Practice questions

A broker is representing a buyer that wants to purchase a home, however has recently changed jobs. The lender requires two pay stubs from the new employer to approve the buyer for financing. The buyer wants to move into a property before school begins and will need to rent for a few months before closing. The broker finds a property and the buyer wants to make an offer. The buyer asks the broker to prepare an Offer to Purchase and a Lease Agreement, with both the offer and lease being contingent on the seller's agreement to both. Which of the following actions is permitted by the agent? Choose only ONE best answer. A The agent should refer the buyer to an attorney or allow the buyer to make the desired changes in his/her handwriting. B The broker should add the desired language so long as the client has written an outline of the terms they want to be included in the offers. C The broker should ask the listing agent t

A A broker is not permitted to draft legal documents. The broker is allowed to complete a standard form by filling in the blanks. When a client wants to make a substantial change to the standard offer or seeks to add legal language to a standard offer, the agent should refer the client to an attorney. The client can elect to write the language into the offer, but it is recommended that the agent refer the client to an attorney. The agent is not permitted to write up the language even if the client is giving the direction of what they want to be included. NOTE: The drafting rule relates to contracts that the broker is not a party to, like the offer to purchase and contract, unless the broker is an attorney or party to the contract (lease, buyer agency, listing agreement or offer to purchase).

A clause in the buyer agency agreement requires a buyer to pay compensation to the buyer's agent, after expiration, if the buyer purchases property that was introduced to the buyer by the buyer's agent, which is known as: Choose only ONE best answer. A a protection period. B a protection agreement. C liquidated damages D a retainer fee.

A A protection period may require a buyer to pay commission to the buyer's agent when the buyer purchases property that was shown to them even after the buyer agency agreement has expired. The period is agreed to in the buyer agency agreement and will be lost if the buyer hires another buyer agent. A Protection Agreement documents how much a For Sale by Owner will compensate a broker that represents a buyer. Liquidated damages are defined in the contract - for example, the seller is entitled to the earnest money deposit and due diligence fee upon buyer's breach of contract as the sole and exclusive remedy for breach. A retainer fee may or may not be creditable to a buyer when they purchase a home. In the event the buyer does not purchase, the buyer's agent retains the fee for showing the property to the buyer.

Which of the following is FALSE regarding the disclosure of a bonus paid to the selling agent by someone other than his/her principal? Choose only ONE best answer. A When a new home builder offers a $5,000 bonus to a broker that sells three homes in a new subdivision, disclosure is required only when the bonus is earned. B An agent representing a buyer must disclose the existence of the bonus to the buyer no later than the time the buyer is considering an offer on the property. C The disclosure can initially be oral; however, it must be reduced to writing before the buyer makes an offer to purchase. D The bonus must be reported on the settlement statement.

A The disclosure must be made to all parties if, for example, the agent is offered a trip for three closings in a neighborhood, then all buyers must be made aware. The correct time frame for the latest date to disclose a bonus is orally no later than consideration of an offer and reduced to writing before the presentation of an offer. Note that the bonus can be in cash or some other compensation equivalent - a trip, electronics, gift certificates, etc. The settlement statement, typically closing disclosure for financing that is federally related, must outline all money that has changed hands, including 3rd party compensation.

A residential tenant complains of a defect with the heating system in the apartment. The heating system is not operating, and the February temperatures are falling into low 20's. Which of the following statements is most accurate? Choose only ONE best answer. A The tenant may vacate after providing written notice to the landlord and waiting a reasonable time for the repair to occur. B The tenant can repair the system and reduce rent by that amount. C The tenant may remove himself from the property; however, must continue to pay the rent until the court orders otherwise. D The tenant may withhold rent in a designated account until work completes.

A The tenant may remove himself from the property and then stop paying rent when the landlord fails to make repairs, after written demand and a reasonable amount of time, which is known as constructive eviction. NOTE: Constructive eviction does not terminate a property management agreement, however, it does terminate the lease agreement with that particular tenant. Remember that a tenant may never withhold rent while in possession of the property unless there is a court order allowing this or the landlord has agreed to this. Also, a tenant cannot make repairs and seek compensation from the landlord or reduce rental payments by the amount.

All the following statements are true regarding timeshares, EXCEPT: Choose only ONE best answer. A To list or sell timeshares, a licensee must obtain a timeshare license. B The initial deposit and fees must be held in a trust account for ten days from the effective date of the contract unless it is returned to the buyer before that date due to cancellation. C Timeshare projects must be registered with the North Carolina Real Estate Commission. D A project broker supervises licensed real estate agents to ensure compliance with Commission rules.

A There is not a separate license for timeshare sales, just as there is no separate license for Provisional Broker or Broker-in-Charge. To remember the requirements for a timeshare, remember 5/5/5/10 - the basic definition of a timeshare is five or more nonconsecutive periods over at least five years, five days for the buyer to terminate from the effective date of the contract, and ten days that ALL funds must remain in the trust/escrow account. The Commission can fine a timeshare developer $500 per violation of the timeshare act. A project broker supervises the licensed sales staff.

An investor contacts a provisional broker to represent them in the purchase of a property located near a recently approved proposed light rail stop. The broker calls sellers in the area and entices them to list the property for sale. At no time does the broker disclose to the sellers that he also represents the buyer. This is an example of: Choose only ONE best answer. A undisclosed dual agency. B implied agency. C apparent agency. D designated agency.

A Undisclosed dual agency occurs when a broker represents both the buyer and seller in a transaction without their knowledge and consent. Dual agency must be agreed to before a broker can act in that capacity. The broker would not be entitled to compensation in this scenario. Implied agency occurs by the conduct of the parties, rather than explicit agreement. NOTE: When two firms cooperate in a sale, it is typically based on the behavior of the parties rather than a specific agreement.

A broker is preparing an offer on behalf of his buyer client using standard N.C.A.R. forms. The seller lacks sufficient funds to pay off the liens against the property. Which addendum would the broker attach to the offer? Choose only ONE best answer. A Additional Provisions Addendum B Short Sale Addendum C Back-Up Contract Addendum D Financing Addendum

B A Short Sale addendum is used when the seller needs to seek approval from the bank to agree to take less than the amount currently owed (with or without a release from the deficient balance). The Additional Provisions addendum is used when a property is subject to a lease, the client wants to insert a deadline for the seller to respond, repairs are being agreed to in advance, etc. The Back-Up Contract addendum is used when the property that the buyer wants to make an offer on is already under contract. In N.C., the standard NCAR/NCBA Offer to Purchase and Contract is not contingent upon financing.

All of the following situations will result in dual agency, EXCEPT: Choose only ONE best answer. A A buyer represented by the firm decides to purchase a property currently listed with the firm. B A listing agent that writes up an offer for a buyer that is not working with another broker. C A tenant represented by the firm decides to rent a property currently listed with the firm. D An owner of a property represented by the firm under an exclusive property management agreement finds a tenant for a property, and the tenant enters a tenant representation agreement.

B A buyer or tenant can choose to remain unrepresented in a transaction to purchase or lease a home, or the firm's client has not agreed to dual and/or designated dual agency. The listing agent is permitted to write up the offer to purchase or lease a property. They do not represent the buyer/tenant and owe honesty, fairness, and disclosure of material facts.

Which of the following financial regulations requires the disclosure of financing terms when a trigger term is used? Choose only ONE best answer. A Real Estate Settlement Procedures Act B Regulation Z C TILA-RESPA Integrated Disclosure D Equal Credit Opportunity Act

B Regulation Z governs financial disclosures when an individual/entity runs an ad regarding consumer finance. It does not prevent using trigger terms in an ad; it requires full disclosure of terms when a trigger term is used. Trigger terms include the amount of down payment expressed as a percentage or dollar amount, the amount of any payment, the number of payments, the period of repayment, or the finance charges. The use of one of the trigger terms requires disclosure of all of the terms and the annual percentage rate (APR). It is important to remember that APR alone does not trigger full disclosure.

A broker who is representing a property owner through a valid property management agreement will typically be authorized to perform which of the following tasks? Choose only ONE best answer. A Make improvements to the property that the broker believes will increase the rent that can be charged each month. B A property manager may take action to evict a tenant for failure to pay rent, as outlined in the property management agreement. C Pay for replacing an HVAC system at the cost of $5,000 from trust account funds when the trust account balance is $100,000, and the client's repair reserve account balance is $4,500. D Encourage a prospective tenant to select another property in a different location that will better cater to his/her religion.

B This answer is correct. A property manager is typically not authorized to make changes to the property, even when the changes may result in increased rent. The owner of the property would have to approve those changes. A property manager can hold repair funds on behalf of the owner. She/he would not be permitted to deficit spend, spending more than the amount paid by the property owner, even if she/he have sufficient funds to cover the expense in the trust account (conversion). Trust account money is other people's money. The property manager can expend his or her operating account and invoice the owner for the HVAC repair. Trying to influence a prospective tenant to rent in a certain area by directing them away from a property is steering, which may be called directing or channeling.

All of the following statements are included in the standard NCAR/ NCBA Offer to Purchase and Contract, EXCEPT: Choose only ONE best answer. A The contract is not assignable without the written permission of all the parties except in the instance of a tax-deferred exchange. B The seller is required to deliver a general warranty deed to the buyer. C A party that is acting in good faith and with reasonable diligence in preparing for settlement is entitled to delay settlement up to ten days. D The buyer and seller may elect to deliver the earnest money deposit five days from the effective date of the contract.

C A party that is acting in good faith is entitled to a 7-day delay in closing under the standard NCAR/NCBA Offer to Purchase and Contract. The standard offer states that the seller will deliver a general warranty deed, and the contract is not assignable without the written permission of all the parties. The buyer and seller may agree elect to deliver the earnest money deposit within five days of the effective date of the contract.

A broker representing a buyer under an Exclusive Right to Represent prepared an offer to purchase using the standard NCAR/NCBA form. The seller agreed, and the property went under contract. Ten days before closing, the city confirmed a $5,000 special assessment for installing city water lines. The listing agent stated that the buyer is responsible for paying the assessment. Is this accurate? Choose only ONE best answer. A Yes. The assessment is the buyer's responsibility as he/she will benefit most from city water. B Yes. The buyer takes the title subject to pending and confirmed assessments per the contract. C No. The seller is obligated to pay confirmed assessments before settlement. D No. The seller is obligated to pay pending and confirmed assessments before settlement.

C Per the Standard NCAR/NCBA Offer to Purchase, the seller is obligated to pay confirmed assessments where the fees are known through closing. The buyer takes title subject to proposed special assessments - which are under consideration, although no action has been taken.

Which of the following statements is true regarding ad-valorem taxation in North Carolina? Choose only ONE best answer. A Real property tax values are based on the most recent sale price. B The Machinery Act requires reassessments for tax purposes every four years. C Real property taxes and special assessments constitute an involuntary lien against property on Jan 1st of the tax year. D Tax rates are effective until the next revaluation year.

C Real property taxes are charged based on the assessed value, not the sale price. The Machinery Act requires that property values be reassessed at least once every eight years (octennial appraisal). Tax rates can be changed every year based on the budget of the municipality, not the Machinery Act. The tax lien attaches on January 1st, is due September 1st and late if not paid by January 5th of the following year.

The listing broker receives an offer that is $5,000 above the list price, with the seller required to respond in 24-hours. The seller is traveling but reviews the offer over the phone and authorizes the listing broker to sign the offer as presented. Is this action permitted? Choose only ONE best answer. A Yes. A broker is required to follow the lawful instructions of the seller. B Yes. E.U.T.A. permits a client to verbally accept an offer when it is reduced to writing within three calendar days. C No. The broker lacks the authority to sign the offer to purchase, even with the seller's verbal authorization. D No. A broker is never permitted to sign on behalf of a client as this would violate license law.

C A listing broker is acting as a special agent with no ability to sign on behalf of the client. A special agent gathers information, presents it to his/her client, and the client decides how to proceed. The seller's request is not a lawful instruction. The Uniform Electronic Transaction Act (UETA) permits electronic signatures, which are just as binding as ink signatures without a seasoning or withdrawal period. A broker is allowed to sign on the client's behalf when granted a power of attorney (or attorney-in-fact), or the broker is acting under general agency (property management agreement)

A brokerage typically holds the earnest money for property listed by the firm. A transaction closed two weeks ago, and the accounting department has not moved the funds to the operating account. The brokerage is guilty of: Choose only ONE best answer. A embezzlement. B collusion. C conversion. D commingling.

D Commingling occurs when brokerage and client funds mix in the trust or escrow account, above the $100 to maintain the account (unless fees exceed this amount). Embezzlement occurs when someone steals the funds from the trust account. Collusion relates to the federal antitrust law, where parties cannot conspire to inflate commission rates. Conversion occurs when expenses are paid on behalf of a client over the amount deposited in the trust account for the client.

ABC has a policy of designated agency when dual agency arises. Which of the following is accurate per NC Commission rule? Choose only ONE best answer. A A provisional broker may be designated for the seller, but only if another provisional broker is designated for the buyer. B A broker-in-charge can never act as a designated agent for the seller. C A broker and non-provisional broker are not permitted to act as designated agents. D A broker and provisional broker may act as designated agents so long as certain conditions are met.

D PB may be designated with any other agent (PB or Broker) as long as the other agent is not his or her supervising broker in charge. BIC can be designated with other brokers. Designation cannot occur when the personal/confidential information is known about the other party. One way to remember this is No BIC and PB and no P&C.

A married couple purchases a home at 1515 Sycamore. Sometime later, the husband dies. Both the husband and wife have grown children from previous marriages. How will the husband's estate be settled regarding the home on Sycamore? Choose only ONE best answer. A The wife gets half, and the husband's grown children split the other half. B The wife can express marital interest in the property. C The wife will have a life estate in the property, and the children will have a remainder interest. D The wife will own the home in severalty.

D Since the couple was married when the property is acquired, it is presumed they hold the title as tenants by the entirety. Therefore, when the husband died, the wife holds the property in severalty. A will cannot defeat the right of survivorship afforded by tenancy by the entirety.

A seller has agreed to check with her neighbor to see if he wants to purchase her house before offering it for sale, which is known as: Choose only ONE best answer. A an option to purchase. B a right of first refusal. C a preemptive right. D a right of first opportunity.

D The right of first opportunity requires an owner to check to see if a party wants to purchase the property before offering it to another. The right of first refusal allows the owner to put the property on the market and obtain offers, however the owner can't sell the property without checking first with the party that has the right. With an option to purchase, all terms are agreed to upfront - including the purchase price, the period to exercise, and how long the buyer has to close once the option is exercised.

Back-Up Contract addendu

The Back-Up Contract addendum is used when the property that the buyer wants to make an offer on is already under contract.

A provisional broker forget take CE by June 10th, they must?

When a licensee neglects to take the prior year's continuing education, they must complete the current year (8 hours) and make up the deficiency (8 hours) for a total of 16 hours, which will include the general update and three elective courses.

The listing broker is holding an open house. Which of the following statements made by a prospective buyer would require the listing broker to disclose the Working with Real Estate Agent's brochure? Choose only ONE best answer. A "I am approved for a maximum purchase price of $250,000." B "The living room is large enough to hold my furniture." C "I am thinking about listing my home in the next 30 days." D "The city may widen the road in the next two years."

The correct answer is 'A ' The requirement to disclose the Working with Real Estate Agent's brochure is at first substantial contact (FSC), the point that the conversation is shifting from facts about the property to personal/confidential information that could weaken a party's bargaining position. Disclosing the maximum price a buyer is willing to pay, the amount a lender has approved a buyer for, a buyer's special interest in this particular property, etc. is considered FSC. The statement that a room is large relates to the property itself. While a broker may be interested in offering services when a potential buyer or seller states they are considering listing a home for sale, that does not rise to the level FSC. A road-widening project is a material fact to disclose; however, it would not trigger FSC.

Which of the following statements is TRUE regarding property insurance? Choose only ONE best answer. A The CLUE report details claims for the past seven years. B A package homeowner policy covers the property against flood damage. C Townhome policies typically cover the walls in. D An owner is permitted to rent the home for up to 6 months before changing the owner-occupied coverage.

The correct answer is 'A' The CLUE report details claims over the past seven years and will impact insurance rates. Only flood insurance covers flood losses. A condo has walls in coverage since the owner owns the airspace. When renting property it is best to seek advice from your insurance carrier when an unoccupied building policy is needed.

A brokerage would violate trust account rules: Choose only ONE best answer. A if they pay an affiliated broker's commission from the account. B if the bank is not physically located in North Carolina C when a brokerage holds earnest money deposits and security deposits in the same account. D when the broker delegates accounting to another, including preparation of the monthly reconciliation.

The correct answer is 'A' Commission or compensation is not paid from the brokerage trust account. This payment would be made through the brokerage operating account. A bank must only be approved to do business in North Carolina, virtual or otherwise, thus may be held in a bank that is outside of the State. A brokerage can hold earnest money deposits and security deposits in the same account without triggering the need for a separate account, unless one individual or entity has more than $250,000 in the trust account as this exceeds FDIC limits.

Which of the following is TRUE regarding earnest money held in a trust account by a real estate firm? Choose only ONE best answer. A A cash earnest money deposit must be deposited into the trust account within three days of receipt, regardless of the status of the offer or contract. B An earnest money check must be deposited within three days after contract formation. C A broker holding earnest money may transfer the earnest money to the settlement agent no earlier than seven days before settlement. D Earnest money must be held by the listing agent in the brokerage's trust account.

The correct answer is 'A' Cash must be deposited within three banking days of receipt. It sounds correct to say that a check must be deposited within three banking days after contract formation, but this is not completely true as you cannot deposit a check you have not received. An earnest money check must be deposited into the trust account the LATER of three banking days from receipt or three banking days from the effective date of the contract. NOTE: Failure to deliver the earnest money or if the check bounces does not impact contract formation. A broker holding earnest money may transfer earnest money no earlier than ten days before settlement.

Which of the following is TRUE regarding a broker-in-charge responsibilities? Choose only ONE best answer. A The broker-in-charge is responsible for all advertisements done in the name of the firm, regardless of the status of licensee running the ad B The broker-in-charge is expected to supervise all licensees affiliated with the firm directly C The broker-in-charge may delegate responsibility for trust account supervision to a company financial manager D The name of the broker-in-charge must appear in all ads run in the name of the firm

The correct answer is 'A' The BIC is responsible for all advertisements done in the name of the firm. The problem with the other answers: BIC does not have to supervise brokers (only PBs), BIC may delegate the activity of the trust account but can never delegate the responsibility for supervision. The firm name must appear in all ads regardless of license status (PB or non-PB), however it is not a requirement that the BIC's name is included.

A broker that lists a property for sale on behalf of an owner will earn commission: Choose only ONE best answer. A when the property goes under contract. B when the property closes. C when a buyer terminates during the due diligence period. D when the property is destroyed by fire.

The correct answer is 'A' Compensation is earned by the listing agent when a ready, willing, and able buyer makes a full price offer meeting all of the seller's terms or when the seller enters into a contract for sale. It is payable once closing has occurred. A broker is not entitled to compensation when the buyer can terminate the contract, for example, exercising the right to terminate during the due diligence period.

A party meets all the statutory requirements to take an acre tract of land from the current owner. Which of the following best describes the legal action? Choose only ONE best answer. A Adverse Possession B Suit to Quiet Title C Right of Redemption D Eminent Domain

The correct answer is 'B ' A suit to quiet title or action to quiet title is filed to resolve a dispute about who holds legal title to the property or has the greatest claim. Adverse possession occurs when a party hostilely and intentionally takes the property of another, and the taking is open, continuous, exclusive, adverse, and notorious. The right of redemption is available when a property is in foreclosure or foreclosure has finalized. The equitable right of redemption is the right of the owner to pay off the liens before the foreclosure sale. The statutory right of redemption allows the owner to pay off the liens before the foreclosure sale finalizes (the 10-day period in North Carolina). Eminent domain is the government's right to take private property for the public good. The government pays the owner the fair market value of the property.

Oscar agrees to purchase Emanuel's home for $140,000, with a closing set for 45 days following the effective date of the contract. Before the settlement date, Emanuel learns that Oscar is a minor. Based on this fact, the contract is now: Choose only ONE best answer. A valid. B voidable at Oscar's choosing C void. D voidable at Emanuel's choosing

The correct answer is 'B' A minor can legally enter into a contract to purchase real estate but they cannot be bound to the promises of that contract. The contract is voidable from the perspective of the minor, where the minor may terminate the contract without penalty. The adult is still obligated to perform under the terms of the contract. A valid contract is legally binding on both buyer and seller. A void contract is not legally enforceable by the courts and is considered invalid.

A seller leases a propane tank from a gas company. Per the Offer to Purchase, how will the tank be addressed in the contract? Choose only ONE best answer. A The tank and contents are considered fixtures and will convey with the property. B The tank is considered the personal property of the seller and should be entered in the personal property section of the contract. C The tank should be excluded from fixtures as the seller does not own it. D The buyer will be required to purchase the tank and contents from the seller.

The correct answer is 'C' The tank should be excluded from the fixtures provision. Had the tank been owned by the seller it would have been considered a fixture since it is buried in the ground. The seller cannot transfer property that the seller does not own.

John Simpson has recently removed the provisional status from his license. He is acting as the listing agent for a mini-farm property in Cedar Grove, North Carolina. A buyer calls to ask questions regarding the property and ultimately schedules an appointment to see the home. Which of the following statements is TRUE? Choose only ONE best answer. A John must disclose agency at initial contact with the buyer. B John must disclose agency at first substantial contact with the buyer. C John can only explain agency in a face to face meeting as the buyer must acknowledge receipt of the brochure. D John is not required to explain agency until the buyer requests to write an offer on the property.

The correct answer is 'B' A listing agent must explain agency and his/her agency status at first substantial contact with the buyer. A buyer's agent must disclose his/her status as a buyer's agent at initial contact with the seller or seller's agent. The WWREA brochure may be disclosed over the phone or through email when physical delivery is impractical, however the agent must transmit a copy within three calendar days.

A broker is representing a buyer that becomes interested in a For Sale by Owner property. The broker asks the seller to confirm the compensation to be paid. This is known as: Choose only ONE best answer. A a protection period. B a protection agreement. C a kickback agreement. D an extender contract.

The correct answer is 'B' A broker who wishes to be paid by a seller CUSTOMER will have the seller sign a protection agreement that outlines compensation. This agreement will clearly state the fact that the broker does not represent the seller. The broker owes the seller customer HFD - honesty, fairness, and disclosure of material facts. A protection period (extender clause or tail clause) is outlined in agency agreements, where the client agrees to compensate the broker in certain circumstances, even though the agency agreement has expired. It effectively extends the length of the listing period under certain circumstances. Again, it would be part of a LISTING agreement which would never be signed with a FSBO. Kickbacks occur when a broker pays or gets paid for recommending services and are a violation of RESPA. Kickbacks are definitely not something we would want to agree to in a contract.

Russell is preparing to list a single-family property in Chapel Hill, North Carolina. The local multiple listing service requires Russell to report the living area of the property. Which of the following statements is FALSE regarding Commission guidelines for square footage? Choose only ONE best answer. A Russell must be reasonably accurate when disclosing square footage. B The buyer's agent must verify the accuracy of Russell's calculation by measuring the home. C Russell should compare his calculation with tax records to identify potential issues. D The living area must be heated, finished, and directly accessible.

The correct answer is 'B' A buyer's agent can rely on the listing agent's square footage calculation unless it is apparent that it is wrong. The buyer's agent should compare the square footage reported to tax records to determine potential issues. The buyer's agent is responsible for failing to discover an error when a reasonably prudent agent would have discovered the issues. The Commission does not require the disclosure of square footage; however, when reported, it must be accurate. As a general rule, the agent has a 5% tolerance when an error is made calculating the square footage.

Salem, an agent with City of Oaks Realty, has a buyer client who becomes interested in a For Sale by Owner on Sycamore Street. Salem approaches the seller of the home to ask whether he would be interested in hiring an agent. Seller replies that yes he has decided to engage an agent to market the house. Salem takes the listing and promptly assists his buyer in making an offer without disclosing his status as a dual agent. Which of the following is TRUE? Choose only ONE best answer. A The agent has done nothing wrong if he is acting in good faith on behalf of the seller. B The agent is practicing undisclosed dual agency and may face recourse from the Commission and Courts. C The agent can practice designated agency with the informed consent of both parties. D The agent could legally be compensated by both parties in the scenario above.

The correct answer is 'B' Agent is practicing undisclosed dual agency (without consent from the parties). To act as a dual agent, the brokerage represents both the buyer and seller, and all parties consent. Dual agency reduces the services that an agent can perform. The agent can no longer advocate on behalf of an exclusive client, must conceal personal and confidential information unless it rises to the level of material fact and cannot disclose personal information learned about the other side that they could normally disclose as an exclusive agent.

The buyer and seller enter into a legally binding purchase contract, and the buyer agrees to pay $1,000 due diligence and $5,000 earnest money. The buyer's agent delivers the funds to the listing agent. The buyer changes his mind and demands the listing agent return both checks. Assuming that the listing firm has a trust account, which of the following actions must the listing broker take? Choose only ONE best answer. A Return both the due diligence and earnest money checks that are in the listing agent's possession. B Return the due diligence fee that is in the listing agent's possession. C Refuse to refund the earnest money and due diligence checks that are in the agent's possession. D Return the earnest money and due diligence checks that are in the agent's possession only if the buyer signs a termination agreement.

The correct answer is 'B' The listing agent must follow the buyer's instructions when the funds have not reached the intended party. Since the listing agent did not deliver the due diligence fee to the seller, he/she is obligated to give the check to the buyer. The firm holds trust funds and would not be obligated to return the earnest money deposit as it reached the intended party.

The treated wrap applied to the sheathing before the siding is known as: Choose only ONE best answer. A Ridge Board B Tar Paper C Flashing D Sill Plate This answer is incorrect.

The correct answer is 'B' Tar paper or house wrap is applied to the sheathing prior to installing siding to protect against water entry. The ridge board is tested as the highest wooden point of construction and is a roofing component that is fastened to the ends of the rafters. Flashing is sheet metal that protects buildings from water damage and is commonly found around chimneys, skylights, dormers and roof joints. The Sill Plate is commonly tested as the lowest wooden member that rests upon the foundation and is the most commonly missed term on the licensing exam.

A buyer is moving to North Carolina from a state that does not practice caveat emptor. The broker explains that a Seller is only required to disclose material facts that they know or reasonably should have known. Was the broker accurate? Choose only ONE best answer. A Yes, as the seller has the most knowledge about the property they must disclose. B Yes, as the buyer may elect to purchase the property "As-Is" without obtaining an inspection and would not be able to discover material facts. C No, the seller is not required to disclose all material facts, only items required by North Carolina law. D No, the broker should have told the buyer that the seller has no duty to disclose material facts, and the buyer must discover and disclose.

The correct answer is 'C' In North Carolina, the seller has limited items where they are mandated to disclose information regarding the house. Some items are deemed material facts by the Real Estate Commission, so the seller must disclose synthetic stucco (EIFS - Exterior Insulating Finishing System) when the home is clad or has been previously clad and replaced, leaking polybutylene pipes and if the property has ever been the site of a methamphetamine lab. Also, a seller must disclose if they severed or plan to sever oil, mineral, or gas rights. The seller can select NO REPRESENTATION on the Residential Property Owner Association Disclosure Statement. The buyer must perform inspections on the property and the agents to disclose material facts known or those they reasonably should have known. Selling a property "As-Is" does not relieve the brokers from disclosing material facts.

A provisional broker is working for a buyer under an Exclusive Buyer's Agency Agreement that outlines 3% commission to be paid by the buyer when no compensation is offered from the seller. The provisional broker finds a property listed with a competing real estate firm that the buyer loves. The listing firm has provided for 2.5% compensation outlined in the Multiple Listing Service. Upon closing, no compensation is paid to the provisional broker. Which of the following is the best course of action for the provisional broker to take? Choose only ONE best answer. A File a complaint with the North Carolina Real Estate Commission B File a complaint with the Multiple Listing Service C File a complaint with the local Association of Realtors D File a lawsuit against the buyer for the commission

The correct answer is 'C' The local Association of Realtors will hear complaints/grievances, including disputes regarding commission. The NC Real Estate Commission will not hear compensation/commission disputes between brokers regarding the amount or non-payment. The Multiple Listing service also will not hear complaints regarding compensation. While the broker may sue the buyer for the commission in certain circumstances, it is not the best course of action.

A provisional broker who desires to remain on active status must do which of the following? Choose only ONE best answer. A Complete one of the Postlicense class before his/her anniversary date B Complete continuing education before the June 30th deadline C Pay the renewal fee within the 45-day renewal period D Affiliate under the supervision of a North Carolina broker

The correct answer is 'C' To keep a license on active status a licensee must renew their license. Failure to do so will result in the license expiring. There are no postlicense or continuing education requirements for a licensee to remain on inactive status. The 45-day license renewal period begins on May 15th and ends June 30th. A new licensee does not need to complete CE before his/her first license renewal. Each year after the first renewal, before the June 10th deadline, the licensee must complete 8-hours of CE. Beginning July 1st, 2020 a provisional broker desiring active status must complete Postlicense courses within 18-months of licensure.

Which of the following statements is TRUE regarding Timeshares in North Carolina? Choose only ONE best answer. A Timeshares in North Carolina are defined as ownership of a property for ten or more separate periods over ten or more separate years B Timeshare salespersons need not be licensed to sell, for compensation, for the developer C Earnest money deposits for timeshare sale are held in a trust account for a minimum of 10 days D The NCREC must license a timeshare developer before offering any units for sale

The correct answer is 'C' Earnest monies remain in the trust account for ten days before disbursement. NOTE: All money must stay in the trust or escrow account for the 10 days (unless refunded to the buyer before expiration). Timeshare ownership is defined as 5 or more separate periods over five or more years. Timeshare sales staff must be licensed, but the timeshare developers are not required to be. A project broker supervises the licensed timeshare sales staff.

Which of the following acts would violate the Federal Antitrust law? Choose only ONE best answer. A A broker sends a fax without a prominent opt-out. B A REALTOR solicits an active client that is working with another firm. C An MLS refuses membership to a discount brokerage. D A broker calls a FSBO to solicit the listing when the seller is on Do Not Call.

The correct answer is 'C' The Sherman Antitrust Act, also called Federal Antitrust, prohibits price-fixing and boycotting. There are no usual, standard, comparable, or customary commission rates. A broker cannot boycott a discount provider, and an MLS cannot refuse membership. Sending unsolicited faxes will violate Junk Fax laws. Soliciting another REALTOR's client is known as tortious interference with a contract and may be the basis for civil damages. Soliciting a FSBO that is on the Do Not Call Registry is a violation where the licensee can be fined.

A licensee fails to pay his renewal fee by June 30th. Which of the following best describes the appropriate steps to cure his deficiency? Choose only ONE best answer. A He must complete the current year CE before renewing. B If he discovers nonpayment by December 31st for the same year, he needs only to pay the fee to begin practicing general brokerage activities. C The agent will pay an increased fee and send the broker activation form to the Commission by December 31st for the same year. D The agent's license has expired, and he will be required to complete prelicensing education and pass the state exam if he is interested in continuing to practice.

The correct answer is 'C' The agent should pay the increased fee and send documents to activate a license when expiration is up to 6 months. When expiration is more than six months up to 2 years, the agent would need to pay an increased fee, submit a new background check/application, and will be required to either pass the licensure exam or take a 30-hour postlicense class. When a license has expired for more than 2 years, the candidate will be treated as if they never held a license and will need to start over beginning with the completion of a prelicense course

A new provisional broker with ABC Realty is holding an open house with the permission of a top producing listing agent in his office. A potential buyer begins to ask questions beyond facts that relate to the property. The provisional broker stops the conversation and explains the Working With Real Estate Agents Brochure. The provisional broker informs the potential buyer that he can act as an exclusive buyer's agent should the buyer be interested in purchasing the property. Is this a CORRECT statement? Choose only ONE best answer. A Yes, as the seller's agent will exclusively represent the seller's interest, and the provisional broker will exclusively represent the buyer's interest. B Yes, so long as the seller's agent is not also the broker-in-charge that is supervising the provisional broker. C No, as the provisional broker may only act as a seller sub-agent in the transaction since he has held the house

The correct answer is 'D' Should the potential buyer elect to purchase the property and hire the provisional broker to represent them, dual agency would arise (both buyer and seller represented by the same firm). The provisional broker can represent the buyer under dual or designated dual agency (so long as he/she does not have personal and confidential information about the seller, and is not designated against the BIC). The potential buyer could also elect to be unrepresented.

Which of the following statements is TRUE about an exclusive right to represent the buyer in a purchase transaction? Choose only ONE best answer. A The listing broker may also be referred to as the selling broker in an offer to purchase. B The buyer's broker is entitled to compensation only when they show the property that the buyer decides to purchase. C The brokerage firm cannot show similar property to the type the current buyer is looking for to other buyers as this is a breach of loyalty. D The compensation earned by a buyer's agent when the buyer closes on an acceptable property may be called a success fee.

The correct answer is 'D' Commissions are "success fees" A brokerage may show other buyers and clients the same or similar property to the buyer clients as it would be impractical to try to do otherwise. Remember that clients may promise to only work with that one office (exclusively) but the office never promises to only work with that one client. A broker granted the exclusive right to represent the buyer, is entitled to compensation regardless of how the buyer was introduced to the property if the buyer is successful in purchasing a property during the term of the buyer agency agreement. The broker that writes the offer is typically referred to as the selling broker in an offer to purchase. This could be a buyer's agent or a listing agent. It could also be the same person being the selling agent and listing agent if that broker/salesperson finds both the buyer and the seller in the transaction.

All of the following activities require a license EXCEPT: Choose only ONE best answer. A the sale of a home that belongs to a family member for compensation. B managing an apartment building for a friend in return for free rent. C the purchase of a property for a buyer client where the buyer pays the commission. D the purchase of an investment property by a Limited Liability Company where the seller pays a commission to the LLC.

The correct answer is 'D' A license is required when compensation is earned on behalf of another (even when compensation is paid by gift card, free rent, meals, etc. or paid by a friend or family member. Exempt activities include those acting as Power of Attorney (or Attorney in Fact) as they are standing in for a party and for legal purposes are that person, representing yourself in the transaction (FSBO / FLBO), or an officer of a corporation or W-2 employee acting on behalf of the entity. Remember the license triggering event is earning compensation on behalf of another. The law applies even when a friend or family member pays compensation.

A minor desires to purchase real property however, her guardian has moved out of the state and relinquished her duties. The minor asked his school principal to sign the contract for him. The principal agreed, and the agent, upon review of the signed offer, stated that the property is under contract. Has a legally binding contract been formed? Choose only ONE best answer. A No. The contract is voidable by the sellers as the intended owner is minor B No. The contract is unenforceable as the principal did not have the authority to act for the minors. C Yes. The contract is enforceable against the property owner and the minor D No, the contract is voidable at the choice of the minor because the Principal does not have the legal authority to act on behalf of the minor.

The correct answer is 'D' A guardian may be appointed to handle the affairs of a minor. If this happens, then the guardian can make legally binding decisions for the child. This means even a child can be bound to a contract if their adult guardian agrees to the contract. When the guardian is no longer able to perform, the courts must appoint a new party to act in that capacity. The high school principal cannot act in this role without court appointment. The child doesn't have the legal authority to choose their own guardian. The property might be under some type of contract but that contract would be voidable at the choice of the child who is not bound. It would not be voidable for the adult and it would not be unenforceable ( problem with 2 people) because there is legal force against the adult.

The seller agreed to deliver a general warranty deed to the buyer in a sales contract. Which of the following is FALSE? Choose only ONE best answer. A The seller is obligated to defend the title against third party claims of ownership based upon past activity. B The general warranty deed provides the most protection to a purchaser. C Most standard offer to purchase forms used by brokers require the seller to provide the buyer a general warranty deed. D The general warranty deed automatically transfers a marketable title to the buyer.

The correct answer is 'D' Unit 10 Transfer of Title A general warranty deed is used to transfer ownership from grantor to grantee and is the most protective deed that can be used. The grantor/seller promises to defend the grantee/buyer against third-party claims of ownership for all time. It does provide a warranty that marketable title is given but there is no absolute guarantee of marketable title (title without defects). This is why a buyer should hire an attorney/title company and obtain title insurance. The grantor or seller promises to defend the grantee/buyer against third-party claims of ownership.

To form a legally binding contract for real property, all of the following must occur EXCEPT: Choose only ONE best answer. A unconditional acceptance of the offer. B written agreement signed by all owners. C notification of acceptance. D delivery and receipt of the signed contract.

The correct answer is 'D' Unit 8.2 Offer and Acceptance To form a legally binding contract there must be: 1.offer, it must be in writing (Statute of Frauds), signed by the offeror 2. unconditional acceptance/signature by the offeree and 3. notification of acceptance to the offeror. Notification can be oral or in writing but does not require that the full contract be delivered. Delivery and acceptance is a requirement for the essential elements of a valid deed not purchase contracts. NOTE: It is common for the exam to mix elements to trick you - here contract vs deed.

A non-provisional broker failed to complete his continuing education by the June 10th deadline. Which of the following statements is CORRECT concerning bringing his license to active status? Choose only ONE best answer. A The broker must complete all 3 Postlicensing courses before requesting the Commission activate the license. B The broker must complete 8 hours of continuing education to request that the Commission activate the license. C The broker must cease all brokerage activity on June 11th until they take the general update and three elective courses before requesting that the license be activated. D The broker must complete the general update and three elective courses before they can request for the license to be activated by the Commission.

The correct answer is 'D' A licensee that desires to keep his/her license on active status must complete 8 hours of continuing education (unless it is the first renewal) consisting of the general update and an elective unless the licensee is a broker-in-charge or BIC eligible (then they are required to take the Broker-in-Charge Update and elective). When a licensee neglects to take the prior year's continuing education, they must complete the current year (8 hours) and make up the deficiency (8 hours) for a total of 16 hours, which will include the general update and three elective courses.

A broker, not on provisional status, forgets to renew his license, discovering the error eight months after the renewal deadline. His broker-in-charge informs him that he will need to pay an increased fee of $90, with no additional requirements. Is the broker-in-charge CORRECT? Choose only ONE best answer. A Yes, the only instance the Commission would require the non-provisional broker to meet additional conditions would be an expired license greater than three years. B Yes, the only instance the Commission would require the non-provisional broker to meet additional conditions would be an expired license greater than five years. C No, when a license expires beyond six months but less than two years, the non-provisional broker will be treated as if they never obtained a license and must meet the new licensure requirements. D No, when a license expires beyond six months but less than two years, the non-provisional brok

The correct answer is 'D' When a license has expired for more than six months up to 2 years, the Commission will require payment of the increased fee ($90), application, and updated background check. The Commission will require brokers that were not provisional to take postlicense class(es) or sit for the licensure exam as a penalty. An individual whose license expires for more than two years is treated as if they never obtained a license. Licensees need to complete all postlicense courses within 18-months of his/her anniversary date to remain on active status.

A broker entered a buyer agency agreement with a prospective buyer for a property owned equally between the broker and two of his siblings. Is the broker's action permitted? Choose only ONE best answer. A Yes. With the buyer's informed consent, the broker can represent the buyer. B Yes. With broker-in-charge approval the broker can represent the buyer. C No. This action violates license law as the broker is acting as an implied agent. D No. This is an example of self-dealing and is a conflict of interest.

The correct answer is 'D' A broker cannot represent a buyer that is purchasing a property when the broker has an ownership interest. (There is a limited exception specific to commercial real estate). The BIC or buyer cannot authorize conflict of interest. Implied agency occurs when a party is acting as an agent for another without getting consent.

A broker measures a two-story residential property. Which of the following statements is TRUE? Choose only ONE best answer. A The area under the stairs is only included in the first-floor total square footage. B Square footage in a basement cannot count toward the living area unless there are windows on at least three walls. C The total square footage of a room with sloped ceilings is considered living area. D A broker may use interior measurements when outside measurements are impractical.

The correct answer is 'D' A broker must add 6" to any outside wall when taking interior measurements unless the subject property is a condo. An adjustment for stairs occurs only when the opening for the stairway is larger than the width of the stairs (grand foyer). The maximum height that is included in the living area for a room with a sloped ceiling is 5 feet when 50% or more is at least 7 feet ta

All the following are responsibilities of the broker-in-charge, EXCEPT: Choose only ONE best answer. A making sure the firm has a copy of a broker's current pocket card. B ensuring that all licensees of the firm have completed continuing education. C ensuring that all licensees of the firm have complied with the Commission's agency disclosure rules. D direct supervision of all licensees that are affiliated with the firm. This answer is incorrect.

The correct answer is 'D' A broker-in-charge must directly supervise all provisional brokers. The BIC is responsible for ensuring all agents comply with advertising and disclosure of agency and ensuring transaction files are complete. An easy way to remember the BIC's duties to all brokers is "3 A's and 2 T's". The BIC is responsible for advertising, agency disclosure/documents, active status of affiliated brokers, trust accounts, and transaction files.

A broker with X.Y.Z. Realty has a listing that was effectively under contract, where the firm is holding the earnest money deposit in the brokerage trust account. A buyer's agent with A.B.C. Realty represents the buyer. The contract ultimately fails, and the buyer and seller are disputing the release of the funds. The buyer's agent is required to retain records: Choose only ONE best answer. A for 3 years from the release of the disputed funds from X.Y.Z. Realty's trust account. B for 3 years from the effective date of the contract. C for 3 years from the expiration date of the listing contract. D for 3 years from the date that the contract terminated.

The correct answer is 'D' The buyer's agent must retain records for 3 years from the date that the contract effectively terminated. The listing firm will be required to retain records for 3 years from the date that the earnest money deposit was released upon the transfer of the disputed funds to the clerk of courts in the county in which the property is located, with 90-days' notice to the buyer and seller

A broker is representing the buyer in the purchase of a property that is being sold For Sale by Owner. The broker has the seller sign a protection agreement outlining that the broker represents the buyer in the transaction, and the seller agrees to pay the broker 3% commission. Which of the following would violate license law? Choose only ONE best answer. A The broker has the seller sign the Working with Real Estate Agents brochure before the seller signs the protection agreement. B The broker provides the seller with a copy of the protection agreement within five calendar days of signing the document. C The broker provides the owner of the property with a sample copy of the NCAR Offer to Purchase and Contract to review. D The broker discloses that the buyer will make an offer contingent upon the sale of their current home.

This answer is correct B. A broker must deliver instruments (offers, contracts, agency forms - anything that the client signs) immediately but no later than three calendar days from receipt. Before obtaining personal/confidential information about the seller, at first substantial contact, the broker must disclose WWREA, which would occur prior to the seller signing the protection agreement. The broker must deliver a sample copy of the NCAR/NCBA Offer to Purchase and Contract and must disclose a material fact to ALL parties.

A provisional broker enters into an Exclusive Buyer Agency Agreement to help a buyer locate a property in Mebane, NC. The buyer finds a property and wants to write an offer. The provisional broker is acting as a designated dual agent in the purchase of the property. Which of the following is FALSE? Choose only ONE best answer. A The provisional broker is permitted to prepare a market analysis for the buyer to assist with determining an appropriate offer price. B The provisional broker is appointed by the broker-in-charge to act as a designated agent in the transaction. C The provisional broker cannot disclose personal or confidential information that they learn about the seller unless it rises to the level of material fact. D The provisional broker must disclose to the buyer any adverse information that they learn about the property.

This answer is correct C. When a broker is acting as a designated agent, they are permitted to advocate for their client. In this situation, the broker subsequently learns information about the seller and must disclose it to the buyer, even though the same firm represents both. Do not confuse dual agency (cannot advocate for one over the other - cannot disclose information known from buyer to seller or seller to buyer), with designated agency (where the agent advocates for his/her client - similar to exclusive representation).

Both the buyer and seller have exclusive representation by provisional brokers under respective buyer agency and listing agreements. The listing firm has offered a 3.5% commission to the selling firm. Upon closing, the listing firm pays both the buyer and seller's agent his/her compensation directly. Does this violate license law? Choose only ONE best answer. A Yes, compensation cannot be paid directly to the buyer agent. B Yes, neither agent for buyer or seller can receive payment directly from the attorney. C No, it is common practice for the listing firm to pay agents compensation directly to the agent that earned the commission. D No, the Real Estate Commission does not set rules regarding payment of compensation to provisional brokers.

This answer is correct. A The buyer's agent does not work for the listing brokerage since both clients are represented under an exclusive agency agreement. The broker-in-charge must pay commission to a provisional broker, and compensation cannot be paid directly by any other party.

Which of the following statements about option agreements is correct? Choose only ONE best answer. A The seller is unable to sell the property to another person other than the option holder. B An option is a bilateral contract until exercised and then becomes a unilateral contract. C All terms of purchase of the are agreed to when the option is exercised. D The option automatically renews until either of the parties gives notice.

This answer is correct. A Unit 8.5 Unusual purchase agreements Under an option agreement, the owner has tied up their property, preventing sale to another party until the option is exercised or expires. It is very important to remember that all terms of an option are agreed to upfront including the purchase price, period of time to exercise, period of time to close and steps that must be taken to exercise. Options do not automatically renew themselves

A commercial broker actively licensed in good standing in a state other than North Carolina is interested in representing buyers and sellers in the sale or lease of commercial property. Which of the following is NOT required for the agent to lawfully engage in this type of brokerage activity? Choose only ONE best answer. A Brokers must pass the State portion of the licensure exam. B Affiliate with a broker licensed in North Carolina. C Limit activity solely to commercial transactions, however, may earn referral fees for residential sales. D Apply for a limited license, including a background check.

This answer is correct. A A broker seeking a Limited Non-Resident Commercial License does not need to pass the State portion of the licensing exam. They must meet the other requirements. Also, they are not permitted to hold trust funds and must deliver funds to the N.C. broker. A limited non-resident commercial broker must be licensed in good standing in another state, affiliate with a North Carolina broker, and declare affiliation with the Commission.

Charlotte Jones is managing a residential rental property located at 401 Shepherd Lane for Bob Johnson. All the followings statements are accurate regarding renting a property in North Carolina, EXCEPT: Choose only ONE best answer. A Should the tenant damage the property during the lease term, Charlotte can pay invoices from the tenant security deposit, and the tenant must replace the funds within 30 days. B The owner is not permitted to discriminate against protected classes, even if one unit of the triplex being rented is owner-occupied. C Charlotte must hold tenant security deposits in a trust or escrow account. D Should the tenant request repairs to ensure the unit is safe, fit and habitable, Charlotte and Bob cannot seek to evict the tenant without cause in retaliation.

This answer is correct. A A property manager/ owner cannot access the tenant security deposit until the end of the tenancy where the tenant has vacated. There are permitted uses and limits on the amount that can be charged according to the Tenant Security Deposit Act. When an owner hires a licensed broker, they lose the limited exemptions that they may have to discriminate. Security deposits must be held in a trust account when a licensee is involved (even personally owned by the broker), or if unlicensed - the landlord may be bonded. The property manager and owner are not permitted to retaliatory eviction when a tenant exerts his/her right to habitable premises. The owner/property manager would not be required to renew a lease upon the expiration of the initial lease term.

An example of a place of public accommodation under ADA requirements is: Choose only ONE best answer. A a real estate brokerage office. B an owner-occupied home. C a single-family vacation home. D a duplex with both units available for rent.

This answer is correct. A A real estate brokerage office is open to the public, therefore must be accessible. The other property may require reasonable modification to a property at the renter's expense under the Federal Fair Housing Act. The ADA allows a service animal (dog or miniature horse) access to public facilities. It requires facilities to be accessible (ramps, pull bars, etc.) when it is open to the public. Service animal must be allow to public places like libraries, restaurants... Assistant animal are allowed to residential only

A licensed broker has decided to rent an apartment in a nearby city since a large majority of his residential brokerage sales have been in that area. The owner of the property manages the property "For Lease by Owner." The owner does not have a residential lease agreement and asks the broker to create a lease offer. Can the broker follow this request? Choose only ONE best answer. A Yes, the broker can use a preprinted form that has been prepared by an attorney. B Yes, so long as the broker has extensive knowledge concerning property management. C No, a broker is not permitted to write up a lease agreement for the owner to sign under any circumstances since he is a party to the transaction. D No, a broker can only write up a lease agreement when he/she is acting under a property management agreement.

This answer is correct. A If you restate the question to its base form, it would be "can a broker complete an offer to purchase/lease a property when it is for his/her own use?" When you get a real estate license, it does not mean that you can never represent yourself. A broker can make offers for sales or leases on preprinted forms or elect to write his/her offer on a bar napkin for that matter. While it is recommended to use preprinted forms written by an attorney for the protection of all parties, the broker can draft provisions or an entire form. The broker should understand lease agreements, however is not required to be knowledgeable in property management as he is a tenant.

Which of the following advertisements placed by licensed brokers would comply with License Law and Commission Rules? Choose only ONE best answer. A Large 3 bedroom 2 bath home in desirable neighborhood for only $215,000. Call Anita James at 919-555-1212. B Fulfill your dreams or someone else. Great opportunity to own investment property while your tenant pays the mortgage. Large duplex for only $280,000. One unit rents for $1,400. Call James Jones, Broker XYZ Realty at 919-555-1212. C Great rental opportunity. Own for as little as $5,000 down with seller financing available with excellent credit. For more information, visit www.abcrealty.com. D Great home for a first-time home buyer or retiree with no children. This home is located in a quiet neighborhood. Call Homes Realty at 336-222-2222.

This answer is correct. B Listing how much a property rents for is a fact and does not trigger Regulation Z's disclosure requirements. The ad includes the name of the brokerage and therefore is not a "blind ad." An advertisement is a "blind ad" when it is not apparent that a potential buyer is calling a real estate license rather than the owner of the firm. A website is not sufficient; the advertisement must include the firm name. A broker should stick to facts about the property and not the people to avoid violating fair housing laws.

Which of the following would violate the Federal Fair Housing Act of 1988? Choose only ONE best answer. A A handicap tenant is permitted to widen doorways, install pull bars, and a wheelchair ramp at his own expense. B Refusal to rent to an Indian applicant when one unit is occupied by the owner if a 5-unit dwelling. C Refusal to rent based upon the marital status of the tenant. D A property owner fails to give preference to a protected class when multiple rental applications are received.

This answer is correct. B There are limited exceptions for property owners under Federal Fair Housing, where the landlord can refuse to rent to a protected class when a unit is owner-occupied. The limited exception is for residential, 1-4 unit apartments, not five or greater units. The Federal Fair Housing Act allows a tenant to modify the rental premises at the tenant's expense to make a property handicap accessible. There are limited exceptions to the law for a seller so long as they do not use discriminatory advertising or tell the individual why they are refusing to rent. The Equal Credit Opportunity Act protects against discrimination based upon marital status, not Federal Fair Housing. Federal Fair Housing does not require an owner/manager to give preference to a protected class; however, it does set restrictions on discrimination. An owner is exempt when leasing a multifamily property with four or fewer units, where one unit is owner-occupied, senior housing, owner of 3 or fewer homes - selling no more than one home every two years, private clubs, and religious organizations. It is important to note that a REALTOR® cannot discriminate, and an owner that hires a REALTOR® loses the above exemptions.

Which of the following is FALSE about mortgage financing? Choose only ONE best answer. A The risk of default is higher for adjustable-rate mortgages than fixed mortgages. B A borrower often pays discount points to lower the interest rate stated on the banknote. C Construction loans are the riskiest and often require a borrower to obtain a take-out commitment. D A borrower with limited funds to purchase would seek a blanket loan which allows a parent to cosign on the mortgage.

This answer is correct. B A blanket loan occurs when the lender finances multiple properties/parcels of land in one loan. The loan will require the borrower to pay off a portion of the loan when the borrower sells one of the properties. A kiddie-condo loan allows a parent to cosign on a mortgage & most banks enable a parent to cosign a mortgage loan. Adjustable-rate mortgages transfer the risk of increasing interest rates to the borrower & can increase the monthly mortgage payment, which could cause a borrower to default. Discount points are prepaid interest that lowers the interest rate stated on the note. A borrower pays discount payments to lower the monthly payment.

A property located in the western part of North Carolina: Choose only ONE best answer. A are less likely to have tar paper installed. B will have a higher R-value. C are more likely to be built on a slab foundation. D are less expensive to build as construction is often one-story.

This answer is correct. B A property located in a colder climate like mountainous areas in northwestern North Carolina have higher R-values for insulation. Tar paper or house wrap is installed before the siding is installed to prevent water entry. Slab construction is commonly built in warmer climates as the footing is poured below the freeze line. A one-story building is the most expensive form of construction as it takes up more land.

A newly licensed broker holds an active license on provisional status. The provisional broker begins to send marketing materials to expired listings. Which of the following would NOT be permitted under federal law or Commission rules? Choose only ONE best answer. A Mailing postcards to all expired listings in the service area without first obtaining permission from the owner of the property. B Offering to perform a comparative market analysis at a discounted rate of $25 with the permission of his/her broker-in-charge. C Calling a seller directly whose home was listed by an agent of the firm one year after the listing expired when the seller is on the Do Not Call Registry. D Sending solicitation emails once a seller has requested additional information that includes a prominent opt-out.

This answer is correct. B A provisional broker cannot be compensated for the preparation of a CMA / BPO. The provisional broker can still earn compensation on the sale of a property, but cannot charge a separate fee for the CMA/BPO. A broker, not on provisional status, would be able to be compensated for performing a CMA/BPO. There are very few regulations about sending regular mail - so no permission is required before sending out marketing material. The listing agreement is with the firm, so an agent of the firm may contact a past client up to 18 months after the agreement expired without violating the Do Not Call Registry. Can-SPAM requires a prominent opt-out from receiving future marketing emails.

For a seller to qualify tax-deferred exchange, a property must Choose only ONE best answer. A be held for at least 30 years. B be used in a trade or business. C be a primary residence for two out of the last five years. D be residential if the new property is residential.

This answer is correct. B A tax-deferred exchange (also called 1031 Like-Kind-Exchange) applies to investment property, not a primary residence. A qualifying intermediary (attorney) exchanges the property rather than a direct exchange between two parties. Once the relinquished property sells, the seller has 45 days to identify the new property and 180 days to close. The exchange is an investment for an investment property, so the seller can sell a residential property to purchase an office building. When selling a primary residence, the owner can exclude $250,000 of gain if single / $500,000 of the gain if married requiring that the property be used as a primary residence for 2 out of the last 5 years. The deductible expenses in the current year on an owner's tax return are mortgage interest (which includes prepayment penalties and late fees), discount points, and property taxes. The origination fee MAY be deductible, so a prudent owner should check with a qualified tax professional.

Which of the following statements is TRUE regarding the income capitalization approach? Choose only ONE best answer. A Net operating income is calculated by taking the effective gross income and subtracting operating expenses and vacancy losses. B The capitalization rate is determined by taking the selling price of other buildings and dividing by the gross market rent. C Net Operating Income is calculated by removing all expenses except the Debt Service from the Effective Income. D To calculate the value of the property, the broker or appraiser would need to calculate the before-tax cash flow.

This answer is correct. C Net operating income is calculated by taking effective gross income and subtracting operating expenses (no depreciation, debt service or capital improvements). To calculate the capitalization rate, divide net operating income by the value of a property. To calculate before-tax cash flow subtracting debt service from net operating income.

Which of the following statements is TRUE regarding providing an adequate legal description of a property in a contract? Choose only ONE best answer. A The metes and bounds property description is the primary method used in the US. B Reference to recorded documents such as plat book and page and deed book and page are sufficient to identify a property uniquely. C The street address is sufficient to form a legally binding contract. D Only an attorney can provide an adequate legal description for a real estate contract.

This answer is correct. B The 13 original colonies and Texas use the metes and bounds system. The rest of the country uses the government rectangular survey system. It is important to remember that in the government rectangular system a township has 36 sections, there are 640 acres in a section and that a section is also 1 square mile of land. It is common practice for real estate brokers to reference recorded legal documents such as deed book and page/plat book and page, property tax ID, and other legal descriptions. The deed will contain all of these items as well as the metes and bounds or government rectangular survey system description. The street address is an informal reference, and by itself is not sufficient to form a legally binding contract. A broker can fill in the blanks to a standard form, which will provide an adequate legal description.

Which of the following loans is not subject to the Truth-in-Lending Act? Choose only ONE best answer. A Home Equity Line of Credit B Commercial Real Estate Loan C First Mortgage Loan D Second Mortgage Loan

This answer is correct. B Unit 6.4 Finance Legislation...Financing is a major study topic The Truth-in-Lending Act applies to consumer finance including first mortgage, second mortgage and home equity lines of credit. The truth in lending Act also applies to credit cards, car loans, and any other loans made to individuals. Loans made to businesses or commercial real estate loans would not be subject to the Truth In Lending Act

A broker shows property and writes up an offer for the buyer and seller: Choose only ONE best answer. A must act as a dual agent with the informed consent of both buyer and seller. B will breach his fiduciary responsibility due to the reduction in duties the broker can perform. C may act as a transaction broker where the broker only represents the transaction. D may act as an exclusive agent for both buyer and seller in the transaction.

This answer is correct. C A facilitator or transaction broker is a non-agency relationship where a licensed agent can assist the buyer and seller in the purchase/sale of a property without representing the interests of either party. The buyer and seller are customers and owed honesty, fairness, and disclosure of material facts. NOTE: North Carolina does not permit transaction brokerage.

A property along a navigable river suffered substantial damage when widespread flooding caused the owner to lose approximately 80 feet of land along the river boundary. This is known as: Choose only ONE best answer. A reliction. B erosion. C avulsion. D accretion.

This answer is correct. C Avulsion is the sudden and violent loss of land that is commonly caused by large storms such as hurricanes with extensive flooding. Erosion is a gradual loss of land over time. Reliction is the gradual extension of land as water permanently recedes, while accretion is the gradual extension of land through soil deposits (alluvium/alluvion).

A municipality decides to expand access to public water services in a neighborhood that previously only had wells. The municipality did not require the owner to tap on to the new system. The municipality would commonly pay for this expansion: Choose only ONE best answer. A by increasing tax rates for all residents that live within municipality limits. B by increasing the rate of taxes charged to all owners in the neighborhood. C by charging a special assessment that supersedes other recorded liens. D by charging a higher amount for water use in this designated area.

This answer is correct. C When a municipality expands city water/sewer services, installs sidewalks, street lights, or paves a roadway, they can charge a special public assessment. Property taxes and special public assessments are paid first, before all other recorded liens.

A broker is working with a buyer as a seller's subagent in the purchase of a resale property located outside city limits built in 1998. The roads in the subdivision are deteriorating, and the buyer asks if roads are publicly or privately maintained. The broker informs the buyer that all subdivisions built after October 1st, 1975 require the subdivision developer to establish a fund for road maintenance when roads are private. The agent is guilty of: Choose only ONE best answer. A Willful Omission B Negligent Omission C Negligent Misrepresentation D Willful Misrepresentation

This answer is correct. C A broker must investigate to determine if roads are public or privately maintained as this is a material fact. When a property is initially sold by a developer, after October 1, 1975, the developer must disclose if roads are public or private by providing the Subdivision Street Disclosure Statement. The developer is not required to set up a fund for road maintenance. Willful versus negligent is determined by intent, and the facts of the question fail to show intent. Misrepresentation vs. Omission is determined by the agent stating something or remaining silent. In this case, the agent made a representation and was wrong.

An agent working with a buyer in the purchase of a property located in a subdivision learns the property has experienced well and septic issues. Recently the city has decided to extend services to the community, which will substantially increase the value of the home. The agent fails to disclose this fact to the seller but does disclose this to the buyer. Has the agent acted properly? Choose only ONE best answer. A Yes, as the agent's fiduciary duties, including loyalty to the buyer, and it would weaken the buyer's bargaining position. B Yes, as the seller has to protect his/her interest by remaining informed about changes that may impact the value of the property. C No, the agent must disclose material facts relating to the property to both parties regardless of the party represented. D No, the agent represents the seller and owes loyalty to the seller only.

This answer is correct. C A broker owes disclosure of material facts to all parties regardless of agency status (representing the buyer, seller, or both). In this transaction, the agent acts as a seller subagent as the question states the agent is working "with a buyer." While it does not impact the answer, it is essential to watch out for working "with" (customer) or working "for" (client).

The listing agreement between a seller and brokerage can include which of the following provisions? Choose only ONE best answer. A A clause that allows for an automatic renewal of the listing agreement B A disclaimer of liability for the brokerage when an affiliated broker makes an error when advertising the property on the MLS or other internet media C The authority for the broker to disclose the existence of other offers on the property D A provision allowing the owner to discriminate against Muslim buyers

This answer is correct. C This is a question of legality. As part of OLDCAR, we owe our clients following their instructions so long as the instructions are legal. A brokerage can seek permission to disclose the existence of other offers. Listing agreements cannot contain an automatic renewal clause. They must expire and have an expiration date. A brokerage is liable for the negligent or willful actions of affiliated brokers. This means there cannot be statements in a listing agreement trying to remove that liability. When a broker advertises a property in error, such as wrong square footage, an illegal use based on current zoning, or an incorrect number of bedrooms based upon septic permit, the brokerage cannot disclaim liability. A brokerage can certainly not agree to discriminate against a protected class of individuals.

Which of the following best describes the action an individual homeowner in a neighborhood with restrictive covenants would take when a neighbor in violation? Choose only ONE best answer. A File a complaint with the local housing department. B Encourage neighbors to send letters demanding the neighbor to stop. C Contact the police to complain. D Seek an injunction through the courts.

This answer is correct. D The best course of action when a homeowner is violating restrictive/protective covenants is to file a complaint with the homeowner's association. Since this is not an option in the question, the second-best answer is seeking an injunction through the courts. The local housing department and police department will not hear a complaint unless it is a violation of the law. It is not advisable to encourage neighbors to send letters demanding a neighbor to stop a certain action.

Terry owns a property located near a major university. He anticipates that property values will appreciate significantly over the next few years, so rather than selling the property, he decides to rent. Which of the following statements is correct? Choose only ONE best answer. A Terry has a leasehold interest in the property and has given up the right of control. B Terry has a leasehold interest in the property and has given up the right of possession. C Terry has a leased fee interest in the property and has given up the right of control. D Terry has a leased fee interest in the property and has given up the right of possession.

This answer is correct. D The landlord receives the fee and therefore has a leased fee interest in the rental property. The tenant has a hold on the premises, and therefore the tenant has a leasehold interest in the rental property. When the landlord rents out the property, she/he gives up the right of possession in return for the rental rate. He/she does not give up the right of control - they could sell the property to another, subject to the lease agreement.

Which of the following statements regarding the Standard NCAR / NCBA Offer to Purchase form 2-T is FALSE? Choose only ONE best answer. A The seller is not obligated to transfer title free from all liens and encumbrances B The seller is to transfer the title under a general warranty deed C The buyer is permitted a 7-day delay in settlement D The standard contract is created by the NC Real Estate Commission

This answer is correct. D The Commission does not create contract forms, the NCAR does. The Commission sets the rules for standard forms, and the brokerage will determine if association forms will be used or hire an attorney to create standard forms for the office. It is important to know the definition of an encumbrance. It is a common mistake to think only of financial liens as encumbrances - however, encroachments, easements, deed restrictions, and restrictive/protective covenants are also encumbrances. Most of these items, excluding encroachments that may be cured, run with the land, and the seller would not, on his/her own, terminate them. The buyer or seller is entitled to a 7-day delay in the settlement so long as the delaying party is using best efforts.

Property has been under contract for three weeks, and the finance contingency will expire in the next 48 hours. The buyer is requesting a one-week extension of the contingency. If the seller agrees to modify the contract, which of the following has occurred? Choose only ONE best answer. A Substitution B Novation C Addendum D Amendment

This answer is correct. D The agreement to modify a contract is known as an amendment. Novation is the act of replacing a party to the contract with the release of liability. An addendum adds provisions to an offer during the process of negotiation. Addendum....negotiation Amendment...RE-negotiation

Which of the following is CORRECT with regards to handling funds in a real estate transaction? Choose only ONE best answer. A An agent must deliver the earnest money and due diligence payment to his/her broker-in-charge so that it can be deposited in the trust account according to the Real Estate Commission's guidelines. B The brokerage is only required to retain the deposit for a timeshare in a trust account for five days from the effective date of the contract. C A brokerage must deposit earnest money received with an offer within three banking days of receipt. D When an agent receives an earnest money deposit in cash it should be deposited into the trust account immediately but no later than three banking days from receipt.

This answer is correct. D When a broker accepts cash for an earnest money deposit, it must be deposited into the trust account within three banking days, even if a legally binding contract has not been formed. The due diligence fee is made payable to the seller, and so it does not go into the trust account and should be delivered to the seller within 3 calendar days of the effective date of contract. A deposit that is for a timeshare must be retained in the trust account for ten days from contract acceptance (note: ALL funds remain in the trust/escrow). Earnest money must be deposited the later of 3 banking days from the effective date of the contract or three banking days from receipt. The statement says, "earnest money received with an OFFER," not earnest money received with a contract.

A licensee that shows a prospective buyer neighborhoods based upon the buyer's color rather than on the amenities of the homes is guilty of: Choose only ONE best answer. A redlining. B blockbusting. C steering. D misrepresentation.

This answer is correct.C Directing or channeling a buyer to particular neighborhoods based on one or more of the protected classes under the federal fair housing act is known as steering. Redlining was a common practice of refusing to lend or insure loans in racially mixed areas. Blockbusting induces the sale of a property because one of the protected classes is moving into the neighborhood. Misrepresentation occurs when a licensee lies either orally or in writing.

An agent is trying to determine the probable selling price for a property using the sales comparison approach. The subject property is inferior as it does not have a deck; however, the comparable property does. A deck contributes $4,000. Which of the following adjustments should the agent make? Choose only ONE best answer. A The comparable property should be adjusted downward. B The comparable property should be adjusted upward. C The subject property should be adjusted downward. D The subject property should be adjusted upward.

This answer is correct.A Unit 7.2....STUDY UNIT 7! It is one of the units that students do the worst on. When using the sales comparison approach it is essential to remember that you never adjust the subject property. One way to ensure this is to recall comp superior subtract and comp inferior increase. When the subject property is inferior that means that the comparable property is superior, so the comparable property would be adjusted downward

Seller's agent A lists a property for sale in a desirable location in Charlotte, NC. Buyer's agent B represents a buyer that becomes interested in the property. At which point must agent B disclose to agent A that they are acting as a buyer's agent in the transaction? Choose only ONE best answer. A When agent B telephones agent A to schedule a showing appointment B Before showing the home, notice must be provided either orally or in writing C Once first substantial contact is reached D Upon submission of an offer by agent B

This answer is correct.A The buyer's agent must disclose his / her status to the seller or seller's agent at initial contact. This can occur over the phone when scheduling an appointment and may occur up to the presentation of an offer. The first time the buyer's agent interacts with the seller or seller's agent, they must disclose that they represent the buyer. It allows each party to protect confidential information about his/her client.

Which of the following defines when a lien with a higher priority takes a lower position? Choose only ONE best answer. A Subordination B Refinancing C Disintermediation D Affirmation

This answer is correct.A When a lender agrees to take a lower priority, it is known as subordination. Disintermediation is directly investing rather than passing through a middle man, such as a real estate investment trust. Affirmation is the continuation of a void or voidable contract through closing, thus affirming it is legally binding.

The seller lacks funds to clear the current debt against the property in full. A prudent buyer's agent will include which addendum in the offer to purchase? Choose only ONE best answer. A Back-Up Contract B Short Sale C FHA/VA Financing D Contingent Sale

This answer is correct.A short sale may arise when the seller's property is "under water", where they owe more money than the house is worth, and the seller does not have sufficient assets to pay the difference. The bank needs to approve the short sale, where they agree to take less money and release the lien. A back-up addendum is used when the property is currently under contract. The FHA/VA addendum is used when the buyer obtains either FHA or V.A. financing. NCAR no longer provides a standard form for a contingent sale. The buyer negotiates the due diligence period to cover the contingency. Nationally, a contingent sale addendum is when the buyer needs to sell or rent another property to qualify for the new home.

Annette is purchasing a large tract of land to build a home, farm organic vegetables, and raise chickens. The lot does not have access to public water, sewer, or cable television. Her agent has obtained a copy of the restrictive/protective covenants to review with her. Which of the following should the broker recommend to determine if the lot is suitable for a 4-bedroom house? Choose only ONE best answer. A Contact the EPA to obtain permission to install a septic system. B Obtain a perc (soil suitability) test, which may be performed by the county. C The buyer should review the restrictive covenants for the required bedrooms. D The buyer should obtain a survey defining septic size and location.

This answer is correct.B A property that does not have access to a public sewer system will require a septic system. To determine the type of system or if the soil were not suitable - a buyer would obtain a perc test. This test can be performed by a private company (if allowed by local regulations) or the county. An environmental engineer is used to determine if the soil is contaminated. Covenants are essential for minimum construction standards, however not the best choice for determining soil suitability. A survey details locations of items on the property, however does not include soil testing.

Which of the following statements about option agreements is correct?Which of the following statements is CORRECT regarding title insurance policies? Choose only ONE best answer. A A borrower will pay for the policy at the time of closing and must renew the owners' policy on an annual basis to maintain coverage. B An extended policy covers unrecorded rights of persons in possession, survey errors, and unrecorded liens not known by the policyholder. C The policy covers defects that were discovered by the attorney when performing the title search. D The owner's policy coverage will decrease to zero once the mortgage is paid in full.

This answer is correct.B The premium for a title insurance policy is paid once at the time of closing. There are no annual premiums paid after closing. There are standard and extended policies available, with extended being the preferred policy as it covers the buyer against more potential losses. The borrower will typically pay for both the lender/mortgagee policy and the borrower/mortgagor policy. The policy covers the sins of the past that were not discovered by the closing attorney (insurance companies won't cover known errors before the policy is issued). The lender's policy will eventually expire upon final loan payment. The owner policy remains for the full purchase price.

Ben manages a commercial property for Kelly, where the tenant will pay a monthly rent plus taxes, insurance, and common area maintenance. What type of lease did the tenant enter? Choose only ONE best answer. A Gross Lease B Percentage Lease C Net Lease D Ground Lease

This answer is correct.C When a tenant signs a net lease, he/she pays monthly rent plus property tax, insurance and/or common area maintenance. A gross lease requires the tenant to pay monthly rent and the owner to pay property tax, insurance, and common area maintenance fees. A percentage lease is typical in retail rental agreements where the tenant pays a low flat rental plus a percentage of sales to the landlord. A ground lease requires the tenant to pay rent for the land as well as pay for the construction cost of the building, which is often an extended lease (ex: 99-year lease with a 99-year renewal).

A property owner desires to change the zoning of a large tract of land into a subdivision that will provide affordable housing. The owner did not have to go through the typical process to obtain approval. The owner received a: Choose only ONE best answer. A Variance Permit. B Spot Zoning Permit. C Subsequent Exception Permit. D Special Use Permit.

This answer is correct.D A special use permit allows a property owner to use a property for a specific use that does not follow the current zoning in that area. It is provided for in long-term planning as it is in the public's interest (such as low-income housing, hospitals, museums, etc.). A variance is a minor change to the property - such as adding additional parking space. Spot zoning is changing the rules for one property rather than the surrounding area, typically for the financial benefit of the owner. There is no such thing as a subsequent exception permit.

All of the following statements are correct concerning lead-based paint EXCEPT: Choose only ONE best answer. A The buyer should receive the pamphlet Protecting Your Family From Lead in the Home. B Encapsulation is the primary method to protect against the hazards of lead-based paint. C The buyer is allowed an opportunity to inspect the home for lead-based paint. D The Lead-Based Paint Addendum is required if the home is built before 1992.

This answer is correct.D The Lead Based Paint Addendum is used in most homes built prior to 1978. Disclosure is required in residential sales, so if the property has been converted to commercial there is no disclosure requirement. The owner does not have to certify that the property is lead free. Lead may be encapsulated to reduce the health risks or remediated from the property.

A buyer is considering the purchase of a property that was used as a gas station 20 years ago. They intend to rehab the building to operate a restaurant. What should the agent recommend to the buyer? Choose only ONE best answer. A The buyer should contact the Environmental Protection Agency (EPA) to discover potential contamination. B The broker should review public records to determine if a past leak was reported on the property. C The buyer should instruct the closing attorney to review past legal action taken against the property for potential contamination. D The buyer should hire an environmental engineer to perform testing.

This answer is correct.D When a buyer is purchasing a property that may have been environmentally contaminated, a broker should recommend the use of an Environmental Engineer (to assess potential risk/contamination). The EPA can provide information and will investigate reports of active contamination; it is not the best recommendation. The attorney is not responsible for assisting the buyer in determining contamination. The public record may not contain information regarding contamination, as it has not been discovered.

The owner of a property grants a license to a hunter so she can hunt on his 100-acre property. The owner decides to sell the property. Which of the following statements is TRUE? Choose only ONE best answer. A This is an illegal act as only the state can issue a license to use the property for hunting. B This is a personal easement in gross, that the owner must honor for the hunters' lifetime. C This is a commercial easement in gross that may be sold or conveyed by the hunter. D The license is not an encumbrance, as the owner may terminate it at any time.

This answer is correct.D A license may be revoked at any time and therefore is not an encumbrance against the property. While the state does set rules for hunting, they would not be able to grant permission to use private land. A commercial easement in gross is common for utilities, railway, billboards, etc. and may be sold, inherited, or conveyed. A personal easement in gross is generally for the lifetime of the individual that is benefiting from the easement.

Aiden is representing a seller through an Exclusive Agency Listing Agreement on October 10th. He performed a visual inspection of the property and viewed the crawl space from the opening, noting no material facts for disclosure. Had he thoroughly inspected the crawl space, he would have seen water stains on the inside foundation block from standing water that occurs during springtime. The seller made no mention of standing water to Aiden, and Aiden did not disclose the standing water to the buyer or buyer's agent. Aiden guilty of: Choose only ONE best answer. A negligent omission as standing water is a material fact that should have been discovered. B negligent misrepresentation for failure to disclose the material fact. C willful omission as Aiden failed to investigate the property as required by the Commission. D no violation as this is a latent defect.

This answer is incorrect. D The correct answer is 'D' An agent is responsible for disclosing facts that they know or reasonably should have known. Since Aiden performed a visual inspection of the property with no noted defects, he would not be liable. The defect is latent - meaning hidden. Brokers are not required to inspect the entire crawl space visually or to discover concealed problems. Had the seller disclosed the issue, then Aiden would be required to disclose as a material fact, even if standing water is not present at the current time. Willful vs. Negligent comes down to intent or a broker's failure to take additional action when informed about a material fact. Omission vs. Misrepresentation comes down to the broker, not saying something or saying something untrue.

T/F The Working with Real Estate Agents brochure is required in ALL sales transactions

True, It is NOT required in all real estate transactions as auctions and lease transactions are exempt.

undisclosed dual agency.

Undisclosed dual agency occurs when a broker represents both the buyer and seller in a transaction without their knowledge and consent.Dual agency must be agreed to before a broker can act in that capacity. The broker would not be entitled to compensation in this scenario.

perc test

also known as a soil suitability test

Protection Agreement

documents how much a For Sale by Owner will compensate a broker that represents a buyer

a right of first refusal

he right of first refusal allows the owner to put the property on the market and obtain offers, however the owner can't sell the property without checking first with the party that has the right.

Sherman Antitrust Act

prohibits price-fixing and boycotting