Questions - NC License Law

Question 1

What is the first point at which a provisional broker may begin practicing real estate in North Carolina?

A. when the NCREC receives notification of the provisional broker’s activation with a BIC
B. upon successful completion of all course work and required examinations
C. upon completion of all educational requirements
D. upon formal notification from the NCREC that the candidate has successfully passed the real estate examination and has been issued a license number

Answer 1

LL1-1 A

Once an applicant has passed the NC Licensing Examination, they are licensed, but their license is inactive until they affiliate with a brokerage. Provisional brokers are always inactive when they are not affiliated.

Question 2

An unlicensed assistant may do all of the following activities, EXCEPT:

A. assist the licensee with administrative duties and tasks
B. exhibit units for rent and provide tenants with information about the lease agreement
C. exhibit homes that are for sale and show the buyer around the home
D. fill in preprinted lease agreements and collect monies from prospective tenants, as long as the employee does not negotiate rents

Answer 2

LL1-2 C

Unlicensed property management assistants are permitted to show rental properties to prospective tenants, however, we do not allow unlicensed assistants to show homes or conduct open houses in residential sales.

Question 3

With regard to timeshares, all of the following are true, EXCEPT:

A. A timeshare developer and broker must maintain records of sales, rentals or exchange transactions for a minimum of three years.
B. All monies received by a timeshare developer or broker must be deposited within three banking days of receipt and remain in the trust account for ten days from the date of sale or until cancellation by the purchaser, whichever occurs first.
C. Timeshares are not considered real estate and no license is required to sell time shares in North Carolina.
D. Any refunds due to a cancellation of a timeshare purchase will be refunded within 30 days following the date of execution of the contract.

Answer 3

LL1-3 C

You must be licensed to sell timeshares in North Carolina. All of the other answers are correct regarding the handling of funds and monies concerning timeshares.

Question 4

Which of the following statements is true about timeshares?

A. They do not have to be registered with the NC Real Estate Commission.
B. They may be transferred prior to registering with the NC Real Estate Commission.
C. They must be registered with the NC Real Estate Commission prior to sale.
D. The timeshare broker may be fined by the NC Real Estate Commission.

Answer 4

LL1-4 C

Timeshares must be registered and approved by the NC Real Estate Commission. They cannot be transferred or sold without that registration.

Question 5

All of the following statements are correct regarding the NCREC, EXCEPT:

A. They shall be entitled to the services of the Attorney General of North Carolina.
B. They shall not make rules or regulations regulating commissions, salaries, or fees to be charged by licensees.
C. They shall make rules to allow a licensee to pay a travel agent who does not have a real estate license a referral fee.
D. They shall have the power to make reasonable bylaws, rules and regulations that are inconsistent with the provisions of the general statutes.

Answer 5

LL1-5 D

Their bylaws, rules and regulations must be “consistent” with the general statutes. It is true that the NCREC can use the services of the Attorney General. It is also true that they do not regulate the commissions or fees charged by licensees. Though referral fees generally cannot be paid to unlicensed people, the payment of a referral fee to a travel agent is the exception to the rule and is permitted.

Question 6

It is correct to say that the NC Real Estate Commission may not fine a real estate licensee. However, the NC Real Estate Commission may do which of the following?

A. order licensees to pay clients for damages caused and arbitrate disputes over fees
B. fine a timeshare developer up to $500 per violation of the Timeshare Act
C. revoke a broker’s license if the broker fails to take the required number of continuing education hours per year
D. dictate the amount of commission brokers may charge their clients and resolve commission disputes between agents

Answer 6

LL1-6 B

The Commission cannot fine a licensee, but they can fine a developer. They do not get involved in fee disputes or dictate the commission which brokers may charge. If a broker failed to take CE, their license would become “inactive.” The commission would not revoke the license.

Question 7

General Statute 93A-2 states, in part, that a real estate broker is any person who, for compensation or valuable consideration or the promise thereof, lists or offers to list property. All of the following would constitute valuable consideration, EXCEPT:

A. a listing agent is promised a weekend trip to Myrtle Beach if the agent puts the home under contract before the end of the year
B. the owner of a jewelry store gives his buyer’s agent a diamond bracelet as a way of saying thank you for the agent’s hard work
C. a butcher offers a year’s supply of top sirloin to his agent if they can purchase an investment property for 50% off the asking price
D. the neighbor brings fresh tomatoes from their garden and bakes their agent a fresh apple pie as a way of saying thank you

Answer 7

LL1-7 D

Brokerage activities are defined as acting on behalf of another for compensation. These nominal items would not be considered compensation or valuable consideration. However, vacations, trips, expensive jewelry and expensive food would all be considered valuable.

Question 8

All of the following could result in disciplinary action by the NC Real Estate Commission for unworthiness or incompetence, EXCEPT:

A. making any willful or negligent misrepresentation
B. pursuing a course of making false promises
C. accepting commissions or valuable consideration as a provisional broker from any person other than your Broker In Charge
D. Attempting to take all of the post licensing courses in a single year

Answer 8

LL1-8 D

There is a list of reasons why a licensee can be disciplined in Statute 93A-6. A provisional broker may always elect to complete post licensing classes on an earlier schedule than that required by the Commission

Question 9

A provisional broker is subject to two separate education requirements. They must complete postlicensing education of 90 hours within 3 years from the date of licensure. When must a provisional broker complete their first 8 hour CE requirement?

A. Within 1 year of the date of licensure
B. At the conclusion of their post licensing education
C. At the time of the first renewal of their license
D. Prior to the 2nd renewal of their real estate license

Answer 9

LL1-9 D

Question 10

A nonprovisional real estate licensee is on inactive status. They are NOT holding themselves out to be available to help others buy, sell, rent or auction property. A friend asks for their help in a real estate transaction. Which of the following is TRUE?

A. Because they did not actively advertise or solicit the business the licensee may assist their friend, but they will have to be paid directly, not through the brokerage firm.
B. The agent may assist their friend so long as they activate their license before the transaction closes and they are paid.
C. An agent who’s license is inactive may not earn any fees or represent others in a real estate transaction.
D. Because the agent is a full broker they are not required to affiliate with a BIC and therefore the licensee may represent their friend and collect a fee.

Answer 10

LL1-10 C

A licensee on inactive status may not earn any fees or be involved in brokerage activities. The commission is concerned with the status of the license at the time the money was earned, not when it was received.

Question 11

In the event that a licensee’s annual renewal fee is returned unpaid, the North Carolina Real Estate Commission may take all of the following actions, EXCEPT:

A. deny licensure renewal
B. suspend the agent’s license
C. revoke the agent’s license
D. fine the agent

Answer 11

LL1-11 D

NCREC does not fine licensees. If the fee is returned unpaid or the check was returned for insufficient funds the license would be expired because it was not properly renewed. The Commission could also take any of the actions listed in the other answers.

Question 12

All of the following would constitute an illegal action by an inactive licensee who is not affiliated with a firm, EXCEPT:

A. telling members of a networking club that they are a broker and offering members of the club their services
B. handing out business cards at a social gathering
C. telling a new acquaintance that they are a broker, but they are on inactive status
D. hosting an open house for another agent

Answer 12

LL1-12 C

A licensee who is inactive may not advertise, solicit business or engage in brokerage activities.

Question 13

Which of the following do not need a real estate license to sell property?

A. a corporation that owns property and is using an employee to sell the property
B. an auction house that deals in the sale of real property
C. an attorney who regularly and routinely assists others in the buying and selling of real property
D. an unlicensed assistant sitting in an open house

Answer 13

LL1-13 A

A real estate license is never needed when handling your own property. A corporation’s W2 salaried employees who are not paid on a commission basis are considered as dealing with the corporation’s own property, therefore do not need a license.

Question 14

Which of the following is INCORRECT about the post licensing requirement of a provisional broker?

A. the due date of the post licensing education is the anniversary date of licensure
B. post licensing consists of three 30 hour courses which may be taken in any order and must be completed within 3 years of the date of licensure
C. post licensing courses end on June 10th and must be completed for the provisional broker to renew their license on June 30th
D. if a provisional broker does not complete post licensing by the deadlines their license will become inactive

Answer 14

LL1-14 C

This is the rule for continuing education courses, not post licensing.

Question 15

If a provisional broker fails to complete a postlicensing course as required by the anniversary date of their license, what is their license status once the anniversary date passes?

A. active
B. expired
C. cancelled
D. inactive

Answer 15

LL1-15 D

Failure to complete any required education will result in an inactive license. An expired license occurs when a licensee fails to file their renewal or pay the license renewal fee.

Question 16

If a licensee does not pay their renewal fee on or before June 30 of the year, what is the time period for the licensee to reinstate their license without the imposition of additional educational requirements?

A. 30 days
B. 60 days
C. 6 months
D. one year

Answer 16

LL1-16 C

When a licensee fails to renew their license, it becomes expired. The licensee may renew up to 6 months late. They will have to pay a late fee and they may not practice or earn fees while it is expired. After 6 months, the NCREC may impose additional educational requirements.

Question 17

If an active provisional broker pays their renewal fee before their second renewal, but does not take their 8 hours of continuing education before their second renewal, what is their license status on July 1st?

A. Active
B. Inactive
C. Expired
D. Suspended

Answer 17

LL1-17 B

Failure to renew the license results in the license being expired. Failure to complete required education makes the license inactive.

Question 18

A corporation selling its own properties through the actions of its own salaried W2 employees:

A. is not required to have a firm license, but may not use its own employees
B. can use its own unlicensed employees, but must have a firm license
C. needs neither a firm license nor do its employees need to be licensed
D. need not have a license, but must affiliate with an NC broker-in-charge

Answer 18

LL1-18 C

a corporation is exempt from licensure when dealing with its own property and using its own W2 salaried employees

Question 19

In regard to real estate fees and commissions between brokerages and clients what is the role of the North Carolina Real Estate Commission:

A. only sets maximum limits on the fees and commissions
B. has no role in fees or commissions
C. only becomes involved when a complaint is filed
D. regulates the commissions exchanged between brokers, but not those exchanged with clients

Answer 19

LL1-19 B

The NCREC plays no role in either the setting of commissions, the regulation of commissions or commission disputes

Question 20

All of the following are correct statements about the composition of the NCREC, EXCEPT:

A. there are 9 appointed members of the NC Real Estate Commission
B. the chairman of the Commission is elected by the Commission members
C. commission members serve 5 year terms
D. there are at least three licensees and at least two laypeople serving on the commission

Answer 20

LL1-20 C

Members of the NCREC serve for 3 year terms and may be reappointed at the end of their term

Question 21

All of the following are required in order to obtain a NC real estate license, EXCEPT:

A. a high school diploma
B. age of at least 18
C. completing an application
D. successfully completing a 75 hour course and passing a school final examination

Answer 21

LL1-21 A

No specific level of education is required to obtain a NC real estate license.

Question 22

All of the following are true when a real estate license is inactive due to a CE deficiency, EXCEPT:

A. the licensee must cease all real estate activity as of July 1st
B. the licensee may not earn any commissions or referral fees while inactive
C. if the inactivity is for longer than 5 years the license will be considered expired
D. the licensee must file an activation form once all CE is current

Answer 22

LL1-22 C

A licensee may remain on inactive status indefinitely. When returning to active status NCREC will only require a maximum of 16 hours of CE and the filing of an activation form. The license will not be considered expired regardless of the period of inactivity.

Question 23

Which of the following must have a NC real estate license?

A. The executor of an estate selling their parent’s property and receiving a fee as the executor
B. An investor who is purchasing rental properties and placing them back on the market for sale
C. An auctioneer
D. A crier of sales

Answer 23

LL1-23 C

An auctioneer must have a NC real estate license when selling real estate. Criers of sales are exempt.

Question 24

All of the following are requirements of licensure for a NC Real Estate license, EXCEPT:

A. Possess a social security number
B. Be a United States citizen
C. File a complete application and fee
D. Be a resident of North Carolina

Answer 24

LL1-24 D

An applicant does not have to reside in NC. Many people who live outside of NC have a North Carolina real estate license.

Question 25

An unlicensed individual who transacts real estate for another or participates in the sale, lease or exchange of another for compensation is subject to which of the following penalties?

A. They will likely be issued a cease and desist order
B. They are guilty of a misdemeanor
C. They are subject to a fine of up to $10,000
D. They are subject to civil sanctions and a civil lawsuit

Answer 25

LL1-25 A

Practicing real estate and operating as a real estate agent without a license is a felony.

Question 26

An individual licensed in another state may receive a waiver of the NC education requirement to complete the 75 hour Broker Prelicense course if they meet which of the following criteria:

A. Successful completion of another state’s prelicense course of at least 75 hours within the last 3 years.
B. They must have been licensed in another state for a minimum of 10 years
C. Be a resident of North Carolina
D. They must have taken another state’s course within the last 5 years

Answer 26

LL1-26 A

An individual who completed a prelicense course of at least 75 hours in another state within the last 3 years may obtain an education waiver and directly take the NC Licensing Examination.

Question 27

Judy is an unlicensed individual. Her parents are selling their own home as For Sale by Owner without the representation of a real estate licensee. While her parents are on vacation, Judy shows the home to some interested potential buyers and has long conversations with them about the conditions under which they may purchase her parent’s home. Judy’s parents do not pay her in cash but instead offer to send her on an upcoming vacation. Is Judy in violation of NC Licensing Law?

A. No because the home is her parent’s own property and it is therefore exempt from the licensure requirement.
B. No, because Judy did not receive any cash payment for her activity.
C. Yes, Judy is engaged in the business of real estate without a license
D. Yes because Judy is legally required to obtain a power of attorney from her parents in this instance.

Answer 27

LL1-27 C

She is receiving compensation or valuable consideration and is assisting another on a property she does not own.

Question 28

Henri is the manager and owner of his own LLC. He has a full time salaried staff person, Sheila, that he employs to work for his LLC. Henri’s company is buying homes, renovating them and putting them back on the market. He has Sheila show the properties to prospective buyers. Who is in violation of NC Licensing Law?

A. Only Henri
B. Only Sheila
C. Both Henri and Sheila
D. Neither Henri nor Sheila

Answer 28

LL1-28 D

There is no license law violation. Both the managers of the LLC and the W2 employees are exempt when dealing with property in the name of the LLC

Question 29

All of the following are TRUE about the character issue of an applicant for a NC Real Estate License, EXCEPT:

A. an applicant must possess honesty, integrity and good moral character
B. a mandatory criminal background check is required
C. the Commission makes a character determination before an applicant is permitted to take the NC Licensing Examination
D. an applicant has 60 days to request a hearing if the Commission determines that they do not possess satisfactory character

Answer 29

LL1-29 C

The background check must be ordered and in the possession of NCREC prior to examination, but the Commission makes a determination on any character issue only AFTER the applicant has successfully passed the examination

Question 30

How long is an applicant’s Examination Eligibility Period to take the NC Real Estate Examination once the Commission has approved their application

A. 60 days
B. 90 days
C. 180 days
D. 360 days

Answer 30

LL1-30 C

Once an individual has successfully completed the 75 hour course and their application has been processed by NCREC, the applicant will receive notification that they are eligible to take the examination within the next 180 days.

Question 31

All of the following require the refiling of an applicant’s application for a NC Real Estate license, EXCEPT:

A. If the applicant delays taking the examination until after the 180 day expiration of their examination eligibility period
B. If the license was expired for a period of more than 6 months
C. If the license was surrendered or revoked for any period of time
D. If the license was inactive for more than 2 years

Answer 31

LL1-31 D

A licensee may remain inactive indefinitely. There is never a requirement to refile an application for a licensee to move from inactive to active status, regardless of the time period of inactivity.

Question 32

An applicant will forfeit both their examination and license application fees and their license will be canceled for all of the following, EXCEPT:

A. Failure to take the examination within the 180 day period
B. Failure to appear for an examination appointment as scheduled
C. Attempting to reschedule an examination appointment
D. Appearing more than 15 minutes late for a scheduled examination appointment

Answer 32

LL1-32 C

Once an examination appointment has been scheduled it may be rescheduled by contacting AMP one time. Applicants are not permitted to reschedule a second time.

Question 33

A NC provisional broker’s real estate license is initially issued on what type of status?

A. active
B. inactive
C. probationary
D. expired

Answer 33

LL1-33 B

The initial license is issued on inactive status. In order to activate the license a provisional broker must affiliate with a BIC and the proper license activation form must be filed with NCREC.

Question 34

So long as it is part of his or her duties, is it legal for an unlicensed assistant to solicit listings for the broker?

A. Yes, if it is part of a written job description
B. No, soliciting listings is the exclusive responsibility of the broker-in-charge
C. Yes, because he or she is being paid a salary not a commission
D. No, active participation in soliciting real estate business requires a real estate license

Answer 34

LL1-34 D

Cold calling, prospecting and soliciting of real estate business requires a license. An unlicensed assistant may schedule appointments, but they cannot solicit or cold call for business.

Question 35

When a corporation is involved in the sale or leasing of property that is owned by the corporation, who is exempt from the requirement to possess a real estate license?

A. Only the officers of the corporation
B. Only the directors of the corporation
C. Only the officers and directors of the corporation
D. The corporation’s officers, directors and all W2 salaried employees are exempt from licensure

Answer 35

LL1-35 D

The officers and directors of the entity are exempt. Only in corporate entities are the W2 salaried employees also exempt from licensure.

Question 36

All of the following are considered exempt from licensure and considered to be dealing with their own property, EXCEPT?

A. the general partners of a partnership
B. the managers of an LLC
C. the officers, directors and W2 salaried employees of a corporation
D. a sole proprietor and their W2 salaried employees

Answer 36

LL1-36 D

Only the sole proprietor would be exempt. No exemption would apply to the W2 salaried employees of a sole proprietorship, an LLC or a partnership

Question 37

A provisional real estate broker must remove the provisional status of their license by taking 90 hours of post licensing courses. The 90 hour courses are divided into three 30 hour courses. A provisional broker must take at least one of these thirty hour courses by which date?

A. the annual renewal date of their real estate license
B. the anniversary date of their real estate license
C. the end of the first calendar year their license was obtained
D. the second renewal of their real estate license

Answer 37

LL1-37 B

Postlicensing deadlines have nothing to do with the month of June. The June deadlines are for CE courses. Postlicensing due dates are on the anniversary date that the license was issued.

Question 38

A provisional broker obtains their NC real estate license on April 15th and joins a real estate firm. In order to remain active, the broker must pay the renewal fee to the NC Real Estate Commission on or before:

A. June 30 of the current year
B. June 30 of the following year
C. June 10 of the current year
D. December 31 of the current year

Answer 38

LL1-38 A

Although provisional brokers are not required to complete any CE until the 2nd renewal of their license, they must still renew the license on June 30th. This is accomplished by going to the NCREC website, filing the form and paying the renewal fee.

Question 39

All of the following are powers of the NC Real Estate Commission, EXCEPT:

A. to conduct announced or unannounced audits of licensees
B. to subpoena the books, records and bank statements and accounts of a licensee
C. to seek injunctive orders in court
D. to order licensees to make restitution to clients and levy fines

Answer 39

LL1-39 D

The NCREC does not levy fines or order the repayment of monies to clients.

Question 40

In North Carolina under the Residential Property Disclosure Act, sellers of 1-4 unit residential properties must complete a MOG (Mineral, Oil & Gas Disclosure). The purposes of this law includes all of the following, EXCEPT:

A. to require sellers to disclose to buyers if mineral, oil and gas rights have been severed from the property.
B. to prevent sellers from severing mineral, oil and gas rights from a property
C. to require sellers to disclose to buyers if mineral, oil and gas rights have been leased separately.
D. to inform buyers if the seller does not intend to transfer mineral, oil and gas rights.

Answer 40

LL1-40 B

Mineral, oil and gas rights to real estate can always be sold or leased separately from a real estate transfer. The requirement is one of disclosure and does not prevent the seller from severing such rights.

Question 41

All of the following are true under the NC Condominium Act, EXCEPT:

A. the units are usually separately taxed and assessed
B. there must be a unit owner’s association prior to the transfer of the first unit
C. a unit owner is prohibited from ownership of land and must take only title to their individual unit.
D. if the buyer cancels within the 7 day rescission period all money must be returned promptly with no penalty

Answer 41

LL1-41 C

The definition of a condominium is when an individual owns both their unit and shared ownership of the common area.

Question 42

In a NC condominium project, only certain owners have reserved parking spaces and garages. Under the NC Condominium Act, these areas would be known as:

A. Shared special assessments
B. Limited condo areas
C. Areas owned by the condominium owners association
D. Exclusive rights areas

Answer 42

LL1-42 B

Condominium owners own an interest in their unit and shared ownership of the common areas. There can be certain areas only available to some specified residents. These are called limited condominium areas.

Question 43

All of the following are true of a project broker within a NC Time Share, EXCEPT:

A. the project broker is designated by the developer or owner of the time share
B. the project broker must be an actively licensed broker
C. a provisional broker may serve as a project broker
D. the project broker is responsible for supervision and management of the time share project and all licensees that are associated with the project

Answer 43

LL1-43 C

a provisional broker may not serve as the project broker in a NC timeshare. However, a provisional broker may work as a time share salesperson under the supervision of the project broker

Question 44

All of the following are TRUE if a time share is not properly registered in NC and a public offering statement is not provided to a buyer prior to contract under the NC Time Share Act, EXCEPT:

A. the purchaser has a five day rescission period to cancel their purchase without penalty
B. it is a felony to not register the units
C. the purchaser may be entitled to a penalty of 10% of their purchase price or $3,000 whichever is greater
D. the buyer and the developer may agree to waive both the 5 day cancellation period and the providing of a public offering statement.

Answer 44

LL1-44 D

A buyer and a developer may not waive either the 5 day cancellation period or the providing of a public offering statement

Question 45

How long does a provisional broker have to activate their license from the date of licensure?

A. 180 days
B. there is no required time period for license activation
C. 30 days
D. 1 year from the date of licensure

Answer 45

LL1-45 B

There is no required time frame for a provisional broker to activate their license. A licensee may remain on inactive status indefinitely.

Question 46

Can a real estate licensee renew an inactive license?

A. Yes, but they must pay a penalty for being inactive
B. Yes, because that will prevent the license from being expired
C. No, a licensee cannot renew an inactive license because inactive means they have not completed the required education
D. No, a licensee cannot renew an inactive license without refiling a license application

Answer 46

LL1-46 B

Inactive and expired are two different statuses for the license. A licensee should always renew a license on or before June 30th whether active or not. Failure to renew will change the status to expired.

Question 47

Under the NC Mechanic’s Lien statute an owner of property must designate a mechanic’s lien agent (MLA) under which of the following situations?

A. an owner who is making improvements to public buildings
B. the improvements are less than $30,0000
C. the improvements are to a primary residence
D. a new roof is being placed on a vacation rental unit that costs $42,000

Answer 47

LL1-47 D

An mechanic’s lien agent is designate by the owner of the property to receive notice of the lien. This is not required for improvements to a primary residence or when the improvements are less than $30,000. Because these improvements are not to a primary residence and exceed $30,000 a lien agent must be designated under the statute

Question 48

The NC Homestead Exemption would be of importance and have the greatest impact on:

A. a borrower who is in default on their property and facing foreclosure
B. an individual who filed bankruptcy due to excessive medical bills and judgment liens
C. an investor who must engage in the short sale of an investment property
D. a married couple who is selling their primary residence to a buyer

Answer 48

LL1-48 B

The NC homestead exemption applies to personal residences and provides protection against judgment creditors

Question 49

Jack is a licensed real estate professional in Illinois. He has been a broker for many years, but is not licensed in NC. Jack has a friend who wants to purchase a home in Charlotte, NC. In regard to the representation of this buyer all of the following are TRUE, EXCEPT:

A. Jack may refer the buyer to a licensed NC broker and receive a referral fee even though he is not licensed in NC.
B. Jack may meet with the buyer in Illinois and explain the purchase process and answer questions about the NC transaction.
C. So long as Jack affiliates with a NC broker he may accompany the buyer to North Carolina and assist in showing the buyer property
D. The NC real estate commission does not have jurisdiction over Jack unless Jack conducts illegal brokerage activities in NC

Answer 49

LL1-49 C

An out of state licensee cannot set foot in NC and participate in the real estate transaction without having a NC real estate license

Question 50

Sherry is a provisional broker who works for a residential sales BIC and firm in North Carolina. Sherry has a couple of clients who want her to manage their rental properties. What are Sherry’s options?

A. Sherry can manage the properties on her own outside of her existing firm
B. With the permission of her BIC Sherry can also affiliate with another firm that engages in property management.
C. Sherry can manage the rental properties only if she obtains a power of attorney from the owners.
D. Sherry can refer the clients to a property management firm and earn a referral fee that is paid to her through her BIC

Answer 50

LL1-50 D

Sherry can make a referral and collect a referral fee so long as the referral fee is paid to her through her BIC.

Question 51

The broker-in-charge of a real estate office is responsible for all of the following, EXCEPT:

A. Appointing a BIC at every location where the firm operates
B. Maintaining all records for at least 3 years
C. Maintaining the trust account
D. Active and direct supervision of all provisional brokers

Answer 51

LL2-1 A

BIC’s are appointed by the Qualifying Broker who holds a firm’s license.

Question 52

Jack, a licensee wants to make an offer to the seller on a property which Jack has listed on behalf of his firm ABC. Which of the following is CORRECT?

A. A licensee may not make an offer on a property which they have listed
B. Jack can only proceed with an offer if he obtains full and proper consent for dual agency
C. Jack must withdraw as the listing agent prior to making an offer. If the seller wants to continue representation by the firm, the BIC can appoint another licensee to handle the listing
D. So long as Jack discloses his status as a licensee and treats the seller fairly he may proceed with an offer

Answer 52

LL2-2 C

Question 53

Sally has had a buyer sign the Working with Real Estate Agents Brochure and execute an Exclusive Buyer Representation Agreement. How long does Sally have to deliver these documents to her Broker-in-Charge?

A. Immediately
B. Prior to Sally Being Paid Compensation
C. Within 3 Calendar Days
D. Within 5 Calendar Days

Answer 53

LL2-3 C

All transaction documents must be delivered to the firm or the BIC within 3 calendar days of their receipt by a broker

Question 54

Regarding nonresident commercial licensees, all of the following statements are TRUE, EXCEPT:

A. They must affiliate with an in-state brokerage firm.
B. They may enter North Carolina to assist a buyer or seller, but must sign a document allowing the NC Real Estate Commission to discipline the agent.
C. They must take and successfully pass the state portion of the NC Real Estate Commission licensing exam before conducting business in North Carolina.
D. They must place any trust monies they receive from clients or customers into the in-state brokerage firm’s trust account.

Answer 54

LL2-4 C

A license is issued to nonresident commercial licensees who submit the application and meet other requirements. They do not have to take any courses or pass any examinations. The license does have to be renewed on an annual basis on June 30th.

Question 55

A real estate agent is representing a buyer under a written buyer agency agreement. The buyer would like to see a builder’s home. The builder is offering a $1,000 bonus to agents who sell at least 3 homes in the neighborhood. The real estate agent has not yet made a sale in that neighborhood. Which of the following actions should the agent take regarding disclosure of the bonus?

A. Because the agent has not made a sale, they are not required to notify the buyer of a bonus until they are eligible for it.
B. The agent should notify the buyer of the bonus at the time of contract.
C. If the buyer client requests the agent share a portion of the bonus with them, the agent is to instruct them that it is illegal for the agent to share bonuses with unlicensed entities.
D. The agent may notify the buyer of the bonus orally, but the bonus must be confirmed in writing before the client makes an offer to buy the home.

Answer 55

LL2-5 D

Licensees can receive bonuses if they have disclosed the bonus to the principal and have their consent. This consent is required before the licensee writes an offer.

Question 56

When dealing with multiple offers, which of the following is a correct statement regarding North Carolina statutes and rules?

A. The existence of multiple offers is a material fact and must be disclosed
B. An licensee is always permitted to disclose the terms of multiple offers to competing buyers
C. A seller may not accept an offer when multiple offers exist without giving the other buyers an opportunity to increase their offers
D. The existence of multiple offers is not a material fact and the terms and conditions of multiple offers can only be disclosed with the consent of the offeror.

Answer 56

LL2-6 D

A licensee must always communicate all offers to their client. Multiple offers are not a material fact and their existence does not need to be disclosed to competing buyers unless the seller directs the licensee to do so. However, the terms and conditions of the offers cannot be disclosed without the consent of the offeror.

Question 57

A broker has received an offer from a prospective buyer on a property that the broker has listed for sale. How long does the broker have to deliver the offer to their seller/client?

A. Immediately, but never later than 5 banking days
B. Immediately, but never later than 5 calendar days
C. Immediately, but never later than 3 banking days
D. Immediately, but never later than 3 calendar days

Answer 57

LL2-7 D

All documents and offers in real estate transactions must be provided to the client, “immediately, but never later than 3 days.” The three days are calendar days. Generally speaking, the time frames dealing with documents are always calendar days. The time frames dealing with deposits and money are always banking or business days.

Question 58

Under the NC Machinery Act, which of the following is a TRUE statement about North Carolina real property taxes?

A. They are not levied on an ad valorem basis.
B. They become a lien on the property on September 1st.
C. They become a lien on the property on January 1st and are due on September 1st
D. The Machinery Act requires reappraisal of the property every four years.

Answer 58

LL2-8 C

NC real estate taxes ARE levied on an ad valorem basis “according to value.” They become a lien on January 1st and are due on September 1st. The Machinery Act requires an appraisal every 8 years (octennial appraisal).

Question 59

All of the following are true regarding the North Carolina Working With Real Estate Agents brochure, EXCEPT:

A. The consumer is not required to sign the brochure.
B. If the first substantial contact is by phone, the brochure must be provided within 3 calendar days.
C. The brochure’s use is mandatory in all real estate transactions including residential sales, commercial transactions and lease transactions.
D. The brochure must be given in all sales transactions at first substantial contact.

Answer 59

LL2-9 C

Use of the brochure is mandatory in all residential and commercial transactions. It is not mandatory in lease transactions.

Question 60

The North Carolina Working With Real Estate Agents brochure must be given:

A. to property owners upon initial contact
B. to all consumers upon initial contact
C. only to clients in a real estate transaction at first substantial contact
D. to all consumers in a sales transaction no later than first substantial contact

Answer 60

LL2-10 D

The timing for use of the brochure is “first substantial contact.” First substantial contact is defined as when the client begins discussing personal, financial, confidential information or motivations, needs and wants.

Question 61

Which of the following can be contained in the Standard 2T Offer to Purchase & Contract?

A. A disclaimer of liability for actions of the firm or broker
B. The fee splits between the listing firm and the selling firm
C. The amount of liens and judgments that the seller has against the property
D. An estimated date for settlement

Answer 61

LL2-11 D

The amounts of compensation and fees are properly contained in the agency employment agreements, not the purchase contract between the seller and buyer. Real estate licensees may not disclaim liability for their conduct in regard to the transaction. Such limitation of liability clauses may not be utilized in either the Offer to Purchase and Contract nor any agency employment agreements.

Question 62

Jane is a non-provisional broker who is affiliated with ABC Realty. Jane wants to form an LLC entity for legal or tax purposes and have her BIC make her commission checks payable to her LLC. Which of the following is correct?

A. A broker affiliated with a firm is prohibited from forming their own entity
B. Jane must obtain a firm license for the LLC
C. The LLC must have a Broker-in-Charge
D. Only provisional brokers are permitted to have a separate entity

Answer 62

LL2-12 B

Every entity must obtain a firm license. So long as the entity is for compensation only it does not have to have a Broker-in-Charge

Question 63

After being active in the real estate business for three years, Broker Sallie wants to become a broker-in-charge. All of the following are requirements that Sallie must meet to become a BIC, EXCEPT:

A. have two out of the last five years of active real estate practice
B. complete the 12 hour BIC course prior to becoming a BIC
C. file a designation form with the NCREC
D. have completed all of her post-licensing requirements and not be in provisional status

Answer 63

LL2-13 B

Sallie must take the 12 hour BIC course, however, she does not have to complete the course before becoming a BIC. If she meets the other eligibility requirements she will have 120 days within which to take the 12 hour course.

Question 64

A licensee can act as the Broker-in-Charge of more than one firm, when:

A. the office is an approved national franchise
B. the offices are affiliated and owned by the same person
C. the offices are in the same building
D. the offices are in the same city

Answer 64

LL2-14 C

Usually each location has one BIC and there is only one BIC per location. There is an exception which allows a licensee to be a BIC for more than one firm when the two firms are in the same location.

Question 65

In regard to the use of standard forms and contracts by real estate professionals and the role of the North Carolina Real Estate Commission, NCREC:

A. requires the use of specific forms and contracts
B. drafts specific forms and contracts but does not mandate their use
C. prescribes certain essential provisions that must be included in the forms and contracts
D. has no authority regarding the content of real estate forms and contracts

Answer 65

LL2-15 C

The NCREC does not create, write or prescribe the standard forms. Standard forms are created by a joint committee of the bar association and the REALTOR Association. However, the Commission does dictate that certain provisions must be included in the forms and contracts.

Question 66

Real estate licensees and firms can create entities. Which of the following is INCORRECT regarding real estate entities in North Carolina?

A. Every entity, other than a sole proprietorship must have a firm license
B. Firm licenses must be renewed annually no later than June 30th
C. A licensed broker working for a firm cannot create their own legal entity
D. Partnerships create the most liability for the general partners involved

Answer 66

LL2-16 C

A licensee can create an entity such as an LLC or a Subchapter S corporation and be affiliated with a firm. However, every entity in NC that is involved in real estate brokerage must have a firm license.

Question 67

Which of the following is INCORRECT in regard to brokerage advertising?

A. Provisional brokers cannot advertise without broker-in-charge approval and consent.
B. Brokers-in-charge are not required to review and approve all firm advertising.
C. Real estate professionals cannot create blind advertising.
D. All real estate ads must include the name of the firm or the BIC

Answer 67

LL2-17 B

Brokers-in-Charge ARE required to supervise all firm advertising.

Question 68

Which of the following does NOT need a firm license in North Carolina?

A. a national franchise that is licensed to do business in multiple states and has formed a corporation to do real estate business in North Carolina
B. a local sole proprietorship using a tradename or DBA
C. a general partnership that consists of only two individuals
D. a corporation that is already approved by the NC Secretary of State

Answer 68

LL2-18 B

A sole proprietorship does not need a firm license because it is not an entity. Every entity that is formed, such as a corporation, partnership or LLC must have a firm license.

Question 69

If a provisional broker terminates their affiliation with a BIC and does not reaffiliate with another BIC or firm, their license is considered:

A. terminated
B. expired
C. revoked
D. inactive

Answer 69

LL2-19 D

A provisional broker may not engage in real estate brokerage activities or earn fees unless they are affiliated with a firm. If the provisional broker leaves the firm or their affiliation is terminated, they will become inactive. They may not engage in the practice of real estate or earn fees until they have re-affiliated with another firm.

Question 70

When can an unlicensed person receive fees for real estate referrals in North Carolina?

A. when the individual is a past client of the broker
B. when the individual is a licensee, but their license is inactive
C. when the individual is a travel agent making a vacation referral
D. when the individual is a family member of the broker

Answer 70

LL2-20 C

The general rule is that an unlicensed person may never receive fees for the referral of real estate business to a licensee. The only exception is that a travel agent who does not have a real estate license may receive a referral fee when making a vacation rental referral.

Question 71

All of the following are required for an individual to become a broker-in-charge, EXCEPT:

A. They must complete a 12-hour BIC course taught by the Commission within 120 days of designation.
B. They must have at least 2 years full-time practice or the equivalent
C. The experience must have been attained within the last 5 years.
D. They must have completed at least 75% of their postlicensing requirements as a provisional broker.

Answer 71

LL2-21 D

It is not possible to become a broker-in-charge until ALL post licensing requirements have been met and the licensee has removed their provisional status.

Question 72

A real estate licensee must notify the North Carolina Real Estate Commission of any changes in address within:

A. 3 days
B. 5 days
C. 10 days
D. 60 days

Answer 72

LL2-22 C

Any change of address, name change or change in the affiliation of a provisional broker must be reported to NCREC within 10 days.

Question 73

A real estate licensee in North Carolina must comply with which of the following rules in regard to any criminal activity:

A. report all arrests within 60 days
B. report all court proceedings within 15 days
C. report all convictions within 60 days of the conviction
D. report all criminal activity within 10 days whether convicted or not

Answer 73

LL2-23 C

Note that the 60 day reporting requirement is from the date of the conviction, not the date of the court hearing or the arrest.

Question 74

When must a firm practicing “designated agency” disclose to the seller the name of the agent representing the buyer.

A. at first substantial contact with the seller
B. at initial contact with the seller
C. at the time the buyer’s agent shows the seller’s property
D. at the time the offer is submitted to the seller

Answer 74

LL2-24 D

This is different from “first substantial contact.” First substantial contact mandates the use of the WWREA brochure. When a firm is practicing designated agency and one licensee is designated as the seller’s representative and another licensee is designated as the buyer’s representative in the same firm, in the same transaction, the disclosure of the name of the agent representing the buyer and their designated status is provided at the time of offer.

Question 75

When a provisional broker terminates their relationship with a firm or BIC, what is the requirement for notification of the termination to NCREC?

A. the provisional broker must notify the BIC within 10 days
B. the BIC must notify NCREC of the termination within 10 days
C. both the BIC and the provisional broker must notify NCREC immediately
D. the notification must be received by NCREC within 30 days

Answer 75

LL2-25 B

Brokers-in-Charge must notify NCREC within 10 days of changes in the affiliation of provisional brokers.

Question 76

A real estate broker is aware that the highway department has adopted a long range plan for a new interstate beltway to be constructed. Anticipating that such actions will increase the surrounding land values, the broker seeks out buyers and encourages them to buy property in that area, suggesting they would be able to make substantial profits. The broker begins submitting offers, but never discloses the proposed developments with any of the property owners. Which of the following statements is true?

A. The broker must disclose this information as a material fact even though acting as a buyer’s agent.
B. This information is only required to be disclosed if the broker were representing the sellers.
C. The broker would violate fiduciary duties owed to their buyer if they made such a disclosure.
D. The broker is only obligated to disclose such information if specifically asked about highway expansion by the seller or their agents.

Answer 76

LL2-26 A

The construction of the highway is a material fact. Material facts must always be disclosed to all parties in the transaction regardless of whom the licensee represents.

Question 77

All of the following statements is correct regarding “designated agency?, EXCEPT:

A. Only the agents in the transaction are designated, the other agents are dual agents
B. If the Broker-in-Charge is not one of the designated agents, then the BIC is in dual agency
C. A BIC and a provisional broker in the same transaction must be designated agents
D. A BIC and a provisional broker may never act as designated agents in the same transaction

Answer 77

LL2-27 C

Question 78

A real estate broker is working with a buyer as a seller’s subagent. All of the following are duties that the broker owes to the buyer, EXCEPT:

A. confidentiality
B. fairness
C. honesty
D. disclosure of material facts

Answer 78

LL2-28 A

The agent is working for the seller. The licensee owes fiduciary duties to the seller including the duty of confidentiality. No such duty extends to customers which is the role of a buyer when the licensee is working as a subagent of the seller.

Question 79

A real estate broker is working with a buyer client. The broker wants to show a property that is listed with a competing real estate firm. When must the real estate broker, working with the buyer disclose their agency status to the listing licensee?

A. first substantial contact with the firm when the buyer shows serious interest in the property
B. initial contact with the firm when the agent first calls to show the property
C. time of offer where the real estate broker gives confirmation of agency on the offer to purchase and contract
D. time of contract where there is a meeting of the minds and the brokers confirm their agency status in the contract

Answer 79

LL2-29 B

Licensees must disclose their agency status to other licensees at initial contact. Other licensees deserve to know at the time of initial contact whom the agent represents.

Question 80

Charlene is an active sole proprietor independent broker who teaches school full time. Charlene gives referrals to brokers and she receives referrals. Charlene is not required to be a broker-in-charge or affiliated with a firm so long as she does not:

A. Receive any commissions
B. Make any referrals
C. Represent a buyer in a sales transaction
D. Hands out business cards promoting herself as a broker

Answer 80

LL2-30 D

a full broker is not required to affiliate with or be a BIC unless they: 1) advertise or market in any way 2) maintain a trust account 3) hire other licensees

Question 81

Nonresident commercial licensees are allowed to conduct business in North Carolina if they obtain a limited non-resident commercial brokerage license. Which of the following statements is NOT correct regarding nonresident commercial licensees?

A. A nonresident licensee may advertise in North Carolina, but must indicate in the advertisement “limited nonresident commercial real estate broker.”
B. No person shall enter North Carolina to perform real estate services unless he or she has first entered into a brokerage cooperation agreement and declaration of affiliation with an individual who is a resident in North Carolina licensed as a North Carolina broker.
C. A nonresident commercial licensee must agree to be subject to the jurisdiction and discipline of the NC Real Estate Commission.
D. Commissions or fees earned by a nonresident commercial licensee shall be paid directly to the licensee if said licensee is employed by or working for a North Carolina real estate broker or firm.

Answer 81

LL2-31 D

A limited nonresident commercial licensee must be affiliated with a NC resident broker. All monies must pass through the firm and may not be paid directly to the non-resident licensee. They must file a declaration of affiliation, agree to be subject to the jurisdiction and discipline of the NCREC and their advertising must indicate that they have a “limited nonresident commercial broker license.”

Question 82

With regard to brokers-in-charge, all of the following statements are correct, EXCEPT:

A. A broker-in-charge may supervise more than one firm as long as the firms are in the same building
B. A broker-in-charge is required to take the General Update update course and the Broker Update (BICUP) course each year before June 10th or their license is cancelled.
C. A broker-in-charge is required to have two years of experience out of the last five years and may not be a provisional broker.
D. A broker-in-charge is required to take the 12- hour initial broker-in-charge course either within the last three years or within 120 days of becoming the broker-in-charge.

Answer 82

LL2-32 B

A broker-in-charge is not required to take General Update. They must take Broker Update (BICUP) and one elective. The license is not cancelled. If any licensee fails to complete the proper and required CE, their license becomes “inactive.” Even BIC’s who do not represent clients must take the CE courses. There are no exceptions. If the BIC becomes inactive, the firm would also become inactive, because a firm cannot operate without a BIC.

Question 83

Which of the following is NOT a correct statement when describing agents and firms responsibilities regarding pocket cards:

A. an agent must keep their pocket card on them at all times when conducting real estate business
B. all licenses expire on June 30th of each year. At that time, a new card will be issued once the agent pays their annual fee to the NCREC
C. once the licensee removes their provisional broker status, they will be issued a new card
D. a firm must display all pocket cards prominently

Answer 83

LL2-33 D

Question 84

All of the following statements are correct regarding commission rules, EXCEPT:

A. should a broker or provisional broker change their name, address or broker affiliation, they must notify the NCREC within 30 days
B. a provisional broker may not be the Broker-in-Charge regardless of the years of experience they may have as a broker in another state
C. a broker must include the firm or BIC’s name in all advertising
D. should a broker or provisional broker be convicted of a DWI (driving while impaired) they must report this within 60 days of the conviction

Answer 84

LL2-34 A

Address changes by any licensee must be reported to the NCREC within 10 days.

Question 85

In the event that a licensee fails to deliver, within a reasonable time, a completed copy of any purchase agreement or offer to buy and sell real estate to the buyer and to the seller, the NCREC may take all of the following actions, EXCEPT:

A. revoke the agent’s license
B. suspend the agent’s license
C. censure or reprimand the licensee
D. set the agent’s license to inactive status

Answer 85

LL2-35 D

The NCREC does not set licenses to inactive or expired status. These occur because a licensee failed to complete required education or renew the license, not as a result of disciplinary action

Question 86

A real estate broker is working for more than one firm and more than one broker-in-charge. This would not be a violation of licensing law and commission rules as long as:

A. the broker has the consent of both firms and the broker is not a provisional broker
B. the broker works only in the property management field
C. the broker does not list properties for more than one firm
D. the broker only accepts their commission from one of the firms

Answer 86

LL2-36 A

Question 87

Which of the following would result in a conflict of interest for which the licensee could be disciplined by the NCREC?

A. an agent working for the buyer notifies the listing agent that the buyer is their sister
B. a licensee notifies the listing agent that they are self-representing and are interested in purchasing the listing
C. a sub-agent to the seller assists their sister in the purchase of a home but keeps the information confidential because they are representing the seller
D. an agent working as a sub-agent of the seller notifies the seller of confidential information the buyer shared

Answer 87

LL2-37 C

The licensee is acting as an agent of the seller. They would need to disclose any family relationship with the buyer and should not be assisting the buyer because a licensee cannot be a sub-agent of the seller and a buyer representative at the same time

Question 88

A buyer’s representative is required to reveal their agency status to the seller or listing agent:

A. no later than time of offer
B. at “initial contact”
C. no later than contract
D. at “first substantial contact”

Answer 88

LL2-38 B

The WWREA brochure must be provided to consumers at first substantial contact, however, a licensee is required to disclose their status to the other agent in the transaction at initial contact.

Question 89

An agent is working under an oral buyer’s agency agreement. The agent knows the buyer is strongly interested in one of the homes seen by the buyer. The buyer is ready to write the offer, but refuses to sign a buyer’s agency agreement. At this point, the agent may:

A. write the offer, but advise the buyer they are now a sub-agent of the seller and anything the buyer has revealed must be provided to the seller
B. not write the offer because the agent may not proceed without a written buyer representation agreement
C. write the offer, but advise the buyer that they are a sub-agent of the seller, but they are not allowed to reveal to the seller what they have already learned about the buyer
D. write and present the offer under an oral buyer’s agency agreement, but reduce the buyer’s agency agreement to writing prior to contract

Answer 89

LL2-39 B

Oral buyer agency (non-exclusive agency) may only exist up until the time that the buyer submits an offer. If the licensee does not have a written buyer representation agreement they may not write the offer.

Question 90

With regard to advertising, which of the following is INCORRECT?

A. a licensee must have a client’s permission before placing a sign in a yard
B. In order for a nonresident commercial licensee to advertise their services in North Carolina, they must conspicuously identify themselves as “Limited non-resident Commercial Real Estate Broker”
C. All real estate ads must contain the name of the firm or BIC
D. A licensee may advertise a home as “Coming Soon” before they have a written listing agreement

Answer 90

LL2-40 D

A licensee may not advertise or market a property without a written listing agreement

Question 91

Which of the following ads would be considered a blind ad?

A. Sheila Jones, REALTOR, is available for your assistance.
B. Call Mike Smith for your home buying needs
C. ABC Realty is looking for your business
D. Sandy Jones at XYZ Realty has listed a property

Answer 91

LL2-41 B

A blind ad is an advertisement which gives no indication that a licensee or brokerage is involved in the sale of the home.

Question 92

With regard to a real estate agent’s pocket card, all of the following are CORRECT, EXCEPT:

A. The card indicates whether the agent is a provisional broker or broker.
B. The card indicates the postlicensing education the agent has taken and whether the agent is active or not.
C. The pocket card displays the license expiration date.
D. The pocket card displays the license number and the agent’s signature.

Answer 92

LL2-42 B

The pocket card contains the license number, license type and expiration date. It does not contain any information about whether the license is active or inactive. It does not contain the firm name and it does not indicate any education successfully completed by the licensee.

Question 93

All of the following would constitute an illegal action by an inactive broker who is not affiliated with a firm, EXCEPT:

A. telling members of a networking club that they are a broker and offering members of the club their services
B. handling out business cards at a social gathering
C. telling a new acquaintance that they are a broker, but they are on inactive status
D. hosting an open house for another agent

Answer 93

LL2-43 C

A licensee who is inactive cannot engage in real estate activity including hosting open houses, advertising and marketing

Question 94

An agent must discuss agency with a prospective buyer or seller at “first substantial contact.” This is the moment the consumer begins talking about confidential information, motivation, personals wants, needs and desires or any terms and conditions they would accept regarding purchase of the home. All of the following information is required to be discussed/provided, EXCEPT:

A. the agent must discuss their compensation
B. the agent must provide the Working with Real Estate Agents brochure immediately if the meeting is face to face or within 3 calendar days if the meeting is over the phone or by email
C. the agent must get the consumer’s signature on the brochure’s panel before proceeding forward in a transaction
D. the agent must disclose, discuss and decide they type of agency relationship the consumer wishes to have with the agent and the agent is to warn the consumer not to say anything the consumer would not want another party to know prior to hiring the agent

Answer 94

LL2-44 C

It is not required for the consumer to sign the brochure panel, but the agent must indicate that it was provided, date the panel and place it in the real estate transaction folder

Question 95

In a NC real estate development subject to the NC subdivision requirements all of the following can occur prior to approval or recordation of the final plat map, EXCEPT:

A. offers to purchase and contract may be written and accepted
B. reservations may be taken and accepted
C. deposits may be accepted and held
D. transfer of title can occur

Answer 95

LL2-45 D

Transfer of title, closing and coveyance cannot occur until approval of the final plat map

Question 96

John, a North Carolina licensee has completed all of his required post-licensing courses and is currently an active and current North Carolina Broker. He just terminated his affiliation with a BIC. Which of the following is TRUE regarding John.

A. He must reaffiliate with a BIC in order to engage in the practice of real estate and in the meantime his license is inactive
B. If John does not affiliate with a BIC he must become a BIC
C. John may not remain a sole proprietor. If he does not affiliate with a BIC he must at least obtain a firm license
D. John may engage in the practice of real estate and receive compensation so long as he does not perform any activities which would require him a BIC.

Answer 96

LL2-46 D

John can engage in real estate without affiliation and without becoming a BIC so long as he does not: 1) maintain a trust account 2) hire other licensees or 3) engage in advertising or marketing of any kind

Question 97

A BIC must retain records for the firm for how long?

A. 5 years
B. 3 years from the date of closing
C. 3 years from the termination of the relationship
D. 3 years from the date of closing, the termination of the relationship or the distribution of all funds, whichever is later.

Answer 97

LL2-47 D

Question 98

Under the NC Residential Property Disclosure Act, a licensee should inform and request that all of the following sellers complete the Mineral, Oil & Gas (MOG) disclosure, EXCEPT:

A. an investor selling a SFR vacation rental unit
B. a seller who is selling a parcel of vacant land
C. a developer selling a new home in a subdivision
D. a couple selling their primary residence

Answer 98

LL2-48 B

The NC Residential Property Disclosure Act applies to all sellers of residential 1-4 unit properties. The MOG disclosure is not required on the transfer of vacant land because it is not considered residential property

Question 99

A buyer has requested that their real estate broker make substantial changes to the offer to purchase and contract. What should the licensee do?

A. make certain that any and all changes properly reflect the direction and instructions of their client
B. make the changes, submit the offer and recommend that the buyer seek legal advice regarding the document
C. only make those changes and alterations if the licensee believes they have sufficient experience or knowledge of the contract
D. recommend that any and all such changes and alterations be done by an attorney

Answer 99

LL2-49 D

Licensees are prohibited from the drafting of contracts and these changes and alterations should be made by an attorney

Question 100

How long does a provisional broker have to dispose of the earnest money check once it has been delivered to them?

A. the provisional broker must deposit the money in the trust account no later than 3 banking days from the date of receipt of the money
B. the provisional broker must deliver the earnest money to the BIC immediately
C. the provisional broker must deposit the money in the trust account no later than 3 calendar days from the acceptance of the offer
D. the provisional broker must deposit the money within 3 banking days from the receipt of acceptance of the offer

Answer 100

LL2-50 B

All monies received by a provisional broker must be delivered to the BIC immediately. The deposit and holding rules are for full brokers and the BIC, not provisional brokers

Question 101

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

Answer 101

LL3-1 C

Question 102

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

Answer 102

LL3-2 A

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.

Question 103

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

Answer 103

LL3-3 D

No funds may be dispersed by the settlment agent (usually a closing attorney) until the deed has been recorded.

Question 104

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

Answer 104

LL3-4 D

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

Question 105

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

Answer 105

LL3-5 B

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.

Question 106

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

Answer 106

LL3-6 A

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

Question 107

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

Answer 107

LL3-7 C

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.

Question 108

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

Answer 108

LL3-8 A

A broker has an obligation to review the Closing Disclosure for its accuracy and completeness.

Question 109

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

Answer 109

LL3-9 D

A broker may have a trust account with the consent of the client and disperse the interest as agreed.

Question 110

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

Answer 110

LL3-10 D

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.

Question 111

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

Answer 111

LL3-11 C

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

Question 112

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

Answer 112

LL3-12 D

Property managers do not provide depreciation schedules or tax information to the owners of property that they manage

Question 113

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

Answer 113

LL3-13 C

A non-resident who is licensed in another state and wishes to practice in NC may obtain a non-resident commercial real estate license

Question 114

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

Answer 114

LL3-14 C

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

Question 115

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

Answer 115

LL3-15 C

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.

Question 116

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

Answer 116

LL3-16 B

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.

Question 117

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

Answer 117

LL3-17 D

Either a broker or a provisional broker may perform a BPO. However, a provisional broker may not charge a fee for doint so.

Question 118

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 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

Answer 118

LL3-18 C

Commingling is the mixing of a client’s monies with those belonging 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.

Question 119

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

Answer 119

LL3-19 C

This is a special provision in the NC Residential Rental Agreements Act that is different than national real estate principles

Question 120

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

Answer 120

LL3-20 B

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.

Question 121

All of the following properties are exempt from the NC Residential Rental Agreements Act, EXCEPT:

A. an investor renting a beach house to an out of state resident for a period of 60 days
B. a private homeowner who is renting out a single family residence without a property manager
C. hotels and motels
D. an owner who rents a beach home out for a single weekend

Answer 121

LL3-21 C

Question 122

A landlord is renting a duplex rental unit. All of the following are TRUE regarding utilities connected to the property, EXCEPT:

A. the landlord can charge separately for water, sewage and electricity
B. the landlord must notify the tenant if water contamination exceeds the acceptable limit
C. the landlord can disconnect the utilities if the tenant fails to pay the utility bills
D. the landlord can collect for unpaid bills that remain at the end of the lease

Answer 122

LL3-22 C

A landlord is prohibited from disconnecting utilities due to the non-payment of the bills. A disconnection would be considered a “constructive eviction”. If the bills are unpaid and the lease provided for their payment, the landlord must pursue an actual eviction of the tenant for breach of the lease.

Question 123

All of the following would be considered an “eminently dangerous” condition which the landlord or property manager must remedy in a reasonable time, EXCEPT:

A. lack of an operable toilet
B. unsafe ceilings, floors or steps
C. broken windows or locks
D. inoperable smoke or carbon monoxide detectors

Answer 123

LL3-23 D

Because inoperable smoke and carbon monoxide detectors pose a direct threat to health and safety both the NC Residential Agreements Act and the NC Residential Rental Contract requires these items to be repaired within 15 days of the receipt of notice of them being inoperable.

Question 124

Which of the following is TRUE regarding tenant security deposits?

A. Any licensee or property manager must place such monies into a trust account
B. Any property owner, landlord or property manager must place security deposits in a trust account
C. Only a licensed property manager is required to have a trust account
D. A trust account is not required so long as the funds are securely held in an FDIC bank

Answer 124

LL3-24 A

Tenant security deposits must be placed into a trust account regardless of whether the owner or landlord is or uses a licensed property manager. Even a private owner must place tenant security deposits in a trust account, although a private owner who is not a licensee is permitted to obtain a bond

Question 125

Janice leased a property that was owned by an investor and managed by a licensed property manager. Janice was recently the victim of a domestic violence assault by her boyfriend who is also named in the lease. All of the following are TRUE, except:

A. If request is made of the property manager they must change the locks and the owner must pay for the new locks on the property
B. If requested the owner or property manager must change the locks within 48 hours or allow the tenant to do so
C. Janice can be required to pay for the lock change
D. Janice’s boyfriend will remain liable on the lease, but the property manager nor owner do not have to give him access

Answer 125

LL3-25 A

Victims of domestic violence have a right to have locks changed within 48 hours or they must be permitted to do so. The person who requested that the locks be changed can be required to pay those costs.

Question 126

Under the NC Residential Rental Agreements Act all of the following can terminate a lease early by giving thirty days notice and without additional penalties for the remainder of the lease, EXCEPT:

A. military personnel who receive a station change order 50 miles away
B. an individual who has a forced job relocation
C. a victim of domestic violence
D. family members of a serviceman whose death occurred while on active duty

Answer 126

LL3-26 B

The NC Residential Rental Agreements Act does not create an exception for someone who is transferred by their employer unless that person is a military personnel

Question 127

Jane is a non-provisional broker who is affiliated with ABC Realty. Jane wants to form an LLC entity for legal or tax purposes and have her BIC make her commission checks payable to her LLC. Which of the following is correct?

A. A broker affiliated with a firm is prohibited from forming their own entity
B. Jane must obtain a firm license for the LLC
C. The LLC must have a Broker-in-Charge
D. Only provisional brokers are permitted to have a separate entity

Answer 127

LL3-27 B

Every entity must obtain a firm license. So long as the entity is for compensation only it does not have to have a Broker-in-Charge

Question 128

The North Carolina Real Estate Commission may take which of the following action(s) against a broker-in-charge who has converted and embezzled trust account monies for his own personal use?

A. Fine the broker-in-charge
B. Revoke the broker-in-charge’s license
C. File criminal charges against the broker-in-charge
D. Redesignate their license as expired

Answer 128

LL3-28 B

The NCREC does not not get involved in monetary disputes between licensees and consumers. NCREC would not order the licensee to pay damages, reimburse a consumer or return money to a trust account. Those actions may occur by a lawsuit or criminal prosecution, but the Commission’s authority is limited to actions that affect the professional license, such as a suspension or revocation.

Question 129

If there is an earnest money dispute between the buyer and seller over the return or forfeiture of earnest money held by the broker, the broker must:

A. Release the funds to the proper party according to the terms of the contract
B. Follow the directions of the buyer to whom the funds legally belong
C. Hold the funds until receipt of mutual agreement or deposit them after 90 days with the clerk of courts
D. Follow the directions and instructions of the buyer’s attorney

Answer 129

LL3-29 C

A broker must not release money from a trust account that is in dispute. When there is a dispute the broker must receive an agreement from the parties as to the distribution of funds or a court order. After 90 days the broker may deposit the money with the clerk of courts in the county where the property is located.

Question 130

In verifying and reporting square footage, a real estate licensee may rely on which of the following measurements?

A. The square footage determined by the listing agent and placed into MLS.
B. The measurement as contained and verified in public records.
C. The square footage as contained in a previous appraisal or survey in a past transaction concerning the property.
D. The square footage as reported by the seller.

Answer 130

LL3-30 A

Real estate licensees should not rely on the owner’s representations or any past measurements contained in public records, appraisals or surveys from a previous transaction. They may rely on the measurements performed by other licensees, including the listing agent.

Question 131

Earnest money given in the form of a check on an Offer to Purchase and Contract must be deposited by the BIC into an escrow account:

A. No later than three banking days after acceptance of contract
B. No later than 72 hours after receipt of money
C. No later than three banking days from receipt
D. No later than 72 hours after acceptance of contract

Answer 131

LL3-31 A

Question 132

The owner of a property tells her listing agent that the home is 2,500 square feet. The listing agent enters this information into the local MLS. A buyer presents an offer which is subsequently accepted by the seller. The appraisal report for the buyer indicates that the home is only 1,500 square feet. The buyer is unhappy and reports the agents to the NC Real Estate Commission. Who would be most subject to disciplinary action and why?

A. the listing agent because they have primary responsibility to ensure the accuracy of data. The listing agent would be guilty of negligent misrepresentation
B. the buyer’s agent because they represent the buyer and should have reasonably known the difference between 1,500 square feet and 2,500 square feet. The buyer’s agent would be guilty of negligent misrepresentation
C. Both the buyer’s agent and the listing agent because it is reasonable that both agents should have known the difference between 1,500 square feet and 2,500 square feet. Both agents would be found guilty of a negligent misrepresentation.
D. Neither agent because it is not reasonable to be able to tell the difference between a 1,500 square foot home and a 2,500 square foot home. Neither agent would be guilty of a negligent misrepresentation

Answer 132

LL3-32 C

Although the listing agent had primary responsibility to verify the square footage that they reported for the home, a difference of over a 1,000 square feet is something that the buyer’s agent should have known

Question 133

A property manager may:

A. advise the owner as to the tax consequences of rental income
B. negotiate rents and obtain the owner’s authority and approval after the fact
C. allow unlicensed employees of the property management company to negotiate rents for long-term leases
D. with the owner’s permission, offer concessions as inducements to all prospective tenants

Answer 133

LL3-33 D

Concessions are inducements to attract or retain tenants. With the owner’s permission this is permissible. Unlicensed employees cannot negotiate. Property managers do not give tax advice and if the property manager is negotiating rents, they should have authority and approval from the owner before the fact, not after the fact.

Question 134

A builder is offering a $100 gift card to real estate agents if they simply bring a buyer to look at the model home. In this case:

A. if an agent has an oral buyer agency agreement, they do not need to disclose to the buyer the possibility of receiving a gift card
B. if an agent has an oral buyer agency agreement, they may disclose the existence of the gift card orally and if the buyer agency agreement is in writing they may disclose the existence of the gift card orally, but put the disclosure in writing prior to submitting any offer
C. if the buyer is a customer, they must disclose the possibility of receiving a gift card
D. the agent may not receive a gift card as this is a violation of RESPA

Answer 134

LL3-34 B

An agent can receive gifts or bonuses with the consent of their client. Disclosure should occur prior to the writing of an offer. The receipt of such compensation needs to be put into writing when the licensee has a written employment agreement with the client.

Question 135

The firm holding the earnest money is allowed, by the NC Real Estate Commission to write a check from the trust account to the attorney:

A. 3 days before the anticipated settlement date
B. 5 days before the anticipated settlement date
C. no sooner than 10 days before the anticipated settlement date
D. 1 day before the anticipated settlement date

Answer 135

LL3-35 C

Question 136

All of the following are TRUE regarding pet deposits in North Carolina, EXCEPT:

A. the landlord or property owner may make the deposit refundable
B. a landlord or owner may prohibit pets including service animals so long as it done consistently
C. a landlord or property manager can require a tenant with a service animal to provide a doctor’s letter
D. a reasonable non-refundable pet deposit may be charged to a tenant

Answer 136

LL3-36 B

A property manager or landlord can prohibit pets and charge either refundable or non-refundable deposits. A service animal is not a pet and no deposit may be imposed nor can such animals be prohibited

Question 137

A tenant rents a residential property in an area that has no HOA and in which zoning allows for small businesses to exist in the residences. The landlord stated in the lease agreement that the property could only be used for residential purposes. The tenant wants to open a barbershop. Can the tenant operate the business out of the property?

A. Yes, because the property is zoned for such use
B. No, because the lease can prohibit certain activities even though they may be lawful and permitted under other laws and rules
C. No, because the tenant did not inform the landlord of their intentions prior to signing the lease
D. Yes, because the zoning negates any contrary lease provisions

Answer 137

LL3-37 B

Landlords and tenants can place restrictions in leases that are more restrictive than zoning and HOA requirements. The lease evidences a mutual agreement by the parties as to use of the property

Question 138

A tenant signs a two year residential lease. The landlord or owner subsequently sells or transfers the property eight months later. The new owner has issued the tenant a notice of lease termination. Can the new owner terminate the lease?

A. Yes, because sale of a property terminates a lease
B. No, because the tenant’s agreement was with the original owner and the original owner will remain the property manager regarding the lease
C. No, the sale of property does not end a lease and the new owner must honor existing leases
D. Yes, provided that the new owner gives the tenant at least 90 days notice

Answer 138

LL3-38 C

Sale of a property does not end a lease and the new owner must honor all existing leases

Question 139

A licensee who is issued a disciplinary notice by the North Carolina Real Estate Commission:

A. Must request a hearing within 14 days of the notice
B. Is only entitled to a hearing if the license is being suspended or revoked
C. Is not entitled to a hearing but may appeal the decision of the Commission if they disagree
D. Is always entitled to a hearing

Answer 139

LL3-39 D

A licensee is always entitled to a hearing in regard to any disciplinary action by the NCREC

Question 140

Which of the following properties are subject to the NC Vacation Rental Act?

A. a summer vacation rental that is rented for 180 days
B. a beach cottage that is leased as a temporary residence for the summer
C. a 30 day property rented by an out of state contractor who is working on repairs to the property
D. a mountain condo that is rented to an out of state resident for 2 weeks and visiting North Carolina with their family

Answer 140

LL3-40 D

The VRA act applies to residential properties leased to out of state residents for less than 90 days and who are renting the property for vacation, recreation or leisure

Question 141

Sam is selling a NC residential property that is being used as a vacation rental and is subject to the NC Vacation Rental Act. All of the following are true about the sale of this property, EXCEPT:

A. the new buyer must honor all existing leases
B. all of the leases for the vacation rental must be in writing
C. the maximum time for accounting for and returning the security deposit on vacation rentals is 45 days
D. Sam must provide the new owner with all leases on the property within 10 days of closing

Answer 141

LL3-41 A

On a vacation rental unit the new buyer must only honor leases for occupancy that occurs within 180 days of closing

Question 142

The standard form NC Residential Rental Contract provides for all of the following, EXCEPT:

A. lead based paint disclosure
B. early termination by military personnel
C. a provision that can require the tenant to obtain insurance and provide a renter’s policy
D. a provision that if the tenant breaches the lease the landlord is entitled to retain the security deposit

Answer 142

LL3-42 D

Regardless of how a lease ends there is no automatic forfeiture of a security deposit. It must be accounted for and only those deductions permitted by the Tenant Security Deposit Act are permitted.

Question 143

All of the following would be examples of a licensee committing mortgage fraud, EXCEPT:

A. misrepresenting on a purchase contract the occupancy of the property to the lender
B. encouraging the buyer and the seller to have separate agreements outside of escrow and closing
C. providing a lender with a gift letter for the borrower’s downpayment when the licensee has been told that the funds are actually a loan and must be paid back
D. crediting a portion of the licensee’s commission to the borrower’s closing costs on the Closing Disclosure

Answer 143

LL3-43 D

A licensee can always share commissions with a client so long as the client is not performing brokerage services.

Question 144

How are members of the NC Real Estate Commission chosen?

A. they are elected by the public at large
B. they are appointed by the Governor
C. 7 are appointed by the Governor and 2 are appointed by the legislature
D. 4 are appointed by the legislature and 3 are appointed by the governor

Answer 144

LL3-44 C

Question 145

All of the following are true of a firm license, EXCEPT:

A. every real estate brokerage that is employing licensees must have a firm license
B. a firm license must be obtained by a qualifying broker
C. a firm license is only required when an entity has been formed
D. A firm license must be renewed every year by June 30th

Answer 145

LL3-45 A

A firm license is only required in NC when an entity is formed. Every entity must have a firm license, but a brokerage could operate as a sole proprietorship and as such would not be required to have a firm license

Question 146

An unlicensed person who is managing their own rental property is subject to all of the following statutes, EXCEPT:

A. Residential Agreements Act
B. Security Deposit Act
C. The NC Real Estate Commission rules regarding trust accounts
D. The Vacation Rental Act

Answer 146

LL3-46 C

All owners, landlords and managers whether licensed on not must comply with the Residential Rental Agreements Act, the Security Deposit Act and the Vacation Rental Act. Only licensees are subject to the jurisdiction of the NCREC.

Question 147

What is the maximum late fee that a landlord, owner or property manager may charge a tenant for delinquent rent?

A. $15 or 5% of the rent, whichever is greater
B. $15 or 5% of the rent, whichever is less
C. $25 or 25% of the rent, whichever is greater
D. $10 or 10% of the rent, whichever is less

Answer 147

LL3-47 A

Question 148

Which of the following statements is correct?

A. A broker and a firm must retain all records for three years
B. Rejected offers do not have to be retained as records
C. Buyer broker agreements which did not result in the client purchasing a home only have to be retained for one year
D. All records and documents must be retained for 7 years

Answer 148

LL3-48 A

All records must be kept for a period of three years.

Question 149

When a broker is delivering 3rd party checks such as the earnest money made payable to a closing attorney and the due diligence fee made payable to the seller. If the contract is accepted and the broker is still in possession of the funds, which of the following is CORRECT:

A. the checks must be delivered within 3 banking days
B. the broker must always complete delivery of the checks once the offer is accepted
C. the broker is acting as a courier and until the checks have been delivered they must follow the directions of the buyer
D. the checks must first be deposited in the firm’s trust account and then disbursed to the appropriate parties out of the account

Answer 149

LL3-49 C

The broker when acting as a courier must follow the buyer’s instructions until delivery of the checks has occurred

Question 150

Which of the following 3rd party checks may a broker have in their custody?

A. the due diligence fee made payable to the seller and an earnest money check made payable to a 3rd party escrow agent such as the closing attorney
B. any fees or monies that the buyer wants delivered so long as the broker is only acting as a courier
C. only fees and monies that are connected with the purchase of the property, such as the home inspection, home warranty and other similar charges
D. only the due diligence fee made payable to a seller

Answer 150

LL3-50 A

These are the only 3rd party checks that should ever be in the custody of a licensee