NC License Law 03 Flashcards
The “delivery of instruments” rule applies to all documents; however, a lease is an “exception” to this rule. The property manager, however, must give written notice to the owner of the name of the tenant, the property address and the rental amount within how many days after lease acceptance?
A. 7 days
B. 30 days
C. 45 days
D. 60 days
C. 45 days
Which of the following is correct regarding the handling of money by a provisional broker?
A. Earnest money deposits and tenant security deposits received by a provisional broker must be delivered immediately to their broker-in-charge
B. A provisional broker may retain money until the parties have entered into a binding contract
C. A provisional broker must deliver all funds to their broker-in-charge within 3 days
D. A provisional broker must deposit all funds in a trust account within 3 business days
A. Earnest money deposits and tenant security deposits received by a provisional broker must be delivered immediately to their broker-in-charge
(Provisional brokers must turn ALL monies over to their BIC immediately. It is true that the due diligence fee is made payable to the seller and does not get deposited into the trust account, but provisional brokers may not hold onto this money)
According to the NC Good Funds Settlement Act, when is the settlement agent allowed to disburse money to the seller and the commission check to the broker?
A. at settlement
B. after settlement meeting
C. after parties sign papers and the seller signs the deed
D. once the transaction has been recorded
D. once the transaction has been recorded
(No funds may be dispersed by the settlment agent (usually a closing attorney) until the deed has been recorded)
The primary duty of a property manager is to:
A. evict disruptive tenants
B. provide copies of leases to the owner every 5 days
C. place tenants in apartments according to age
D. manage the property in a manner consistent with the owner’s instructions
D. manage the property in a manner consistent with the owner’s instructions
(The property manager is the agent of the owner. The property manager must fulfill fiduciary duties to the owner and is expected to maximize the net revenue consistent with the owner’s instructions)
A provisional broker decides to leave one firm and join a different firm. Which of the following statements best describes the agent’s situation:
A. the agent must notify the NCREC within five days of their move
B. if the agent had a transaction in progress at the previous firm, the provisional broker may be paid directly by their former BIC. They do not have to have the money flow through their current firm
C. the provisional broker’s license is expired when the provisional broker is in between two firms
D. if the provisional broker decides to work for the new firm as a commercial agent and continue working for the old firm as a residential agent, they are allowed to do so as long as both BIC’s notify the NCREC
B. if the agent had a transaction in progress at the previous firm, the provisional broker may be paid directly by their former BIC. They do not have to have the money flow through their current firm
(Whether the provisional broker will be paid will be determined by their independent contactor agreement with their previous firm. The previous firm can pay the money directly because that is the firm the agent was working for at the time the commission was earned)
Real estate agents should carefully follow the guidelines set out in the Residential Square Footage Guidelines brochure. Which of the following is NOT true regarding these guidelines:
A. the NCREC requires licensees to measure square footage
B. On the first floor the ceiling must be seven feet high to count the square footage
C. for reporting purposes, a basement is defined as an area below the entry level of the dwelling which is accessible by a full flight of stairs and has earth adjacent to some portion of at least one wall above the floor level
D. if a water heater is located in a small closet immediately off of and accessible from the living area, it is to be included in the HLA
A. the NCREC requires licensees to measure square footage
(NCREC does not require a licensee to measure a home. The Commission rules require a licensee to verify square footage if they are going to report it)
Joe, a licensee with an active and current real estate license. Joe is selling his house as a For Sale by Owner. All of the following are TRUE, EXCEPT:
A. Joe is subject to discipline by NCREC in selling his own property
B. Joe cannot represent a buyer who is interested in purchasing his home
C. Because Joe is acting as a For Sale By Owner and owns the property, he is not required to make disclosures regarding problems with the home
D. Joe must disclose in all advertising and contracts that he has an active real estate license
C. Because Joe is acting as a For Sale By Owner and owns the property, he is not required to make disclosures regarding problems with the home
(Joe does not have the same option as a seller to keep silent and check “no representation” regarding defects. He is a licensee and must disclose everything he knows and everything he should have known about the property)
A real estate agent has which of the following responsibilities for the Closing Disclosure?
A. The agent is responsible for reviewing the Closing Disclosure for their client to make certain it is accurate and complete
B. a broker directs the closing attorney to deliver the Closing Disclosures.
C. a broker must correct the Closing Disclosure and notify all parties to the closing of any errors the broker finds
D. a broker must provide the Closing Disclosure to the client no later than 48 hours prior to the settlement meeting
A. The agent is responsible for reviewing the Closing Disclosure for their client to make certain it is accurate and complete
(A broker has an obligation to review the Closind Disclosure for its accuracy and completeness)
All of the following are TRUE in regard to trust accounts and the earning of interest on such monies, EXCEPT:
A. the accounts must be balanced and reconciled monthly
B. An escrow account or trust account may be interest bearing so long as the client is informed and consents to the interest and it is paid in accordance with the client’s agreement
C. All interest that is being retained by the broker must be removed every 30 days
D. It is illegal for the broker to retain the interest on trust accounts
D. It is illegal for the broker to retain the interest on trust accounts
(A broker may have a trust account with the consent of the client and disperse the interest as agreed)
A real estate licensee may perform which of the following activities?
A. Draft a legal document on behalf of a client
B. Render their opinion on the legal title to real property
C. Provide advice concerning how a buyer should hold title to real estate
D. Fill in the blanks when completing a preprinted offer to purchase and contract for their client
D. Fill in the blanks when completing a preprinted offer to purchase and contract for their client
(All of the other answers would be considered the unauthorized practice of law. Since NC is an attorney state, licensees do not engage in any of those activities. Licensees are permitted to fill in preprinted forms including the offer to purchase and contract)
A buyer makes an earnest money deposit of $1,500 on a $15,000 property and then withdraws the offer before the seller can accept it. The broker is responsible for disposing of the earnest money by:
A. turning it over to the seller
B. deducting the commission and giving the balance to the seller
C. returning it to the buyer
D. depositing it into his or her trust account
C. returning it to the buyer
(A buyer may always withdraw an offer prior to the seller’s acceptance. If the buyer withdraws their offer all due diligence fees and earnest money deposits should be returned to the buyer)
All of the following could result in disciplinary action by the NC Real Estate Commission for unworthiness or incompetence, EXCEPT:
A. failure of the agent to properly complete an offer to purchase and contract
B. failure of the agent to diligently perform services they agreed to in a listing contract
C. failure of the agent to review the Closing Disclosures of their clients
D. failure of a property manager to provide a depreciation schedule
D. failure of a property manager to provide a depreciation schedule
(Property managers do not provide depreciation schedules or tax information to the owners of property that they manage)
A large investment group is interested in purchasing commercial property in North Carolina. They have utilized the services of a properly licensed and active real estate agent from the state of California for many years. They have asked the agent to come to North Carolina to search for and write offers on any commercial properties that meet their needs. Given this information, which of the following statements is correct?
A. since the California agent is representing the owners of the investment group and it is the investment groups own property no NC license is required
B. an agent who wishes to conduct business in North Carolina is always exempt from pre-licensing classes, but must take the state portion of the NC Real Estate Commission examination
C. an agent who wishes to conduct commercial business in North Carolina may do so as long as they affiliate with an in-state firm, and they receive a limited non-resident commercial real estate license
D. an agent who wishes to conduct commercial business in North Carolina may do so, but will be answerable to the real estate commission in the state in which they are licensed
C. an agent who wishes to conduct commercial business in North Carolina may do so as long as they affiliate with an in-state firm, and they receive a limited non-resident commercial real estate license
(A non-resident who is licensed in another stat and wishes to practice in NC may obtain a non-resident commercial real estate license)
A listing agent who was a BIC and a sole proprietor received a $500.00 weekend get-away to the North Carolina Mountains from their seller because of the outstanding service the listing agent provided. According to the NC Real Estate Commission Rules this would be acceptable because:
A. any amount $500 or less is considered nominal
B. the agent has a relationship with the client and is therefore allowed to accept gift monies for their services
C. the agent may receive the bonus as long as it was provided for in a written agency agreement
D. the agent may receive the bonus, but must notify prospective buyers even if they are represented by a different company
C. the agent may receive the bonus as long as it was provided for in a written agency agreement
(Licensees may receive compensation in the form of bonuses with the permission of their client and their BIC. Here the sole proprietor is the BIC and can receive the bonus)
When is a broker allowed to draft their own lease agreement?
A. when managing an immediate family member’s property
B. when managing corporate-owned property as an independent contractor
C. when managing their own property
D. when providing free property management services to their neighbor
C. when managing their own property
(The drafting of leases and contracts is considered the unauthorized practice of law. Licensees only complete preprinted forms approved by the bar association. However, clients may draft their own contracts and agreements, and in this instance the broker is handling their own property, not representing another)
With regard to property management agreements, which of the following is NOT correct?
A. a property management agreement is a personal services contract
B. a property agreement is between the agent within the property management firm and the owner
C. a property management agreement creates a general agency relationship
D. A provisional broker cannot be a property manager
B. a property agreement is between the agent within the property management firm and the owner
(A property management agreement is not with the licensed leasing agent. It is with the property manager (who must be a full broker) or the property management firm)
Regarding BPO’s (Broker Price Opinions) all of the following statements are correct, EXCEPT:
A. a broker may conduct a BPO for a bank and charge a fee even if the broker has no reasonable chance of getting the listing
B. a Broker Price Opinion is the same thing as a comparable market analysis
C. a Broker Price Opinion is not an appraisal or an opinion of value
D. a provisional broker is permitted to perform a Broker Price Opinion and collect a fee
D. a provisional broker is permitted to perform a Broker Price Opinion and collect a fee
(Either a broker or a provisional broker may perform a BPO. However, a provisional broker may not charge a fee for doint so)
Which of the following would be considered commingling?
A. a real estate licensee owns and manages his own investment property. He has placed all security deposits in a trust account, but places each month’s rent in his personal checking account
B. a property management company that manages several Homeowner Associations has an interest-bearing account trust account set up for each Homeowner Association. Every 30 days the property management company removes any interest earned from the trust accounts and transfers these monies to their business checking account
C. A broker who is a BIC is acting as a property manager for several investors. The broker also owns several rental properties. Each month the broker deposits rents from all of the units into their trust account
D. a general brokerage firm keeps some of its money in their trust account to cover bank fees
C. A broker who is a BIC is acting as a property manager for several investors. The broker also owns several rental properties. Each month the broker deposits rents from all of the units into their trust account
(Commingling is the mixing of a client’s monies with those belong to the broker or firm. The broker should not place their own rent into the trust account which is designated for the holding of money belonging to another)
When a tenant dies who is the sole occupant of the lease the NC Residential Agreements Act provides that:
A. This lease is automatically terminated upon the death of the tenant and the security deposit may be retained by the landlord or property manager
B. The owner or property manager must pursue an eviction against the estate of the deceased
C. The owner or property manager may file an Affidavit for Possession and must hold the tenant’s personal property for 90 days
D. The landlord or property manager may give a 90-day notice to terminate the lease and must account for and return the security deposit to the estate
C. The owner or property manager may file an Affidavit for Possession and must hold the tenant’s personal property for 90 days
(This is a special provision in the NC Residential Rental Agreements Act that is different than national real estate principles)
When must a lease be in writing?
A. All leases are required to be in writing by the NC Real Estate Commission
B. Only leases for longer than 3 years are required to be in writing. Leases on property subject to the Vacation Rental Act which are for less than 90 days must also be in writing
C. Only leases on property that is managed by a property manager
D. Only leases on residential property must be in writing
B. Only leases for longer than 3 years are required to be in writing. Leases on property subject to the Vacation Rental Act which are for less than 90 days must also be in writing
(The statute of frauds only requires leases to be in writing when they are longer than 3 years. The NC Vacation Rental Act also requires leases subject to that law which are less than 90 days to also be in writing)
