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North Carolina Real Estate Pre-Licensing Course Questions and Answers, Exams of Advanced Education

A series of multiple-choice questions and answers related to the north carolina real estate pre-licensing course. It covers various topics including designated agency, dual agency, agency disclosure, commission rules, contracts, property disclosure, and real estate law. The questions are designed to test the understanding of key concepts and regulations relevant to real estate practice in north carolina.

Typology: Exams

2024/2025

Available from 11/10/2024

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Licensing Course questions and answers exam

Designated agency in North Carolina is considered: I. A form of dual agency II. Mandatory if you practice dual agency A. I only B. II only C. Both I and II D. Neither I nor II - --A. I only Designated agency can be practiced: I. Between two firms II. Between a broker-in-charge and a provisional broker licensee in their office A. I only B. II only C. Both I and II D. Neither I nor II - --D. Neither I nor II Under the general principles of agency, when a licensee is acting on behalf of a client and acts improperly who is liable for the acts of the licensee? A. only the client B. only the licensee and the broker-in-charge C. only the client and the licensee D. the client, the licensee, the firm and or the broker-in-charge - --D. the client, the licensee, the firm and or the broker-in-charge A disclosure of agency status should be made by a buyer's agent to the seller: l. With a written confirmation in the offer to purchase and contract ll. At the initial contact with the seller's agent, orally or in writing

A. l only B. ll only C. Both l and ll D. Neither l nor ll - --C. Both l and ll Which of the following would be dual agency? A. a broker-in-charge assisting a buyer client in the purchase of property that was listed by a provisional broker of another firm B. a provisional broker and a broker licensee from firms that are cooperating in a transaction C. a firm that represents buyers and sellers D. a broker having a buyer client for a property the broker personally listed - --D. a broker having a buyer client for a property the broker personally listed A parcel of vacant land 80 feet wide and 200 feet deep was sold for $200 per front foot. How much money would an individual agent receive for a 60% share of the 10% commission earned? A. $ B. $ C. $1, D. $2,400 - --B. $ A buyer-client has instructed the agent to show only properties where the seller is willing to pay the buyer agent's commission. The agent contacts an owner selling a property without the assistance of a real estate agent with the hope that the seller would be willing to pay her commission if the buyer decided to purchase the seller's property. In order to comply with North Carolina Real Estate Commission Rules, the agent must do all of the following, EXCEPT: A. obtain permission from her buyer-client in order to obtain compensation from the seller B. disclose her agency status to the seller at initial contact C. convince the seller to list with her and authorize dual agency D. provide the Working with Real Estate Agents brochure to the seller - --C. convince the seller to list with her and authorize dual agency

If the broker-in-charge (BIC) is to act as one of the designated agents on a North Carolina in-house transaction, which of the following may be appointed as a designated agent for the other party to the transaction? A. an actively licensed provisional broker within the firm, so long as disclosure is made to both clients B. a full broker within the firm who has no prior confidential knowledge of the party that the BIC will represent C. a broker-in-charge cannot be appointed as a designated agent D. a licensed broker who has prior confidential knowledge about the party that the BIC will represent

  • --B. a full broker within the firm who has no prior confidential knowledge of the party that the BIC will represent A licensee is an actively licensed real estate broker who has a written contract with his firm that specifies that he will not be treated like an employee. The licensee's entire income is from sales commissions rather than an hourly wage. Based on these facts, the licensee will be treated by the IRS as: A. a real estate assistant B. an employee C. a subagent D. an independent contractor - --D. an independent contractor All of the following are TRUE regarding the North Carolina Working With Real Estate Agents brochure, EXCEPT: A. the consumer is not required to sign the brochure B. if the first substantial contact is by phone, the brochure must be provided within 3 calendar days C. the brochure's use is mandatory in all real estate transactions, including residential sales, commercial transactions and property management D. the brochure must be given in all sales transactions at first substantial contact - --C. the brochure's use is mandatory in all real estate transactions, including residential sales, commercial transactions and property management All of the following are exempt from the requirement to provide an RPOADS and MOG, EXCEPT:

A. Transfers between spouses B. First sale of a dwelling not yet inhabited C. Both parties agree not to complete the form D. A For Sale by Owner - --D. A For Sale by Owner Which of the following statement(s) is/are true? l. In a breach of a sales contract, the earnest money deposit is considered liquidated damages. ll. In a breach of a sales contract, liquidated damages are an agreed upon amount of money the parties agree to accept in the event of breach. A. l only B. ll only C. Both l and ll D. Neither l nor ll - --C. Both l and ll Which of the following document(s) would be covered by the NC Statute of Frauds? l. Listing agreement ll. Buyer agency agreement A. l only B. ll only C. Both l and ll D. Neither l nor ll - --D. Neither l nor ll A man has posted a $100 reward for anyone who returns his missing dog. This is an example of: A. a unilateral contract B. a bilateral contract C. an implied contract D. an executed contract - --A. a unilateral contract An executory contract is one in which: A. all of the terms and conditions have been performed B. there are still essential elements to be performed

C. one or more of the parties is in breach of the agreement D. the contract has expired - --B. there are still essential elements to be performed The fact that the NC listing agreement and buyer agency agreement must be in writing is required by: A. Statute of Frauds B. Commission Rule C. Conner Act D. Contract law - --B. Commission Rule A licensee has just discovered a major roofing leak in one of his current listings even though the seller has indicated "no representation" on the Residential Property Disclosure Statement. The listing agent does not inform the selling agent of the defect and since the defect, is hidden, the selling agent does not discover or disclose the problem to the buyer. According to the North Carolina Real Estate Commission, who is held responsible for this nondisclosure? A. the listing agent B. the listing broker and the selling broker C. the seller and the listing agent D. the seller - --A. the listing agent Which of the following is TRUE about the North Carolina Residential Property Disclosure Act? A. All agents in the transaction should facilitate the timely delivery of the property disclosure report to the buyer. B. The property owner should disclose the condition of the listed property or be subject to a 3-day rescission period on any contract formed. C. All residential sellers are exempt from this act unless a broker is not involved in the transaction. D. Buyers must receive the completed disclosure report no later than the beginning of the due diligence period. - --A. All agents in the transaction should facilitate the timely delivery of the property disclosure report to the buyer. Earnest money deposits, when paid in the form of a personal check given on an Offer to Purchase and Contract, must be deposited in an escrow account:

A. no later than three banking days after acceptance of contract B. no later than 72 hours after receipt of money C. no later than three business days after receipt of the money D. no later than 72 hours after acceptance of contract - --A. no later than three banking days after acceptance of contract A seller sold his property for $97,000. He made a 321.74% profit. What was the purchase price of the property? A. $13, B. $23, C. $74, D. $97,000 - --B. $23, Deed restrictions can be created by all of the following, EXCEPT: A. deeds B. statutes C. written agreements D. general plans of a subdivision - --B. statutes The enforcement of zoning requirements occurs by: A. local homeowners' associations B. local municipalities through the Enabling Act C. the NC Department of Transportation D. local homeowners' associations - --B. local municipalities through the Enabling Act The concept by which land would increase automatically along a river or stream is known as: A. accretion

B. littoral rights C. avulsion D. reliction - --A. accretion The owner of a house wants to fence the yard for a dog. When the fence is erected, the fencing materials are converted to real estate by: A. severance B. annexation C. immobility D. indestructibility - --B. annexation A deed conveyed ownership to a grantee "so long as the existing building on the property is not destroyed." Following the transfer, the original grantor has what type of interest? A. life estate B. ongoing ownership in the property that lasts as long as the condition C. fee simple estate D. reversionary estate - --D. reversionary estate A woman conveys a life estate to her son-in-law and stipulates that upon his death the estate will pass to her grandson. The grandson has an: A. estate in reversion B. estate in remainder C. estate pur autre vie D. estate for the life of another - --B. estate in remainder A person who acquired ownership that can be inherited, with the provision "that the land must always be used for recreational purposes," has: A. a fee simple absolute estate

B. a defeasible fee C. a fee simple to a condition subsequent estate D. an estate that cannot be sold - --B. a defeasible fee A brother and sister bought a commercial building and took title as joint tenants with right of survivorship. The brother died. The sister now owns the building: A. as a joint tenant with right of survivorship with her brother's heirs B. in severalty C. as a tenant in common with her brother's heirs D. as a life tenant with her brother's heirs having remainder interests - --B. in severalty Co-owners of a fee simple interest in a small office building are neither related to nor a creditor to each other. One owner dies intestate. The surviving owner would become the sole owner of the property under which of the following rights? A. adverse possession B. reversionary interest C. survivorship D. foreclosure - --C. survivorship Three joint tenants with rights of survivorship own a parcel of land. One owner sells his interest to a long-time friend. After the conveyance, the remaining original owners: A. become tenants in common with each other B. become tenants in common with each other and the newest owner C. become joint tenants with the newest owner D. remain joint tenants with each other - --D. remain joint tenants with each other The owner of a condominium unit learns that a neighbor has failed to pay his condominium association dues. If the neighbor does NOT pay the dues: A. a lien can be filed against the condominium complex

B. a lien can be filed against the neighbor's unit C. a lien can only be filed against the common areas of the condominium D. the taxing authority can order the condominium be dissolved - --B. a lien can be filed against the neighbor's unit The severalty owner of a parcel of land sells it. The buyer insists that the owner's wife also sign the deed. The purpose of obtaining the wife's signature is to: A. terminate any rights the wife may have in the property B. defeat any curtsey rights C. provide evidence that the owner is married D. subordinate the wife's signature to the buyer - --A. terminate any rights the wife may have in the property Vonda Lee and William purchased a home together in 2003 with the deed simply listing both of them as "grantees" without specifying how they were to hold title. They married each other in early 2004. How do they now likely hold title to the house purchased in 2003 if they have not made any other adjustments to their deed? A. tenancy by the entirety B. tenancy in severalty C. joint tenancy D. tenancy in common - --D. tenancy in common Which of the following statements is true? I. A life estate is a freehold estate. II. It is possible to have a freehold estate and a non-freehold estate on the same property at the same time. A. I only B. II only C. Both I and II D. Neither I nor II - --C. Both I and II

Which of the following would be considered real property? I. Electrical switch plate covers II. Gas logs attached to a fireplace A. I only B. II only C. Both I and II D. Neither I nor II - --C. Both I and II Jason's property is adjacent to a navigable river in North Carolina and Jason wants to sell his property. Which of the following statements is true? A. Jason can restrict the public from using that portion of the river that is next to his property B. An owner can sell the property and retain his rights to access the river once it is sold C. Jason's land ends at the center of the waterway D. If Jason obtains proper permits and builds a dock on the river, the dock will automatically become owned by the public - --B. An owner can sell the property and retain his rights to access the river once it is sold The owner of two acres of land sold one acre but retained an appurtenant easement over that land for ingress and egress to his retained lot. The retained lot: A. is the dominant tenement B. serves as the servient tenement C. can be cleared of the easement when it is sold to a third party D. is subject to an easement in gross - --A. is the dominant tenement Bill and Betty just received $25,000 profit from the sale of their home. They are in the process of buying a new home for $185,500 with an 80% LTV ratio. The lender is charging the normal loan origination fee and is lending the money at 1.5 discount points. Bill and Betty pay an attorney $400 to handle the closing, and they must also pay for the excise tax. How much money will the lender be paid in fees? A. $1, B. $4,

C. $3,

D. $4,1581 - --C. $3,

Under a contract for deed, the title to the property is held by the: A. vendor B. vendee C. trustor D. trustee - --D. trustee A mortgagor is the one who: A. gives the mortgage B. holds the mortgage C. provides the mortgage funds D. forecloses on the mortgage - --A. gives the mortgage The defeasance clause in a deed of trust requires the trustee in a specified situation to execute: A. an assignment of mortgage B. a deed of reconveyance C. a satisfaction of mortgage D. a partial release agreement - --B. a deed of reconveyance The borrower utilizing a trust deed is best referred to as the: A. beneficiary B. trustor C. trustee D. mortgagor - --B. trustor

When appraising real estate, the appraiser would consider all of the following in making a determination of value, EXCEPT: A. contractual agreement between the seller and the buyer B. highest and best use of the property C. seller's original purchase price of the property D. selling prices of similar properties - --C. seller's original purchase price of the property In the cost approach to value, the appraiser makes use of the: A. owner's original cost of the building B. estimated replacement cost of the building C. sales prices of similar buildings in the area D. assessed value of the building - --B. estimated replacement cost of the building A building is valued at $215,000 and contains four apartments that rent for $470 each per month. The owner estimates that the net operating income is 65% of the gross rental receipts. What is the capitalization rate? A. 3.7% B. 6.8% C. 10.5% D. 14.2% - --B. 6.8% In the sales comparison approach, what is the indication of value for the subject property with the information given? The subject property is a 2,000 square foot home with 3 bedrooms, 2.5 baths and a 1- car garage. The comparable property is a 2,150 square foot home in the same neighborhood with 3 bedrooms, 2 full baths and a 2 car garage. The comparable property sold for $215,000 last week. The market values additional square footage at $80 per square foot; full baths are valued at $4,000 and half baths at $2,500; 2-car garages are worth an additional $10,000 over a 1-car garage. A. $195, B. $200, C. $203,

D. $229,500 - --A. $195,

Title to real estate passes when a valid deed is: A. signed and recorded B. signed, delivered and accepted C. filed and microfilmed D. executed and mailed - --B. signed, delivered and accepted Which of the following is an essential element of a valid North Carolina deed? A. a seal B. recordation C. the signature of the grantee D. words of conveyance - --D. words of conveyance Regarding title recordation, which of the following statement(s) is/are true? l. Physically taking possession of the property is constructive notice. ll. Public notice of recording documents is actual notice. A. l only B. ll only C. Both l and ll D. Neither l nor ll - --D. Neither l nor ll The recording of a deed: A. is required in order to fully transfer the title of the real estate B. makes the deed enforceable C. ensures the grantee's interest in a parcel of real estate D. warrants the grantee's title to real property - --B. makes the deed enforceable

Determine the excise tax to be paid on a house that sells for $268,210 if the buyer makes a $25, down payment and the seller takes back a second mortgage for $50,000? A. $536. B. $ C. $ D. $538 - --B. $ The concept of "constructive eviction" requires the lessor to keep the property in a "fit and habitable" condition. Which of the following areas of the property would apply under this doctrine? l. Common hallway leading to the apartment units ll. Parking lot A. l only B. ll only C. Both l and ll D. Neither l nor ll - --C. Both l and ll A businessman agrees to lease a barber shop from a landlord. The party responsible for the expense of making repairs to the interior of the building would most likely be: A. shared equally by the landlord and the tenant B. determined by negotiation of the parties per the lease agreement C. the landlord under the NC Residential Rental Agreements Act D. the tenant - --B. determined by negotiation of the parties per the lease agreement Tenants living in foreclosed residential properties: A. must vacate the property within 48 hours of the foreclosure B. must vacate the property within 30 days if the new owner wishes to occupy the property C. can always occupy the unit until the end of their lease period

D. have at least a 90-day notice to vacate the property per federal law - --D. have at least a 90-day notice to vacate the property per federal law Frank is not a licensee. He owns several residential investment properties. He is renting one of his houses out for $1,500 per month. What is the maximum security deposit that Frank may charge the tenant is the lease is for a one year term? A. $1, B. Whatever Frank would like because he is not a licensee or a licensed property manager. C. $2, D. $3,000 - --D. $3, Which of the following actions is a property manager permitted to perform? l. Prepare depreciation schedules for the property owner. ll. Make capital improvements to the property for the property owner when the property manager deems them necessary for the property owner. A. l only B. ll only C. Both l and ll D. Neither l nor ll - --D. Neither l nor ll Functions of the property manager include all of the following, EXCEPT: A. producing the best possible net operating income for the owner B. preservation and maintenance of the property C. carrying out a fiduciary relationship to the owner D. fulfilling fiduciary duties and obligations to the tenants - --D. fulfilling fiduciary duties and obligations to the tenants In regard to the transfer and retention of risk, which of the following statements is INCORRECT regarding property management?

A. a low deductible transfers risk and a high deductible retains risk B. risks can be controlled by installing sprinklers and fire doors and taking other preventative measures C. a low deductible retains risk and a high deductible transfers risk D. removing a swimming pool avoids risk - --C. a low deductible retains risk and a high deductible transfers risk Which of the following liens generally holds first priority? A. mortgage lien B. purchase money lien C. ad valorem real estate tax lien D. federal income tax lien - --C. ad valorem real estate tax lien In order to be entitled to an owner-occupied capital gains exclusion related to a primary residence, which of the following statements is correct? A. The owner must occupy the home two consecutive years out of the last five. B. If the owner has occupied the home for two years at any time during ownership the exclusion. applies C. The owner must occupy the home for two years out of the last five years prior to sale. D. The amount of the exclusion is $500,000 per person. - --C. The owner must occupy the home for two years out of the last five years prior to sale. The amount of the capital gains exclusion for the sale of a principal residence is limited to: A. a sales price of $250,000 per individual and $500,000 per married couple B. a gain of $250,000 per individual and a $500,000 gain per married couple per lifetime C. a gain of $250,000 per individual and a $500,000 gain per married couple per residence D. an aggregate lifetime gain of $500,000 - --C. a gain of $250,000 per individual and a $500,000 gain per married couple per residence

A prospective buyer makes a written purchase offer through a buyer's agent at ABC Realty. The seller accepts the offer as written. The seller communicates to a listing agent at XYZ Realty that the offer was signed. At this point in time, the: A. seller is contractually bound B. buyer is contractually bound C. both parties are contractually bound D. buyer can still withdraw the offer - --D. buyer can still withdraw the offer A real estate Offer to Purchase and Contract becomes valid when: A. the written offer has been signed by both the offeror and offeree B. communication of acceptance is given to the offeror or the offeror's agent C. communication of acceptance is given to the offeree or the offeree's agent D. earnest money has been deposited into the escrow agent's trust account - --B. communication of acceptance is given to the offeror or the offeror's agent During the due diligence period in the North Carolina standard offer to purchase and contract, the buyer who was attempting to obtain a conventional loan did not receive final loan approval, but chose not to terminate the contract based on favorable communications from the lender. A week before closing, the buyer's loan application is denied. If the buyer terminates the contract at this point, the buyer: A. will forfeit the earnest money deposit and due diligence fee because it would be a buyer breach B. will receive a refund of the earnest money, since the termination was related to financing C. can be sued by the seller for specific performance D. will receive a refund of the earnest money and the due diligence fee - --A. will forfeit the earnest money deposit and due diligence fee because it would be a buyer breach When should parties to a purchase contract in NC utilize the NCBA/NCAR Contingent Sale Addendum? A. When there are multiple offers pending in a short sale transaction B. When the buyer wants to make multiple offers on several properties at the same time

C. When the buyer conditions their offer upon the sale of another property that they currently own D. When the seller is also purchasing a property and needs that property to close before they can sell and transfer a current property to a buyer - --C. When the buyer conditions their offer upon the sale of another property that they currently own