NC Landlord and Tenant

Question 1

The deposit that a lessee must pay is

A)
called an earnest money deposit.
B)
considered to be the property of the lessor during the term of the lease.
C)
called a binder.
D)
called a security deposit.

Answer 1

D)
called a security deposit.

Explanation
It is called a security deposit and is held in trust by the lessor, but it is the money of the lessee and can be used only to cover losses due to breach of the lease.

Reference: Landlord and Tenant

Question 2

A tenant has given the landlord notice she will be terminating the lease at the end of this month because of being relocated to a different state. The tenant has six months remaining on the lease. Which of the following would typically apply?

A)
The landlord is legally bound to attempt to rerent the premises and can only withhold funds from the security deposit for the lost rent and cost of rerenting the unit, or actual damages. The landlord is entitled to actual monetary damages plus any physical damages.
B)
Anytime tenants break a lease in North Carolina, they automatically forfeit their tenant security deposit.
C)
The tenant typically gives a 10-day notice to the landlord of termination of the lease and requests to be released from liability for the remaining rent.
D)
The tenant forfeits the security deposit and is liable for the six months of remaining time left on the lease.

Answer 2

A)
The landlord is legally bound to attempt to rerent the premises and can only withhold funds from the security deposit for the lost rent and cost of rerenting the unit, or actual damages. The landlord is entitled to actual monetary damages plus any physical damages.

Explanation
The landlord is entitled to actual monetary damages plus any physical damages. Absent impending foreclosure, the tenant may avoid liability for the remaining months on the lease if the landlord is able to immediately obtain a new tenant for the property. There is no automatic forfeiture of security deposit under any circumstances.

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Question 3

Which leases must be in writing to be enforceable per the North Carolina statute of frauds?

A)
All leases have to be in writing to be enforceable
B)
Leases that exceed three years
C)
Residential leases that exceed one year
D)
Commercial real estate leases only

Answer 3

B)
Leases that exceed three years

Explanation
While it is strongly advised to have all leases in writing, an oral lease under three years in duration does not have to be in writing to be enforceable, but in a dispute, either party may face challenges enforcing it without some proof of an agreement.

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Question 4

A woman owns several vacation rental properties at the Outer Banks in North Carolina. She mainly rents it to friends and family but has decided to place her properties on VRBO. She is not using a real estate agent. When a renter sends her deposit monies and advance rent, what should she do?

A)
Place the money in her personal saving account
B)
Any of these, as long as agreed to in the contract
C)
Put the monies in a trust account in North Carolina
D)
Do not cash the checks until the end of the tenancies

Answer 4

C)
Put the monies in a trust account in North Carolina

Explanation
In North Carolina, vacation rental property monies must go into a trust account until the end of the tenancy. Certain amounts and fees may be disbursed before then, in accordance with the statute.

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Question 5

Which state law governs the obligations of an apartment lessor and lessee?

A)
North Carolina Residential Rental Agreements Act
B)
North Carolina Tenant/Landlord Act
C)
North Carolina Housing Act
D)
North Carolina Apartment Statute

Answer 5

A)
North Carolina Residential Rental Agreements Act

Explanation
The others do not exist.

Reference: Landlord and TenantExplanation
The others do not exist.

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Question 6

A tenant has repeatedly complained to the property manager that the toilet in her apartment will not flush. What are her legal options?

A)
Withhold payment of rent until the toilet is fixed.
B)
Initiate summary ejectment procedures in small claims court.
C)
Hire a plumber and pay the bill herself, deducting the charge from her rent check that month.
D)
Speak to an attorney about constructive eviction, which would allow her to break her lease.

Answer 6

D)
Speak to an attorney about constructive eviction, which would allow her to break her lease.

Explanation
Tenants in North Carolina may not withhold rent because the premises are uninhabitable, but they may avail themselves of the common-law doctrine of constructive eviction if the landlord fails to provide fit and habitable premises or they may contact the local building inspector and report the landlord.

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Question 7

Which of the following is TRUE regarding the North Carolina Residential Rental Agreements Act?

A)
A security deposit must be charged before the lease is valid.
B)
A tenant can withhold rent if the heat is not working.
C)
A shopping center tenant may cancel the lease if business is poor.
D)
A landlord must provide fit and habitable premises.

Answer 7

D)
A landlord must provide fit and habitable premises.

Explanation
There is no law requiring a security deposit, and a tenant cannot withhold rent without a court order. A shopping center is not residential.

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Question 8

A tenant has given the landlord notice he will be terminating the lease at the end of this month because of receiving notice of an impending foreclosure. The tenant has three months remaining on the lease. Under current North Carolina laws, which of the following apply?

A)
The landlord is legally bound to attempt to rerent the premises and can only withhold funds from the security deposit for the lost rent and cost of rerenting the unit, or actual damages to the premises.
B)
The tenant may, typically, give 10 days’ notice to the owner that he is terminating the lease and be released from liability for the remaining rent.
C)
The tenant forfeits his security deposit and is liable for the three months remaining on the lease.
D)
Anytime tenants break a lease in North Carolina, they automatically forfeit their tenant security deposit and will owe for all months left on the lease.

Answer 8

B)
The tenant may, typically, give 10 days’ notice to the owner that he is terminating the lease and be released from liability for the remaining rent.

Explanation
Because the tenant was notified of an impending foreclosure of the property, the tenant has the right under most circumstances to terminate.

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Question 9

A landlord and a tenant agree to a reduced rent for a home in as-is condition because the home has a nonfunctioning heating system. Is this allowed under North Carolina tenant laws?

A)
Yes, as long as the tenant agrees to buy a space heater.
B)
No, a landlord has a statutory duty in North Carolina to provide a heat source for a tenant.
C)
Yes, as long as there is an old fireplace in the house that still works.
D)
No, the landlord must put in a new heating and air-conditioning system before the tenant can move in.

Answer 9

B)
No, a landlord has a statutory duty in North Carolina to provide a heat source for a tenant.

Explanation
Landlord/tenant law in North Carolina mandates that housing have heat. There is no requirement for air-conditioning.

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Question 10

A tenant has signed a residential lease for one year. What is the maximum amount the landlord may request as a pet fee?

A)
Two months’ rent is the maximum allowed.
B)
A landlord may charge any reasonable amount for a pet fee.
C)
A landlord may not charge a pet fee in addition to a tenant security deposit.
D)
One month’s rent is the maximum allowed.

Answer 10

B)
A landlord may charge any reasonable amount for a pet fee.

Explanation
The “reasonableness standard” regarding pet fees applies in North Carolina, typically at the discretion of the landlord.

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Question 11

An agent in North Carolina keeps a trust account for personal residential rental properties. A renter skips out with no forwarding address. What should the agent do with that renter’s security deposit?

A)
Apply the money to the balance of the lease immediately
B)
Move the money to the operating account
C)
Apply the money to damages and unpaid rent, and refund the difference, along with a notice on how the deposit was applied
D)
Keep the money because the renter skipped

Answer 11

C)
Apply the money to damages and unpaid rent, and refund the difference, along with a notice on how the deposit was applied

Explanation
If there is no forwarding address, it is sent to the last known address. The North Carolina Residential Rental Agreements Act and the North Carolina Tenant Security Deposit Act specifies how the security deposit must be handled.

Reference: Landlord and Tenant > State

Question 12

Tenants are delinquent in rent payment. What are the landlord’s options?

A)
Padlock the home until the rent is paid in full.
B)
Advise the tenants that their personal belongings will be seized and sold to pay the rent if they do not bring the rent current.
C)
Begin the summary ejectment process after notice to the tenants.
D)
Tell the tenants they have10 days to cure the default or the property will be seized and padlocked by the landlord.

Answer 12

C)
Begin the summary ejectment process after notice to the tenants.

Explanation
Due process for evicting tenants begins with the landlord filing summary ejectment (actual eviction) with a request for a hearing in front of a magistrate in small claims court. Padlocking the premises, seizing the tenants’ property, or turning off utilities are considered peaceable self-help and are strictly forbidden.

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Question 13

The Tenant Security Deposit Act regulates

A)
all of these.
B)
when the residential tenant security deposit must be returned.
C)
the amount of money that can be required as a security deposit on a residential property.
D)
how residential tenant security deposits can be used.

Answer 13

A)
all of these.

Explanation
The Tenant Security Deposit Act regulates the amount and use of money held as a residential tenant security deposit. The tenant’s deposit must be returned, or the tenant must be given an initial accounting of the deposit within 30 days of the termination of the lease.

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Question 14

A tenant moves out before his lease expires and leaves the apartment in excellent condition. The landlord is able to re-rent it three days later. How much of the security deposit may the landlord retain?

A)
What is necessary to cover lost rent and re-renting expenses
B)
None of it
C)
One month’s rent
D)
All of it

Answer 14

A)
What is necessary to cover lost rent and re-renting expenses

Explanation
The purpose of a security deposit is to make the landlord “whole” in case of breach, not to make money on it.

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Question 15

Which of the following statements is NOT true under the Tenant Security Deposit Act?

A)
The landlord cannot use the tenant security deposit before the tenancy is terminated.
B)
The security deposit is the property of the lessee but under the control of the lessor.
C)
A landlord cannot charge a security deposit equal to more than two months’ rent.
D)
The landlord must make requested repairs up to a maximum of $1,000.

Answer 15

D)
The landlord must make requested repairs up to a maximum of $1,000.

Explanation
There is no requirement to make requested repairs.

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Question 16

The sale of a property that is under a long-term lease has which of the following effects?

A)
It cannot be made unless the present tenant is notified of the intention to sell and given an opportunity to terminate the lease.
B)
It terminates the lease on 45 days’ notice by the new owner.
C)
It terminates the lease, and the tenant must negotiate a new lease with the new owner.
D)
It has no effect on the term of the lease as far as the tenant is concerned.

Answer 16

D)
It has no effect on the term of the lease as far as the tenant is concerned.

Explanation
The purchaser takes the property subject to the rights of the lessee under the existing lease. This explains why it is important to inspect the property to discover the rights of parties in possession. Under the North Carolina Connor Act, leases exceeding three years need to be recorded to protect the lessee’s interests against third parties.

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Question 17

Which of the following would NOT be ordinary wear and tear in North Carolina?

A)
Missing range burners
B)
Lightly soiled carpet
C)
Wood floor needing buffing
D)
Small marks on the painted walls

Answer 17

A)
Missing range burners

Explanation
Worn vinyl, fading drapes, and marks on the walls are all ordinary wear and tear. Missing parts are not considered wear and tear.

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Question 18

A residential property manager had a tenant in one of his properties who signed a one year lease on April 1. The tenant paid a $1,000 tenant security deposit, which the property manager deposited into his trust account. Each year when the lease expired, the tenant signed a new one-year lease. The tenant moved out of the house on March 31, 2019. The property manager returned the full amount of the tenant security deposit to the tenant on April 20, 2019. Which of the following is TRUE?

A)
The property manager is only required to keep records until they are three years old.
B)
The property manager is required to keep all records related to this tenant until April 20, 2022.
C)
The property manager is not required to keep the original lease after April 1, 2014.
D)
The property manager is required to keep all records related to this tenant until March 31, 2018.

Answer 18

B)
The property manager is required to keep all records related to this tenant until April 20, 2022.

Explanation
All records must be retained for three years from the last activity related to the tenancy.

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Question 19

Which of the following is TRUE about the security deposit in most residential leasehold situations?

A)
It must consist of the first and last month’s rent.
B)
It must be returned at any time within one year.
C)
It can be applied only to cover physical damage caused to the premises.
D)
It may be put in an interest-bearing account.

Answer 19

D)
It may be put in an interest-bearing account.

Explanation
The security deposit should not be earmarked as the last month’s rent, for it would then be taxable as prepaid rent. It belongs to the lessee and is held in trust as security against physical damage, failure to pay rent, failure to return any items on the premises (like keys), or failure to meet other lease conditions.

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Question 20

Which of the following would typically be considered ‘‘normal wear and tear’’ under current North Carolina laws relating to tenant security deposits?

A)
Leaking plumbing
B)
A burn mark on the counter
C)
Food stains on the carpet that the tenant tried but could not remove
D)
Small crayon marks left by a toddler

Answer 20

A)
Leaking plumbing

Explanation
A plumbing leak is considered normal unless the fixture was broken by the tenant. The rest are not considered normal wear and tear.

Reference: Landlord and Tenant

Question 21

Under the statute of frauds, which of the following leases would have to be in writing to be enforceable?

A)
All commercial and residential leases
B)
Any lease that exceeds three years from the making of the lease
C)
All residential leases
D)
All commercial leases that are for rent greater than $5,000 a month

Answer 21

B)
Any lease that exceeds three years from the making of the lease

Explanation
Only leases that exceed three years from the making, or signing, have to be in writing to be enforceable under the statute.

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Question 22

A woman owns resort property at the beach in North Carolina, which she rents out. According to the North Carolina Vacation Rental Act, she must

A)
place all monies received in advance in an escrow or trust account.
B)
have all rental agreements in writing.
C)
provide fit and habitable premises.
D)
do all of these.

Answer 22

D)
do all of these.

Explanation
This law passed in January 2000 and has many requirements for landlords. Providing fit and habitable premises, having all rental agreements in writing, and placing monies received in advance in an escrow or trust account are just three of the requirements.

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Question 23

Which of the following are NOT typically considered ‘‘normal wear and tear’’ under current North Carolina laws relating to tenant security deposits?

A)
Cracked and peeling paint
B)
Threadbare carpet in front of the doors
C)
Custom paint colors in the den
D)
Dirty carpets

Answer 23

C)
Custom paint colors in the den

Explanation
Any paint color that is unauthorized or unusual would require repainting to rerent and is therefore considered damages.

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Question 24

The North Carolina Vacation Rental Act requires

A)
none of these.
B)
that rental units covered under the act be habitable.
C)
that primary residences in resort areas file quarterly reports with the NCREC.
D)
that all real estate in resort locations in North Carolina comply with the regulations.

Answer 24

B)
that rental units covered under the act be habitable.

Explanation
The act applies to residential properties leased for less than 90 days for leisure purposes and is not the tenant’s primary residence. Any units leased must be habitable.

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Question 25

A man runs a property management company in Brunswick County, North Carolina. His firm handles short-term and long-term rentals for others, including vacation rentals. Which of the following is TRUE about the management of vacation rentals?

A)
When a property is sold, rentals within 180 days of sale must be honored.
B)
Certain monies can be advanced to the owner if specified in the management agreement.
C)
All of these.
D)
The man must hold all monies in a trust account.

Answer 25

C)
All of these.

Explanation
In North Carolina, vacation rental property monies must go into a trust account until the end of the tenancy. Certain amounts and fees may be disbursed before then, in accordance with the statute, and rentals within 180 days of sale must be honored.

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Question 26

A residential tenant does not pay the rent when due. The landlord has another tenant to rent the property to. What can the landlord do?

A)
Cut off the utilities
B)
Nothing for 30 days, then take possession
C)
File for eviction, using summary ejectment
D)
Move the delinquent tenant’s property out within 10 days

Answer 26

C)
File for eviction, using summary ejectment

Explanation
There is a procedure to follow. The other choices are illegal.

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Question 27

Which North Carolina law requires that leases of a certain duration be in writing in order to be enforceable?

A)
Statute of frauds
B)
Connor Act
C)
Real Estate License Law
D)
Residential Rental Agreement Act

Answer 27

A)
Statute of frauds

Explanation
It states that leases that exceed three years be in writing to be enforceable. The Connor Act deals with recording documents.

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Question 28

The act that requires a tenant to maintain her dwelling unit is

A)
RESPA.
B)
the North Carolina Tenant Act.
C)
ECOA.
D)
the North Carolina Residential Rental Agreements Act.

Answer 28

D)
the North Carolina Residential Rental Agreements Act.

Explanation
The North Carolina Tenant Act does not exist; ECOA is the Equal Credit Opportunity Act and deals with borrowing money; and RESPA is the Real Estate Settlement Procedures Act, which deals with disclosure about real estate settlement costs.

Reference: Landlord and Tenant