302 CE FN

Question 1

Pablo and Sarah were interested in buying Cindy’s property. They’d saved a little, but didn’t have enough money to obtain financing. Cindy decided to help the couple out by financing a portion of the purchase price. What addendum should be attached to their purchase contract?

Answer 1

• Contingent Sale Addendum
• Loan Assumption Addendum
  * Seller Financing Addendum
• Seller Possession After Closing Agreement

Question 2

The ______ provision of the North Carolina Offer to Purchase and Contract states that all documents necessary to complete the transaction must be properly executed and delivered to the closing attorney.

Answer 2

• Earnest Money
• Entire Contract
• Escrow Agent
  * Settlement

Question 3

What are accrued expense items?

Answer 3

• Items to be divided proportionately between the buyer and seller that the seller hasn’t fully used
  * Items to be divided proportionately between the buyer and seller that the seller owes
• Items used to lower the loan’s interest rate
• The money spent on improvements to a property

Question 4

If a contract is accepted under duress, it’s ______.

Answer 4

• Breached
• Enforceable
• Voidable by either party
  * Voidable by the victim

Question 5

If a seller in NC has prepaid an annual school tax of $1,825 in January, how much of that will tax will show up as a credit to the seller on a settlement statement for a closing on July 31?

Answer 5

• $1,055
• $1,060
  * $765
• $770

The seller owns the property from January 1 through July 31 (212 days) since in NC, the seller owns the day of closing. That means that the buyer is responsible for the tax for 153 days. Since the daily tax rate is $5 ($1,825 ÷ 365), the seller would see a $765 credit (153 × 5) for the amount of tax prepaid.

Question 6

After a closing in North Carolina, whose job is it to update the title to ensure it is marketable and without defect?

Answer 6

• The buyer
  * The closing attorney
• The seller
• The seller’s agent

Question 6

Which of the following parties must sign, acknowledging receipt of the earnest money deposits under North Carolina’s Standard Form 2-T’s Acknowledgment of Receipt of Monies section?

* The escrow agent

Answer 6

* The escrow agent
* The listing agent
* The seller
* The selling agent and the listing agent
*

It’s the escrow agent’s duty to sign, acknowledging when the agent’s received the earnest money deposits under the contract.

Question 7

Fisher and his neighbor, Glenn, form a handshake agreement: Whoever wins tonight’s poker game also wins the title to the other’s house. When Fisher wins, though, he refuses to give his house to Glenn. Because the men didn’t ______, their agreement is not enforceable, so Glenn has no recourse.

*Put their agreement in writing

Answer 7

• Exchange any money
• Have a notarized agreement
• Have any witnesses to the agreement
  * Put their agreement in writing

Question 8

North Carolina seller Lorelei is planning for the proceedings from her real estate closing to be wired to her. Lorelei is going to attend closing. What does the Wire Fraud Warning in Standard Form 2-T say about her wiring instructions?

*She must provide written wiring instructions at closing in the attorney’s presence.

Answer 8

• In North Carolina, sellers who attend closings are provided with a cashier’s or bank check, rather than funds being wired.
  * She must provide written wiring instructions at closing in the attorney’s presence.
• She must provide written wiring instructions to her agent within 48 hours of closing, so her agent can communicate that information to the closing attorney.
• She must tell the closing attorney the wiring instructions at closing.

The wire fraud warning recommends that sellers whose proceeds will be wired provide written wiring instructions at closing in the attorney’s presence.

Question 9

A contract shows that a fee is “$200” in one location and “two thousand” in another. What should one presume the correct fee to be?

* 2,000

Answer 9

• $200
  * 2,000
• The contract will be considered invalid.
• You would split the difference, for a fee of $1,100.

When it comes to numbers, the one that is less likely to be a typo takes precedence—that is, the spelled-out number. It’s harder to mistype “three” than it is to mistype “3.”

Question 10

A North Carolina agent who’s working with purchase offers is PROHIBITED from using which of the following provisions?

* A provision that disclaims the broker’s liability for any statements the broker made regarding the transaction

Answer 10

• A provision that addresses the buyer’s right to inspect property before closing, and identifies which party must pay for any repairs and improvements
• A provision that details the items to be prorated or adjusted at closing
  * A provision that disclaims the broker’s liability for any statements the broker made regarding the transaction
• A provision with the amount and method of earnest money payment, along with the escrow agent’s name

Question 11

The North Carolina General Statutes define _______ as performing any legal service—including preparing deeds, mortgages, or trust instruments—or advising or giving an opinion about the legal rights of any person, firm, or corporation.

* The practice of law

Answer 11

• Explaining contractual provisions
• Preparing contracts
• Presenting a legal document
  * The practice of law

Question 12

Knowing that the seller always owns day of closing in NC, for how many days of property tax will the seller be credited when using the calendar year method of proration if the closing is on October 9, and property taxes have already been paid for the year?
* 84 days

The seller will receive a credit for October 9 through December 31 (23 + 30 + 31), or 84 days.

Answer 12

• 23 days
• 270 days
• 281 days
  * 84 days

The seller will receive a credit for October 9 through December 31 (23 + 30 + 31), or 84 days.

Question 13

The Real Estate Settlement Procedures Act is a consumer protection statute that ______.

* Requires lenders to provide the consumer with certain disclosures for residential real estate transactions and prohibits kickbacks among settlement service providers

Answer 13

• Prohibits lenders from denying credit to an applicant for a mortgage based solely on the location of the property in a certain geographic area
• Regulates the type and amount of fees and commissions that settlement service providers may charge to borrowers in a residential real estate transaction
• Requires lenders to disclose all credit terms in an advertisement for credit if any of the terms are given
  * Requires lenders to provide the consumer with certain disclosures for residential real estate transactions and prohibits kickbacks among settlement service providers

Question 14

Troy and Lena’s home was being auctioned by their lender. They owed the lender $285,000 plus additional fees of $2,800, so they owed a total of $287,800. They’re surprised to learn that the auction price was $322,000. Which of the following is true about the overage the lender will receive?

* Troy and Lena are entitled to any amount over that which they owe the lender.

Answer 14

• It’s legal for the lender to keep the overage, but the penalties and fees have to be refunded to Troy and Lena.
• The lender is entitled to keep any overage as damages.
  * Troy and Lena are entitled to any amount over that which they owe the lender.
• Unless Troy and Lena request a refund, the lender may keep the additional auction proceeds.

Lenders aren’t allowed to profit from a foreclosure auction; the overage funds must be returned to Troy and Lena.

Question 15

North Carolina buyer Simon plans to submit his initial earnest money deposit and due diligence fee with his completed Offer to Purchase and Contract, Standard Form 2-T. Which of the following is true of this situation?

* The initial earnest money deposit must be paid to the escrow agent, and the due diligence fee is paid to the seller. Both can be paid using cash, personal check, bank check, wire, or electronic transfer.

Answer 15

• The initial earnest money deposit and due diligence fee may be paid together to the seller by using a bank check, wire transfer, or electronic transfer.
• The initial earnest money deposit and the due diligence fee may be paid together, and must be paid to the escrow agent using a bank check, wire transfer, or electronic transfer.
  * The initial earnest money deposit must be paid to the escrow agent, and the due diligence fee is paid to the seller. Both can be paid using cash, personal check, bank check, wire, or electronic transfer.
• The initial earnest money deposit must be paid to the seller, and the due diligence fee must be paid to the escrow agent. Both can be paid using cash, personal check, bank check, wire, or electronic transfer.

Question 16

What information appears on the LE?

* An estimate of fees and charges a borrower will pay at closing

Answer 16

* An estimate of fees and charges a borrower will pay at closing
* An estimate of the amount of time it will take the borrower to comply with underwriting guidelines
* An estimate of the borrower’s monthly housing costs
* An estimate of the seller’s net profit after the sale

Question 17

Which of the following is true about the CFPB toolkit that lenders are required to provide to borrowers who use a federal loan?

* The toolkit informs consumers about the lending rules to protect borrowers and what to expect for the duration of the mortgage process.

Answer 17

• The toolkit establishes the limits that lenders can charge to maintain escrow accounts.
• The toolkit identifies the mortgage provider and other key players during the mortgage process.
  * The toolkit informs consumers about the lending rules to protect borrowers and what to expect for the duration of the mortgage process.
• The toolkit locks in the interest rate and outlines how much will be due at closing.

Question 18

Carson is married, but the home he purchased after marrying his wife is titled in his name only. When selling the house, his spouse must sign the sales contract and related documents. Why?

* North Carolina law provides some protection for non-owner spouses, so both must sign.

Answer 18

• Carson’s wife must sign to acknowledge that she’s aware of the sale.
• North Carolina is a community property state, so the house is considered by law to belong to both Carson and his wife.
  * North Carolina law provides some protection for non-owner spouses, so both must sign.
• North Carolina law requires that all residents of a property sign all transaction documents.

Because North Carolina law provides some protection for non-owner spouses in the form of a marital life estate and a right to dissent from the will, the non-owning spouse must sign the contract.

Question 19

The seller has pre-paid July HOA fees of $60, and closing day is July 21. Assuming the seller owns the property the day of closing and you’re using calendar year (365-day) proration, how much does the buyer owe the seller for July HOA fees, if rounded to the nearest whole dollar?

* $19

Answer 19

* $19
* $20
* $40
* $41

Question 20

When inserting the sellers’ names in a contract, which of these is correct?

* Insert the sellers’ names as they appear on the property deed.

Answer 20

• Insert the full legal names, including any middle names.
• Insert the full legal names, including any middle names and nicknames.
• Insert the names by which the sellers are most well-known.
  * Insert the sellers’ names as they appear on the property deed.

• Insert the sellers’ names as they appear on the existing deed.

Question 21

In the interests of simplicity, the Loan Estimate form is three pages long. How many pages is the Closing Disclosure?
* Five pages long

Answer 21

* Five pages long
* Four pages long
* The same length
* Two pages long

The Closing Disclosure form integrated and replaced the existing RESPA HUD-1 and the final Truth in Lending disclosure forms. The Closing Disclosure is five pages long.

Question 22

Which of the following statements about a North Carolina sales transaction is true?

* Neither an earnest money deposit nor a due diligence fee is required for a valid offer.

Answer 22

• A due diligence fee is required for a valid offer.
• Both an earnest money deposit and a due diligence fee are required for a valid offer.
• Earnest money is required for a valid offer.
  * Neither an earnest money deposit nor a due diligence fee is required for a valid offer.

Question 23

Of the following, who typically prepares the closing statement?

* Closing agent

Answer 23

* Closing agent
* Listing broker
* Loan officer
* Seller

Question 24

What entity brought about the Uniform Electronic Transactions Act (UETA) in order to harmonize state laws regarding the validity of these records and to set more comprehensive rules regarding their use?

* National Conference of Commissioners on Uniform State Laws (NCCUSL)

Answer 24

• Fair Housing Commission
• National Association of REALTORS® (NAR)
  * National Conference of Commissioners on Uniform State Laws (NCCUSL)
• U.S. Department of Housing and Urban Development (HUD)

Question 25

In North Carolina Standard Form 800-T, what must a married seller couple do while signing and dating the contract?
* If the sellers are married, both the husband and wife must sign the contract.

Answer 25

* If the sellers are married, both the husband and wife must sign the contract.
* If the sellers are married, only the husband is required to sign the contract.
* If the sellers are married, only the party who owns the property must sign.
* If the sellers are married, only the person who wishes to sell is required to sign the contract.

Question 26

North Carolina seller Abby was selling her home but wanted to dig up and take the rosebushes in the backyard because her grandmother gave them to her. When her agent, Kent, completed the Offer to Purchase and Contract, Standard Form 2-T, for Abby, where should he have listed this information?
* He should name the rosebushes under the Other Items That Do Not Convey sub-paragraph.

Answer 26

• He should name the rosebushes in an addendum.
  * He should name the rosebushes under the Other Items That Do Not Convey sub-paragraph.
• He should name the rosebushes under the Personal Property provision.
• He should name the rosebushes under the Specified Items sub-paragraph.

Question 27

occurs when the parties can’t legally or practically do what they’ve agreed upon due to circumstances beyond their control.
* Impossibility of performance

Answer 27

* Impossibility of performance
* Partial performance
* Performance of a contract
* Specific performance

Question 28

Which of the following parties must sign North Carolina’s Standard Form 2-T?

* The buyers and the sellers

Answer 28

• The buyers and buyers’ agent
  * The buyers and the sellers
• The buyers, the sellers, and both parties’ agents
• The sellers and sellers’ agent

The parties to a real estate purchase agreement are the buyers and the sellers; therefore, they are the ones who must sign the real estate sales contract.

Question 29

You are calculating prorations. Which of the following items go into the seller’s credit column and the buyer’s debit column?

* Prepaids

Answer 29

• Credits
• Debits
  * Prepaids
• Prorations

Prepaid items—such as prepaid utilities—are a seller credit and buyer debit.

Question 30

is the worst way for a seller to handle multiple offers.

* Accepting all of the multiple offers*

Answer 30

* Accepting all of the multiple offers
* Accepting or countering one offer and rejecting the others
* Presenting multiple counter-offers
* Providing all buyers equal opportunity to provide their best offer

Question 31

ill is a seller making a counter-offer. She’s referred to as the _______.

* Offeror

Answer 31

• Counterer
• Counter-offeror
• Offeree
  * Offeror

The roles can switch, so it’s not tied to beginning the transaction as a seller or a buyer. The person sending the most current offer or counter-offer is the offeror, and the person on the receiving end is the offeree.

Question 32

Which of these statements regarding document delivery is correct?

* Documents presented to either the party or the party’s agent are considered delivered.

Answer 32

• Documents must be presented directly to a party from the opposing agent to be considered delivered.
• Documents must be presented to a party through the party’s agent to be considered delivered.
  * Documents presented to either the party or the party’s agent are considered delivered.
• The parties must acknowledge receipt of all documents for those documents to be considered delivered.

Documents presented to the party or the party’s agent are considered to be delivered.

Question 33

Which of the following actions would North Carolina transaction principals Burt and Karen take to minimize unnecessary closing delays?

* Get the closing attorney any requested information or documentation in a timely manner.

Answer 33

• Avoid using third parties like settlement agents or closing attorneys.
  * Get the closing attorney any requested information or documentation in a timely manner.
• Hire a project manager to track the timeline.
• Set a definitive settlement date in the contract.

Question 34

In the Agreement for Purchase and Sale of Land, Standard Form 580L-T, what is unique about the potential purchase price?

* The purchase price may be calculated per-acre.

Answer 34

• The purchase price can be negotiated.
• The purchase price can change based on inspection of the commercial structure.
• The purchase price is set prior to the sale by the seller’s agent.
  * The purchase price may be calculated per-acre.

Question 35

Real estate broker Wallace has recently partnered with a few other service providers to form a company that specializes in closings in order to increase his revenue stream. Which of the following is true?

* Wallace has created an affiliated business arrangement.

Answer 35

• Wallace and the other service providers will no longer own their own businesses.
  * Wallace has created an affiliated business arrangement.
• Wallace may not accept any monetary compensation from this arrangement.
• Wallace must present an Affiliated Business Arrangement Disclosure statement to each of the other service providers.

Wallace has created an affiliated business arrangement.

Question 36

For income-producing properties, how is rent prorated at closing?

* The seller typically receives rent through the day of closing, with the buyer receiving rent afterward.

Answer 36

• All rent halts. New rental agreements must be made with new tenants.
• The buyer receives all rent for the current month.
• The seller receives rent through the leasing period, after which the buyer receives the rent.
  * The seller typically receives rent through the day of closing, with the buyer receiving rent afterward.

Question 37

______ are items that go in the seller’s credit column and the buyer’s debit column when you are determining prorations.

* Prepaids

Answer 37

• Credits
• Debits
  * Prepaids
• Prorations
  *

Prepaid items—like taxes, for instance—would be a seller credit and buyer debit.

Question 38

In North Carolina, what actions must you take to renew a real estate license that has been expired for two to three years?

* Requalify for a real estate license by completing pre-licensing courses and passing the state and national licensing exams.

Answer 38

• Complete the continuing education requirements and submit a renewal and late fee.
• File an appeal with the commission.
  * Requalify for a real estate license by completing pre-licensing courses and passing the state and national licensing exams.
• Retake the state licensing exam.

Question 39

What form should be provided to borrowers no fewer than three days prior to closing?

* Closing Disclosure*

Answer 39

**
* Closing Disclosure**
* Escrow Closing Notice
* Loan Estimate
* The Mortgage Servicing Transfer Disclosure

Question 40

North Carolina broker Elizabeth is helping her buyer client, Mark, purchase a property that includes a mobile home. Which of the following is true of this transaction?

* The parties should consider including the Manufactured (Mobile) Home provision in the Additional Provisions Addendum with Standard Form 2-T.

Answer 40

• Elizabeth should draft her own contract form for the parties to use, instead of having them use Standard Form 2-T.
• The parties should complete the Manufactured Home provision under the Property paragraph in Standard Form 2-T.
• The parties should complete the Mobile Home provision under the Property paragraph in Standard Form 2-T.
  * The parties should consider including the Manufactured (Mobile) Home provision in the Additional Provisions Addendum with Standard Form 2-T.

Question 41

Janet sold her Durham duplex to Cara for $418,000, and closing is on May 16. Each unit rents for $530 per month. The tenants paid rent in full on May 1. At closing, how will prorated rent be shown on the closing statements? Assume the seller owns the day of closing.

* $512.96 seller debit, buyer credit

Answer 41

• $491.72 seller debit, buyer credit
• $510.97 seller credit, buyer debit
  * $512.96 seller debit, buyer credit
• $565.28 seller credit, buyer debit

Janet keeps the rent she received for May 1 to May 16 (16 days), so she owes Cara for 15 days. $530 × 2 = $1,060 ÷ 31 = $34.19 (rounded to nearest cent) per day. $34.19 × 16 = $547.04, which is what Janet gets to keep. Subtract that amount from $1,060 and you have the amount that will be debited from Janet (seller) and credited to Cara (buyer): $512.96.

Question 42

As part of the notice of primary status, the seller must provide the back-up buyer with _____.

* Written evidence that the primary contract was terminated

Answer 42

• A copy of the previous primary buyer’s purchase contract
• A new purchase contract
• The earnest money deposit
  * Written evidence that the primary contract was terminated

Question 43

Your client Jazz is purchasing a house that was built in 1977. Based on this, you know you’ll need to add which of the following North Carolina addenda to Standard Form 2-T?

* Lead-Based Paint or Lead-Based Paint Hazard Addendum (Form 2A9-T)

Answer 43

• Additional Provisions Addendum (Form 2A11-T)
  * Lead-Based Paint or Lead-Based Paint Hazard Addendum (Form 2A9-T)
• Loan Assumption Addendum (Form 2A6-T)
• Owners’ Association Disclosure and Addendum (Form 2A12-T)

Question 44

If a broker is not a member of the North Carolina Association of REALTORS®, which of these statements about Form 12-T, the Offer to Purchase and Contract – Vacant Lot/Land, is correct?

* The broker may use the North Carolina Bar Association’s version of form 12-T

Answer 44

• The broker may still use the NC REALTORS® form.
  * The broker may use the North Carolina Bar Association’s version of form 12-T
• The broker must draft a version of Form 12-T.
• The broker’s firm must provide an appropriate copy of the correct form.

Brokers who aren’t members of NC REALTORS® or another REALTOR® association may use forms approved by NCBA.

Question 45

What two regulatory bodies overlook the creation and upkeep of standard forms 800-T and 800G?

* The North Carolina Association of REALTORS® and the North Carolina Bar Association

Answer 45

• The National Association of Brokers and the National Bar Association
• The National Association of REALTORS® and the National Bar Association
• The North Carolina Association of Brokers and the North Carolina Bar Association
  * The North Carolina Association of REALTORS® and the North Carolina Bar Association

Question 46

North Carolina broker Ahmed represents buyer Marc in the purchase of Sarah’s home. Marc found a host of issues that need to be repaired, but negotiations with Sarah have slowed down. She doesn’t have the time or energy to devote to making the repairs that Marc wants, and has agreed to a reasonable price reduction. What form will broker Ahmed use to make this price change request for Marc?

* Standard Form 4-T, the Agreement to Amend Contract

Answer 46

• Standard Form 2A11-T, the Additional Provisions Addendum
• Standard Form 2-T, the Offer to Purchase and Contract
• Standard Form 310-T, the Due Diligence Request and Agreement
  * Standard Form 4-T, the Agreement to Amend Contract

Standard Form 4-T, the Agreement to Amend Contract, is used to amend the conditions of the original Standard Form 2-T, Offer to Purchase and Contract, such as the renegotiation of the purchase price as a result of findings from the buyer’s due diligence efforts. In order to change the purchase price agreed to in Standard Form 2-T, the contract would have to be amended using Standard Form 4-T.

Question 47

Forgetting to include a required addendum is ________.

* Risky

Answer 47

• An easy fix
• Common
• No big deal
  * Risky

Question 48

Which North Carolina broker’s license will be inactive as of the first day of the next licensing year?

* Freida, a broker who paid a renewal fee but didn’t complete her CE before June 10

Answer 48

• Craig, a broker-in-charge who’s a solo practitioner
• Denise, a provisional broker who’s associated with Flying High Realty
  * Freida, a broker who paid a renewal fee but didn’t complete her CE before June 10
• George, a broker-in-charge who supervises other brokers but no longer actively sells real estate

Question 49

Can the interest rate on the borrower’s Closing Disclosure be different than on the Loan Estimate?

• * Yes, it can be different than the rate shown on the Loan Estimate if the rate wasn’t locked.

Answer 49

• No, it can never be different than the rate shown on the Loan Estimate.
• Yes, it can be different than the rate shown on the Loan Estimate. But, only if it’s an adjustable rate product
  * Yes, it can be different than the rate shown on the Loan Estimate if the rate wasn’t locked.
• Yes, it will always be different than the rate shown on the Loan Estimate.