Offer To Purchase Provisions Flashcards
Is the legal description a formal or informal reference?
Formal
Is the street address a formal or informal reference?
Informal
What NC act requires a deed to be recorded?
The Connor act.
In order to search a title of a property, what index is used in the register of deed office?
Grantee/grantor index
Who signs a deed?
Seller/grantor
Who receives the deed?
The buyer/grantee
Is acknowledgement of a deed an essential element of the deed?
No
What is the best deed for the buyer to receive?
General warranty deed
A deed of gift must be recorded within how many years in order to be valid?
2 years
Are restrictive covenant a pubic land use control or a private land use control?
Private
Can homeowners association fine a home owner for violating a rule of the association?
Yes
What is the definition of an encumbrance?
A charge, burden or a claim
Who pays for the home inspection?
Buyer
What is the definition of time is of the essence?
Absolute performance required or contract void.
What options do the buyer have if the seller refuses to make repairs?
Buyer can accept the the home in the present conditions, negotiate repairs with seller, or not proceed with transaction.
What happens if a buyer fails to provide a written decision to the seller by 5pm on the due diligence date?
Buyer is bound to the contract…needs to proceed with the transaction…or he will be in breach of contract.
Who pays for the wood destroying insect report?
Buyer
Is seller required to pay for termite treatment?
No
Who pays for termite repairs?
Negotiable between seller and buyer.
Can the seller refuse to complete repairs?
Yes
What is the definition of radon?
A radioactive gas emitted by the decay of uranium
What effects does radon have on the human body?
Lung cancer
What is the best way to reduce radon gas level in a property?
Install a ventilation system or seal cracks in the foundation.
Is the due diligence date classified as
“ the time is of the essence “?
Yes
Who pays the due diligence fee?
Buyer
Who receives the due diligence fee check after contract acceptance?
Seller
If the buyer does not close for any reason or no reason, what happens to the due diligence fee?
Seller retains it.
If a buyer does not close for any reason or no reason at all, what happens to the earnest money deposit if the buyer has passed the due diligence date?
Earnest money is forfeited by buyer
If the buyer decides to close on the property, what happens to the due diligence fee at closing?
The due diligence fee will be a credit to the buyer on the settlement statement and debit the seller.
Can the buyer ask a seller to make repairs with the due diligence?
Yes
Does the seller have to make repairs if requested by the buyer using due diligence?
No
Can the buyer make any request to the seller for any repairs and any improvements?
Yes
What is the definition of earnest Money?
Money paid to show good faith
What is the entry for earnest money deposit on the settlement statement?
Credit to buyer only
When is the earnest money to be deposited?
In three banking day after the acceptance of contract
Which firm does the NC real estate commission recommend hold the earnest deposit?
Listing firm
If the earnest money deposit check bounces, how many days does the buyer have to deliver good funds?
One banking day
Is the earnest money deposit essential element for a sales contract?
No
What is the consideration in a sales contract?
Sales price.
What is the definition of consideration?
Anything of value.
If the earnest money deposit becomes a dispute between the buyer and the seller, what is the firm required to do?
Hold the money until the parties agree in writing, or the courts decide, or firm can deliver a notice to all parties stating that after 90 days of receipt of the notice, the firm is turning the earnest money deposit over tot the clerk of court in the county where the the property is located.
Is an interest bearing trust account allowed in NC?
Yes, as long as the sales contract specifies in bold type interest nearing trust account and who will receive the interest.
When a broker opens a trust account initially, what is the initial minimum deposit?
$100 or what ever the bank requires
What type of institution is allowed to hold earnest money deposit?
An insured bank or savings and loan in North Carolina.
Can a credit union hold earnest Money deposit?
No
What is the definition of due diligence fee?
Money given by the buyer to the seller to buy time in order for the buyer to do their inspections and investigations on the property in order to make a decision to buy or not buy.
To whom should the due diligence fee be made out to?
The seller
Does the real estate firm deposit the due diligence fee check in a trust account?
No
Is the seller allowed a deficiency judgement when a purchased money mortgage is used in NC?
No
What is the entry on the settlement statement for the loan amount on a loan assumption?
Debit seller, credit buyer
What is the effective date?
The date that: (1) the last one of buyer and seller has signed or initialed this offer of the final counteroffer, of any, and (2)such signing or installing is communicated to the party making the offer or counteroffer, as case may be.
If a buyer terminate prior to 5 pm on the due diligence date, who retains the due diligence fee and who receive earnest money deposit?
Seller keeps the due diligence fee and the earnest money is returned to the buyer.
If the buyer terminate the contract by 5 pm on the due diligence date, and then the buyer cannot close, who receive the due diligence fee and who receives the earnest money deposit?
Seller keeps the due diligence fee and the earnest money deposit.
If the buyer closes on the property , does the buyer receive the due diligence fee and the earnest money deposit as a credit at closing?
Yes
Can due diligence fee be $0 if the buyer and seller mutually agree?
Yes
Are gas logs real or personal property?
Real
Are switch plate real or personal property?
Real
A shrub in a tub and the tub is placed in the ground. Is the shrub real or personal property?
Personal
What is the definition of free of liens?
There is no debt or money owed
What is the definition of Uniform Commercial Code?
The seller has paid off debts including any items financed through the power or has company.
What is a definition of appurtenances?
Runs with the land, passes with the land, stays with the land
Are emblements real or personal property?
Personal
What is a fructus naturales?
Fruits of nature which do not require cultivation
What is fructus industriales?
Fruits of the industry which do require cultivation.
Is the chandelier that is attached to the ceiling in the dining room classified as real or personal property?
Real
What is the name of the legal test to determine if an item is a fixture?
Total circumstance test.
Which of the following item is a fixture?
Range, stove, oven(even if not built in)…. yes
Freestanding refrigerator …..no
Carbon monoxide alarms….yes
Attached wall and/ or door mirrors….yes
Landscaping lights ….yes
Any contents in the fuel tank….yes
What is the definition of personality?
Personal property
If a buyer wants an item of personal property to remain with the property, what should an agent do?
Name the item in the personal property section and list any items the buyer wants to remain.
Are ornamental trees real or personal property?
Real
What is a settlement date?
The proper execution and delivery to the settlement agent of all documents necessary to complete the transaction contemplated by this contract, including the deed, settlement statement, deed of trust and other loans or conveyance documents and the settlement agent receipt of all funds necessary to complete such transaction.
What is the closing date?
The legal process which results in the transfer of title to the property from seller to buyer. Closing includes the following steps. 1. The settlement (defined above) 2. The completion of a satisfactory title update to the property following the settlement. 3. The settlement agent’s receipt of authorization to disperse all necessary funds and 4. Recordation in the appropriate county registry of deeds and deeds of trust, if any, which shall take place as soon as reasonably possible for the settlement after settlement. Upon such recordation of the deeds and deed of trust, if any, Closing shall be deemed completed and the proceeds of sale shall be disbursed by the settlement agent in accordance with the settlement statement and the provisions of chapter 45A of the North Carolina General Statutes. If the title update should reveal unexpected liens, encumbrance or other title defects, or if the settlement agent is not authorized to disperse all necessity funds, then the closing shall be suspended and the Settlement deemed delayed under paragraph 13( delay in Settlement/Closing).
Does the buyer agree to indemnify and hold seller harmless of loss or injury to any contractor they hire to inspect the property?
Yes
Is Buyers responsibility for any damages caused by accepted practices approved by NC Home Inspectors Licensure Board?
No
If the property is located in a flood plain, is this fact classified as material?
Yes
If the house is not in a flood plain but the back left corner of the lot is located in a flood plain, is the agent required to disclose?
Yes
Who pays for the attorney?
Buyer
Who pays for the tile insurance?
Buyer
Does title insurance protect an individual from past claims or future claims?
Past claims
Who signs a deed of trust?
Grantor (borrower)
Is the deed of trust an encumbrance?
Yes
Is NC a title theory state or a mortgage theory state?
Title theory state
Does the lender sign a deed of trust in NC?
No
What is the name of the lender in a deed of trust?
Beneficiary
What is the name of the lender in a mortgage?
Mortgagee
What is the name of the borrower in a mortgage?
Mortgagors
What type of foreclosure method is used in a deed of trust?
Non-judicial foreclosure.
What type of foreclosure method is used in a mortgage?
Judicial foreclosure.
In North Carolina, what is the time period between the date of default and the date of sale at the court house?
Equitable redemption.
In North Carolina, what is the time period after the sale of the property at the court house?
Ten day upset bid period (statutory redemption).
In North Carolina, if there is a surplus after foreclosure, who receives the surplus?
Borrower
What is the function of FHA?
FHA insures the loan.
What type of mortgage insurance required on all FHA loans?
MIP (mortgage insurance premium)
Can the mortgage insurance premium be financed into the FHA loan amount?
Yes.
Can the closing costs be financed into the FHA loan amount?
Yes.
Does FHA control interest rates banks can charge?
No.
Does the property have to appraise for the sell price by the FHA appraiser?
Yes. If the property does not appraise, the buyer can terminate the contract, or the seller can decrease the sale price to the appraised value, or the buyer could increase their down payment to pay the difference in the sale price and the appraised value.
What is the function of VA?
VA guarantees the loan.
What type of mortgage insurance required on a VA loan?
Funding fee.
Can the mortgage insurance on a VA loan be financed into the VA loan amount?
Yes.
Can the buyer’s closing costs be financed into the VA loan amount?
No.
Does the property have to appraise for the sale price by the VA appraiser?
Yes. If the property does not appraise, the buyer can terminate the contract, or the seller can decrease the sale price to the appraised value, or the buyer could increase their down payment to pay the difference in the sale price and the appraised value.
Are discount points a percentage of the sale price or the loan amount?
Loan amount.
Is the seller required to pay discount points on VA loans?
No. Discount points are negotiable between seller and buyer.
Can an agent write in the blank, (initial interest rate not to exceed _____), prevailing rate or market rate?
No, the agent must insert a number.
What is the federal law that requires the lender to give “good faith estimate” at time of loan application but no later than three banking days after loan application?
RESPA real estate settlement procedure act
What is the federal law which requires lenders to disclose to borrowers the “annual percentage rate”?
Truth in lending act.
What is the federal law that requires the lender to give an information booklet to the borrower?
RESPA Real Estate Settlement Procedure Act
Can a lender discriminate on a borrower’s income and/or nature of the profession?
Yes.
In qualifying a borrower, what is the name of the first ratio?
Housing expenses.
In qualifying a borrower, what is the name of the second ratio?
Recurring obligation.
Does the North Carolina residential property disclosure act apply to “for sale by owners”?
Yes.
Is a builder selling new construction never inhabited (first sale) required to complete the disclosure statement?
No.
Is the buyer required to sign the North Carolina residential property disclosure statement?
No.
If the residential property disclosure statement is required, and the buyer does not receive the form by the time of offer, how many days does the buyer have to rescind the sale contract?
No later than three calendar days.
Can an agent complete the North Carolina residential property disclosure form for the seller?
No.
Can the agent give the seller legal advice on the proper way to complete the form?
No.
Are vacant land and lots exempt from the North Carolina residential property disclosure form?
Yes.
Are special assessments paid by specific individuals or paid by the entire general public?
Specific individuals.
Are special assessments deducted from an individual’s taxes in the year paid?
No.
Are special assessments added to the basis when the property is sold?
Yes.
Would a special assessment be classified as a specific lien or a general lien?
Specific lien.
According to the NCAR Offer to Purchase and Contract, are the property taxes calculated on a calendar or fiscal year basis?
Calendar
Are home owner association dues deductible from an individual’s taxes?
No.
Are homeowner association dues included in the calculation of a qualifying ratio for a loan?
Yes.
Lead based paint possibility must be disclosed if a property is built prior to what year?
1978
Is a buyer required to perform a lead based paint test?
No.
How many days does a buyer have by federal law to perform a lead based paint test?
Ten calendar days.
Is the seller required to remove lead paint?
No.
Will FHA still insure a loan for a property with lead based paint?
Yes.
Are special assessments a general or specific lien?
Specific lien
Is a mechanic lien a specific or general lien?
Specific lien
At closing, a seller signs an affidavit that no work has been performed on the property within how many days prior to the date of closing?
120 days.
What is the definition of a specific lien?
A charge against a property.
What is the definition of a general lien?
A charge against a person.
Is a judgment a general or specific lien?
General
A judgment remains valid for what time period?
Ten years
Can property be landlocked in North Carolina?
No, there must be an ingress and egress.
What is the definition of dominant tenement?
An individual who benefits from an appurtenant easement.
What is an example of an easement in gross?
Utility easement
Is a deed classified as an encumbrance?
No.
Who shall remove the garbage and debris from the property prior to closing?
Seller
What does “ad valorem” mean?
According to value.
What North Carolina act allows real property to be taxed?
Machinery act
When do real property taxes technically become a lien on real property?
January 1st
Are real property taxes paid in advance or in arrears?
In arrears
If the seller has not paid real property tax, what is the accounting entry on the HUD 1 settlement statement?
Debit seller credit buyer for the amount of taxes from January 1st to and including the settlement date.
If the personal property taxes have already been paid by the seller, what’s the entry on the HUD 1 settlement statement?
No entry
Who pays for preparation of deed?
Seller
Who pays for the recording fee for the deed?
Buyer
Who pays for the recording of the deed of trust?
Buyer
Who pays the excise tax?
Seller
What is the formula to calculate excise tax?
Take sales price, round up to the nearest 500 increment and divide by 500; OR take sales price, divide by 500, round up to the nearest whole dollar.
When should a seller cancel their homeowners insurance policy?
After the deed is recorded.
What is the most popular homeowners insurance policy used in North Carolina?
HO3
Is flood included under the basic homeowners insurance policy in North Carolina?
No.
Is a third party protected under the liability portion of homeowners insurance policy in North Carolina?
Yes
What happens if there is a fire prior to closing?
Buyer can terminate contract by written notice to seller or sellers agent. If buyer elects not to terminate, buyer shall be entitled to the property and any of the seller’s insurance proceeds.
Who pays to record the deed?
Buyer
Who pays to prepare the deed?
Seller
Is “time is of the essence” in regards to the settlement date?
No
What is the number of days for a delay in settlement or closing?
Fourteen days
When shall possession be delivered?
At closing
Can an agent draft provisions for a buyer or a seller?
No
Can an agent fill in the blanks of a preprinted sales contract form?
Yes
Can an agent disclaim their liability by writing in a contract the agent is not liable for the amount of heated square footage reported?
No
Can an agent write the brokerage fee into the preprinted NCAR Offer To Purchase and Contract?
No
Does the North Carolina real estate commission prescribe sales contract forms for licensees to use?
No.
Does North Carolina real estate commission prescribe essential provisions to be included in the sales contract form?
Yes
What is an assignment?
Substitution of one person for another person.
Who is the assignor?
The giver of the assignment.
Who is the assignee?
Receiver of the assignment
Is the NCAR Offer to Purchase and Contract automatically assignable?
No. All parties must agree to assignment.
What type of property is used in a tax deferred exchange?
Like-kind property.
What is the tax code number for tax deferred exchange?
1031
What is boot?
Anything of value.
Is boot taxable?
Yes
Can you depreciate your primary residence?
No
Can you depreciate investment property?
Yes
Are repairs on investment property deductible according to the IRS?
No
Are repairs on primary residence deductible according to the IRS?
No
Is the addition of a patio to an investment property deductible in the year built or depreciated over the life of the patio?
Depreciated on the life of the patio.
What is the only method of depreciation allowed by the IRS?
Straight line depreciation
If the seller dies prior to closing, what happens to the contract?
Contract shall be binding upon their heirs, successors, and assigns.
If the buyer dies prior to closing, what happens to the contract?
The contract shall be binding upon the heirs, successors, and assigns.
If a seller dies after signing a listing agreement with a firm, is the listing agreement terminated?
Yes
If a broker in charge dies after the seller signs a listing agreement with a firm, is the listing agreement terminated?
Yes
Is “fax” legal in North Carolina?
Yes
Is email legal in North Carolina?
Yes
What act allowed electronic communication to be legal?
UETA. Uniform electronic transmission act
What is the definition of the effective date?
When the contract has been signed and initialed by all parties and communicated to the party or to the party’s agent.
Can a buyer request a time limit for an expiration of an offer?
Yes
Can a buyer withdraw their offer at any time prior to the expiration of an offer?
Yes
Must a seller respond within the time limit requested by the buyer?
No
Can a buyer withdraw an offer or counteroffer at any time prior to acceptance?
Yes
If a buyer withdraws an offer or counteroffer anytime prior to acceptance, what happens to the earnest money deposit?
Returned to the buyer since there was no meeting of the minds.
If purchasing a new condominium in North Carolina, how many days are allowed for the buyer to legally Rescind the contract?
Seven calendar days
If purchasing a new timeshare in North Carolina how many days are allowed for a buyer to legally rescind the contract?
Five calendar days
If changes are made to the notice information or escrow acknowledgement, does that constitute a counter offer or rejection of the offer?
No
Days refers to business days or calendar days?
Calendar days
Will weekends and holidays be included in the number of days?
Yes
Is delivery of the final sales contract to buyers agent deemed delivery to the buyer?
Yes
Is the delivery of final sales contract to a dual agent deemed delivery to both buyer and seller?
Yes
When does the counting of days start?
Counting begins on the day following the day on which the act or notice provided in contract
What North Carolina statue requires sales contract to be in writing in order to be enforceable in a court of law?
Statute of fraud
Are North Carolina listing agreements required to be in writing under statute of frauds?
No
If the seller deletes a provision in a buyer’s original and responds back, is this situation considered a counteroffer?
Yes
What is the definition of a counteroffer?
A rejection and a new offer.
According to North Carolina real estate commission rules, an agent is to deliver paperwork immediately but in no event later than how many calendar days?
Five calendar days
Is voicemail delivery of contract acceptance from a buyer agent to a listing agent legal in North Carolina?
Yes
Is voicemail revocation from a buyer to a buyer agent legal in North Carolina?
No
Who signs the acknowledgement for receipt of earnest money?
Firm holding the earnest money?
Agents are to indicate their agency status. Is this confirmation of agency or initial disclosure of agency?
Confirmation of agency
If a buyer agent is under an oral buyer agency agreement, then the buyer agency agreement must be signed at what time?
Prior to the time of offer.
Is oral buyer agency exclusive or non exclusive?
Non exclusive
Is oral buyer agency binding or non binding?
Non binding
Can an agent restrict a buyer under an oral buyer agency agreement?
No
Are agents to indicate their license number beside their name on the sales contract?
Yes
