up shop independently or continue to work in a brokerage under a broker-in-charge's supervision as an associated or affiliated agent
What type of profit is granted and to whom from a tax lien sale at an auction?
Liens (unpaid taxes) are sold to the highest bidder. If the homeowner doesn't redeem the liens (pay the taxes plus interest), the new owner can foreclose on the property. Not all states allow tax lien sales.
A North Carolina license issued to licensees of other jurisdictions that entitles the out-of-state licensee to conduct transactions involving commercial real estate in North Carolina
Limited Nonresident Commercial Broker
Rocco, a listing agent, prefers ________ agreements that allow him to offer a la carte services to his clients.
Limited service
NC Mountain Ridge Protection Act
Limits mountain ridge development Protects views Municipalities enforce
Closing costs are itemized on page two of the Closing Disclosure, and all amounts are ______.
Listed according to who paid them: the borrower, seller, or other
This time, we're going to find the factor, then use it to make some calculations. Your client has a loan of $315,000. The interest rate is 3.5% and the loan term is 30 years. Using the calculation described in your resource, figure the monthly payment for this loan.
Loan amount: $315,000 Rate: 3.5 % (.035) Term: 30 years Amor number of 2.5% & 30 year term = 4.49045 amor number (Loan / 1000) x amor number ($315,000 / 1000) x 4.49045 = 315 x 4.4905 = $1,4414.49
Which of the following options describes a loan's beginning balance?
Loan balance before the monthly payment is applied
Loan-to-value ratio
Loan-to-value ratio compares the loan amount to the property value. With a high ratio, the borrower has a make only a small down payment.
What types of Loans are exempt from RESPA?
Loans Exempt from RESPA: Commercial or business loans Vacant land Agricultural land Land tracts of 25 or more acres, with a residence or not Certain kinds of loan assumptions Construction-only loans Loans to the government
Conforming loan
Loans that meet the underwriting standards of Fannie Mae or Freddie Mac and fall within the limits established by the Consumer Financial Protection Bureau (CFPB)
Which type of legal descriptions if surveyed land do courts prefer?
Lot and block
USDA loans are designed for ______.
Low- to moderate-income home buyers
What is market allocation? What law does it violate?
Market allocation occurs when real estate professionals from two or more competing firms agree to divide their market—by geography, price range, property type, etc.—and then refrain from competing for business. This used to be common practice within a brokerage—"You take the north side of town, I'll take the south"—so real estate agents weren't tripping over one another in their pursuit of business. But any agreement that restricts trade, discourages competition, or restricts choices for the consumer—which market allocation does—is a violation of antitrust law.
Megan was working with seller client Ruben on a pretty straight-forward transaction. They signed their agency agreement on February 1, 2018. The sale closed on April 1, just two months later, and all of the funds that the brokerage firm held were properly disbursed by May 1, 2018. "Okay, Megan, you're doing great!" Natalie said. "It looks like you've gotten Harry absolutely every transaction document, so great job. Based on the transaction timeline, can you figure out when the retention period for these transaction documents will end?"
May 1st, 2021 (the retention period last for 3 years after all funds that the brokerage firm held were properly disbursed)
Details of a qualified mortgage with Safe Harbor status
Meets all criteria for a qualified mortgage Consumer can't later claim that the lender didn't comply with the ability to repay requirements Lower-priced loan because the lender assumes less risk Prime loan (as opposed to subprime) Offers borrower the greatest legal certainty that the lender is complying with the ability-to-repay rule. (However, the borrower can legally challenge a lender if that borrower believes the loan doesn't meet the definition of a qualified mortgage.)
Metes and Bounds
Metes are the distance from point to point in the description of the property. Bounds are the directions from one point to another in the description of the property. EX: On the deed - "The metes is 40 feet, the bounds are south".
Adverse possession "squatters rights"
Method of acquiring title to real property by conforming to statutory requirements: 1) Possession/occupation must be open and known to others (notorious) 2) Possession must be without true-owners permission (hostile) 3)Possession must be able to be viewed by the public (open and notorious) 4) Possession must be continuous and uninterrupted for a period of time for 7 years
Mike is the broker-in-charge for Big Green Realty in Raleigh, and buyer Phil just handed him an earnest money check. Who may act as custodian for Phil's trust funds?
Mike or a clerical employee who Mike designates
Jenny decided to bid on a house in her neighborhood. The auctioneer announced the lowest bid that will buy the property. This is a(n) ______ auction.
Minimum Bid
What is a sale at an auction called when there is a set minimum price for the property to be sold at?
Minimum sale The auctioneer will accept bids that are at or are more than a specified minimum price.
The injured party may sue the agent for any damages resulting from the undisclosed material defect if the agent committed _______________
Misrepresentation
What is mold? How does it appear?
Mold can appear wherever there's moisture and a lack of air circulation, such as in unvented attics and behind laminated walls in bathrooms. Can cause respiratory issues.
What is mold? What does it do?
Mold damage to property is almost universal after floods. This is because mold damage occurs any time there's enough moisture available to allow mold to thrive and multiply. FEMA notes that mold comes in a variety of colors from white to orange and from green to brown or black. In addition, it usually gives off a musty or earthy smell. It can cause serious respiratory issues.
What is a good definition of trust funds?
Money belonging to others held for a specific purpose in the course of a real estate transaction
Earnest money
Money the buyer deposits with the offer to purchase to show that the buyer is earnest, or intends to purchase the property.
In addition, What is the borrower charged for all FHA loans?
Mortgage Insurance Preminum
Arrears
Mortgage loan interest almost always is calculated in arrears. A monthly payment due on the first of the month includes interest for using the money during the previous month.
When the loan has been paid in full, how is this documented with a Mortgage?
Mortgagee executes satisfaction of mortgage.
When does a business entity NOT require a company-specific real estate license in North Carolina?
Most business types require licensure to be run as a real estate brokerage, but if a broker chooses to own the firm as a sole proprietorship (meaning the business and the individual are legally the same), no separate license is needed for the business.
State and Federal Tax Liens
Much like property tax liens, state and/or federal tax liens allow state tax officials or the IRS to attach a lien to a person's property—real or personal—for the payment of taxes.
The market value of your client's property is $280,000. Taxes in the area are assessed at 60% of market value. Your client's semi-annual tax bill was $1,461. What's the tax rate per 100?
Multiply market value ($280,000) by assessed percentage (60% or .6) to get an assessed value of $168,000. The semi-annual bill was $1,461, so annual taxes are $2,922. Divide annual taxes by assessed value: $2,922 ÷ $168,000 = .0174. Multiply this by 100 to get $1.74.
Your client, Gabe, needs to calculate the business part of his real estate taxes. How can Gabe calculate the business part of his real estate taxes?
Multiply the real estate taxes paid by the business percentage.
The Crane family's lease isn't up for renewal until next September, but Ms. Crane was offered a position in Seattle, and she asked Mrs. Hudson to let them out of the lease early. Mrs. Hudson agreed, since it's easy to rent an apartment like theirs in June, so they've decided to terminate the contract through ______.
Mutual agreement
Marcy listed her property with Jennings Homes in March. The market was slow, and Marcy's property isn't in great condition—though she's sure she can get top dollar for it because of its location. Her agent encouraged her to either reduce the price or fix the property up, but she refused. Both Marcy and her agent are frustrated. What's the best option for both of them?
Mutually agree to terminate the listing
During the period of retention for real estate transaction records in North Carolina, to which entity must the records be made available, with no required notice?
NCREC
What is the deadline that a deposit of funds into an escrow account needs to be done by?
NCREC determined that three banking days after receipt from the client is the deadline by which that deposit must be made.
Belinda has her provisional broker license, but didn't get her post-licensing education completed in time. What will happen?
NCREC will place her license on inactive status.
Nathan assisted with the sale of a commercial building. He doesn't hold a real estate license, yet his actions didn't violate any license laws. What must be true about Nathan's situation?
Nathan is an officer or employee of the company that owned the building he sold
A federal program created to help mitigate future flood losses through the use of building and zoning ordinances by providing homeowners with access to affordable flood insurance protection
National Flood Insurance Program (NFIP)
Nicola and Sam are divorcing. Nicola transfers the house, which is in her name, to Sam. What forms does she need to supply?
Neither the RPOADS form or the MOG form
What is a Net Lease? Hint: its used with commercial properties
Net lease - Net's (TIM) expenses are billed separately to tenants and not included in rent - 3 types of net leases: 1) Net/double leases: Tenant pays 2 of the 3 (TIM) expenses 2) Triple Net Lease: - Called "NNN" - Tenant pays all 3 (TIM) expenses - Keeps rent low for tenants 3) Absolute Net Lease: - Dont not protect tenants in the event of eminent domain or something simular - Basically an "NNN" leases
New Special Assessments
New special assessments can be assessed for different kinds of projects. These require a majority vote; that is, more than half of the people with properties that would be assessed have to agree to the special assessment. These new special assessments can fund projects such as: - Museums, civic centers, stadiums, art centers, and auditoriums - Public health services - Parking facilities - Recreation facilities and parks State, local, and federal taxes take precedence over special liens—even if the special assessment was levied before one of these. However, special assessments take priority to all other kinds of liens.
North Carolina broker Nina presented her seller client George with four offers. George really liked the offer by Offeror K, and asked Nina to disclose some of the key terms of that offer to the other potential buyers in the hope that the others will present better offers. Which of the following is true of this situation?
Nina may only disclose this information with Offeror K's express permission.
What happens before funds are distributed to the appropriate parties?
No funds are distributed at the closing—to anyone. The attorney conducting the closing first verifies the "good funds" and records the deed with the court prior to any distribution of money.
Stacey, a buyer, is working with Rebecca, a licensee. Rebecca doesn't represent Stacey, however, and is performing only ministerial tasks for her. What type of agency is this called?
Non-agency
When is the North Carolina Association of REALTORS® Standard Form 340-T, Response to Buyer's Offer used?
North Carolina Association of REALTORS® Standard Form 340-T, Response to Buyer's Offer, to make a simple inquiry about the buyer's willingness to accept a possible counter, because this form is used ONLY to formally reject an offer.
What are North Carolina brokers expected to recognize regarding land-use related situations?
North Carolina brokers are expected to recognize land use-related red flag situations, advise involved parties of any potential problems, and recommend that the parties verify the permitted land uses. Brokers should also help the parties find and review Federal Emergency Management Agency flood hazard area maps and/or contact the local planning office to find out if there's a potential flooding problem. North Carolina brokers are also expected to be aware of any planned major highway or public transportation changes in the area, and to disclose that information when appropriate. North Carolina brokers should verify the septic system's capacity and/or any system restrictions. A broker should check with the county health department to determine the limits of the septic system capacity. The capacity is determined by the number of bedrooms on the property, and maximum occupancy is limited to two persons per bedroom.
What are the three levels of appraiser licenses?
North Carolina currently issues three levels of licensure: registered trainee, certified residential appraiser and certified general real estate appraiser.
Statutory Cartway Easement
North Carolina law recognizes something called a "statutory cartway," which is when an owner of landlocked property is given an easement to access another's land because there is no access to a public road. This is an example of an easement arising by operation of law. This "cartway" can be acquired if it's necessary to cultivate or work the land for mining, forestry, manufacturing, or private cemeteries. The person owning the land from which the statutory cartway is granted is entitled to compensation from the person receiving the cartway.
Seller Lydia knows her home has asbestos in the insulation. What her responsibility for disclosing this information to your buyer client?
North Carolina requires that she disclose the presence of asbestos
Homestead Exemtion
North Carolina residents can exempt up to $35,000 of their home's value from seizure by creditors using the North Carolina Homestead Exemption. The exemption amount is doubled for married couples filing a joint bankruptcy. The exemption is automatic and no declaration is required.
North Carolina statute specifically refers to the following as trust funds:
North Carolina statute specifically refers to the following as trust funds: Earnest money deposits Down payments Sales proceeds Tenant security deposits Undisbursed rents Time share purchase monies
What powers does NCREC have?
North Carolina statutes grant the following powers to NCREC: Making reasonable bylaws, rules, or regulations consistent with North Carolina general statutes Licensing real estate brokers and brokerage firms Registering time share projects Establishing and administering pre-licensing education programs for prospective licensees Establishing and administering post-licensing and continuing education programs for licensees Providing the public and licensees with education and information about the real estate brokerage business Regulating the business activities of brokers and brokerage firms Disciplining licensees who violate the license law or commission rules Owning property just like any person or entity
What entitiy has zoning powers?
North Carolina's Agricultural Development and Farmland Preservation Enabling Act.
Easements Arising by Operation of Law
North Carolina's statutory cartway, easements by prescription, and easements by condemnation are all examples of easements arising by operation of law.
North Carolina Uniform Electronic Transaction Act (UETA)
North carolina adopted a state version of the federal E-sign legislation called the Uniform Electronic Transaction Act that allows contracts to be created by electronic means such as fax and email in addition to recognizing that an electronic signature is binding. org
Negotiable note
Notes can either be negotiable or nonnegotiable. A negotiable note is a written promise to pay a specified sum of money according to specified terms to the bearer or holder of the note. The negotiable note will use such terms as "to bearer" "to holder" or to a person or corporate or business entity.
Kirk and his cousin Dewey decided to buy a vacation home. They entered into a contract with the seller, Crystal. Before finalizing the sale, Dewey wanted out, but he doesn't want to let his cousin down. So instead of pulling out altogether, Dewey convinced his son to replace him in the purchase contract. Kirk and Crystal agreed to the substitution, and Dewey was released from all his obligations under the contract. Dewey's son is now the contracting party. What's this an example of?
Novation
With which of the four methods used to measure depreciation does the appraiser estimate the property's loss in value for both curable and incurable items of depreciation?
Observed condition
Negligent misrepresentation
Occurs as a result of misconception as to the facts on the part of the person making the unintentional misrepresentation. The person making the misrepresentation believes it to be true; however, a reasonable person in the same situation should have known it was not true.
Spot Zoning
Occurs when a certain property with a zoned area is a reason to permit a use that is different from the zoning requirements for that zoned area.
Apparent Authority
Occurs when an agent gives the impression that he has certain authority that a third party might reasonably rely upon, when in fact the agent does not actually hold such authority.
Estoppel
Occurs when an individual claims incorrectly that a person is his agent and a third party relies on the incorrect information.
Nonconforming use
Occurs when the use of property in a zoned area is different from that specified by the zoning code for that area.
When does offer and acceptance occur?
Offer and acceptance occurs only when there is a meeting of minds.
In North Carolina, what about revocation of offers is true?
Offers may be revoked any time before they're accepted and that acceptance is communicated to the offeror.
Termination of Offers
Offers terminated because: 1) By the expiration of a time limit specified by the offeror prior to acceptance 2) By the death or insanity of the offeror or the offeree prior to acceptance 3) By the revocation of the offer by the offeror prior to acceptance 4) By the expiration of a "reasonable" period of time after the offer is made and prior to acceptance 5) By the failure of the offeree to comply with the terms of the offer as to the specific manner in which the acceptance must be communicated 6) By the expiration of the power of attorney when the offeror or the offeree is acting as attorney-in-fact under a power of attorney.
Consumer Protections for Purchasing Condos
Oftentimes, condos are purchased before development is completed. In order to help ensure that buyers get what they pay for, the North Carolina Condominium Act of 1986 regulates the creation and resale of condominiums in North Carolina. Declaration The North Carolina Condominium Act requires that developers prepare a declaration, which includes a description of the property and each unit, how it is governed, covenants, conditions, and restrictions related to the use of the property, and how dues are assessed. It also details the repair and maintenance responsibilities, and how ownership of common areas is shared among unit owners. This declaration must be recorded in the public records for each county in which any part of the condo exists. Public Offering Statement and Right of Rescission: The North Carolina Condominium Act also requires that developers provide buyers with a public offering statement before the purchase is final. The public offering statement has information about the community, such as the size of the development, the expected completion date, the legal documents that govern the property, and the expected common expense assessment. It also informs buyers of their right to cancel the purchase contract within seven calendar days of signing, without penalty. This is known as the seven-day right of rescission. Both the public offering statement and the right of rescission apply only to newly developed condominiums and not pre-owned units. Pre-Owned Condos: Resale Certificate When purchasing a pre-owned condo unit created on or after October 1, 1986, the seller must provide a resale certificate before the property is conveyed. This document provides details about expenses and fees the owner will be required to pay.
Suppose that the Masons' living room is 10 feet, one inch long and exactly 12 feet wide. Jane will multiply these numbers to get the square footage. What number should she report for the square footage?
On your calculator, first multiply Length x Width which is 10 x 12 = 120 Take note of that number and then divide the 1 inch of width by 12 to get 0.083 . Then add the 0.083 to 120 to get 120.083 and then round to the nearest tenth since you're calculating square footage and the final number would be 120
Once licensees have earned an initial broker license, what must they complete?
Once licensees have earned an initial broker license (issued with a provisional status), they must complete 90 hours of post-licensing education from an approved provider within 18 months. The post-licensing education program consists of three 30-hour courses: Broker Relationships and Responsibilities Contracts and Closing License Law, Commission Rules, and Legal Concepts Once post-licensing education is completed successfully, the education provider reports the completion to the commission, and the provisional status is automatically removed.
What happens when a consumer and an agency enter into an agency agreement?
Once yoy both agree to the agency relationship, the consumer becomes your client, and you become the client's agent and fiduciary
Is an agent entitiled to commision with an Exclusive Agency Contract?
One broker represents the buyer/seller, but the client may buy/sell the property without the broker's help and owe no commission.
Section
One of the primary units of measurement in the government survey system of land description; a section is one mile square and contains 640 acres
Nonrecourse note
One situation in which deficiency judgments are not available to the lender.
Conventional loan
One that has no participaction by an agency of the federal government, can be uninsured or insured.
Point of beginning
One that is reasonably easy to locate and tied to a reference point that is well established. Ex: "the old well"
Trust Basics
One way to hold ownership in real property is through a trust. A trust is a fiduciary relationship that allows a third party to hold assets on behalf of someone else (a beneficiary). All trusts have three parties: Trustor: The trust maker or person conveying title to a trustee Trustee: The third-party fiduciary, who holds the assets on behalf of the beneficiary and carries out the trustor's wishes Beneficiary: The person benefiting from the trust
What is the length of the statute of limitations to file a fair housing complaint with HUD?
One year
What's the most basic rule to remember about real estate licensure? Why is this important?
Only an individual who has a North Carolina real estate license may perform real estate activities in the state for others in return for a fee or other compensation. It's importance: To Protect the Public
When it comes to protecting tenants from landlord retaliation ______.
Only some states protect tenants
Maddy sells the new house she just built to Silas, a friend of a friend. What forms does she need to supply?
Only the MOG for because it's a first sale of new construction.
How do you calculate square footage of a 2 story foyer with no floors?
Only the first level will factor into the square footage as space without flooring doesn't count in square footage.
Cluster zoning would include single-family homes, townhomes, apartments, and condominiums on a single parcel, provided that the developer leaves a portion ________.
Open for a playground, a park, and a walking path
Eileen is preparing a report pursuant to the terms of a property management agreement. This report attempts to predict the income and expenses associated with running the property over the next year. What report is she preparing?
Operating budget
Operation of Law
Operation of law describes the manner in which the rights and/or liabilities of parties may be changed by the application of law without the act of cooperation of the parties affected.
The right of a tenant to renew a lease upon the expiration of a lease period (seen frequently in commercial leases)
Option to Renew
You have a buyer who's purchasing a home appraised at $380,000. The bank has a 90/10 loan-to-value ratio and will charge an origination fee of 1% at closing. Calculate the loan origination fee.
Org fee = % of loan Purchase Price: $380,000 LTVR: 90/10 Og fee: 1% $380,000 x .10 in Value = $38,000 $380,000 x .90 in Loan = $342,000 Loan Am = $342,000 $342,000 x .01og fee = $3,420 Origination Fee = $3,420
On page 2 of the closing disclosure, _______________ are upfront fees the lender charges for making the loan.
Origination Fees
A fee charged by the lender to cover the cost of processing the loan
Origination fee
Customers
Other people in the transaction Fairness, honesty, disclosure of material fats, prompt presentation of offers
Where is the condensing unit of a split central air conditioning system most often located?
Outside, adjacent to the home
What is overlay zoning? What about in NC?
Overlay zoning designates special zoning districts over existing zones, typically to protect special features or areas. North Carolina has established many overlay districts, such as watershed districts, historic preservation districts, and neighborhood conservation districts.
When Saundra Neill signed a property management agreement with Henderson Properties, Inc., she made sure the agreement stated explicitly that Henderson owned each property she would be managing. In which section of the agreement would she find this verification?
Owner's covenants
Features of a Townhome
Ownership: Townhome owners own the structure in severalty, including the interior and exterior walls, and also the land on which the home sits, which is often cited as the one primary distinguishing characteristic of this type of property. By contrast, condo owners don't individually own the land on which the units sit, but they own all common areas in common with other owners. Structure: A townhome may or may not have walls in common with other townhomes. Usually, they are built in a group or row. Unlike condos, townhomes can't be vertically stacked because the owner owns the land on which the townhome sits. Financing: Townhomes are treated differently than condos for lending purposes. Financing a townhome is very similar to financing a single-family house, and less complicated than financing a condo. Interest rates for townhomes are usually lower than interest rates for condominiums. Cost: A townhome is generally more expensive than a condo (because the land is owned), but less expensive than a single-family home. HOA: Like condos, townhomes are usually governed by a homeowners' association (HOA), and both typically are subject to HOA dues to cover maintenance of common elements or amenities owned by the HOA, such as a pool or clubhouse. Common areas: In North Carolina, the HOA owns the common areas of the townhome development, whereas all unit owners own common areas of condo developments in common.
PETE is an acronym for the government powers over land use. What does it stand for?
P = police power - governmental authority at all levels to do what's right for the public good E = eminent domain - involuntary conveyance of private land for public use T = taxes - levied to fund necessary public works; unpaid taxes lead to liens against the property E = escheat - involuntary conveyance upon death when no will exists and no heirs or creditors are found
The federal Residential Lead-Based Paint Hazard Reduction Act of 1992 requires that potential buyers and renters of housing built before 1978 be informed of any lead hazards prior to buying or renting the property. What should be provided to a buyer or renter?
Pamphlet: Give them an Environmental Protection Agency-approved information pamphlet titled "Protect Your Family from Lead in Your Home," which outlines how to identify and control lead-based paint hazards. Known information: Disclose any known information concerning lead-based paint or lead-based paint hazards. The seller or landlord must also disclose information such as the location of the lead-based paint and/or lead-based paint hazards, and the condition of the painted surfaces. Records and reports: Provide any records and reports on lead-based paint and/or lead-based paint hazards that are available to the seller or landlord. For multi-unit buildings, this requirement includes records and reports concerning common areas and other units when such information was obtained as a result of a building-wide evaluation. Lead warning statement: Include an attachment to the contract or lease (or language inserted in the lease itself) which includes a lead warning statement and confirms that the seller or landlord has complied with all notification requirements. This attachment is to be provided in the same language used in the rest of the contract. Sellers, landlords, and agents, as well as home buyers and tenants, must sign and date the attachment. Ten-day risk assessment/inspection period: Sellers must provide homebuyers with a 10-day period in which to conduct a risk assessment for lead-based paint or lead-based paint hazards. Parties may mutually agree, in writing, to lengthen or shorten the time period for the inspection. Homebuyers may waive this inspection opportunity.
Extended clause
Paragraph (b)(iii) provides for the full commission for any sale or exchange to registered aspects within a specified period after termination of the contract.
Public recreation areas administered to and controlled by state and local governments
Parklands
What's a key difference between parklands and recreation areas?
Parklands are administered by state or local governments, while recreation areas may be administered by any entity.
What is the Parol Evidence Rule in respect to contracts?
Parol is French means "formal promise" which enerally prohibits the introduction of earlier verbal or written statements that contradict, augment, or otherwise change the written contract's terms.
Contractual capacity
Parties must be legally competent in order to contract. North Carolina's age is 18.
What is a potential disadvantage for the buyer when it comes to the contract for deed agreement? (installment contract)
Paying property taxes
Clients
People we represent We owe a client: fiduciary duties
Percolation rate
Percolation rate The absorption rate of soil for a septic drain field; determined through a percolation test (aka perc test)
Sue Ellen has a contract to buy Roger's house, which she has always admired, when Roger decides he's ready to move to a senior living community. After Roger finds a suitable senior apartment and moves, Sue Ellen writes a check for the agreed-upon amount, and Roger transfers the deed to her. What is happening in this scenario?
Performance
Involves possessory interest that's automatically renewed at the end of each period specified in the lease (e.g., month-to-month)
Periodic Estate
Jacob is a developer who purchased 78 acres and had it subdivided into half-acre lots. He decided to install sewer and underground electric for the entire subdivision, because he thinks that he will easily recoup his initial infrastructure investment. This is an example of which economic characteristic of real property?
Permanence
NC Dredge & Fill Act
Permit for dredging Affecting wetlands and coast Part of federal clean water act
Variance
Permitted deviation from specific requirements of the existing zoning ordinance.
On the Offer to Purchase form, this provision names items transferring with the property to the buyer that aren't real property.
Personal Property
Which scoring system is a way for insurance companies to rank the risk of a person filing an insurance claim?
Personal insurance score
What is your personal information that needs to be submitted to NCREC in order to locate & correspond w you?
Personal name Firm name Trade name Residence address Firm address Telephone number Email address If any of this information changes, you must notify the commission in writing of the change within 10 days.
The presence of neighborhood amenities, such as shopping and schools, is an example of which real estate value influencer?
Physical
What do planning boards do?
Planning boards decide the layout of a community—whether it's a town, city, or village—and then map the zones and decide which uses are allowed within each zone.
A surveyor created a lot and block survey for a new residential development. The first thing she did when she surveyed the new neighborhood was to reference a metes and bounds land description. From there, she divided the land into numbered lots and blocks. This output is known as a _______.
Plat map
Default
Pledging property does not require the borrower to give up possession except in the event of a default.
What is the term for an increase in property value caused by the joining of two neighboring parcels of land?
Plottage
On page 2 of the closing disclosure, _____ are paid by the borrower to the lender in exchange for a lower interest rate
Points
Footings are constructed out of which of the following?
Poured concrete
What's the name of the clause that's standard in a deed of trust, can be included in a mortgage, and allows the lender to foreclose non-judicially?
Power of Sale
Liquidated Damages
Pre-set outcomes in the event of breach of contract
On page two of the Closing Disclosure, _______ are items included with the borrower's monthly payment that are due before the first scheduled payment of the loan
Prepaids
What are the most general services provided by a licensee in a Limited Service Listing Agreement?
Preparing a CMA Assisting sellers with proper pricing Marketing and advertising the property Listing the property on the MLS Handling buyer inquiries Negotiating with buyers' licensees Preparing contracts Generally managing the transaction up until closing
A ________ Market is where lenders and borrowers come together to originate, negotiate the terms of, and fund a mortgage loan.
Primary Market
What does the fiduciary duty of obedience intail?
Principals are owed absolute loyalty and obedience. Agents must put their clients' interests above all others, including their own. This means that agents must be careful not to commit "self-dealing." Does the agent have personal interest in a property being sold? If so, the agent must withdraw from the transaction or disclose the interest to the client—and only proceed if the client agrees.
How are principles who breach their duty of acting in good faith with their agents to diligently fufill all of their obligations under the contract?
Principals who do breach this duty may be responsible for paying damages to the agent for any expenses incurred while trying to fulfill the agency agreement.
Someone who's a party to a transaction, or the person for whom the agent acts
Principle
What may the lender require if the borrower is unable to put at least 20% down on a conventional loan?
Private Mortgage Insurance
What are subdivision regulations enforced by the subdivision residents or owners considered?
Private controls
What may the lender require if the borrower is unable to put at least 20% down on a conventional loan?
Private mortgage insurance
The law that states only the parties within a contract can be held to the contract's requirements
Privity of Contract
When two or more parties hold an interest in the same real property.
Privity of Estate
What are examples of times in which additional experts from a home inspector are needed:
Problems or questions regarding the condition of a major system, such as electrical, plumbing, heating, or HVAC Settling of the home or foundation Questions regarding the condition of the roof The defective siding on the home, or siding that the manufacturer has recalled Suspected mold issues Water intrusion Hazardous substances, such as asbestos, lead-based paint, or oil in the surrounding soil
Eileen is preparing a quarterly report pursuant to the terms of a property management agreement. This report shows the property owner whether this property operated at a surplus or deficit during the reporting period. What report is she preparing?
Profit and loss statement
Which economic principle is based on the belief that it's better to have the cheapest house in the nicest neighborhood than the nicest house in the cheapest neighborhood?
Progression
Your neighbors build a high-quality addition to their home, increasing its value compared to your own home's value. Because of this, you notice a bump in your property value. Which economic principle is at work here?
Progression
"Someone licensed as a real estate broker and designated by the developer to supervise brokers at the time share project."
Project broker
This is used when a property owner or manager wants an agent to find a tenant and also perform ongoing services for a rental property.
Property management contract
Who are the parties to a listing agreement?
Property sellers and their agent
What type of IRS deduction can be taken for a vacation home?
Property tax
Property Tax Liens
Property tax liens are a mechanism tax collectors use to collect a tax commitment from a taxpayer's property. It allows the tax collector to seize and sell a taxpayer's property—real or personal—to satisfy unpaid taxes. This can include foreclosure on real property.
FHA insured loan
Protects lenders against financial loss.
NC Coastal Area Management Act (CAMA)
Protects wetlands and marshes Limits development Compliance a material fact
What is an in-house brokerage employment contract?
Provide details of a licensee's employment with the sponsoring brokerage, and creates an agency agreement. Cooperation agreements between brokers or firms are used when brokerages cooperate to bring buyers and sellers together, and detail how each agent gets paid and who represents whom.
Universal agency
Provides an agent to have all-encompassing powers to make decisions and act on behalf of the principal. Examp: power of attorney signed by parents entrusting all their property and assets to adult children.
Right of assignment
Provides liquidity to the loan because the lender can sell the loan at any time and obtain the money invested rather than wait for payment of the loa over an extended time.
The North Carolina Conner Act
Provides that certain real estate documents are not valid against third parties until recorded, therefore creating the need of protection.
Fee simple absolute title
Provides the greatest form of ownership available in real property. Most common form of ownership. A transfer of _______ does not mean there are no encumbrances, and the covenant against encumbrances in a deed is only a covenant against encumbrances that have not been disclosed.
Acceleration clause
Provides the lender with the option of calling the entire loan due and payable at once if the buyer defaults or breaks the contract in any way.
What is a PLSS? What are it's parts?
Public Land Survey System
What type of control are subdivision regulations imposed by government entities considered?
Public controls
Undeveloped land that can be as small as a pathway between public areas, the size of a vacant lot in a large city, or large acreage
Public open space
The itemized costs of building or installing all of a new structure's component parts are added together.
Quantity Survey
With which of the four methods used to find the reproduction cost of a structure does the appraiser add the itemized costs—including direct and indirect expenses—of building or installing all of a new structure's component parts?
Quantity survey
Cloud on a title
Quick claim deed's may be used to clear cloud on a title, a situation that occurs when someone has a possible claim against a title. (ex: when a property address is misspelled on a deed)
What type of deed releases any of the grantor's property rights to the grantee but does not offer any warranties to the grantee.
Quickclaim Deed
Which licensees are required to use the Mls?
REALTORS*
Lenders must provide written disclosure of estimated settlement costs to borrowers.
RESPA
In what cases is the RPOA disclosure form not required?
RPOA disclosure form isn't required. Transfers involving the first sale of new construction Transfers by lease with option to purchase where the lessee occupies or intends to occupy the property Transfers to or from the state, county, or city Transfers from one co-owner to another Transfers made solely to a spouse or direct family member Transfers between spouses because of a divorce or equitable distribution decree Transfers pursuant to court order Transfers made because of a mortgage default or foreclosure Transfers by a fiduciary (estate executor, guardian, trustee, etc.) Transfers resulting from the owner's failure to pay federal, state, or local taxes Transfers where the parties agree that the owner won't provide a Residential Property and Owners' Association Disclosure Statement Sales of property only (with no improvements to the land)
What cancer-causing substance is naturally created when the gas in rocks and soil decays?
Radon
____ occurs naturally in the environment and can enter a home through cracks in the chimney, floor joists, water, soil tracked in from outside, floor drains and sump pumps, cracks in concrete, and porous walls. Can cause lung cancer.
Radon
Which type of roof features a ridge beam or girder that forms the top line of the roof?
Rafter roof The ridge beam, or girder, in a rafter roof is the highest part of the framing and forms the top line of the roof. Most homes today are actually built with trusses, which eliminates the need for a ridge beam.
Long wooden boards that form the gables of the roof
Rafters
What are range lines in a township?
Range Lines: The north to south lines which mark township boundaries.
Business entities operating as real estate firms must hold a real estate firm broker license
Real estate firm broker
When must liencess satisfy continueing ed requirements by? What happens if they dont?
Real estate licenses must be renewed annually before June 30. If the renewal requirements aren't met, the license will expire on June 30.
What's the best definition of real property?
Real estate, plus all of the interests, benefits, and rights included in ownership
Real Property
Real estate, plus the interests, benefits, and rights automatically included with real estate ownership
In North Carolina's FHA/VA Financing Addendum, the VA Notice to Buyer states that the parties agree that the purchaser will NOT incur a penalty for forfeiting an earnest money deposit, nor will the buyer be obligated to purchase the property under the contract if the contract purchase price or cost exceeds the property's ______.
Reasonable value
What procedures does a closing attorney need to perform prior to settlement?
Receive transactional paperwork and review instructions from the parties. Order title search from the title company. Calculate prorated expenses, such as property taxes and community association fees. Work with the seller's lender to get the loan payoff amount. Work with the buyer's lender to get the closing amount and loan documents. Follow up on any special instructions within the purchase agreement. Receive broker instructions for the commission. Prepare closing statements. Order title insurance (the buyer and/or seller will pay for this).
Jayne was tired of waiting for her subcontractor to get his part of the deal done. The agreed-upon deadlines came and went, and Jayne lost money waiting for the subcontractor to come through. She decided that if the subcontractor wasn't going to honor his commitments, neither was she, so Jayne consulted with her attorney and then terminated the contract. This is an example of ______.
Recinding the contract unilaterally
Parks, shorelines, public fishing areas, trails, and waterway access
Recreation Areas
A lending company denies all loans for properties south of the river because of the demographics of the area. What violation of Fair Housing is this?
Red-lining
Early in its history, the Federal Housing Administration officially supported keeping "incompatible" racial groups out of the newly developed white suburbs. What is this practice known as?
Redlining
Includes shorter time frames, higher monthly payments, and less total interest. What feature of loan payment is this?
Reduced Loan Term
What is the Equal Credit Opportunity Act (ECOA)
Regulation B Prohibits discrimination in financing based on several protected classes: Race Color Religion National origin Sex Marital status Age (over the age of 18) Dependence on public assistance
what is regulation B?
Regulation B protects consumers from discriminatory lending practices. Anyone who's completing a loan application shouldn't be subjected to discrimination based on race, color, religion, national origin, sex, marital status, or age.
Lenders must provide residential loan borrowers with all important information related to the loan, such as the annual percentage rate.
Regulation Z
What duties do you owe to your customer?
Remember, too, that you also owe skill, care, and diligence to your customers. You can't advise them, but you can help with ministerial tasks. And if you're a cooperating broker, you and the other broker should work together to complete the transaction.
One of the provisions on the Offer to Purchase Standard 2-T form where seller must remove all garbage and debris, along with personal property that's not part of the sale, from the property.
Removal of sellers property
NCREC has the athority to impose the following disiplanary actions:
Reprimand: an official, public admonishment. Censure: a formal, public condemnation but license privileges are retained License suspension: the temporary halting of licensure and license privileges that prohibit licensees from practicing activities requiring a license while the license is under suspension License revocation: the permanent removal of a license
Procuring Cause of Sale
Requires an agent to prove that he was the primary foundation upon which negotiations have begun, the predominant factor is bringing about a conclusion to the transaction, and not in violation of agency law.
What is the MLS statement Clear Cooperation policy?
Requires that agents publish listings to the MLS within 1 business day of marketing it to the public. (If a seller refuses to have their listing published to the MLS, the listing must still be entered but the seller does have the right for the listing to be excluded from the MLS's collection of current listings.) The national policy doesn't apply to certain properties, such as: - Commercial - Rental - New developments comprising multiple properties
NC Failure to provide RPOADS
Residential Disclosure from seller to be signed by buyer When buyer making an offer, they have to recieve within 3 days 3-day recission (walk way) from receipt of form & date of contracts If buyer not provided within 3 days, they can walk and claim money back
ANSI requires that residential measurements be rounded to the nearest ____, or _____ of a foot,
Residential measurements must be rounded to the nearest inch, or 10th of a foot,
How long do restrictive covenants last?
Restrictive covenants may run with the land forever and appear on future deeds, or they may have a time limit.
Voidable contracts
Results from failure to meet some legal requirement in negotiating the agreement. As a result, it is technically defective and is not enforceable by one or more of the parties.
Proper Deposition of Earnest Money
Return to buyer if offer is cancelled or withdrawn prior to acceptance Transfer to closing attorney no more than 10 days prior to settlement for buyer credit
Generally used by the older individuals who want to receive income from the equity in their home
Reverse Annuity Laon
A loan that's offered based on a homeowner's equity in which funds are drawn over time and the bank gains corresponding property ownership is called a ______.
Reverse Annuity Mortgage
Monty retired 10 years ago and would like to see the world, but his retirement account won't support his desire to travel. Monty heard of a loan that would allow him to take advantage of the equity in his home by getting monthly payments from the bank by using his house as collateral. What is this type of loan called?
Reverse annuity mortgage (RAM)
What closing prodecures does a closing attorney perform during the settlement meeting?
Review the final settlement statement. Review and explain key documents to parties. Collect the funds. Obtain identification and signatures. Make copies for the parties.
Forms the top line of the roof in a traditional rafter roof
Ridge beam
Assigns risk between contracting parties that requires them to determine who will be responsible for calamity, loss, or an accident after the sale has been completed but before delivery occurs
Risk of loss provisions in a sales contract
Prohibits discharging refuse into, altering the course of, excavating, filling or changing the condition or capacity of certain bodies of water. What act is this called?
Rivers and Harbors Act
The Fed wants to avoid a couple of things in its attempt to maintain a balanced economy. What two things does the Fed try to avoid?
Runaway inflation Serious deflation
What's the entire formula for calculating
Sales price = (net amount + mortgage and other expenses) ÷ (100% - commission rate)
Your seller wants to net $47,500 after the 5% commission is paid, but before other closing costs are figured in. At what price does the home need to sell for the seller to net this amount?
Sales price = (net amount + mortgage or other expenses) ÷ (100% ‒ commission rate) = $50,000
The number of properties available describes which of the following factors that influences value?
Scarcity
As part of his property valuation, Gerald reviews government reports regarding the current and projected regional economy. It's fairly positive, and he uses some of the information to support a slightly higher opinion of value for the property. What type of data is this?
Secondary Reports and records developed for other purposes and used by the valuator to find and support an opinion of value are considered secondary data sources.
What is self-dealing?
Self-dealing occurs when a licensee buys a principal's property without disclosing it to the principal. This is a violation even if the licensee uses an intermediary to make the actual purchase. If an agent is found guilty of self-dealing without first getting the client's informed, written consent, the transaction is voidable. That means that the client can back out of the deal without incurring a penalty. The principal can also win a lawsuit just by proving that the agent violated the duty of loyalty and obedience
North Carolina seller Jasmine wanted to remain on the property she was selling for 15 days past the closing date. Which ]addenda should be used for this?
Seller Possession After Closing Agreement
What type of debit or credit is the payoff of the seller's current mortgage loan or other lien?
Seller debit
What type of debit or credit is the seller's share of prorated items?
Seller debit
Loan assumption
Seller whose loan was assumed remains liable for the loan and payment of the note unless specifically released from liability by the lender.
The ______ table discloses the amounts associated with the transaction that the seller will pay and receive, usually resulting in a total cash to seller.
Seller's Transaction
What type of debit or credit is the buyer's share of any prorated items that the seller has prepaid?
Seller's credit
All documents necessary to complete the transaction must be properly executed and delivered to the closing attorney. What is this called?
Settlement
Which loan type is generally used for commercial loans?
Shared Equity mortgage
A loan in which the borrower receives a below-market interest rate in exchange for the lender receiving equity
Shared appreciation
Penelope is a broker who employs an assistant, Carrie. Since Carrie is unlicensed, what's true about how Penelope pays her?
She may pay Carrie only on an hourly basis or with a salary.
Rachel is a North Carolina licensee who is planning when to take her required CE courses. She'll enroll in two separate four-hour courses in order to complete the requirement before her license expires. When must she do this by?
She must complete CE requirements by June 10th and also must renew license & pay fee by June 30th or else license will expire.
North Carolina seller Kathleen received an offer on her property. Everything looked perfect—even the sale price—but Kathleen was going to be out of the country for the two weeks leading up to the settlement date. She wanted to delay the settlement by one week so she had time to move out of the property and have it professionally cleaned. How should she indicate that she liked the offer but wanted to change that one item?
She should sign and date the offer, modify the closing date, and initial and date that modification. Then her broker should submit her counter-offer to the buyer.
What are the penalities for breaking Anti-Trust laws?
Sherman Act can be as much as $1 million for an individual, along with 10 years in prison or $100 million for a corporation. The maximum fine may be increased to twice the amount the conspirators gained from the illegal acts or twice the money that victims lost (if either of those amounts is over $100 million). Price fixing, bid rigging, and customer allocation agreements between competitors are punishable as criminal felonies. Violations of the Clayton Act may result in court awards of as much as three times the amount of damages actually suffered.
What types of capital gains may property owners encounter?
Short and long-term gains
First wooden member of the structure; placed on top of foundation walls
Sill plate
Tenency by the Entirety
Similar to joint tenency but "Unitity of Person" is added to Possession, Interest, Time and Title. Since tenancy by the entirety—which is the default mode of ownership for married couples in North Carolina—is inherently based on the owners being married, in the event of a divorce, both parties automatically become tenants in common. If the ex-spouses don't want to co-own the property, they're free to sell their individual interests. - This form of ownership gives each spouse an equal, undivided interest in the property. - Transfer of title requires both parties consent. - Right of surviorship is present
John just sold the home where he's lived for eight years and made a nice profit. How will john calculate his capital gain?
Since john sold his personal residence, he calculates capital gain by subtracting his adjusted basis (acquisition costs plus the cost of capital improvements) from the sale price. As a single taxpayer, he can exclude as much as $250,000 of his profit from taxable capital gains.
If a private individual owner doesn't own more than three single-family homes at one time, which exemption from the Fair Housing Act could apply?
Single-family housing sold or rented without the use of a broker
Exposure to formaldehyde can lead to ______.
Skin, eye, and respiratory irritations
A high-end home going for a sophisticated look, without regard to expense, would use which long-lasting but breakable roof covering?
Slate tiles
Why are lenders required to provide the Loan Estimate and Closing Disclosure forms to loan applicants and borrowers?
So borrowers can compare loans and make decisions regarding the affordability of loans offered
Brick walls that support the roof structure
Solid masonary
When working with a client on a real estate sale, a real estate licensee is usually acting as which type of agent?
Special
Also known as limited agency, this agent acts as an intermediary and negotiator.
Special Agency
On the Offer to Purchase form, this charge may be either proposed or confirmed, and must be paid either in a lump sum or in future installments.
Special Assessments
Special Flood Hazard Area (SFHA) Areas designated as prone to flooding; used to determine the cost of flood insurance
Special Flood Harzard Area
What type of deed may or may not include covenants of warranty.
Special Warranty Deed
One party didn't meet the terms of the contract in the specified time frame, and is now being required to do exactly what was agreed to in the contract. What should be enforced as a part of the sales contract?
Specific Performance
What is North Carolina's Unfair and Deceptive Trade Practices Act?
Specifically, this act prohibits real estate licensees from committing unfair or deceptive acts, which are defined as: - Giving a misleading opinion or making false inducements - Failing to disclose material facts - Using misleading advertising - Making misrepresentations
What are the common types of cooling systems?
Split central air systems, single zone/mini-split systems, decentralized air conditioners, and evaporative coolers
What is a spot in zoning?
Spot: A specific property is rezoned for another use within a larger zoned area.
The cost per square foot of a recently built comparable structure is multiplied by the number of square feet in the subject building.
Square-foot
What's the first step an appraiser will perform when conducting an appraisal?
State the problem
To calculate prorations based on a 30-day month and 360-day year, use the ______ method of proration.
Statutory proration
North Carolina licensees are required to be honest with all parties in a transaction. While performing this duty, it's important for licensees to _______.
Stay within their scope of expertise
When both supply and demand increase, what tends to happen to prices?
Stays the same
What's the term for the illegal practice of nudging buyers away from or toward a specific area based on the presence or absence of protected class members?
Steering
When working with an African-American client, Nancy makes an effort to show him homes in primarily African-American communities. What violation of Fair Housing is this?
Steering
Robin vacated the North Carolina home she rented from Steve on the agreed-upon lease termination date. The lease didn't specify a time frame to return the security deposit. Robin informed Steve that she broke the back door when moving a table. What must Steve do with the security deposit in this situation?
Steve must return the security deposit, minus the cost for the repair of the back door, within 30 days, and he must include an itemized list of any deductions.
If a tenant moves out before a lease term expires and the landlord is able to rent the unit, the tenant is ______.
Still liable for the rent for the term of the lease
These windows fit on either the inside or outside of the main window. (Usually in old homes) What are they?
Storm windows
What is the term used when buildings discharge their untreated wastewater—from sinks, washing machines, toilets, etc.—through pipes onto the land surface, and/or into streams and creeks.
Straight piping. In North Carolina, it's illegal, and the presence of straight piping on a property is considered a material fact that must be disclosed.
Used to frame exterior and interior walls, doors, and windows
Studs
An agreement for a new occupant to live in the premises and pay rent to the former tenant, who pays the landlord (requires landlord's written permission; doesn't relieve the former tenant from liability)
Sub-lease
Which economic principle says that a property's value is determined by what it would cost to purchase a similar property?
Substitution
The economic principle of ______ says that when there are two houses in the same neighborhood with the same size, appeal, and utility, the lower-priced one will tend to sell first.
Substitution The economic factor of "substitution" states that the lower-priced option of two properties of equal quality will likely sell first.
Property managers spend a good deal of their time overseeing and managing others: maintenance people, staff, contractors, and sometimes even tenants. To be effective in this area, a property manager needs to have what type of skills?
Supervisory
As the most important foundation building block, the purpose of a foundation footing is to _______.
Support the entire weight of the building
When are TRID documents used?
TRID documents must be used for most consumer mortgages, but not for home equity lines of credit, mortgages secured by manufactured homes, reverse mortgages, or mortgages secured by dwellings not attached to land
Why might TRID increase the likelihood of closing delays?
TRID may increase the likelihood of closing delays because certain changes, especially those relating to the cost of the loan, trigger a new three-day waiting period (because borrowers must receive the disclosure three days before closing).
How might RESPA and TILA loan/guidelines impact a closing for a real estate agent?
TRID may increase the likelihood of closing delays because certain changes, especially those relating to the cost of the loan, trigger a new three-day waiting period (because borrowers must receive the disclosure three days before closing). What changes prompt the new three-day waiting period? Annual percentage rate increase of more than a 1/8 of a percent for a fixed rate or 1/4 of a percent for an adjustable rate mortgage The addition of a pre-payment penalty Changes to the basic loan product (such as switching from a fixed-rate to an adjustable-rate mortgage—but not switching from, say, an FHA loan to a conventional loan)
Tiffany, an investor, wants to net 12% profit after paying a brokerage commission of 7%. If her original purchase price was $349,000, what's the minimum offer she can accept? Round to nearest whole dollar.
Take the original purchase price of $349,000 and add 12% (multiply by 1.12) to get $390,880. Now calculate in a 7% commission (divide $390,880 by .93) to get $420,301.
What is inverse condemnation?
Taking of possession without owner consent. Owner must sue the government to receive compensation.
Taxation Timetable
Taxation Timetable January 1, current year: Property value is determined on a reassessment year and a tax lien attaches to the property. January 31, current year: Last day for taxable property to be listed. July 1, current year: Beginning of the fiscal year; counties set the annual tax rate for the current year (if it's a reappraisal year). July 2 - August 31: Tax bills are sent to residents. September 1, current year: Tax bill is due and payable. January 5, next year: Last day to pay last year's tax bill without a late penalty.
Your potential buyer client Vernon is on the fence about signing a buyer agency agreement with you. What's your next step as a North Carolina licensee?
Tell him that if he doesn't sign, you'll conduct the transaction as a sub-agent and will represent the seller's interests. Explain what that means.
If a landlord violates the NC Residential Rental Agreements Act, tenants may recover __________ against landlords who haven't kept up their part of the bargain.
Tenants may recover fair rental value (FRV) against landlords who haven't kept up their part of the bargain. Tenants can recover paid rent plus incidental damages from the offending landlord.
A loan in which the payments are applied to interest only with the entire principal is due at the end of the term
Term mortgage
Cassie is helping her buyer client, Gus, prepare for closing. What should she encourage him to verify as soon as he receives the form?
That the borrower and seller names, the property address, and the sales price are accurate and spelled correctly
What is the CAN-SPAM act of 2003? How must it be honored and what are the penalities of violating?
The CAN-SPAM Act of 2003 protects consumers from being bombarded with unwanted email solicitations. Under the law, commercial emails (which may include those sent through social media platforms and some forms of text message) must include all of the following: - A legitimate return email and physical postal address - A clear and conspicuous notice of the recipient's opportunity to opt out—that is, to decline to receive future messages - An opt-out mechanism that is active for at least 30 days after the message has been sent - A clear notice that the message is an advertisement or solicitation When a consumer sends an opt-out request, it must be honored within 10 business days. The law offers no private right of action for consumers, but each separate email in violation of the CAN-SPAM Act is subject to penalties similar to the fines for Do Not Call violations. The current maximum federal fine for violating the CAN-SPAM Act is $42,530 (for each separate email that violates the act).
What is the North Carolina Telephone Soliciations Act?
The Do Not Call Registry helps to reduce the number of telemarketing calls consumers receive, but the North Carolina Telephone Solicitations Act goes a bit further to protect the state's consumers. The law specifies that telemarketers must: - Have systems in place to ensure numbers on the Do Not Call Registry aren't called - Not make calls before 8 a.m. or after 9 p.m. - Inquire about the consumer's age, and if the consumer is under the age of 18, they must immediately hang up - Not engage in threats or intimidation, or use inappropriate language - Not transmit misleading information - Identify themselves immediately - Telemarketers who block their ID or otherwise attempt to make calls seem as if they're coming from a family member can be fined $5,000. - Use their real name and number or the name and number of the business they represent - This also applies to text message solicitations. - Connect the consumer to a sales representative within two seconds after the call is answered - Honestly disclose all terms of offers presented - Get the consumer's approval before charging a credit card Consumers need only register with the national Do Not Call Registry in order to benefit from the North Carolina Telephone Solicitations Act.
When using North Carolina Offer to Purchase and Contract, Standard Form 2-T, what has occurred after the last party to the contract has signed or initialed the offer or the final counter-offer and that information has been communicated to the party who made the offer or final counter-offer?
The Effective Date
What is the equal opportunity act?
The Equal Credit Opportunity Act (ECOA) of 1974 was the first in a series of fair housing lending laws enacted for the purpose of preventing lenders from discriminating against applicants based on age (the legal age to sign a contract is 18), race, color, religion, sex, national origin, marital status, or public assistance income.
What is the Fair Credit Reporting Act ?
The Fair Credit Reporting Act allows consumers to know the details of the credit report and to resolve any discrepancies by contacting the credit agency. Consumers may also request credit reports annually from the credit reporting agency.
Which law added familial status and disability to the list of protected classes?
The Fair Housing Amendment Act of 1988
The Telephone Consumer Protection Act, managed by __________________________ Commission established the National Do Not Call Registry (DNC) in 2003. What does this act protect consumers from? What is the federal penalty for not complying with the DNC producers or requests? What is the state penalty for not complying with the Telephone Consumer Protection Act?
The Federal Communications Commission - Businesses must comply with certain prohibitions of communication which include no calls to consumers before 8am or after 9pm - Sellers and telemarketers are required to check the DNC registry at least once every 31 days and drop disconnected, registered, or reassigned numbers from their contact lists. - Real estate professionals can call consumers with whom they have established business relationships for up to 18 months after the clients' last purchase, delivery, or payment, even if the client is registered with the DNC list. - Real estate professionals may continue to contact clients for up to three months after an inquiry or application has been made. - Real estate companies can avoid penalties for making accidental calls to numbers on the DNC list by developing and enforcing procedures that comply with DNC requirements, training staff on procedures, documenting processes used in making calls, and updating records as required. - Any time a consumer asks to be removed from the call list, the company must comply immediately. - Do Not Call requests are effective immediately The penalty for violating the DNC registry can be up to $40,000 per violation The penalty for violating the Telephone Consumer Protection Act is: $500 for the first violation $1,000 for the second violation $5,000 for third and subsequent violations Consumers need only register with the national Do Not Call Registry in order to benefit from the North Carolina Telephone Solicitations Act.
What is the Junk Fax Prevention Act of 2005? What is the penalty for violating?
The Junk Fax Prevention Act of 2005 makes it unlawful to send an unsolicited commercial message via fax unless the sender has permission from the recipient or an established business relationship with the recipient. - It must contain an op-out option and telemarketers must comply within 30 days Violators of the law face a fine of $11,000 from the FCC and $500 from the attorney general with with potential fines of $500 per violation, and up to triple damages being assessed if the junk fax were sent willfully or knowingly. The Federal Communications Commission enforces this act.
Maria is a borrower reviewing her Closing Disclosure. She notices that the appraisal fee is listed under "Paid by Others" and has an L listed with the amount. What does this mean?
The L indicates that the creditor pays the item at consummation.
What is the difference between the Federal Fair Housing Act and the North Carolina Fair Housing Act? What is the additional protected class?
The North Carolina Fair Housing Act includes the following protected classes: race, religion, sex, national origin, disability, familial status, and low-income individuals, a status that is not protected under federal law.
Which agency in North Carolina enforces fair housing law?
The North Carolina Human Relations Council (NCHRC)
What is the most common Offer to Purchase form?
The North Carolina Offer to Purchase and Contract form, Standard Form 2-T is the contract most commonly used for purchasing residential real estate
Retainer fee
The North Carolina buyer agency at payment allows the agent to receive ______. This is usually a small monetary compensation paid by the buyer upfront for an agent services.
Which law requires developers to make sure subdivision streets comply with the North Carolina Department of Transportation's minimum standards?
The North Carolina subdivision streets disclosure
Debt service
The P&J payment is the part of the payment covering the principal and interest and is often referred to as the debt service.
Where banks that originate loans operate
The Primary Market
What is the Principle Miridian in a township?
The Principle Miridian in a township is the line that the point of bigginning falls and runs NS
When determining value, what is the "Sales Comparison Approach?"
The Sales Comparison Approach uses a process of comparison with similar properties that have a known sale price to determine a subject property's market value. This is the most reliable of the three approaches when appraising single-family homes for market value.
Where loans are sold, held, and serviced
The Secondary Market
Grantor
The _______ (the one conveying the title) must be legally competent and have the capacity to contract. A corporation may be a grantor, although the title can only be held and transferred in an assumed name rather than a fictitious person or organization (which is not allowed).
Statement of record
The act requires that a developer file a ___________ with HUD before offering on increase lots and interstate commerce. The statement requires disclosure of information about the property as specified by HUD.
Condemnation
The action of claiming property under eminent domain.
Subagent
The agent of the agency.
Jenson signed a seller agency agreement with Susan. Right before closing, a hurricane destroyed the property. What happened to Jenson and Susan's agreement?
The agreement is terminated by Force of Law
Rex has a reputation in the community for being a bit odd. He listed his ranch for sale and insisted on the low price he's placed on it, though his agent told him it's underpriced. Rex's distant family hears of the potential sale, and they go through the courts to present evidence that Rex isn't legally competent to manage his business affairs; the judge agrees. What's the status of the listing agreement?
The agreement is terminated by Force of Law
Principle
The amount of money on which interest is either paid or received
Borrower Max is reviewing his Closing Disclosure to check the amount of prepaid mortgage insurance, taxes, and interest. In addition to itemizing what his borrower-paid closing costs are, the prepaid section includes ______ for each item.
The applicable time period The prepaids cover what is paid at closing and what time period is included. This gives the borrower a glimpse into what will need to be paid in the near future.
If not a certified REALTOR, what form does a buyer's agent use for a Offer to Purchase Contract?
The appropriate Offer to Purchase and Contract provided by NCBA
When would a lender require a mortgage insurance premium?
The borrower has an FHA mortgage
Equity of redemption
The borrower has the right to pay off the loan and receive his title back any time prior to final foreclosure sale. The common law right is known as the equity of redemption or right of redemption.
Mortgagor
The borrower who gives the mortgage is the mortgagor.
Uninsured conventional loan
The borrowers equity in the property provides sufficient security for the lender to make the laon; therefore, insurance to protect the lender in case the borrower default is not required In these cases, the borrower obtains a loan that does not exceed 80 percent of the property value and thus has an equity of at least 20 percent.
Flat fee listing
The broker takes the listing based on a specified payment of money by the seller to broker at the time of the listing.
In North Carolina, which of the following must be included in all advertisements a broker creates?
The broker's affiliated brokerage firm or sole proprietorship's name
Exclusive Buyer Agency Agreement
The buyer is the broker's principal and the agency relationship is between the buyer and the broker.
In North Carolina, a subdivision lot buyer must be informed of the plat approval status from the local jurisdiction. If the plat hasn't been approved, what is a developer NOT required to inform the buyer about? The plat approval and filing are incomplete. There's no guarantee of plat approval. The sales contract may be cancelled if changes are made to the original plat plan. The buyer must secure financing prior to signing a sales contract. The buyer is privy to the street plan and whether the roads will be public or private.
The buyer must secure financing prior to signing a sales contract.
Up-front mortgage insurance premium
The buyer pays for this insurance protection by paying an up-front mortgage insurance premium.
Grantor/trustor
The buyer/borrower who is called a grantor sings a promissory note payable to the lender.
Which entity enforces subdivision covenants?
The civil court system
What is a "Closing Statement"?
The closing statement identifies the total settlement charges, which include but are not limited to buyer and seller credits and debits, real estate broker fees, and title charges.
The commission allows an expired license to be reinstated if the process for reinstatement is completed within ___________ after expiration. The fee to reinstate a license is double the renewal fee.
The commission allows an expired license to be reinstated if the process for reinstatement is completed within six months after expiration. The fee to reinstate a license is double the renewal fee.
What are the members of NCREC made up of?
The commission has nine members in total, and each one serves a three-year term. Seven members are appointed by the governor. Two are appointed by the North Carolina General Assembly, one based on the speaker of the House of Representatives recommendation and one based on the president pro tempore of the Senate recommendation. At least three of the members must be licensed brokers. At least two of the members must be members of the general public, meaning they are not involved directly or indirectly with the real estate brokerage or appraisal business.
What is a proof of licensure called? Hint: it's a card! What does this do, when is it needed?
The commission issues pocket cards annually to each broker. Brokers must retain the pocket card as evidence of licensure. The pocket card may be issued digitally, but brokers must be able to produce a pocket card at any time as proof of licensure. The pocket card doesn't indicate if a license is active or inactive.
Willful Misrepresentation
The communication of false or incorrect information is a misrepresentation. _________ occurs when an agent knowingly communicates information she knows to be false or when an agent provides false information with no regard for the truth or such a statement.
Permanence of investment
The cost and nature of infrastructure improvements (roads, underground water, wastewater, natural gas, or electric installations) are sizeable and can't be easily reversed, and these infrastructure investments have relatively stable returns over time. Thus, these types of improvements represent "permanence."
Negative covenants or easements
The covenants are promises on the part of the purchasers of property in the subdivision to limit their use of their property to comply with the requirements of the restrictive/protective covenants and are therefore sometimes referred to as a negative covenants or easements.
What are the Lead-Based Paint Disclosure Violation Penalties?
The current maximum penalty for violation of lead-based-paint disclosure requirements is $17,834 for each violation.
What generally determines the priority of a lien?
The date it is recorded
Effective Date
The date of communication of written acceptance of an offer
Willful Ommision
The deliberate and intentional failure to disclose material facts that are known to the agent.
What doesNorth Carolina Subdivision Street Disclosure law require before entering into an agreement or conveyance with a prospective buyer?
The developer and seller must prepare, sign, and deliver a subdivision disclosure statement for the buyer that fully discloses the public or private status of the street upon which the house or lot fronts.
Equity
The difference between the market value of the property and what is owed on it.
What's the best definition of land?
The earth's surface, extending downward to the center of the earth and upward to infinity, including permanently attached natural objects
Easement by Necessity
The easement by necessity is a sub-set of implied easements. This easement type can only be created for the purpose of ingress and egress—that is, the purpose of entering and exiting the property. For example, when a property owner owns a piece of land that is landlocked, and the only way to get to it is by crossing over another person's property, an easement by necessity exists.
Servient Estate
The estate "servicing" the party with the easement. When the servient estate is sold, the encumbrance of the easement passes with it.
Chain of Title
The examiner must be able to show a consecutive at unbroken _____ for the statutory time period. A ____ refers to successive conveyances of title to a piece of land.
Parol Evidence Rule
The first convection involves the Parol Evidence Rule. Assumes that the written words reflect the entire agreement and that oral statements that do not agree with the written words in the document and are to be disregarded.
Public Land Use Controls
The government regulation of land is through zoning laws, building codes, subdivision ordinances, and environmental protection laws.
Amortization
The gradual reduction of a mortgage loan amount from the original amount of the loan to a zero balance through periodic payments. As each successive payment is made, a little more goes towards principal and less towards interest.
Damages
The injured party is entitled to receive compensation for any financial loss caused by the breach as may be awarded by a court. This is called compensatory damages.
What would happen if a client's rate lock-in expires two days prior to closing?
The interest rate will revert to the current rates.
Estate for Years
The leasehold continues for a certain period, then automatically ends.
What type of profit is granted and to whom from a foreclosure sale at an auction?
The lender can't profit from the auction. Any bids in excess of unpaid mortgage, fees, etc., must be returned to homeowner. If there are other liens or claims on the property, those claims are paid, and then any excess funds go to the homeowner. The property is often sold at less than market value. Lenders may reject any and all bids. The lender will retain ownership of the property if it rejects the bids. If this occurs, the property becomes real estate owned (REO).
When a borrower has paid off the loan, how is the release handled if the security instrument is a mortgage?
The lender executes and records a satisfaction of mortgage and returns the note to the borrower.
Lien theory
The loan constitutes a lien against the real property.
The final page of the Closing Disclosure provides loan calculations that tell the consumer how much ______.
The loan costs, including total payments, finance charge, and TIP
What is the main purpose of the North Carolina Real Estate Commission (NCREC)?
The main purpose is to protect the general public by regulating the real estate industry and ensuring brokers are professional and competent.
What is a Reserve sale at an auction?
The minimum sales price is the reserve. The reserve price is confidential. The seller may reject any and all bids.
If a licensee is convicted of a criminal crime, when should they notify NCREC?
The notice must be filed must be filed within 60 days of the final judgment, order, or disposition in the case.
When can an offeror withdraw an offer?
The offeror can withdraw the offer at any time, until the offeree accepts or rejects it.
Where's the load carried when a roof truss system is in place?
The outer walls
In what cases does an owner only need to provide the MOG disclosure form and not the RPOADs?
The owner needs to provide only the MOG disclosure: Transfers involving the first sale of a dwelling never inhabited (new construction) Transfers by lease with option to purchase where the lessee occupies or intends to occupy the property Transfers where the parties agree that the owner won't provide the RPOA disclosure
In the North Carolina Offer to Purchase and Contract, which of the following does the Conduct of Transactions provision say about conducting transactions electronically?
The parties agree that any action between them that's related to the transaction may be conducted using electronic means, except for the signing of the contract.
North Carolina broker Maria is depositing her client's trust funds into an interest-bearing account. What must happen for her to be able to do this?
The parties to this transaction gave Maria written authorization to do so.
Dominant Estate
The party inconviencencing the property owner with an easement. When a dominant estate is sold, the benefit of the easement transfers with it.
Principle
The person for whom the agent acts. The party who hires the agents to act in their behalf and is responsible for compensation to the agent absent any other agreement.
Lis pendens
The phrase lis pendens means "a suit pending" in Latin. In real estate, it's a written and recorded claim against real estate. It tells the public that a lawsuit affecting the property is in progress and that any judgment awarded in that legal action will have priority as of the date of the lis pendens. A lis pendens can indicate that the foreclosure process has been initiated by the lender, but it may also be due to divorce proceedings, taxes owed to the IRS, or issues with inherited real estate. The lis pendens creates a cloud on the title and prevents a sale.
Who creates subdivision regulations?
The planning commission which are guided how the subdivision is zoned. A plat may be recorded at the register of deeds: After the municipality or counter has given the final plat approval After the North Carolina Division of Highways has provided a certificate of approval (certificate may be issued by a district engineer of the Department of Transportation's Division of Highways)
How would one describe "first substantial contact"?
The point where the consumer begins to talk about real estate, acts as though an agency relationship exists, or begins to tell the agent personal information about the consumer's real estate needs Also happens when the licensee begins to speak or act in a way that a reasonable person would interpret to mean that an agency relationship exists Agents SHOULD EXPLAIN explain agency BEFORE the consumer begins to reveal such personal information. If your first substantial contact is via email or phone, you must provide the brochure to the consumer within the three days following the phone call or email exchange. Remember that you must also explain the brochure, which may be done via phone or email.
Power of sale clause
The power of sale clause gives the trustee the right to sell the property, without prior court approval being required.
In a 1031 exchange, there are rules governed by Section 1031 of the Internal Revenue Code. The rules include _______.
The property in an exchange must be like-kind.
What does it mean when a property is being sold "as is".
The property is being sold in its current condition, and the seller makes no warranty about that condition. If buyers of as-is properties discover problems after moving in, they have almost no legal recourse. The agent duty of disclosing material facts remains unchanged in as-is property sales, and the same information should be made clear to seller clients.
Title Examination
The purpose of a _______ is to determine the quality of a title. Only an attorney can give a legal opinion as to the quality of a title. (quality=are there encumbrances?)
What is "graduated lease" with commercial properties?
The rent in a graduated lease includes scheduled increases that occur at predetermined intervals (e.g., annually), which graduates the lease to a higher rate. This type of lease may appeal to a business owner who's just starting out and anticipates that business income will rise over time.
Equitable Title
The right in the property to have legal title conveyed once the terms of the agreement have been completed.
Eminent domain
The right to take property.
A severe storm damaged the roof of Bob and Hart's home just days after the closing with the new buyers occurred but before they took possession. How do the parties determine who is responsible?
The risk of loss provisions in a sales contract will outline who will be responsible for property damages after the sale has been completed but before delivery occurs.
If Micah, your buyer client, wants to check past claims on a home he is considering, from whom will he request the CLUE report?
The seller (property owner)
Margot reviewed page three of her Closing Disclosure to see the amounts she'll pay and receive, and the total cash amount. She located this information under the "Summaries of Transaction" in the "Seller's Transaction" table, which is completed by ______.
The settlement agent
To whom does a North Carolina broker-in-charge normally disburse trust funds?
The settlement agent
What is a Short Sale Adendum?
The short sale addendum specifies that the sale is contingent on the approval of the seller's lender, and identifies a deadline for lender approval of the buyer's offer.
Mary is driving through a neighborhood where she's considering moving. She loves these homes because their exterior is a combination of stone and stucco. What part of the wall is she looking at?
The siding
Duress
The singing of a contract has to be voluntary and unforced.
Settlement
The singing of all documents Can be delayed up to 14 days without causing a breach
What happens if there's a conflict between a private land use control and zoning regulations?
The stricter of the two is enforced
Novation
The substitution of a new contract for prior contract. There are two ways to create a novation: The parties to the original contracted are changed, A new party to the contract agrees to satisfy a former contracting party's obligation to the second party in the previous contract. When the novation (new contract) is created, the old contract is discharged. A novation is created when the same parties change the terms of the contract and void the old contract
Transfer Tax in North Carolina:
The tax levied when a non-exempt property is transferred is called an excise tax, payable by the seller before the deed may be recorded. The statewide excise tax rate is $1 for every $500 of value (0. 2%). Several counties in North Carolina also levy a local excise tax, on top of the state one. Most of these counties' local excise tax rates are $1 for every $100 of value (1%).
The following subdivision plats don't need to go through the approval process, they only need to be recorded with the county clerk:
The tract or parcel that's to be divided is not exempted because it's being divided into parcels that are more than 10 acres and no street right-of-way dedication is involved. No part of the tract/parcel that's to be divided has been divided in the 10 years prior to the current proposed division. The tract's/parcel's entire area is more than five acres. After it's divided, there may not be more than three lots resulting from that division.
Negligent Ommision
The unintentional failure to disclose a material fact that the agent should have known but are not known to the agent.
Page four of the Closing Disclosure includes consumer education about ______.
The use of an escrow account
Page four of the Closing Disclosure lists specific disclosures about the loan, such as the penalty for late payments, whether a demand feature applies, whether the loan can be assumed, and ______.
The use of an escrow account
Full performance
The usual manner of terminating contracts is by full performance. When all the terms of the contract have been fully performed by all parties, the contract is executed and terminated.
Special Warranty Deed
The warrantee is limited to claims against the title arising out of the period of ownership of the grantor.
What does fiduciary duties mean?
The word fiduciary can describe both the kind of relationship you have, and the person who's in a position of trust and owes loyalty to another.
What is a yield spread premium?
The yield spread premium (YSP) is a fee (commission) a lender paid to a mortgage broker in exchange for a higher interest rate or an above-market market rate.
If individuals want to use their property in a way that's not permitted by a zoning ordinance, they must submit a request for a variance to which one of the following groups? The architectural review board The building department The planning board The zoning board of appeals
The zoning board of appeals
What are the 7 protected classes of people under the federal Fair Housing Act?
There are seven classes of people that are protected by the federal Fair Housing Act: Race Sex Color Familial status (having children under 18) National origin Mental or physical disability Religion
What are the exemptions of paying Transfer Tax?
There are some transfers that do not require payment of the transfer tax. Those include: - Transfers made by operation of law. - Transfers made by lease for a term of years. - Transfers made as a provision of a will. - Transfers made by intestacy (when a person doesn't have a valid will). - Transfers made by gift, or otherwise when no money or other consideration is exchanged for the property. - Transfers made by merger, conversion, or consolidation. - Transfers made by an instrument securing indebtedness.
Marital Life Estates
There are times when a married person owns property solely in his/her own name, and the spouse doesn't have an interest in the property. In North Carolina, when this happens, the property owner dies, and is survived by a spouse, a martial life estate arises by law. Under a North Carolina marital life estate, the surviving spouse can choose to inherit one-third of the value of whatever the deceased spouse owned during the time of the marriage, even if they didn't own it at the time of their death, instead of what they would normally inherit.
What is an Absolute sale at an auction?
There is no minimum sales price. The highest bidder gets the property.
When must a seller respond to an offer by?
There is no specific time period set in statute within which a seller (the recipient of the offer, also known as the offeree) must respond to an offer. Offerors have the option of putting in an expiration date for the offer, by which time the offeree must respond or the offer expires, but otherwise, there is no time constraint placed on the offeree.
Words of Conveyance
These ___________ are contained in the granting clause. Typical wording is "has given, granted, bargained, sold and conveyed" in the case of warranty deeds.
Non-Freehold or Leasehold Estates
These estates are also known as less-than-freehold or leasehold estates. They provide a rental interest in a property. There are four basic types of nonfreehold estates: Estate for years: An estate for a fixed period of time. Estate from year to year: An estate set up for periodic tenancy that automatically renews at the end of each period. Estate at will: An estate that either party may terminate at any time. Estate at sufferance: An estate situation in which tenants fail to vacate the property at the end of their lease.
What does North Carolina license law govern? What are the laws?
These laws govern an agent's behavior to ALL parties in a transaction, not just clients. North Carolina license law stipulates the following duties for agents: - Don't misrepresent material facts, willfully or negligently, to any party in a transaction. Agents have a duty to disclose all material facts about which they have or should be able to attain knowledge in the course of their work. - Don't make false promises that can induce or persuade a party to a transaction, including through other agents, advertising, or other means. - Avoid undisclosed conflicts of interest, such as acting for more than one party in a transaction if the parties don't know or haven't agreed to it, or failing to disclose personal interest in a property. - Properly account for all funds. - Act competently in all agency relationships; don't endanger the interests of the public. - Avoid any other conduct that is improper, fraudulent, or dishonest. - Deliver copies of written agency agreements and transactional documents within three days of receiving them, unless another timeline has been stipulated in a written agreement. - Disclose all commissions, referral fees, kickbacks, and similar payments from third parties.
Why do owners need to be consistent in their enforcement of CC&Rs?
They could lose the right to enforce certain covenants through the doctrine of laches
What must a duel-agent maintain if they represent both a seller and represent a buyer in the same transaction?
They must maintain nuetrality
George and June Dobson are a married couple who bought their home three years ago, though they lived in it for only 18 months before traveling abroad and renting it out. Now they've been offered a price that's $300,000 more than they paid for it, so they've decided to sell. What's true about this situation?
They won't be allowed to exclude the capital gains from the sale when they file their income taxes because they lived in the home for fewer than two of the preceding five years.
The Machinery Act in North Carolina
This act says the following: Individual counties must appraise all property in their county on at least an eight-year schedule (some counties elect to do so on a four-year schedule). This is called an octennial appraisal. Counties can appraise their properties with their own appraisal staff, by hiring an outside appraisal firm, or by hiring consultants to help their staff appraisers. They can also choose any combination of these three choices. Counties can NOT change property tax values during non-appraisal years due to economic fluctuations. Taxpayers may appeal the appraised value of their property during any year of the reappraisal cycle.
What is the (Ho5) "Comprehensive form policy" type of insurance?
This is basically "HO-3 +" as it also covers personal possessions for all perils except those that are excluded. This type of coverage may be obtained by purchasing a HO-3 policy with a "Special Personal Property" endorsement.
Appurtenances
This is one of those tricky terms that can mean more than one thing in real estate. An appurtenance can describe a legal right of ownership or an improvement.
What is amortization?
This is the process of paying off a loan by making periodic payments on the principal and interes
"Run with the land"
This means that covenants move with the tile in any subsequent convergence.
Mechanics Lein
This term is used to refer to a lien that is attached to a property for goods and services provided by contractors, subcontractors, or suppliers to improve a property. The lien is a security interest in the property that ensures that workers get paid before a property can be sold. Mechanic's liens must be filed within 120 days of completing services. Chapter 44A, Article 2, of North Carolina General Statutes specifies the rules that apply to mechanic's liens in the state. This statute applies to residential or commercial projects that cost more than $30,000. Existing owner-occupied single-family homes are exempt.
What are the three apraisal valuation approaches?
Three Valuation Approaches Sales comparison approach Cost approach Income approach
Agents must deliver copies of written agency agreements and transactional documents within how many day?
Three days
Broker Casey received an escrow money check for a purchase after his client's offer had been accepted. In accordance with North Carolina regulations, within how many banking days must the funds be deposited?
Three days
Buyer Jeff is trying to plan out his expenses. The house he's buying has a septic tank, so you tell Jeff that he should plan to have his septic system inspected every ______, and to calculate the cost of the inspection into his budget.
Three years
Most procuring cause disputes can be linked to three basic points
Threshold, the contract, the agency
"Real property or real property improvement in a project which is divided into time shares and designated for separate occupancy and use."
Time Share Unit
"Document(s) transferring a time share or any interest, legal or beneficial, in a time share to a purchaser" (e.g. contract, lease, deed).
Time share instrument
What are "timeshares"?
Time shares provide the right to occupy a specific unit, or one of several units, during five or more separated periods of time over a period of at least five years, and include renewal options.
Christina purchased a house from Thomas. When did she officially gain ownership of the property?
Title officially changes hands with the transfer of deed from the seller to the buyer.
Lien foreclosure sale
Title to real property may be transferred during life by involuntary alienation (against the owners wishes) as a result of a _______________, adverse possession, or condemnation under the power of eminent domain.
Earnest Money
To a trust account Within 5 days Provisional broker delivers to the BIC immediately Big deposits to the trust account within 3 business day
Mutual assent
To create a valid contract, the parties must enter into it voluntarily. The parties must be in mutual assent (agree) to the terms and conditions in the contract.
Jennings has received a Closing Disclosure from his lender. What's the purpose of this form?
To detail all costs owed at closing
A homeowner has $80,000 of principal left to pay on her mortgage. Her home was recently appraised at $156,000, which is $13,000 more than what she purchased it for. How much equity does she have in her home?
To find how much equity she has, subtract the amount she still owes on her mortgage from the appraised value. $76,000
What are the requirements of the Statute of Frauds that must be written in a contract?
To meet the statute's requirements, the written agreement must: Identify the contracting parties. Clearly identify the subject matter of the contract. Present the essential terms and conditions of the contract.
Suit to quiet title
To obtain marketable title to property, claimie must satisfy the court that they have fulfilled the requirements of the adverse possessions in the particular state by ______. If court satisfied, will award title to them under adverse possession.
You notice a possible mold problem the basement of a house your buyer client has made an offer on. The problem area has been covered up by a large rug. If indeed it is a mold problem, it must be disclosed ________.
To potential buyers
What is the primary purpose of license laws?
To protect consumers from unprofessional practices
What are listing agents most generally tasked by the terms of their contract to perform for their seller?
To provide a ready, willing, and able buyer
What is a negotiable note?
To summarize, negotiable instruments may be handwritten, typed, or preprinted. A negotiable instrument is payable on demand if no definite time is stated. The negotiable instrument may not contain any conditions for payment; it must be unconditional. If interest is charged for the money owed, the rate of interest, which may be fixed or variable, must appear either on the instrument itself or be referenced in an associated document. Signatures may be printed or stamped.
Due Diligence Money
To the seller on the effective date Broker just delivers Buyer controls until delivery
What are township lines?
Township Lines: The east to west lines which mark township boundaries.
Traditional Special Assessments
Traditional special assessments allow counties or municipalities to build, extend, or improve such items as: - Water systems - Street lights - Curbs, gutters, and general street improvements - Sewage collection and disposal systems - Systems that control beach erosion or protect against hurricanes
