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Prelicensing Course > Midterm 1 > Flashcards

Midterm 1 Flashcards

1
Q

The seller of a property has cold feet and had decided to breach an otherwise valid contract by not completing the sale. The buyer has elected to sue for specific performance. What could be the result of such an action?

A. The seller must reimburse the buyer for all expenses, but will not be forced to sell the home.

B. The buyer may seek punitive damages with treble damages.

C. The court may force the seller to sell the home.

D. The seller may force the buyer to rescind the contract.

A

C. The court may force the seller to sell the home.

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2
Q

The term “meridian” and “parallels” refer to which of the following real property legal descriptions?

A. Plat maps
B. Lot and block references
C. Metes and bounds
D. Government survey rectangular method

A

D

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3
Q

Provisional broker John works for Sandra, who is a BIC. Sandra has a listing that one of John’s buyer clients wants to see. In regard to the agency relationship that will be formed with John’s buyer client, what type of agency relationship will. Kth John and sandra have in his transaction?

A. They will both be single agents
B. They will both be dual agents
C. They will both be designated agents, if that is what the firm practices
D. John will be a designated age t and Sandra will be a dual agent

A

B

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4
Q

Wich of the following statements is correct regarding member of the NC Real Estate Commission:

A. There are 9 Commission member who are appointed by the govenor
B. The Commission member are all members of the real estate profession
C. Members of the Real Estate Commission are appointed by both governor and the Legislature. And at least 3 of them must have a real estate license
D. The Real Estate Commission must have at least 3 members from the general public

A

C

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5
Q

Once a provisional broker is licensed, in regard to continuing education, the provisional broker must adhere to which of the following Commission Rules:

A. Complete 90 hours of CE in the first 3 years of licensure
B. Complete 8 hours of CE plus 30 hours of post licensing in the first year or licensure
C. Complete 8 hours of CE every year by June 10 prior to the second renewal of the provisional brokers license
D. Compete 8 hours of CE every year commencing upon completion if the post licensing requirements

A

C

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6
Q

Which of the following is true regarding supply and demand in the real estate market?

A. As demand increases and supply increases, prices tend to increase
B. As demand decreases and supply increases, prices tend to increase
C. As supply increases and demand decreases, prices remain the same
D. As supply decreases and demand increases, prices tend to rise

A

D

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7
Q

All of the following would be considered an appurtenenace, EXCEPT:

A. A building on the property
B. The right or privilege to exclude others from the property
C. A fence that surrounds the property
D. Growing crops that are attached to the ground

A

D

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8
Q

A homeowner lives in a homeowner’s association neighborhood that had some protective covenants originally created by the developer. One of the neighbors has constructed a shed on their property, which violates these provisions. The homeowner would be able to enforce these by a process that would involve:

A. Contacting the local zoning authority
B. Submitting written notice of the violation to the developer
C. Filing a lawsuit
D. They cannot be enforced if the neighbor properly obtained a variance

A

C

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9
Q

All of the following items would normally remain with a property and transfer to s meet owner, EXCEPT:

A. Gas logs attached to pipes in a fireplace
B. Awnings that have been installed above the homes windows
C. A $4,000 gazebo in the back yard with no foundation
D. A $100 pewter switch plate cover next to the front door

A

C

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10
Q

A homeowner would like to install a new heating and cooling system. His home is 50 ft. By 70 ft. And has a 10 foot ceiling. The home also has a 20 ft by 20 ft detached garage. What is the total footage of air his home?

A. 24,500 cubic feet
B. 2,450,000 cubic feet
C. 245,000 cubic feet
D. 35,000 cubic feet

A

D

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11
Q

Which of the following statements is true about timeshares?

A. They do not have to be registered with the NC Real Estate Commission
B. They may be transferred prior to registering with the NC Real Estate Commission
C. They must be registered with the NC Real Estate Commission prior to sale
D. The timeshare broker may be fined by the NC Real Estate Commission

A

C

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12
Q

All of the following are considered to be leasehold interests on real estate, EXCEPT:

A. Estate for years
B. Estate at will
C. Estate at sufferance
D. Life estate

A

D

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13
Q

An owner of a property reserved a life estate that was conditioned upon the life if a relative. At the end of the life estate l, the owner specified that the property was to be transferred to their children. What type of interest do the children have in the property?

A. A reversionary interest
B. A life tenancy
C. A fee simple ownership
D. A remainder interest

A

D

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14
Q

A neighbor has been using a lot that is adjacent to them for a long period of time. They regulary mow the grass and have had a garage and shed constructed on the lot. If the original owner decides to sell the lot, does the neighbor have any legal rights to the property?

A. Yes, the neighbor is a squatter. If they use the property for the statutory period, they may claim ownership by adverse possession.
B. No, squatters are never allowed to acquire property; they may only receive a prescriptive easement.
C. Yes, but only if the neighbor files with the clerk of court and pays fair market value for the property.
D. No, the neighbor may not acquire the property because they never had the owner’s permission to use the property.

A

A

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15
Q

None of the following are essential elements of a contract to purchase real property, EXCEPT:

A. Earnest money
B. Consideration
C. Due diligence fee
D. Recording prior to closing

A

B

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16
Q

A buyer had their offer accepted by the seller, but has decided to cancel within the due diligence period. In this situation:

A. The listing broker agent must complete the Earnest Money Release form with the seller’s and buyer’s signatures before releasing any earnest monies to the buyer
B. The buyer is entitled to a refund of both their earnest money and their due diligence fee.
C. The earnest money must be returned to the buyer immediately.
D. The broker can only release the money to the buyer without the seller’s consent if the broker is acting as a dual agent.

A

A

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17
Q

A buyer and seller are under contract. While under contract, the buyer lost their job and is unable to produce the necessary funds for closing. The listing firm insists that the seller pay the commission promised in the listing agreement. The listing firm’s argument is that they produced a ready, willing and able buyer. Which of the following will most likely occur?

A. The listing firm will be able to collect because the listing agreement is a valid binding contract, even if the buyer is unwilling and unable.
B. The listing firm will not be able to collect because the Good Fund Settlement Act requires funds to be good.
C. The listing firm will most likely have a difficult time collecting their commission because the buyer did not produce the necessary funds.
D. The listing firm should place a lien on the buyer’s real and personal property to collect their commission.

A

C

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18
Q

A sixteen-year-old enters into a contract to purchase an investment property from an elderly couple. What is the status of the contract?

A. The contract is voidable at the seller’s option.
B. The contract is enforceable as long as all the essential elements of the contract are present.
C. The contract is void because the elderly couple entered it with a minor.
The contract is voidable at the buyer’s option.

A

D

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19
Q

In the state of NC, building codes have been established to create minimum construction standards to assure the safety of the building’s occupants. Which of the following statements is correct regarding building codes?

A. Building codes are created at the local level but enforced by the state.
B. Building codes are created and enforced at the local level.
C. Building codes are created at the state level through the Building Code Council but enforced at the local level.
D. Their are no building codes in NC. Enforcement of construction is done through zoning

A

C

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20
Q

A life tenant who has received a conventional life estate may do all of the following, EXCEPT:

A. Sell their interest in the property
B. Will their interest to their children
C. Encumber the property
D. Obtain a loan against the property

A

B

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21
Q

Two properties are adjacent to each other. One of the properties benefits from the existence of an easement. In regard to the property that is benefiting, what is the easement called?

A. Dominant easement
B. Servient easement
C. Easement in gross
D. Easement appurtenant

A

D

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22
Q

John is the BIC at ABC Brokerage. Paul is a provisional broker at ABC, and Sally is a full broker at ABC. Fred is a full broker with XYZ Brokerage. Under this situation, who can properly be named as a designated agent in a real estate transaction?

A. John and Sally
B. John and Paul
C. Paul and Fred
D. Fred and Sally

A

A

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23
Q

Jan is the BIC with Top Gun Realty. She has a listing agreement with a seller, and one of her provisional brokers, Donald, has a buyer under a buyer agency agreement. Donald’s buyer wishes to see the property listed by Jan. In regard to the clients in this transaction, Jan and Donald will be in what type of agency relationship?

A. Single agents
B. Designated agents
C. Dual agents
D. They cannot be in an agency relationship because Jan is a BIC and Donald is a provisional broker

A

C

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24
Q

Ben and Jerry, tow ice cream moguls, decided to purchase a property and took title as tenants in common. If Jerry dies intestate, who will control his interest in the property?

A. Whoever Jerry has Named in his will
B. Ben will own the property
C. Jerry’s spouse and children will own the property
D. The property will be owned according to state laws on intestate succession

A

D

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25
Q

Which of the following statements made by a real estate agent could create an implied agency relationship between the real estate agent and a buyer?

A. “I need to let you know that the roof has a small leak and the seller is addressing it.”
B. “Doesn’t this pea green carpet look stunning?”
C. “You should take this deal; it’s the best one for you.”
D. “There has been talk of a new highway being sited just a half mile from here.”

A

C

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26
Q

All of the following would create an agency relationship, EXCEPT:

A. The payment of money
B. A written agency contract between the buyer and agent
C. An oral buyer agency agreement
D. The actions of the parties

A

A

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27
Q

The process by which the government takes title to private land for the public use and pays the owner just compensation is known as:

A. Eminent domain
B. Condemnation
C. Easement by necessity
D. Police power

A

B

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28
Q

In a cooperative, what the buyer receives is an interest in:

A. A corporation’s stock and a proprietary lease
B. Jointly owned tenancy in common
C. Their unit and an undivided interest in the common area
D. The ownership of the building by entireties

A

A

29
Q

The encumbrance that takes priority over all other liens on a property is:

A. The lien for any unpaid property taxes
B. Recorded mechanic’s liens
C. Liens of the homeowner’s association
D. Federal IRS income tax liens

A

A

30
Q

All of the following would be an encumbrance on a parcel of real estate, EXCEPT:

A. Real estate taxes
B. A loan made by the bank
C. An easement
D. Unpaid medical bills that are in collections

A

D

31
Q

The Satute of Frauds requires that:

A. Deeds must be recorded to be valid
B. Deeds must be notarized
C. Contracts for the exchange of real estate must be in writing in order to be enforceable
D. All leases for longer than one year must be in writing

A

C

32
Q

Jack, a buyer, was never provided with a Residential Property Disclosure Statement by the seller. Under NC law, Jack has the right to:

A. Cancel his contract within 5 days
B. Cancel his contract at any time prior to clsing
C. Cancel his contract within 3 days of the date of his offer
D. Cancel his contract within 3 days of the date the contract was accepted

A

D

33
Q

The Ad valorem tax rate may adjust:

A. Once at least every 8 years
B. Once at least every 4 years
C. Once a year
D. Once at least every 2 years

A

C

34
Q

A provisional broker whose firm has a listing with a seller owes fiduciary obligations to the seller wen working with the seller because:

A. The client is the provisional broker’s client.
B. All agents owe fiduciary duties to sellers.
C Subagency imposes on the provisional broker the fiduciary obligations of the firm.
D. The Seller is the provisional broker’s customer.

A

C

35
Q

How many acres are there in the following legal description: the N1/2 of the SE 1/4 and the SE 1/ of the NE 1/4

A. 80 acres
B. 40 acres
C. 120 acres
D. 160 acres

A

C

36
Q

Which characteristics are correct regarding a planned unit development (PUD)?

A. There is typically no homeowner’s association associated with PUD.
B. PUD differs from a normal subdivision in that buildings may be clustered together rather than complying with normal lot size and setback, which leaves more room for open spaces and recreational areas.
C. PUDs can only exist in areas that have spot zoning.
D. The homeowners in PUD hold title to the common areas as tenants in common.

A

B

37
Q

The following statements are correct about tenancy by the entirety, EXCEPT:

A. Property that is purchased after marriage, if held in both the husband and wife’s names, will by default be titled as tenants by the entirety.
B. If a married couple becomes separated, any property they acquired after marriage will remain as tenants by the entirety unless they take action to change the ownership status.
C. Property acquired prior to marriage does not automatically become tenancy by the entirety ownership.
D. If a married couple becomes divorced, any property acquired during the marriage that was deeded as tenancy by the entireties will remain such.

A

D

38
Q

A buyer makes an offer on a property. After the offer has been presented, the listing agent informs the buyer’s agent that there are multiple offers being presented to the seller. When the buyer is informed of the multiple offer situation, the buyer asks the buyer’s agent, “What are the prices of the competing offers?” Under NC Real Estate commission rules:

A. The listing agent can never disclose prices and terms of competing offers on the property.
B. The seller can give the listing agent permission to “shop offers” and disclose the prices, terms conditions and provisional to all buyers’ agents.
C. If all buyers making offers on the property agree that their offers can be disclosed to other buyers, then mutual agreement by the buyers will allow disclosure of the price and terms of all offers.
D. The disclosure of the price and terms of other offers is only permitted when the agent is practicing single agency.

A

C

39
Q

Which of the following statements is correct regarding the NC Timeshare Act.
I. A person who sells timeshares for a time share developer must have a NC real estate license.
II. The NC Real Estate Commission can fine a timeshare developer $500 for each violation of the NC Timeshare Act because of actions of the developer or their agents.

A. I only
B. II only
C. Both I and II
Neither I nor II

A

C.

40
Q

Which of the following statements is correct regarding NC Residential Property Disclosure Act?
I. Sellers are required to disclose all defects in their property.
II. If the buyer does not receive the NC Residential Property Disclosure Statement by time of offer, then the buyer has 5 calendar day period of time to cancel the sales contract.

A. I only
B. II only
C. Both I and II
D. Neither I nor II

A

D

41
Q

In many states, other than NC, property is considered to be equal between husband and wife. Any property acquired during the marriage is deemed to have been obtained by mutual effort. When a spouse dies, the surviving spouse retains their one-half interest in the property and the other half of the estate is inherited by the decedent’s heirs. In what manner do these people hold title:

A. Joint tenancy
B. Tenancy in common
C. Community property
D. Tenancy by the entireties

A

C

42
Q

The Reason that deeds are recorded under the Conner Act is because:

A. Deeds are subject to the statute of Frauds.
B. Recording provides actual notice to all of the parties in the transaction.
C. Recording provides constructive notice of the transfer.
D. The Conner Act does not require deeds to be recorded.

A

C.

43
Q

All of the following would be ways in which an agency relationship can be terminated without the parties incurring any further liability, EXCEPT:

A. Death of the principal
B. Destruction of the property
C. Unilateral revocation
D. Filing of bankruptcy by the seller

A

C

44
Q

A licensee who is involved in a transaction as a dual agent must:
I. Disclose and get the consent of all parties involved.
II. Avoid discussion about motivations, prices and terms with all parties.

A. I only
B. II only
C. Both I & II
D. Neither I nor II

A

C

45
Q

What is the typical type of agency between a seller and a real estate firm?

A. Universal
B. General
C. Special
D. Servient

A

C

46
Q

A deed that only warrants claims and encumbrances against the property during the term of the grantor’s ownership is a:

A. General warranty deed
B. Bargain & sale deed
C. Quit-claim deed
D. Special warranty deed

A

D. Special warranty deed

47
Q

During the previewing of a property, the prospective buyer asks the listing agent about whether or not a garage located on the property is within the boundaries of the property line. If the garage extends over the property line, which of the following statements is false:

A. The agent should advise the buyer to get a survey.
B. The seller is required to disclose the existence of the encroachment on the seller’s property disclosure.
C. The existence of an easement for such a purpose would solve an encroachment problem.
D. If the garage has existed for a required statutory period, the issue may be resolved by the existence of a prescriptive easement.

A

B. The seller is required to disclose the existence of the encroachment on the seller’s property disclosure.

48
Q

All of the following would result in termination of an easement, EXCEPT:

A. Sale of the property
B. Merger
C. Mutual agreement
D. Abandonment

A

A. Sale of the property

49
Q

A valid and enforceable contract must have all of the following elements, EXCEPT:

A. Contain a meeting of the minds
B. Be for legal purpose
C. Monetary Consideration
D. Competent parties

A

C. Monetary consideration

50
Q

Which of the following statements are correct regarding the issuance of title insurance:

A. The title insurance will insure the owner against any encroachments or issues with the property
B. The title insurance protects the purchaser
C. The title insurance only protects against errors in the recorded documents and any undisclosed liens or encumbrances.
D. The title insurance should be obtained by he owner to protect the owner’s investment and equity.

A

C

51
Q

This type of legal description would be used in heavily populated areas and is usually used to convey the smallest parcels in subdivisions:

A. Metes and bounds
B. Government survey
C. Lot and block
D. Street addresses

A

C. Lot and Block

52
Q

The annual taxes on a parcel of property are $2,800. These taxes have been paid by the seller. When the property is transferred, how will the proration of these taxes be handled on the closing Disclosure:

A. A debit to the buyer and a debit to the seller
B. A debit to the buyer and a credit to the seller
C. A credit to the buyer and a debit to the seller
D. A credit to the buyer and a credit to the seller

A

B. A debit to the buyer and credit to the seller

53
Q

All offers to purchase and documents to clients should be delivered:

A. Within 3 days of the signature of all parties
B. Immediately, but never later than 3 business days
C. Immediately
D. Immediately, but never later than 3 calendar days

A

D. Immediately, but never later than 3 CALENDAR days

54
Q

An offer to purchase would include all of the following, EXCEPT:

A. Confirmation of the agency relationship of the parties
B. The fees to be charged to the parties
C. An accurate description of the property
D. The obligation and duties of the buyer to the seller

A

B. The fees be charged to the parties

55
Q

Which of the following is correct regarding the cancellation of a timeshare agreement in NC?

A. The buyer has 5 days to cancel, and the developer must refund their money within 10 days.
B. The buyer has 3 days to cancel, and the developer must refund their money within 15 days.
C. The buyer has 5 days to cancel, and the developer must refund their money within 30 days.
D. The buyer has 3 days to cancel, and the developer must refund their money within 10 days.

A

C

56
Q

A buyer tendered an offer to purchase with a 10-day due diligence period and settlement date for 30 days later. The buyer provided a $3,000 earnest money deposit and a $500 due diligence fee. The three days prior to closing and after the expiration of the due diligence period, the buyer lost their job and now cannot complete the transaction. Under this scenario, what will be the disposition of the funds:

A. The buyer will get back their earnest money deposit and due diligence fee.
B. The buyer will lose both their earnest money and due diligence fee.
C. The buyer loses their due diligence fee but will get back their earnest money.
D. The buyer loses their earnest money but gets back their due diligence fee.

A

B. The buyer will lose both their earnest mone and due diligence fee.

57
Q

All of the following would be terminated at the death of the parties, EXCEPT:

A. An offer to purchase that has not yet been accepted
B. A listing agreement
C. A life Estate
D. A purchase contract that has been fully signed and accepted by all parties

A

D

58
Q

Which of the following statements is correct regarding the seller’s property disclosure statement:

A. The seller must disclose all material issues with the property.
B. If the statement is not provided to the byer, the buyer has 5 days to cancel the contract.
C. The agent may be liable for the seller’s omission if the agent did not disclose material facts.
A. Agents and sellers are only liable for the representation they make.

A

C. The agent may be liable for the seller’s omission if the agent did not disclose material facts.

59
Q

The annual taxes on a parcel of property are $2,520. These taxes have not been paid by the seller. If closing occurs on November 15 and the escrow agent is instructed to collect and pay the full taxes, how will this appear on the Closing Disclosure?

A. The buyer will be debited $2,520.
B. The seller will be credited $315, and the buyer will be debited $2,205.
C. The buyer will be credited $315, and the seller will be debited $2,205.
D. The buyer will be debited $315, and the seller will be debited $2,205.

A

D. The buyer will be debited $315, and the seller will be debited $2,205.

60
Q

Under which of the following type of listing agreement will an agent be paid only if they or another agent find the buyer, but not if the seller sells the property on their own?

A. Open listing
B. Net listing
C. Exclusive right to sell listing
D. Exclusive agency listing

A

D. Exclusive agency listing

61
Q 
The substitution of an existing contract for another contract is a concept known as: 
A. Assignment
B. Reallocation 
C. Novation 
D. Rescission
A

C. Novation

62
Q

A bargain and sale deed would contain which of the following covenants:

A. Covenant against encumbrances
B. Covenant of further assurances
C. Covenant of seizin
D. Covenant of quiet enjoyment

A

C. Covenant of seizin

63
Q

Which type of property ownership blends ownership of a unit with tenancy in common?

A. Townhomes
B. condominiums
C. Cooperatives
D. Planned unit developments

A

B. Condominiums

64
Q

When someone dies testate, the people who inherit the decedent’s real property from an executor would be receiving:

A. Legacy
B. Bequest
D. Devise
C. Descent

A

C. Devise

65
Q

Which of the following is INCORRECT regarding designated agency:

A. The firm’s broker in charge makes the designation
B. A firm may inform a consumer that designated agency is not available to them.
C. The brokers in designate agency must work for different firms
D The firm must have policies and procedures in place to enforce designated agency rules.

A

C

66
Q

When an owner of real property sells or transfers it and retains their right or interest to the mineral rights, they are creating:

A. An easement that must appear in the deed
B. An encroachment that affects subsequent ownership of the land.
C. A reservation and exception that must appear in the deed
D. An illegal interference in the bundle of rights of the buyer

A

C. A reservation and exception that must appear in the deed.

67
Q

A purchase contract in which one of the parties has made substantial misrepresentation or omissionis:

A. Void
B. Enforceable
C. Voidable by the party damaged by the misrepresentation
D. Unenforceable

A

C.

68
Q

All of the following would be considered involuntary alienation of real estate, EXCEPT:

A. A foreclosure by a lender
B. A condemnation proceeding
C. A transfer in a will
D. Escheat

A

C. Transfer in a will

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