NC 2 Flashcards
An agent seeking to increase his lead generation decides to focus on for sale by owner properties. Which of the following would be a violation of federal laws regarding solicitation?
A. Offering the seller a reduced listing commission if the seller agrees to use the agent as a buyer agent, as well
B. Calling for sale by owners to solicit a listing, who advertise their phone numbers on a yard sign but are on the Do Not Call list.
B. Calling for sale by owners to solicit a listing, who advertise their phone numbers on a yard sign but are on the Do Not Call list.
Agents should not make unsolicited calls to for sale by owners who are on the Do Not Call list for the purpose of obtaining a listing. Agents may call on behalf of a buyer client who is interested in viewing the home, and can ask if the seller is willing to pay compensation. Giving part of the commission to a participant in the transaction (buyer or seller) is not prevented by law. Door knocking is not a violation of any federal law (although certain homes and/or neighborhoods may have no solicitation policies)
Which of the following statements is TRUE regarding Timeshares in North Carolina?
A. Timeshare developers must register projects with the Commission to maintain an active real estate license.
B. All time share brokers must have an active real estate license to earn compensation.
B. All time share brokers must have an active real estate license to earn compensation.
In order to sell time shares, a broker must hold an active real estate license - there is no separate time share license. Time Share Developers are required to register the Time Share Project, however that has nothing to do with the Developer having a real estate license; In fact, most developers do not have a real estate license. Time Share instruments should be recorded after the 10-day period has expired. It is important to recall 5/5/5/10 in relation to time shares. In order for interval ownership to be counted as a time share it must be 5 or more non-consecutive periods, over at least 5-years, the purchaser has 5-days to rescind the contract and the developer must retain the funds in escrow for 10-days (unless the buyer has rescinded the contract). The timeshare Developer may be fined $500 per violation of the Timeshare Act, which is the only instance that the Commission can fine.
Must a non-provisional broker become a broker-in-charge to maintain her license on active status?
A. No. A non-provisional broker may seek referral compensation or represent a buyer without declaring as broker-in-charge when other conditions are met.
B. Yes. License law requires a non-provisional broker to declare as broker-in-charge or affiliate with a broker-in-charge.
A. No. A non-provisional broker may seek referral compensation or represent a buyer without declaring as broker-in-charge when other conditions are met.
A non-provisional or full broker has a limited ability to hold an active license and earn compensation without declaring or affiliating with a broker-in-charge. The activities are limited to referral compensation and representing a buyer. The full broker will not be able to listing property for sale or rent, or market by an means (business cards, website, orally offering services) without declaring as BIC or affiliating with a BIC.
Bonnie is a non-provisional broker that has held an inactive license for 3 years. What must she do to bring her license to active status?
A. Complete 8-hours of continuing education and 60-hours of postlicensing before sending notification to the Commission to activate her license.
B. Pass the real estate Prelicense exam or complete a 30-hour postlicense course in addition to payment of $90, submission of a new application and background check.
A. Complete 8-hours of continuing education and 60-hours of postlicensing before sending notification to the Commission to activate her license.
A broker that maintains and inactive license has paid the license renewal fee (license is current, not expired). When a license is inactive for 2+ years, the licensee will need to complete the GENUP + one elective course, plus complete 2 postlicense courses. Once the courses have been completed the licensee can send notice to activate. When a license has expired for more than 2 years, the former licensee will be treated as if they never had a license - therefore they will start over and require completion of a Prelicense course. When a license has expired for more that 6 months but less than 2 years, the licensee will have to pay 2X the renewal rate, submit a new application and background check, then pass the license exam or complete a 30-hour postlicense course prior to being able to activate.
Which contract best describes the creation of a general agency relationship?
A. An open listing agreement
B. Independent contractor agreement between a broker and firm
B. Independent contractor agreement between a broker and firm
When a salesperson affiliates with a brokerage it creates a general agency relationship. The salesperson has the limited ability to sign agency agreements that bind the brokerage to the agreement (buyer, seller, tenant, property management).
Open listing agreements, non-exclusive buyer agency agreements, and exclusive buyer agency agreements all create special agency where the agent is authorized to represent the principal in a specific act. The independent contractor agreement between a firm and a broker creates general agency because the broker is authorized to represent the firm in a broad range of matters.
Which method of client solicitation is regulated by law?
A. Email
B. Direct Mailers
A. Email
Client solicitation laws include Do Not Call, Do Not Fax, and CAN-SPAM. Postal mail, in-person conversations, and social media are not legally regulated. Social media advertising must be Fair Housing complaint; however there are not current client solicitation laws for social media.
Which of the following is TRUE regarding the Offer to Purchase and Contract, Form 2-T, created by the NCBA and NCAR?
A. It becomes a contract when signed by all parties to the transaction and acceptance is communicated to the offering party
B. This form works equally well for residential, commercial, and land sales.
A. It becomes a contract when signed by all parties to the transaction and acceptance is communicated to the offering party
A legally binding contract must be in writing under the Statute of Frauds and is formed once an offer has been unconditionally accepted and then acceptance has been communicated to the offering party. NCAR has created more appropriate forms for commercial transactions and land sales. All “licensees” cannot use the Standard NCAR forms as only Realtors® are permitted to use the forms. The purchase contract is between the buyer and the seller and therefore no reference should be made to broker compensation nor should a broker add a disclaimer of liability.
A broker lists a property for sale for 6 months. No offers are received during the listing period. The seller may be required to pay a commission to the listing firm:
A. when a contract is formed during the protection period by a buyer that viewed the property during the active listing.
B. when an offer is made during the protection period by a buyer that viewed the property during the active listing.
A. when a contract is formed during the protection period by a buyer that viewed the property during the active listing.
A protection period protects the listing firm when a buyer that was introduced to the property during the active listing decides to make an offer after the listing agreement has expired. If the seller has already listed the property with another brokerage or if the listing firm did not provide a list of buyers within 15 days of listing expiration, then the protection period terminates. The seller is obligated to pay when a contract results, not when an offer is made.
Regarding BPO’s (Broker Price Opinions) all of the following statements are correct EXCEPT:
A. A Broker Price Opinion is the equivalent work product as the Comparable Market Analysis.
B. A provisional broker may prepare a BPO for a lender, for a fee, so long as they are supervised by the broker-in-charge.
B. A provisional broker may prepare a BPO for a lender, for a fee, so long as they are supervised by the broker-in-charge.
A provisional broker cannot complete a BPO for a fee. A full broker can complete a BPO for a fee. The BPO must contain language indicating that the bank cannot use the BPO for the purpose of originating a debt. A BPO is typically performed for a lender, while a CMA is typically performed for a buyer or seller. Both calculate the probable sales price for a property and the price is often reported as a range.
A broker has agreed to exclusively represent a buyer under an oral agency agreement. Has the broker violated license law?
A. No. The buyer’s agency agreement is required to be in writing prior to settlement.
B. Yes. The buyer agency agreement must be in writing based on the information provided.
B. Yes. The buyer agency agreement must be in writing based on the information provided.
A buyer’s agency agreement may be oral when the arrangement: is non-exclusive and open-ended (no end date). Since the broker is acting exclusively for the buyer, the agreement must be in writing from inception. Waiting until settlement or closing is FAR beyond License Law and Commission rules. Agreements to list a property for sale or for rent must be in writing from inception - prior to providing brokerage services.
Broker John writes an offer on behalf of his buyer for $195,000 with a settlement date in 45-days. Broker John’s emails the offer to the listing agent, Provisional Broker Jane. Provisional Broker Jane meets with the seller to present the offer. The seller reviews the terms, agreeing to everything except the settlement date, which he changes to 35-days. The provisional broker emails the buyer’s agent to inform them that the seller has accepted the offer and attached a copy of the signed documents. Broker John calls the buyer to inform them that the offer has been accepted and that they are now under contract. Has a legally binding contract been formed?
A. No. A legally binding contract has not been formed.
B. Yes. When the listing agent emailed the buyer’s agent, a legally binding contract was formed.
A. No. A legally binding contract has not been formed.
To form a legally binding contract, there must be an offer, unconditional acceptance and communication back to the offering party. In addition, the contract must be in writing and signed by all parties.
The seller did not unconditionally agree to the offer. A counter-offer was created when the seller changed the settlement date. The buyer would need to unconditionally accept and then communicate acceptance to the seller for a legally binding contract to be formed. Communication can be by email, personal delivery, fax, etc.
The standard 2-T Offer to Purchase and Contract:
A. allows for a 14-day delay in settlement before the contract can be terminated.
B. is used when a buyer is purchasing residential homes or vacant land.
A. allows for a 14-day delay in settlement before the contract can be terminated.
Settlement is NOT time is of the essence as the delaying party has 14-days to correct the issue. A brokerage can, when members of NCAR, use the form or hire an attorney to prepare an offer that meets Commission rules. NCAR / NCBA created the Standard 2-T Offer to Purchase, not the Commission. The Commission sets the rules for what needs to be included in a standard form. When a buyer desires to purchase land they would use the Vacant Lot and Land offer.
Which of the following is TRUE about buyer agency agreements with regard to dual and designated agency?
A. Dual agency authorization must be in writing from the point that permission is given by either the buyer or seller as it acknowledges the reduction in agency duties.
B. An agent representing a buyer under oral buyer agency may show brokerage listings while acting as an oral dual or designated agent when both buyer and seller consent.
A. Dual agency authorization must be in writing from the point that permission is given by either the buyer or seller as it acknowledges the reduction in agency duties.
Oral buyer’s agency must be reduced to writing prior to the presentation of an offer to purchase. A broker is permitted to act as a dual agent under an oral buyer agency agreement that is non-exclusive and open-ended. Dual / designated dual agency can be practiced when both the buyer and seller consent, as it reduces the duties that the broker owes to both parties (specifically disclosure of personal information learned about the other party, ability to advocate on behalf of one party).
Which of the following is TRUE regarding an agent’s obligation regarding agency disclosure?
A. A buyer’s agent must disclose his agency status to the seller’s agent at first substantial contact with the seller or the seller’s agent
B. An auctioneer who sells real property is exempt from the agency disclosure obligations regarding agency status to bidders at an auction sale
B. An auctioneer who sells real property is exempt from the agency disclosure obligations regarding agency status to bidders at an auction sale
Auctioneers are exempt from the normal agency disclosure to buyers due to the peculiarities of an auction sale where it would be impractical to review the Working with Real Estate Agents brochure with every bidder. WWREA is not required in ALL real estate transactions but it is required in ALL real estate SALES transactions. The exemption for new home sales extends to corporate employees, not agents acting as independent contractors, therefore the WWREA must be reviewed with potential buyers. A buyer’s agent must disclose his status to the seller/listing agent at initial contact (this is the only case where initial contact comes up). The latest point that initial contact can occur is the presentation of an offer. An agent designated for the buyer should disclose his name to the seller no later than the first offer to purchase.
Which of the following would be a duty of a licensee?
A. Provide advice to a buyer customer as to the appropriate sales price to offer to a seller
B. Measuring the square footage of a home for a seller when disclosed in the MLS.
B. Measuring the square footage of a home for a seller when disclosed in the MLS.
The Commission does not require that a licensee measure a home unless the licensee discloses the square footage in the Multiple Listing Service. Measuring a home for a seller client would fall within the agent’s skill set and would be expected as a fiduciary act of a listing agent (agent can hire someone with greater expertise to do this task).
Agents would not draft contracts as that would be practicing law. Similarly, an agent should be careful offering tax advice unless they have expertise in that area.
