missed Qs on learn test pass
A broker in North Carolina has a limited listing agreement with the seller to put a for sale sign in the yard, install a lockbox, and enter the property into the MLS. Which of the following is TRUE?
A limited listing obligates the broker to provide full fiduciary duties to the seller A limited service listing limits services provided, but it does not limit the broker's fiduciary duties, the broker's obligation to discover and disclose material facts, or the broker's liability. Brokers that together decide not to show another firm's listings for any reason are participating in an illegal group boycott, which violates the Sherman antitrust laws.
Which of the following statements about listing agreements is TRUE?
A listing agreement must automatically terminate All agency agreements with the owner (seller or landlord) of the property must be in writing from the inception, include the fair housing paragraph, and automatically terminate.
A developer is building 30 homes in a new subdivision. One property is estimated to cost $124,000 to build. Which of the following is TRUE with regard to mechanics' liens in North Carolina?
A lien agent must be appointed within 15 days of the work commencing. Mechanics liens in North Carolina may be able to jump in priority over other recorded liens, depending on the first day that labor or materials were provided to the job. A lien agent must be appointed when work equals or exceeds $30,000. Owner-occupied single-family homes are exempt from mechanics liens, but not from a contractor filing a lien against the property. The contractor must file the lien within 120 days and sue to enforce the lien within 180 days of work ending. Property taxes and local assessments have the highest priority in a lien foreclosure.
According to the North Carolina Tenant Security Deposit Act, what restriction applies to collecting security deposits from tenants?
A maximum of 2 weeks worth of rent may be collected on a weekly lease The security deposit act places restrictions on the maximum, not the minimum, amount of security deposit a landlord may collect. The maximums are 2 weeks of rent in a weekly lease, 1.5 months of rent in a monthly lease, and 2 months rent for any lease greater than a month. The $15 or 5% refers to the maximum placed on late fees. Security deposits cannot be deposited into checking accounts; they must be placed into trust accounts or performance bonds.
Which of the following businesses are NOT required to obtain a firm license?
A sole proprietorship with 10 affiliated provisional brokers. The question is asking which entity requires a license, not which activity would require a broker in charge. All businesses other than sole proprietorships are required to have a separate firm license. LLC's, partnerships and corporations must have a firm license when engaged in real estate activity where they will earn compensation on behalf of another. A BIC is required when money will be held in a trust account, more than one broker is affiliated with the firm (regardless of provisional or non-provisional status), or advertising (signs, business cards, social media posts, orally offering services)
A buyer's agent is required to reveal his/her agency status to the seller or listing agent:
At initial contact A buyer's agent must disclose his or her status the first time that they interact with a seller or seller's agent. The latest time that this can occur is the presentation of an offer, so long as the buyer's agent has not met the seller or seller's agent. First substantial contact relates to the disclosure of the Working With Real Estate Agents Brochure. This brochure must be disclosed at the point that the conversation shifts from facts about the property to personal / confidential information is discussed with the buyer or seller.
A private special assessment may be levied for which of the following?
Beautification of the area by planting crepe myrtle trees Special assessments are limited to specific areas or properties. They generally refer to improvements ordered by the local municipality or HOA. For example, an HOA could charge a special assessment to maintain common elements. The local city could set a special assessment for beautification projects, street lights, sidewalks, and more. Upgrades to a private residence, like pools and fences, are private owner expenses.
Which of the following is a requirement in all agency contracts?
Non-discriminatory language Sales agency contracts must be in writing, contain non-discriminatory language, include the agent and brokerage license number, and have a definite end date. A property manager's agency agreement for leasing is allowed to contain a renewal clause, but sales agreements cannot. While compensation is likely in all agency agreements, it is not one of the requirements per Commission rules. NOTE: When compensation is offered, it must be referenced in the agency agreement. An agent is not obligated to provide a phone number though it is common.
Which of the following agency agreements can automatically renew unless notice to terminate is sent to either party?
Property Management Agreement The property management agreement is the only agency agreement that may automatically renew or be open-ended. The management agreement must have a method of termination in the agreement. The listing agreement must have a definite end date and required to be in writing from inception. The buyer's agency agreement and tenant representation agreement may be oral and non-exclusive; however, it must be reduced to writing no later than the presentation of an offer. A written buyer's agency agreement or tenant representation agreement must have a definite end date.
Which of the following liens have the highest priority if the property is sold to a private party?
Public Special Assessment. Local property taxes and public special assessments are paid first prior to all other liens. The remaining liens are paid in order of recordation - first mortgage lien, federal tax lien, mechanics lien. Note: A mechanics lien can jump back to the first date labor or materials were provided to a job, assuming all other criteria were met (appointment of a lien agent - file lien in 120 days - sue to enforce in 180 days). Private assessments do not receive the special lien priority treatment that public special assessments have; they fall in line with other recorded liens.
Which of the following is an example of a specific lien?
Real property tax lien Specific liens attach to a specific property. Examples include mortgage notes and deeds of trust, real property tax liens, and Mechanics liens. General liens impact everything an individual owns and include Federal income tax liens, State income tax liens, personal property tax liens, and judgments.
An agency agreement will be terminated by which of the following events?
Death of an Independent Broker When an independent broker dies or goes insane, there is an impossibility of performance, which would result in a termination of the agency agreement. Note: When the agency agreement is with a brokerage / firm, the firm can appoint another agent to fulfill the duties. Agency agreements terminate by full performance, expiration, mutual agreement, etc. Damage to a property that is under contract would make the purchase contract voidable on behalf of the buyer. Termination of the purchase contract does not terminate the agency agreement. Constructive eviction terminates the lease agreement, not the property management agreement. When a buyer terminates a purchase contract during the due diligence period, it terminates the purchase contract, not the agency agreement.
Which of the following would terminate an agency relationship?
Death of the client Agency agreements terminate by the death of the client or the firm. They also terminate when a new deed is recorded as the agency relationship is fully performed (closed). Agency relationships are not terminated by the death of listing agent, buyer agent, subagent, BIC, or selling agent.
A provisional broker should do which of the following when listing a townhouse for sale?
Determine an estimate of seller net proceeds at various sales prices. A prudent broker should calculate an estimate of the seller proceeds at various sale prices to ensure that the seller can pay off all liens against the property. Square footage, when represented, should be calculated according to the Commission guidelines. A broker should not use tax records or previous MLS listings to obtain square footage. A buyer owns the airspace of a unit when purchasing a condo, not a townhouse. The WWREA brochure should be signed at first substantial contact, not prior to closing the transaction.
A provisional broker would be responsible for all of the following when working for a client, EXCEPT
Disclosing the presence of a sex offender in the immediate area. The presence of a sex offender in a given area is not deemed a material fact in NC. A broker must timely deliver documents to his/her client within 3 business days and has a duty to ensure that documents have been properly completed. It is important to determine if streets are public or private and if private if there is a road maintenance agreement. A broker should obtain a copy of the septic specifications to ensure that the property is advertised with the appropriate amount of bathrooms.
A non-exclusive buyer agency agreement must be which of the following?
Free from restrictions on whom the buyer may work with Non-exclusive buyer agency means the buyer is free to work with any many agents or sellers as s/he sees fit and is not restricted on the amount of time to work with an agent. Non-exclusive buyer agency may be oral or written in North Carolina. Buyer agency does need to be in writing prior to presenting an offer, however, the written agency could be written non-exclusive or written exclusive; either is acceptable. A buyer may view property an under oral buyer agency agreement.
Which of the following is a duty owed to a customer?
Honesty Agents owe CUSTOMERS three things - honesty, fairness, and disclosure of material fact only. OLD CAR is owed to CLIENTS!!!. The fiduciary duties to the client are obedience, loyalty, disclosure, confidentiality, accounting, and reasonable skill, care, and diligence.
To receive compensation for brokerage services, the recipient must have a license that is current (meaning renewal fee has been paid) and that is on active status.
License pocket cards only indicate that the licensee has paid the necessary fee to renew his/her/its license; it does not guarantee or certify that the license is on active status
Which of the following is a fiduciary duty of a principal-client, but not a customer?
Loyalty A licensee owes HFD - honesty, fairness, and disclosure of material facts to third party/customers. Agents owe their clients OLD CAR - obedience, loyalty, disclosure of all relevant information, confidentiality, accounting of all money, and reasonable skill/care/diligence. An agent owes material fact disclosure to ALL parties in the transaction, including customers.
A broker receives multiple offers on a property that they have listed through an Exclusive Right to Represent listing contract. Which of the following is TRUE?
The broker can request the highest and best terms upon approval from the seller. A broker must deliver ALL offers to the seller immediately but no later than 3 calendar days from receipt. The seller, upon review of the offers, must make a decision on how to respond - accept, reject, counter one offer or call for highest and best. The broker is then directed by the seller. A broker cannot disclose the price or other material terms contained in an offer without the express permission of the buyer that made the offer.
When must a broker on provisional status complete their 90 hours of post-license education to maintain active status?
Within 18 months of license issuance Do not confuse CE with the postlicense requirements. A provisional broker must complete 90-hours of postlicense education within 18 months of license issuance to remain on active status. To remain on active status a newly licensed provisional broker must compete continuing education before their second license renewal.
A buyer makes an oral offer, and the seller unconditionally accepts. The resulting contract is:
unenforecable A valid offer must be in writing. The Statute of Frauds states oral agreements that transfer an interest in real property are unenforceable. While this agreement is technically voidable by both parties, unenforceable is the best answer.
When the question is about the validity of a deed
the deed is not required to be recorded. An unrecorded deed may be unenforceable.
A buyer attends an open house for a property located at 1412 Oak Court. The buyer asks the listing agent about the list price, square footage, and school districts. The listing agent does not review the Working With Real Estate Agent's disclosure (WWREA). Has the broker violated North Carolina License Law or Commission Rules?
.No. convo w the buyer has not reached first substantial contact. FSC is triggered when question shift from facts about the property to personal/confidential information. NOTE: Had the buyer started to discuss how much they were approved for, motivations, timeline or personal circumstances, the listing broker would have to discuss WWREA. WWREA is not required in all real estate transactions (leasing / auctions are exempt). WWREA is required in ALL SALES TRANSACTIONS - whether residential or commercial. The review of WWREA occurs prior to getting an agency agreement in writing. NOTE: A buyer could choose oral buyer agency - which is non-exclusive / open-ended / must be reduced to writing prior to offer. In this circumstance, WWREA should be reviewed and signed prior to providing brokerage services. The buyer is not required to sign - in which case the broker must document the refusal on the signature panel. All documents must be retained for 3 years.
How many days does a broker have to deliver copies of a rejected purchase agreement to the seller?
3 calendar days All documents must be delivered within 3 calendar days to the consumers and the broker in charge. NOTE: We recommend creating note cards to study the days for the delivery of documents, trust account deposits, etc. Make it a habit to state 3 calendar days, when applicable, rather than 3 days as the exam may test calendar, banking, or business days.
How many days does a broker have to deliver copies of a rejected purchase agreement to the seller?
3 calender days. All documents must be delivered within 3 calendar days to the consumers and the broker in charge. NOTE: We recommend creating note cards to study the days for the delivery of documents, trust account deposits, etc. Make it a habit to state 3 calendar days, when applicable, rather than 3 days as the exam may test calendar, banking, or business days.
When a tenant vacates a long-term residential rental, how long does the property manager or property owner have to account for the security deposit?
30 days, or with written notification during the 30 days, a maximum of 60 days 30 days is a good answer unless the landlord notifies the tenant in writing during the 30-day window that he needs more time. The maximum with written notice given is 60 days. NOTE: You must select the most right answer.
When a tenant vacates a long-term residential rental, how long does the property manager or property owner have to account for the security deposit?
30 days, or with written notification during the 30 days, a maximum of 60 days.
Which of the following statements about land use controls is accurate?
A broker is expected to be able to recognize situations where a buyer may need to further investigate the property prior to purchase based on the buyer's proposed use. A broker should be able to identify "red flag" situations where a buyer has stated his/her intended use which may or may not comply with restrictive/protective covenants or zoning laws. When an owner seeks a minor change to the property - addition parking spaces / lower setbacks - they will seek a variance. When an owner seeks a change in use they would need to seek rezoning. A special use permit is something that has already been provided for in current zoning - which allows a developer to get quicker approval when meeting the requirements of the special use permit - typically something for the public good. Covenants are appurtenant - they run with the land - and the new owner is bound to follow them.
CAN-SPAM laws require which of the following?
A prominent opt-out from receiving future marketing CAN-SPAM requires unsolicited marketing emails have a header that matches the body of the email, a physical address, and the ability to opt-out or unsubscribe. The Do Not Call registry must be checked once a month and relates to phone calls, not emails. Junk Fax laws require a prominent opt-out from receiving future unsolicited faxes. Junk Fax laws do not address exemptions for past business relationships or initial inquiry. NOTE: Read carefully as examiners tend to mix the laws. Answer the question for the applicable law.
Regarding BPO's (Broker Price Opinions) all of the following statements are correct EXCEPT:
A provisional broker may prepare a BPO for a lender, for a fee, so long as they are supervised by the broker-in-charge. A provisional broker cannot complete a BPO for a fee. A full broker can complete a BPO for a fee. The BPO must contain language indicating that the bank cannot use the BPO for the purpose of originating a debt. A BPO is typically performed for a lender, while a CMA is typically performed for a buyer or seller. Both calculate the probable sales price for a property and the price is often reported as a range.
A provisional broker is working for a buyer with a written agency agreement and acting as a designated agent. The listing agent may be which of the following?
A provisional broker of the same firm Designated agency is a form of dual agency that occurs only on in-house sales. A broker from a different firm cannot act as a dual or designated dual agent for another firm. A provisional broker may be designated to represent one party to the transaction while a full broker represents the other party's interest. The only limitation is that the BIC act as a designated agent opposite a provisional broker.
With regard to Ad Valorem taxes, which of the following statements is TRUE?
Ad Valorem tax rates are determined by dividing the city or county's annual budget by the overall assessed value of real property within the city or county. The tax rate is based upon the city or county budget and may be adjusted every year. The assessed value must be adjusted every eight years, however may be adjusted every year (octennial reappraisal). Ad Valorem taxes are a specific lien against real property, and have the highest priority over other recorded liens.
Which of the following is NOT required by North Carolina Real Estate Commission rules for exclusive agency contracts?
Agency agreements must include the signature of the firm's Broker-in-Charge on all agreements signed by a broker on provisional status ] Agents, including PBs, act as general agents of the firm and are given the right to sign on behalf of the firm to enter into agency agreements. All remaining options are true and are spelled in Commission rule 104 (NCAC 58A .0104). An agreement that seeks exclusivity must be in writing, provide a definite end date, contain the anti-discrimination language and the disclosure of the broker's license number.
Which of the following statements is TRUE regarding Timeshares in North Carolina?
All time share brokers must have an active real estate license to earn compensation. In order to sell time shares, a broker must hold an active real estate license - there is no separate time share license. Time Share Developers are required to register the Time Share Project, however that has nothing to do with the Developer having a real estate license; In fact, most developers do not have a real estate license. Time Share instruments should be recorded after the 10-day period has expired. It is important to recall 5/5/5/10 in relation to time shares. In order for interval ownership to be counted as a time share it must be 5 or more non-consecutive periods, over at least 5-years, the purchaser has 5-days to rescind the contract and the developer must retain the funds in escrow for 10-days (unless the buyer has rescinded the contract). The timeshare Developer may be fined $500 per violation of the Timeshare Act, which is the only instance that the Commission can fine.
Which of the following statements regarding agency agreements is CORRECT?
All written agency agreements must provide for a definite end date except for the property management agreement which can automatically renew Property management agreements can include an automatic renewal clause. All other written agency agreements must provide for a definite end date. Oral buyer agreements must be non-exclusive, open-ended and reduced to writing prior to presentation of an offer. Oral agreements have to include agreements about compensation and agency representation. Agency agreements must include the non-discrimination language and disclosure of the agent's license number. A listing agent working "with" a buyer only represents the seller, however would have to disclose WWREA at first substantial contact. Initial contract relates to a buyer's agent disclosing his/her status to the seller or seller's agent at first contract which can extend all the way to submission of an offer. A broker acts under General Agency and has the ability to bind the firm to listing / buyer agency agreements without needing the signature of the BIC.
Which of the following would trigger the need to have an active real estate license?
An assistant that shows property for lease and sale to clients or customers An unlicensed assistant can show a property for rent, however, they cannot show a property for sale. The assistant will need an active license to show the property for sale. The license trigger event is earning compensation on behalf of another. There are no exceptions when working for friends and family. When a family member is NOT receiving compensation for managing property for a family member, there is no license triggering event. A free apartment is considered compensation. W-2 employees that are acting on behalf of his/her employer is exempt from licensing requirements. The tenant receiving 2-months of free rent is not earning compensation on behalf of another, so no license is required. An attorney does not need a real estate license when being paid to settle an estate. The mere crier of a sale at an auction and assistants in many circumstances are not required to be licensed.
Which of the following is TRUE regarding an agent's obligation regarding agency disclosure?
An auctioneer who sells real property is exempt from the agency disclosure obligations regarding agency status to bidders at an auction sale Auctioneers are exempt from the normal agency disclosure to buyers due to the peculiarities of an auction sale where it would be impractical to review the Working with Real Estate Agents brochure with every bidder. WWREA is not required in ALL real estate transactions but it is required in ALL real estate SALES transactions. The exemption for new home sales extends to corporate employees, not agents acting as independent contractors, therefore the WWREA must be reviewed with potential buyers. A buyer's agent must disclose his status to the seller/listing agent at initial contact (this is the only case where initial contact comes up). The latest point that initial contact can occur is the presentation of an offer. An agent designated for the buyer should disclose his name to the seller no later than the first offer to purchase.
Which of the following is TRUE regarding an agent's obligation regarding agency disclosure?
An auctioneer who sells real property is exempt from the agency disclosure obligations regarding agency status to bidders at an auction sale WWREA is not required in ALL real estate transactions but it is required in ALL real estate SALES transactions. The exemption for new home sales extends to corporate employees, not agents acting as independent contractors, therefore the WWREA must be reviewed with potential buyers. A buyer's agent must disclose his status to the seller/listing agent at initial contact (this is the only case where initial contact comes up). The latest point that initial contact can occur is the presentation of an offer. An agent designated for the buyer should disclose his name to the seller no later than the first offer to purchase.
A landlord grants the right to his cousin to stay in his rental property until the State completes the condemnation process for taking the property. This scenario is likely
An estate at will An estate at will allows someone possession of a property for a non-specific period of time and could be without a defined rental payment. An estate at sufferance occurs when a tenant has held over without permission. An estate for years is a fixed-term lease where the lease ends on a specific date without the opportunity of renewal.
Which of the following statements is CORRECT regarding license status?
An initially licensed broker will hold an inactive license until the Commission is informed of their affiliation with a broker-in-charge. A BIC is responsible for all advertising. A BIC is responsible for 3 A's and 2 T's for all affiliated brokers (provisional and non-provisional), agency, advertising, active status, trust accounts, and transaction files. The BIC must directly supervise all provisional brokers. Delegation is possible for some tasks; however, ultimately, the BIC is responsible. The BIC needs to ensure that all affiliated brokers are on active status - renewed his/her license and completed the required education; however, the broker/entity take the actions to renew. The individual licensee is required to notify the Commission within 10-days of name or address change. A brokerage is not required to maintain a trust account unless the services offered require one (property management). The broker / BIC cannot decide who has the highest claim to the disputed earnest money. Earnest money is released when the transaction closes, the buyer and seller mutually agree to the release, court order, or transfer to the clerk of courts in the county where the property is located.
Which of the following is a material fact?
Any restrictions that would interfere and not allow an 8-foot fence needed for the buyer's dog "Material facts" under the Real Estate License Law historically include facts about the property itself (defects like a leaky roof), fact relating directly to the property (such as a highway extension pass through the property), facts relating to the party's ability to complete the transaction, and items of special importance (such as a buyer's stated need to be able to construct a fence of a certain height). Stigmatizing factors are not a material fact in North Carolina. This includes paranormal activity, the presence of sex offenders, and death in any manner. The seller's financial distress is confidential information that a listing agent should not disclose.
Which of the following activities would increase the equity in a property?
Appreciation to the property due to favorable market conditions in an area Equity is the difference between market value and the amount owed, so therefore an increase in value due to appreciation would increase equity. Other things that increase equity are paying down one's debt on a property and adding a needed capital improvement. Paying the interest only on the loan and maintaining a property hold value but do not increase the value. Depreciating a property is a tax concept and does not affect the actual value
Which of the following is a responsibility of a broker-in-charge?
Approving advertising for provisional and non-provisional brokers A BIC is responsible for all advertising. A BIC is responsible for 3 A's and 2 T's for all affiliated brokers (provisional and non-provisional), agency, advertising, active status, trust accounts, and transaction files. The BIC must directly supervise all provisional brokers. Some tasks can be delegated; however, ultimately, the BIC is responsible. The BIC needs to ensure that all affiliated brokers are on active status - renewed his/her license and completed the required education; however, the broker/entity is required to take the actions to renew. The individual licensee is required to notify the Commission within 10-days of name or address change. A brokerage is not required to maintain a trust account unless the services that are being offered require one (property management). The broker / BIC cannot decide who has the highest claim to the disputed earnest money. Earnest money is released when the transaction closes, the buyer and seller mutually agree to the release, court order, or transfer to the clerk of courts in the county that the property is located.
A buyer's agent is working with a buyer under a written buyer agency agreement on an in-house sale. When must the buyer's agent have written consent for dual agency from the buyer?
Before the buyer's agent shows any property listed with her firm A buyer may orally agree to representation and orally authorize dual agency. The agreement may remain oral up to the presentation of the offer. NOTE: A buyer may subsequently agree to dual agency. When the buyer's agency agreement is oral, a subsequent authorization may be oral. When the buyer's agency agreement is written, subsequent authorization must be in writing. NOTE: If the buyer's agent seeks exclusivity, the buyer's agency agreement must be reduced to writing. Once the buyer's agency agreement is reduced to writing, dual agency authorization must be reduced to writing. Dual agency must be agreed to before showing any property listed with the firm to a buyer client.
A listing firm has multiple offices, where one broker from location A has a listing agreement, and a broker from location B has a buyer client with a buyer agency agreement. What type of agency are the firm and all brokers practicing if the buyer wants to view the listed property?
Dual agency This is an example of dual agency, and the buyer and seller are represented by one firm with multiple locations. Dual agency occurs when both the buyer and seller are represented by the same firm (by one or more agents). Exclusive agency indicates that the firm represents only one party to the transaction. Transaction brokers do not represent the buyer or the seller, instead acts as a neutral resource to assist both the buyer and seller in the sale of a home. NOTE: In some states, a licensee acts as a transaction broker unless a written agency agreement is signed. Transaction brokerage is not permitted in North Carolina.
Which of the following statements is TRUE about the North Carolina Residential Property Disclosure form?
If the buyer rescinds the contract within the allowed time period, all deposit money, including the due diligence fee will be refunded to the buyer. A buyer has the right to terminate the contract and receive a refund of EMD/DDF when termination occurs by the EARLIER of: 3 calendar days from receipt, 3 calendar days from the effective date of contract or occupancy by the buyer. A broker must disclose what they know or what they reasonably should know about a property. Nothing can relieve this duty. A seller may mark "no representation" on the disclosure for even if they know that something is wrong with the property. The seller cannot take action to conceal the problem from a buyer or the buyer would be entitled to sue the seller. The disclosure is required in transaction with and without the use of a real estate agent. New construction, foreclosures, transfers among related parties, or when the buyer already has possession of the home are exempt from the disclosure requirement.
Jane is a provisional broker affiliated with XYZ Realty. Tom, who is also affiliated with XYZ Realty, takes a listing. Jane holds an open house and locates a potential buyer that is considering an offer. In this instance:
Jane will act as a subagent of the seller unless dual agency is authorized. Jane is automatically a subagent to the seller, as she is affiliated with XYZ Realty. When Tom signs the listing agreement, binding the firm, all agents of the firm represent the seller. Jane cannot act as an exclusive agent for the buyer, as XYZ Realty already has the listing. XYZ Realty will have to work under dual or designated dual agency if they represent both the buyer and seller in the transaction. Transaction brokerage is not permitted in North Carolina; a broker must represent at least one party to the transaction. A BIC and PB cannot act as designated dual agents. The limitations for designated agent: No BIC & PB and No P&C. Designated agency is not allowed when one agent is the broker-in-charge, and one agent is on provisional status. Also, the agents cannot have personal & confidential information about the other party.
A broker in North Carolina creates My Commissions, LLC for the sole purpose of collecting compensation the broker earns as an agent for ABC realty. The broker is the only member and the manager of the LLC. Which of the following is TRUE?
My Commissions, LLC will require a firm license and a qualifying broker A firm license is required when a broker creates an entity. A partnership, limited liability company, or a corporation all require a firm license. A firm license requires a non-provisional broker license on active status. A qualifying broker is not required to be the broker in charge, nor be qualified to be a broker in charge. A Firm with only one broker for the sole purpose of collecting compensation is not required to have a broker in charge.
A broker is representing a buyer that seeks to purchase a new home. The broker wrote an offer for the buyer while his license was on active status. When the seller accepted the offer, the broker's license was on inactive status. Is the broker entitled to compensation?
No. The compensation must be earned while the broker has an active license. A broker may still be paid a commission when his/her license is on inactive status - only when the compensation was earned while on active status and the broker did not provide any services while inactive. Compensation is earned when a buyer or seller enters into a legally binding contract and is payable upon closing or breach.
A brokerage has advised all agents within the firm to avoid showing property listed by a company that charges a flat fee commission. Is this practice in compliance with law and rules?
No. This is a violation of the federal antitrust laws. Price fixing and boycotting are not permitted under the Sherman Antitrust Act. The brokerage can set policies and procedures, however they must be legal.
A broker prepares and presents an offer on behalf of a buyer client. The seller unconditionally accepts the offer, except for the date the buyer must pay additional earnest money. Which of the following is TRUE?
The offer is rejected, and the offeror has made a counteroffer
A broker has retired after 40 years in the residential sales business and has allowed his license to go inactive. Occasionally a former client will reach out for assistance and is referred to an active broker in the area. Once a referred transaction is closed, and a commission is paid, the active agent sends a thank you note and a gift card to the retired broker. Which of the following is TRUE?
Referral fees of any amount require a license on active status. ACTIVE IS KEY To legally be paid for a brokerage activity, an active license is required. Even a nominal amount, including a gift card. Inactive or expired licensees should not be paid referrals fees. Remember earning compensation (a dime, a dollar, or a donut) on behalf of another is a brokerage activity and requires a license on active status.
Which of the following is considered material fact in North Carolina?
Synthetic stucco, even after removal The NC Real Estate Commission states EIFS, or synthetic stucco, is always a material fact even after that exterior siding is removed. Poly pipes become a material fact once they've been compromised, or leaked. Radon is material fact at 4.0 picocuries or greater. The mere presence of a radon mitigation fan is no longer material fact as of 2010 due to the prevalence of many new home builders preemptive installing them.
A broker has a written buyer agency agreement, including a 3% commission. The broker takes the buyer to a property listed in the MLS that is offering a cooperating buyer agent a 3% commission plus a $1,500 bonus. When must the buyer agent disclose the $1,500 bonus to the buyer client?
The bonus must be disclosed before the buyer makes an offer A broker must disclose to a client all compensation anticipated before the client makes an offer. The client should know how much and what the bonus is for before they make an offer.
A broker that specializes in residential sales for ABC Realty, and agrees to help a seller in distress procure a tenant for a property that has been on the market for an extended period . The broker has the tenant make the rent check payable to the landlord, and the broker gives the tenant keys to the property and delivers the rent check directly to the owner. Which of the following is TRUE?
The broker is in violation of commission trust account rules'' A broker must deposit all funds collected on behalf of others for properties for sale or lease into a trust account. The only exceptions are the due diligence fee paid by means other than cash made payable to the seller and earnest money paid by means other than cash payable to the closing attorney. The broker in charge is strictly responsible for the trust funds.
A broker has an oral buyer agency agreement for 30 days. The broker shows many properties to the buyer and reduces their oral agreement to writing before presenting the first offer. Which of the following is TRUE?
The broker is in violation of the NCREC rules and is not entitled to compensation Oral agency agreements must be non-exclusive and contain no end date. This agreement is in violation of NCREC rules because it is for 30 days. IF a broker wants the buyer to be obligated for a time the agreement MUST be in writing. A non-exclusive agreement must be reduced to writing before the presentation of the offer.
A broker is representing a buyer seeking a new home. One builder is offering a $10,000 bonus when a broker sells 3 homes in one year in the neighborhood. What is the latest point for the broker to disclose this to the buyer?
The broker must disclose in writing prior to presentation of the first offer. A broker must timely disclosure additional compensation which may be verbal - no later than the buyer considering an offer. Written disclosure must occur before an actual offer is presented to the seller. Each buyer needs to be timely informed about the bonus being paid by the 3rd party, even though the payment is authorized in the Buyer Agency Agreement.
A broker discovers a seller client who owns a property in severalty recently married. Which of the following statements is TRUE?
The broker should notify the seller that the new spouse must sign to sell for marketable title. when married: 2 to sell 1 to buy
A broker on provisional status has a listing at 123 Elm Street in a very desirable neighborhood. His broker-in-charge represents a buyer who becomes interested in the listing. The brokers may legally proceed with which of the following actions?
The brokers representing must act as dual agents in this particular transaction. Dual agency is always an option (with the informed consent of the parties) for in-house sales, where the buyer and seller are represented by the same firm. Designated dual agency cannot be practiced by a provisional broker representing one party and his/her BIC representing the other party. While it is possible to terminate agency, it makes no sense as the buyer would lose representation and any personal information learned about the buyer would have to be disclosed to the seller. BICs can practice designated agency with brokers that are not on provisional status. An easy way to remember the limitations placed on dual agency is "No BIC and PB and Not P&C". A BIC and provisional broker cannot act as designated agents. Having personal or confidential information about the other party would prevent designated dual agency.
A buyer and seller enter into a lease with an option to purchase. Which of the following is TRUE?
The buyer and seller have entered into two different contracts, and a broker should consult an attorney A lease with an option to purchase is a complex transaction where the buyer is a tenant with possession, and the seller is a landlord with an obligation to maintain the property. The tenant also has an option (the choice) to buy or not. The seller holds title to the property until the buyer exercises the option. The terms of the purchase should be included in the option agreement. An attorney is required to tie the two contracts together and draft the option.
A buyer makes an offer using a buyer's agent. The buyer's agent delivers the offer to the listing agent of the same firm. The listing agent and the seller meet to discuss the offer, and the seller accepts the offer as written. Before communication of acceptance to the buyer, the buyer calls to withdraw the offer. Which of the following is TRUE?
The buyer may not withdraw the offer When the seller unconditionally accepts the offer and communicates with a dual agent, the agreement is a binding contract. When you communicate with a dual agent, you are communicating with the buyer and the seller. Notification of acceptance to the buyer when forming a legally binding contract is only required when the buyer has no representation.
A subagent of the seller from ABC Realty makes an offer on behalf of a customer. The seller accepts the offer and communicates acceptance to the listing agent. The listing agent notifies the subagent. Meanwhile, the buyer calls the subagent and leaves a voicemail withdrawing the offer before the buyer is told the seller has accepted. Which of the following is TRUE?
The buyer may withdraw the offer An offer may be withdrawn at any time before acceptance. To have a binding agreement, the seller must unconditionally accept the offer, and acceptance must be communicated to the buyer or the buyer's agent. A buyer working with a subagent is unrepresented. An unrepresented buyer must be communicated directly to form a legally binding contract. Communication must make it to the other side, and communication with a subagent remains on the seller's side.
All residential listing agreements must contain which of the following?
the fair housing paragraph All listing agreements must be in writing from the inception and must include the Fair Housing paragraph and automatically terminate. Automatic renewals are strictly prohibited.
When using the NCAR/NCBAR standard Offer to Purchase, the buyer will be entitled to a refund of the earnest when the following occurs?
The buyer terminates the contract in writing before 5 pm on the due diligence date The NCAR offer to purchase dictates when the buyer is entitled to a return of the earnest money. When the buyer terminates the agreement in writing before 5 pm on the due diligence date, or "by the date," the buyer is entitled to a refund. NOTE: The seller retains the due diligence fee. The Due diligence fee is paid by the buyer, so that the buyer can terminate the contract for any reason or no reason at all. NOTE: The Standard 2-T OPC is NOT contingent upon financing or appraisal.
A buyer terminates a contract after the due diligence period has ended due to an issue discovered during an inspection. The buyer and seller will not agree to the release of the earnest money held by the listing firm since both feel that they should get the money. Which of the following statements is TRUE regarding the retention of the records?
The buyer's agent must retain the records for at least 3 years from the date the contract was terminated. The buyer's agent clock to retain records begins when the contract terminates as this would be the date of last activity for them. The listing agent's clock does not start until the funds have been released from the escrow account - either through mutual agreement, court order or after 90-days notice - the transfer to the Clerk of Courts.
When a firm offers to represent both the buyer and the seller in the same transaction, which of the following statements is TRUE?
The firm must have the informed consent of all the parties before engaging in dual agency. Dual agency occurs when one firm has a listing agreement with a seller and a buyer agency agreement with a buyer in the same transaction. One broker may act as a dual agent for both. Do not confuse Dual agency with Designated dual agency. Only designated dual agency limits the BIC. In a straight dual agency transaction, the BIC and provisional broker must keep confidential information about both sides confidential. You must have informed consent for dual agency from all parties in advance.
Broker A represents a buyer, and Broker B represents a seller, as exclusive agents in a purchase transaction. What information may Broker A disclose to Broker B and the seller in the transaction?
The lender has denied the buyer financing; however, the buyer is pursuing other options It is a material fact that the buyer has been denied financing. A broker must disclose this information regardless. Material fact disclosure is required for all parties in the transaction. The exclusive buyer's agent has a duty to conceal confidential, personal information about the buyer, such as the ability to pay more, time constraints, or the buyer's intention to seek rezoning for the property.
A seller is in a rush to get his property on the market, and the listing agent is attempting to make reasonable accommodations by placing the sign in the yard and a lockbox on the door today, but the listing agreement will not be signed until in the morning. Which of the following is TRUE?
The listing agent is in violation of NCREC rules NCREC rules require written listing agreements before providing any services to the owner of the property. Services include signs and lockboxes
When a listing broker misrepresents the property condition to a potential buyer, who is liable for the misrepresentation?
The listing agent, the listing firm, and the seller Remember, the principal is ultimately liable for the actions of the agent. 1 and 3 are correct. The best answer is 4. Absent red flags, the buyer agent is not liable for the misrepresentation of the listing agent.
Real estate agents should carefully follow the guidelines set out in the Residential square footage guidelines brochure. Which of the following statements is CORRECT regarding living area?
The lowest height that can be included in living area is five feet when other criteria are met. In order to be counted as living area the space must be heated, finished and directly accessible. Note that the space does not need to be air conditioned. The ceiling must be at least 7 feet tall unless there is a duct or beam, which allows the height to change to 6 ft 4 in. A room with sloped ceilings must have 50% or more of the space at with at least 7 ft ceiling height to be included in the living area, and then the broker can include in the square footage to where the ceiling height is five feet.
A property manager uses judicial means to remove a tenant from a property for non-payment. Which if the following statements is TRUE?
The property manager must give an accounting of the trust funds within 30-days of termination of the lease. Under the Tenant Security Deposit Act, a property manager must give an accounting of the funds within 30-days of termination of the lease. This can be extended by providing an initial accounting in 30-days and final accounting in 60-days. The summary ejectment case is heard by a magistrate in small claims court. The property manager must follow the law and cannot self-help by changing the locks and removing property until property notice has been provided. Eviction, whether actual eviction by the property manager or constructive eviction by the tenant terminates the lease agreement, not the property management agreement.
Which of the following statements is most accurate regarding the Exclusive Right to Sell Listing Agreement?
The seller has no legal right to terminate the listing agreement during the term of the agreement It is true that a seller has no legal right to terminate during the term of the listing agreement. The seller may fire the listing agent, but s/he would be in breach if the agent is performing in accordance with the terms of the contract. Listing agents may be paid in 2 circumstances beyond the end date of the listing agreement: under the provision of the "extender clause" and if the buyer was procured during the listing agreement but did not close until after the end date. Listing agreements, by rule, cannot automatically renew.
A seller enters into an Exclusive Agency Listing Agreement with ABC Realty. The seller advertises the property on social media and locates a buyer for the property. Which of the following is TRUE?
The seller is not obligated to pay compensation as ABC Realty did not procure the buyer. Under an Exclusive Agency Listing, ABC Realty competes against the seller to find a buyer. The seller is only obligated to pay ABC Realty if the firm locates the buyer. NOTE: Many students read the Exclusive Agency Agreement and mistake it for the Exclusive Right to Sell Listing Agreement. With an Exclusive Right to Sell Listing Agreement, the seller is obligated to pay ABC Realty no matter how the buyer is procured.
A buyer is working with a subagent at ABC Realty. The buyer makes an offer on a property listed with XYZ Real Estate. The buyer and seller negotiate back and forth and finally make an oral agreement for the purchase. The subagent from ABC Realty prepares the paperwork with one minor change, then the buyer signs everything, including the agency disclosure form. The listing agent takes it to the seller, and he accepts the terms, including the minor change. Which of the following is TRUE?
The subagent is in violation of Commission rules The subagent is in violation of license law for failing to provide the at first substantial contact with the buyer. Having the agency disclosure form signed at the time of the offer is a violation of NCREC rules. WWREA disclosure form must be presented at first substantial contact. The latest point for this to occur is prior to showing a house to a buyer. However, this violation has nothing to do with the contract between the buyer and seller. The buyer's minor change is a counteroffer. The seller has accepted the buyer's new offer, but the acceptance has not been communicated to the buyer, so there is no contract.
A property owner wants to build a house on the only lot in a subdivision that has .98 acres. Under current zoning rules, lots must be at least 1 acre. The owner should request:
Variance A variance requires a hardship, and is a minor change in a rule (additional parking, smaller set back from the road), and not a change in use, which would require rezoning. Rezoning is a major change that changes the use of the property. A special use permit is used for anything that is good for the community.
A broker is representing a client at the settlement meeting under the standard NCAR Exclusive Buyer Agency Agreement. Which of the following would the broker be responsible for at the settlement meeting?
Verifying the accuracy of the contract terms on the closing disclosure Brokers are responsible for the accuracy of the Closing disclosures to the extent that they can verify. This would include any items that are memorialized in the contract, which is the best resource to use to determine accuracy. Brokers do not sign closing documents (which could include loan documents) without a Power of Attorney. The buyer would not receive the keys at settlement as this is just the signing of documents, the transfer would occur after closing (recording where cash and keys change hands). The attorney is responsible for notifying the IRS about the property transfer.
A broker with three pending transactions regretfully informed his BIC that he failed to take CE on time and is now inactive. The BIC takes over the three pending transactions. One contract closes the next day. Can the BIC pay the inactive broker?
Yes. So long as the broker immediately ceased all brokerage activity, then the BIC could choose to still pay him. Inactive and expired brokers are allowed to receive compensation for services they rendered while active. However, if these brokers render any brokerage services while inactive or expired, then they forfeit their claim to legal compensation. BICs are not required to pay compensation to brokers no longer affiliated with the brokerage. It is important to read the independent contractor agreement.
A licensee is preparing to list a property for sale. The CMA indicates a probable sales price of $175,000. The seller says he wants to list the property for $140,000. The licensee offers to purchase the lot for $140,000 without disclosing the CMA, which the seller accepts. Is the broker subject to discipline?
Yes. The courts can force the broker to pay the seller $35,000, and the Commission may revoke the broker's license. The broker has violated his/her fiduciary duties to the seller. The Commission can close & warn, reprimand, suspend or revoke a broker's license. The Commission cannot force a broker to repay a client. Only the courts can enter a judgment against a broker, file a writ of attachment to seize assets, and order a writ of execution to force the sale. The listing agent acts as a special agent with no decision making authority, however, must fulfill his/her fiduciary duties. The listing agent must advise the seller about the probable sale price. Embezzlement occurs when a broker steals or misappropriated the funds of another.
A buyer wants to make an offer on a property that is already under contract. In the buyer's offer the broker should include:
a back-up contract addendum When a property is already under contract, the broker should include a back-up contract addendum in the offer. This allows either party to terminate the contract until the back-up is notified that the primary contract has failed. The short sale addendum is used when the seller lacks the funds necessary to pay off existing debts and must seek bank approval to release the lien against the property. The additional provisions addendum addresses time limits for the seller to accept the offer, property subject to lease agreements, and repairs agreed to in advance. The standard 2-T offer to purchase and contract is NOT contingent upon financing and there are no standard addenda to address this issues (NOTE: This can be tested on the National portion of the license exam). The broker would need to refer the buyer to an attorney to prepare one to avoid being guilty of drafting.
With regard to tenant security deposits, all of the following statements are correct, EXCEPT:
a property management company is required to have all security deposit funds deposited in a trust or escrow account or be bonded. A licensed property management company is not allowed to be bonded and therefore would be required to have a trust or escrow account. The trust / escrow account must be in an insured bank that is approved to do business in North Carolina and agrees to make records available to the NC Real Estate Commission upon request. Note that the account can be with a virtual bank so long as it has been approved to do business in North Carolina.
Provisional Brokers. To have an "active" license
a provisional broker must renew his/her license in a timely manner and complete eight hours of continuing education, including the mandatory Real Estate Update course; however, unlike a full broker, the provisional broker must also be affiliated with a broker-in-charge in order to have an "active" license. A provisional broker can pay the renewal fee each year and complete the required CE by June 10 of each year, but his/her license will still be on inactive status until such time as s/he finds a broker who is willing to act as the provisional broker's broker-in-charge
A buyer's agent is working with an oral buyer agency agreement. When shall the buyer's agency agreement be reduced to writing?
before the preparation of an offer. A buyer's agency agreement may be oral in North Carolina up to preparation of the offer. It is advisable to get the buyer's agency agreement in writing up-front before rendering any services, but the last minute is before the presentation.
Which of the following would terminate an agency relationship?
death of the client Agency agreements terminate by the death of the client or the firm. They also terminate when a new deed is recorded as the agency relationship is fully performed (closed). Agency relationships are not terminated by the death of listing agent, buyer agent, subagent, BIC, or selling agent.
What terminates an offer?
death of the offeror Rescission of an offer prior to acceptance, expiration of an offer, expiration of a reasonable time period, a counteroffer, death of the offeror or offeree, and rejection of an offer all kill an offer. Death of the firm kills agency. Death of the seller's agent kills the independent contractor agreement with the firm but not agency.
A provisional broker is representing a builder that plans to build 200 homes in a new home subdivision. A reasonably prudent broker should:
determine if any homes are located in a flood hazard area. When any portion of a property is located in a flood zone, it is a material fact that must be disclosed to all parties to the transaction. New homes are exempt from RPOADS (Residential Property and Owner Association Disclosure Statement), however, are not exempt from MOG (Mineral, Oil and Gas). It is a material fact if roads will be public or private and a broker should disclose a road maintenance agreement. A road maintenance agreement is not required by law. Homes in a new subdivision may be offered for sale upon receipt of preliminary approval. A buyer cannot close on the purchase until final approval.
The most common insurance policy for a single family residential home does not cover:
flood damage. A Homeowner policy does not cover flood damage. An owner will need to purchase flood hazard insurance. It is a material fact that the property is located in a flood hazard area and a lender may require flood insurance, especially when the property is located within the 100-year flood plain (designated as 1% risk of flood). The typical homeowner policy covers damage to the structure as well as liability coverage when someone is hurt at the property.
A buyer signs a copy of the Vacation Rental Addendum that is included in an Offer to Purchase and Contract. The buyer's agent:
has 3 calendar days to deliver a copy to the buyer. A broker has a duty to deliver any written agency and transaction documents within 3 calendars days of the broker's receipt of the executed (signed) documents. The broker must give the buyer a copy of any documents the buyer signs within 3 calendar days. An offer may be accepted and verbal notice may be given to form the legally binding contract. The broker has a duty to deliver a copy of an executed offer within 3 calendar days of receipt. The question is silent as to the receipt of the signed contract - it only states that the offer has been accepted. It does not matter what transaction document has been signed by the client, a copy must be delivered within 3 calendar days to the client and the Broker-in-Charge.
In the North Carolina Association of REALTORS® and North Carolina Bar Association joint standard offer form 2-T, closing is defined as:
recording of the deed. In standard form 2-T, closing is the recording of the deed. The grantor (seller) signs the deed and delivers it to the grantee (buyer) at the settlement meeting. Still, the transaction is not closed until someone, usually the buyer's attorney, records the deed.
A licensed property manager enters into a property management agreement where the seller agrees to rent her 2-bedroom units for $1,200-$1,300 per month. The property manager advertises the rent at $1,300 per month. An unlicensed assistant shows the property for rent to a prospective tenant and the tenant asks to rent the property for $1,200 per month. The unlicensed assistant:
must refer the prospective tenant to the licensed broker to negotiate the rental rate. An unlicensed assistant acting under property management is not permitted to negotiate rental rates. They are permitted to show property that is for rent, fill out pre-printed forms, collect rent, etc. The unlicensed assistant is not permitted to meet with the property owner to enter into a property management agreement. The Residential Rental Agreement Act outlines the mutually dependent duties of the landlord and tenant.The landlord must provide safe, fit and habitable premises, while, the tenant must pay rent and not damage the property.
Oral buyer agency is:
non-exclusive agency Oral buyer agency is a non-exclusive agency agreement, where the buyer-client is free to enter into multiple agency relationships. Oral buyer agency is express (agreed to) even though it is verbal. This means all terms of the fiduciary relationship must be discussed (compensation, dual/designated agency authorization, etc.). Oral buyer agency may or may not authorize dual or designated agency. There is insufficient information in the question to select either as the answer to this question.
The Residential Rental Agreement Act:
outlines the statutory duties of the landlord and tenant. The Residential Rental Agreement Act applies to residential transactions. It does not apply to commercial deals, therefore, does not apply to all leasing transactions. The Tenant Security Deposit Act requires that a security deposit be held in a trust or escrow account, or for a non-broker owner the ability to be bonded. The Federal Fair Housing Act prevents discrimination on the basis of handicap and ADA does not permit discrimination for service animals.
The NCAR Property Management Agreement:
permits the property manager to prorate rent when a unit is not habitable. The property management agreement outlines the duties and responsibilities of the property manager and the property owner. The property manager may prorate rent when a unit is damaged and is not inhabitable. The owner agrees not to enter the property without contacting the property manager so that proper notice can be provided to the tenant. The owner may set the amount of rent, length of time to enter a lease, etc., however, the standard agreement does not restrict the amount of time. A property manager does not have the authority to make changes to the property without the owner's permission. The property manager has a duty to advise the seller about improvements, especially if the changes will lower the amount of rent that can be charged.
A broker must enter into a written agency agreement with a buyer no later than:
preparation of a written offer to purchase. A broker may work with a buyer client with an express oral agreement. Before the preparation of an offer, the buyer agency agreement must be in writing. The new Working With Real Estate Agents Disclosure states: "You may begin with an oral agreement, but your agent must enter into a written buyer agency agreement with you before preparing a written offer to purchase or communicating an oral offer for you."
An agent is working under an oral buyer's agency agreement. The agent knows the buyer is strongly interested in one of the homes seen by the buyer. The buyer is ready to write the offer but refuses to sign a buyer's agency agreement. At this point the agent may:
write the offer but advise the buyer that they are now a sub-agent of the seller and anything the buyer has revealed must be provided to the seller. When a buyer refuses to sign a written buyers agency agreement, the agent can no longer represent the buyer. The agent should warn the buyer that failure to sign the agreement will result in the agent becoming an agent for the seller. If this occurs, they will need to see if the seller will permit seller sub-agency. If so, the agent must disclose all personal / confidential information that they learned about the buyer to the seller. The oral agreement must be reduced to writing prior to the presentation of an offer - not prior to contract or closing.
