Hot Topics Flashcards
- You cannot receive any referrals, fees, gifts, coupons or items of value for the referral of a real estate client if you do not have a real estate license
License Required to Receive Compensation
- Auctioneers need both a real estate license and auctioneer license
License Required to Conduct an Auction
- Selling your own property, including entities and their employees
- Attorneys
- Designated as an attorney-in-fact
- Salaried employees of property managers
- Trustees and others acting under court order
Exemptions from Licensure
- Only for non-resident
- Requires application and proper renewal
- Limited to commercial activity
- Supervised by a NC BIC/broker
- All trust monies stay in NC
- Must list limited non-resident commercial broker on all advertisements
Limited Non-Resident Commercial Broker’s License
- 90 hours (three 30-hour courses)
- Must complete within 18 months of licensure
Post-licensing Education Requirement
- Mandatory 8 hours
- Renewal deadline is June 30
- Education deadline is June 10
- Failure to renew = expiration of license
- Renew but fail to complete CE = inactive license
Renewal and Continuing Education Requirement
- occurs in a single firm
- created by single firm or existence of single agent
- when designated agency exists, the other agents in the firm are dual agents
Dual Agency
- listing agreements and property management agreements in writing at start of agency relationship
- express oral agency with buyers permitted until the time an offer is submitted
- first substantial contact requires use of WWREA disclosure
- seller’s agent or subagent must disclose status to a prospective buyer at first substantial contact
- buyer’s agent discloses status to seller or seller’s agent at initial contact
Agency Agreement Requirements
- dual agency must be disclosed at the formation of the relationship
- the written disclosure must exist prior to the submission of any offers
Deadline for Written Consent to Dual Agency
- Seller is required to provide an addendum with basic information
- Inform buyer to complete due diligence and request the form
- Due diligence includes name of association, services, contact person and dues
Broker Responsibility when Asked Protective Covenant Questions
-Provisional broker delivers earnest money to BIC immediately
- Cash gets deposited immediately
- Earnest money goes into trust account within 3 business days
- BICs may count 3 days from acceptance of offer
Handling Earnest Money
- Compensation receipt must be disclosed in writing
- Must disclose receipt of bonus before making or accepting offer
Disclosure of Builder Bonus
- Agents must always disclose material facts
- Anything that may affect the decision to sell or buy
- Sex offender location, death, haunted, serious illness not materials facts
Duty to Disclose Material Facts
- Must disclose interests in the property
- Must disclose relationships to parties
Duty to Disclose Conflicts of Interest
- Results in expired license (not an inactive one)
- May result in denial, suspension, or revocation
Dishonored Payment of License Fees (NSF)
- Tax rates are adjusted annually
- Tax values can be adjusted horizontally every 4 years
- Property must be appraised every 8 years (octennial appraisal)
Adjustment of Tax Rates
- The official evaluation of a property’s value is an assessment
- Based on comps at 100% market value
Assessed Value
- Settlement date is not “time of the essence” provision
- Good faith effort creates 7-day extension
7-Day Settlement Delay in Purchase Contract
- Flood certifications are required by lenders
- Not necessary on cash transactions
- Flood certificates come from FEMA based on Army Corp of Engineers maps
Flood Certificates
- Agent has obligation for accuracy and delivery of CD
- Borrower has right under RESPA to see CD 3 days prior to closing
- Final CD must be delivered immediately, never later than 3 days after closing
Closing Disclosure Accuracy
- Can’t disperse funds prior to recordation
- We don’t disperse fund at settlement/closing
Disbursement of Funds by Settlement Agents
- Leases longer than 3 years must be in writing
Statute of Frauds related to Leases
- Seller required to complete the property disclosure
- Agents inform clients of their rights and obligations
- Agent responsible for explaining and assisting
- Seller may check “no representation” and choose not to disclose
- Agent must still disclose all they knew and should have known
- Failure to provide form creates 3-day right to cancel
NC Residential Property Disclosure Act
- Floor framing sill is lowest horizontal wooden part of the framing
- Window sill is lowest horizontal frame of window
Home Construction definition of Sill
- The owner’s original acquisition cost (price + closing costs)
- Adjusted adds capital improvements
Cost Basis & Adjusted Basis
- Joint tenancy has right of survivorship and transfers automatically and immediately at time of death to remaining joint tenants
- TIC goes to heirs
Effect of Death on Joint Tenancy, Tenancy in Common
- Mixed use and cluster zoning
- creates open space
Features of a PUD
- Prescriptive easement: adverse possession
- Easement appurtenant: benefits adjacent parcel
- Easement in gross: benefits 3rd party
- Government can get easement by condemnation (eminent domain)
Types of Easements
OCEAN: Open, Continuous, Exclusive, Adverse, Notorious
Requirements for Adverse Possession
- Sole proprietorship is most risky with least protection
- General partnerships do not protect from liability
- Most protection is a corporation or S Corp
Business Entities
- All contracts require mutual consent, competency of parties, consideration, legal purpose
- Those subject to statute of frauds must be in writing
Elements of a Contract
- Contracts require a meeting of the minds
- Free from duress or undue influence
Mutual Consent in Contracts
- Compensatory damages: for compensation
- Punitive damages: to deter future conduct
- Liquidated damages: to receive a specified amount
Remedies for Breach of Contract
- Open Listing
- Exclusive Agency
- Exclusive Right to Sell
Types of Listing Contracts
- signed by all parties
- include licensee’s license number
- contain definite termination date
- be in writing
Characteristics of Listing Contracts
- independent contractor agreement exists between brokers and firms
- only place you find the fee splits between brokers and firms
Employment Contracts
- must be in writing
- 3 days to deliver
- enforceable by optionee
- unilateral
Option to Purchase
- vendor retains legal title
- vendee has equitable title
- deed and transfer occur with last payment
Contracts for Deeds (Installment Land Contract)
- Regulates the disclosure of costs consumers will pay after they have the loan
- Must disclose amount of payment, terms of payment, length of loan, rate of interest, and APR
- Advertisements with trigger term must disclose APR
- Enforced by CFPB
Truth in Lending Act (TILA/Regulation Z)
- both disclosure and anti-kickback statute
- requires Loan Estimate and booklet within 3 days of loan application
- requires use of CD at closing/settlement
- settlement service providers cannot receive anything of value for the referral of business
RESPA (Real Estate Settlement and Procedures Act)
- does not terminate lease
- may require transfer of security deposit
Sale of Property w/ a Lease
- Gross Lease
- Net Lease
- Percentage Lease
- Sale leaseback
Types of Leases
- landlord’s breach
- tenant breack
Constructive & Actual Eviction
- effective gross income – operating expenses = net operating income
- operating expenses don’t include debt service
Income Approach Terms
- ADA applies to commercial/public accommodations
- Multi-family must comply w/ accessibility requirements
- More than 15 employees must make accommodations
- Residential properties require reasonable modifications paid by tenant
- No deposits on service animals
Fair Housing & ADA in Property Management
- supervise all PBs
- responsible for all agency, monetary, legal, and disclosure compliance
- keep firm pocket card
- display firm license and BIC certification
- maintain trust account
BIC Duties
- advertising or promoting service
- handling money of another
- employs one or more licensees
Independent Broker who is Not a BIC Restrictions
- contains name, license number, type, and expiration date
Pocket Card
- 10 days any change of address
- 60 days any conviction/adverse judgments
- 10 days BIC notification of severance
Duty of Licensee to Report to Commission
- immediately, never later than 3 days
- 45 days to provide owner with lease
Delivery of Documents Rule
- licensee can share compensation with principal not engaged in real estate
- must disclose all compensation to principal
- don’t need to disclose commission splites
Compensation Disclosure
- can’t disclose terms of offers without consent of the offerors
- not seller’s consent, buyer’s consent
Disclosure of Offers
-license must be active to earn referral
License Status to Receive Referral Fee
attach as a lien on Jan. 1st for the coming year
Ad valorem Taxes
market, demand, desire of client
Factors of amount of Earnest Money Deposit & Due Diligence Fee
- credit to buyer at closing
- EMD does not appear on seller’s side of CD
- DDF debit to seller
- EMD released with mutual agreement or court order
- EMD refund if contract cancelled during DDP
- DDF does not get refunded
- buyer controls DDF until broker delivers to seller
- DDF goes to seller
- EMD to trust account
Earnest Money Deposit & Due Diligence Fee
