Practice Exam 3

Question 1

Mr. Granger owned a commercial office building and had several of the tenants executed long term leases. The tenants spent considerable expenses in moving and making improvements to the offices which they rented. Shortly after the lease were executed, the city was granted approval for a road widening project and instituted a condemnation proceeding against the building. In regard to the taking of the property under eminent domain, what compensation may be allowed?

Answer 1

Compensation will be due to Mr. Granger as the property owner and to the tenants for damages caused by the termination of the tenancy.

Question 2

Improvements for investment property

Answer 2

Patio

Fence

Screen Porch

(NOT painting)

Question 3

Which of the following laws requires a lender to notify a loan applicant within 30 days if their loan was declined?

Answer 3

Equal Credit Opportunity Act (ECOA)

Question 4

A broker visited Mr. and Mrs Smith and they signed an EXCLUSIVE RIGHT TO SELL listing agreement for their home. The broker was told that all of the Smiths children were also in agreement about the sale and the broker was given strict instructions that the home must be sold asap. The next day a relative of the Smiths called the broker and said that the Smiths had died earlier in the morning in a car accident. What should the broker do?

Answer 4

The broker should immediately stop all efforts because the listing no longer exists

Question 5

Under NCREC rules the Working With Real Estate Agents disclosure must be provided “at first substantial contact”. If that contact occurred electronically or by phone, the brochure may be transmitted to the consumer within 3 calendar days by

Answer 5

FAX

US MAIL

E MAIL

Question 6

When a landlord is responsible for the payment of taxes, insurance, and mortgage payments, and the tenant is required to only pay rent, the lease is an

Answer 6

GROSS LEASE

Question 7

In an OPTION CONTRACT,

Answer 7

the option is enforceable by the OPTIONEE on the OPTIONOR

Question 8

The provision of the Real Estate Settlement and Procedures Act apply to which of the following transactions if a federally related loan is used

Answer 8

The purchaser of a four plex by an investor

Question 9

The following people DO NOT need a real estate license in NC

Answer 9

a salaried person employed by a person/property manager who exhibits rentals

an owner of real estate who is selling or leasing his/her property

A trustee in bankruptcy proceeding or foreclosure sale

Question 10

In a foreclosure proceeding when there is an excess money bid and the funds collected exceed the amount of the mortgages and liens on the property, the trustee or sherif must do what with the overage?

Answer 10

Return those funds to the homeowner

Question 11

A homeowner takes a home equity loan from their personal residence. The only reason for obtaining the loan was so that they could use those funds for down payment on a commercial building. They request that the funds be directly transferred from the home equity lender to the commercial buildings closing agent. Does the Truth in Lending Act apply to any portion of what the consumer is doing?

Answer 11

yes, because the home equity loan involved a residence and it was subject to the TRUTH IN LENDING ACT

Question 12

A disclosure of agency status should be made by a buyers agent to the sellers agent

Answer 12

At the initial contact with the seller or sellers agent

With a written confirmation in the OFFER TO PURCHASE and Contract

Question 13

Parts of a Window

Answer 13

Muntin

Mullion

Sash

Question 14

Sill Plate

Answer 14

Located between the foundation wall and the floor joist

Question 15

SOLE Plate

Answer 15

Connects the studs to the floor

Question 16

Most efficient type of heat in NC

Answer 16

Warm Forced Air

Question 17

Radon gas is known to cause

Answer 17

Lung Cancer

Question 18

A deed provided in a foreclosure in which the sheriff or trustee promises only that they have the right to convey the property would be

Answer 18

BARGAIN and SALE DEED

Question 19

A tenant has signed a six month lease that stipulates it shall convert to a month to month if the tenant continues to occupy and pay rent beyond the initial term. What is the maximum security deposit that is permitted under the NC Residential Tenant Act?

Answer 19

Two Months for a month to month lease

Question 20

The Parole Evidence Rule states that

Answer 20

No oral agreements that contradicts the terms of a written contract may be considered in a lawsuit based on the written agreement

The party who drafted any ambiguous terms in a contract would have that provision construed most narrowly against them

Written contract is assumed to be the complete manifestation of the agreement of the parties

Question 21

RURAL HOUSING SERVICE AGENCY

FARM SERVICE AGENCY

Answer 21

administer these loans under the Rural Economic and Community Services Program of the US Department of Agriculture

Eligibility requirements for these type of loans are restricted to low income residents of rural areas or very small towns

Characteristics of the loans include longer than normal repayment period and subsidized interest rates

Question 22

When a lender is utilizing a DEED OF TRUST, at the end of the loan at the time of defeasance, which of the following will occur?

Answer 22

The trustee will provide the trustor with a deed of reconveyance at the instruction of the beneficiary

Question 23

Who must sign a subordination agreement in order for the relegation of lien position to change in regard to mortgage loans on the property?

Answer 23

The Superior lien holder

Question 24

NC License laws and commission rules

Answer 24

A broker can work for more than one firm if all of the BICs provide written permission

A BIC can be a BIC for more than one firm if the firms are doing business at the same location

Question 25

Under the NC Good Funds Act when may funds be dispersed to the seller from the closing agent/attorney?

Answer 25

After recordation, which is defined in the NC Offer to Purchase and Contract as closing

Question 26

The process of combining two or more lots to increase value is

Answer 26

ASSEMBLAGE

Question 27

Fructus Naturales is classified as

Answer 27

APPURTENANT

Question 28

In performing an appraisal, an appraiser would regard all of the following as NOT Arms Length Transactions

Answer 28

a foreclosure

a sale to a relative

a sale where one of the parties was acting under duress.

Question 29

The Federal National Mortgage Association (FNMA) is

FANNIE MAE

Answer 29

A quasi governmental organization which can borrow money from the US Treasury

An entity which buys and sells loans in the secondary market.

Question 30

When measuring a bonus room over a garage for heated living area, what is the minimum ceiling height of the knee wall in order to count the area as heated living area?

Answer 30

5 feet

Question 31

A homeowner obtaining a mortgage has an automatic three day rescission (right to cancel) due to which federal law under what circumstances?

Answer 31

Due to the Regulation Z when the loan is for the refinance of a primary residence

Question 32

A seller and buyer entered in and offer to Contract and Purchase in which he buyer agreed to pay 300K cash for the purchase of the sellers home. The buyer made and initial earnest money deposit of 20K to evidence their good faith intention of going through with the purchase. Before the parties reached the closing date, the buyer unexpectedly passed away. What is the result of a situation where this occurs?

Answer 32

The contract is still in effect and enforceable by either the seller or the buyer’s heirs

Question 33

The most popular utilized FHA loan program is

Answer 33

an FHA 203(b) fixed rate loan

Question 34

A loan in which the lender is making regularly scheduled payments to the borrower would be referred to as a

Answer 34

Reverse annuity mortgage (RAM)

Question 35

A seller has listed a property for a total sales price of $200 K and has a current mortgage on the property in the amount of $125 K. A buyer has proposed that they will pay the entire purchase price of $200 K by providing the seller with $50K down. if the seller will finance the rest of the total sales price and if the seller will remain liable on the existing $125 loan. What the buyer has proposed would BEST be referred to as

Answer 35

A WRAP AROUND LOAN

Question 36

A homeowner lives in an area that is subject to a lengthy set of protective covenants. One of the owners has erected a fence which is in violation of the CCR’s. If action is taken against the homeowner to force removal of the fence, that action will most likely be taken by

Answer 36

a private lawsuit filed by the homeowners or the HOA