Section 3: Review of the North Carolina Offer to Purchase and Contract

Question 1

When is the buyer required to pay and deliver the due diligence fee to the seller

Answer 1

The effective date

Question 2

How long does the buyer have to pay and deliver to the escrow agent the earnest money deposit?

Answer 2

With the offer or within 5 days of the effective date

Question 3

As a listing agent what should I recommend that my seller do if they don’t receive the due diligence fee as required by the contract?

Answer 3

Request it in writing. If you do not receive it in 1 business day advise to exercise their right to terminate the contract.

Question 4

What happens to the interest that may be earned on the escrow account?

Answer 4

It goes to whoever operates the escrow account

Question 5

What if the lender cannot get the lending documents to the closing attorney by the settlement date?

Answer 5

Built in 14 delay in settlement

Question 6

Does the buyer still have the right to continue to investigate and inspect the property after the due diligence date?

Answer 6

Yes

Question 7

With whom should the buyer consult regarding the length of the due diligence period?

Answer 7

The Lender

Question 8

What if the buyer has not received the RPOADS or MOG disclosures at the time of making an offer?

Answer 8

It may be give the right to back out of the contract

Question 9

What should the parties do if disclosures indicate that the mineral, oil or gas rights to the property have been severed?

Answer 9

Consult an Attorney

Question 10

Does the seller have to use licensed contractors in order to make agreed upon repairs?

Answer 10

No

Question 11

U

Question 12

On what date will the buyer be given possession and allowed to move into the property?

Answer 12

Closing: Legal recording has taken place

Question 13

Which of the following is NOT able to be changed using the Agreement to Amend Contract form:

a. Building deposit
b. Purchas price
c. listing agent
d. escrow agent

Answer 13

C. Listing Agent

Question 14

How long does the buyer have to pay and deliver the earnest money deposit to the escrow agent:

a. 3 business days
b. 3 calendar days
c. 5 business days
d. 5 calendar days

Answer 14

D. 5 Calendar Days

Question 15

On what date will the buyer be given possession and allowed to move into the property?

a. closing date after the recording of the deed
b. on the first of the month
c. Immediately after the contract is signed
d. immediately after the offer is accepted

Answer 15

A. Closing date after the recording of the deed

Question 16

Which of the following is NOT a valid source of standard forms for a broker:

A. NC Bar Association
B. NC Association of REALTORS
C. Joint task force
D. Wikipedia

Answer 16

D. Wikipedia

Question 17

What happens if the buyer has not received the RPOADS or the MOG disclosures at the time of making an offer:

a. the buyer has a 3 business day right of rescission and a full refund of all monies
b. The buyer has a 3 calendar day right of rescission and a full refund of all monies
c. The buyer has a 3 calendar day right of rescission but forfeits all monies
d. the buyer has no right to rescission

Answer 17

b. The buyer has a 3 calendar day right of rescission and a full refund of all monies

Question 18

Which of the following regarding the drafting of contracts is TRUE:

a. It is not prohibited for a seller to change a buyer’s contract
b. It is not prohibited for a seller to change their own contract
c. It is perfectly legal to draft any type of contract
d. Is it common practice to draft a contract to avoid mistakes

Answer 18

B. It is not prohibited for a seller to change their own contract

Question 19

All of the following, unless otherwise stated, will be prorated with the seller responsible for the prorated amounts through the date of settlement EXCEPT:

A. HOA dues
B. Taxes on personal property
C. Taxes on real property
D. Home owner’s insurance

Answer 19

D. Home owner’s insurance

The seller’s home owner’s insurance policy will terminate and the buyer’s will begin, but the policy will not be prorated. (LO: Remember the vocabulary that is involved with contracts, including special assessments, fixtures, and the details of the offer to purchase and contract form 2-T as well as the amend agreement form 4-T)

Question 20

If the buyer fails to deliver either the due diligence fee or any initial earnest money deposits by their respective due dates, then:

a. Buyer has 1 banking day after written notice to deliver the money or the seller has the right to terminate the contract

b. Buyer has 3 banking days after written notice to deliver the money or the seller has the right to terminate the contract

c. Buyer has 5 banking days after written notice to deliver the money or the seller has the right to terminate the contract

d. Buyer has 7 banking days after written notice to deliver the money or the seller has the right to terminate the contract
.

Answer 20

A. Buyer has 1 banking day after written notice to deliver the money or the seller has the right to terminate the contract

The buyer will only have 1 banking day to deliver the money before the seller has the right to terminate the contract if the buyer fails to deliver the due diligence fee or the initial earnest money by their respective due dates. (LO: Remember the vocabulary that is involved with contracts, including special assessments, fixtures, and the details of the offer to purchase and contract form 2-T as well as the amend agreement form 4-T)

Question 21

Which of the following regarding Purchase Price and Money is FALSE:

a. Can be paid in any valid currency
b. Due diligence fee made payable and delivered to the seller by the Effective date
C. Initial earnest money deposit made payable and delivered to escrow agent
D. Balance of the purchase price in cash due at settlement

Answer 21

a. Can be paid in any valid currency

Question 22

What is the role of the Commission regarding forms and contracts for brokers:
a. The commission does not create nor approve contracts and does not provide standard forms
b. Provide standard forms
c. Approve contracts
d. Create contracts

Answer 22

a. The commission does not create nor approve contracts and does not provide standard forms

Question 23

Who is liable for unclear or ambiguous language in a contract:
a. The buyer and seller agents
b. The BIC of both firms
c. Attorney representing the injured party
d. Drafter of the document

Answer 23

d. Drafter of the document

Question 24

Which of the following is NOT part of closing:
a. Settlement
b. Completion of a satisfactory title update to the property
c. Recordation in the appropriate county registry of deeds
d. Turnover of keys to the buyer

Answer 24

d. Turnover of keys to the buyer

Question 25

The settlement date is the: a. Period in which the buyer is able to investigate the property b. Day when all signatures and initials have been placed and communicated to all parties c. Day of the proper execution and delivery to the closing attorney of all documents necessary to complete the transaction d. Day of completion of the legal process which results in the transfer of the title to the property from seller to buyer

Answer 25

C. Day of the proper execution and delivery to the closing attorney of all documents necessary to complete the transaction

Question 26

Who is authorized to draft a North Carolina Offer to Purchase and Contract: a. An attorney who is licensed to practice law in North Carolina b. A full broker who has received authorization from their BIC c. A provisional broker under the supervision of their BIC d. Approved lenders selected by the buyer

Answer 26

a. An attorney who is licensed to practice law in North Carolina

Question 27

Does the seller have to use licensed contractors in order to make agreed upon repairs: a. Yes b. Yes, but only if the buyer requests that licensed contractors be used c. No, the seller never needs to use a licensed contractor d. No, seller has right to make repairs in a good and workmanlike manner, unless repairs require by law a licensed contractor

Answer 27

d. No, seller has right to make repairs in a good and workmanlike manner, unless repairs require by law a licensed contractor

Question 28

All of the following, unless otherwise stated, will be prorated with the seller responsible for the prorated amounts through the date of settlement EXCEPT: a. HOA dues b. Taxes on personal property c. Taxes on real property d. Home owner’s insurance

Answer 28

d. Home owner’s insurance The seller’s home owner’s insurance policy will terminate and the buyer’s will begin, but the policy will not be prorated. (LO: Remember the vocabulary that is involved with contracts, including special assessments, fixtures, and the details of the offer to purchase and contract form 2-T as well as the amend agreement form 4-T)

Question 29

Which of the following is NOT able to be changed using the Agreement to Amend Contract form: a. Building deposit b. Purchase price c. Listing agent d. Escrow agent

Answer 29

c. Listing agent The listing agent is hired by the seller and is a not valid change using for 4-T. (LO: Remember the vocabulary that is involved with contracts, including special assessments, fixtures, and the details of the offer to purchase and contract form 2-T as well as the amend agreement form 4-T)

Question 30

What requires that previous negotiations and informal agreements are superseded by the final written contract and cannot be used to alter the written contract: a. Specific Performance b. Statute of Frauds c. Parole Evidence rule d. Right of Recission

Answer 30

c. Parole Evidence rule The parole evidence rule states that all negotiations and informal agreements must be written and included in the final contract. (LO: Explain what is and what is not prohibited regarding the drafting of contracts, where to find common forms, and the role of the commission in providing standard forms)

Question 31

What should the parties do if the disclosures indicate that the mineral, oil, and gas rights to the property have been severed: a. Contact the commission b. Contact their agents c. Contact a listing agent’s BIC d. Contact an attorney

Answer 31

d. Contact an attorney

Question 32

What changes to a contract take priority over preprinted text: a. Buyer’s right to reject unacceptable terms from the seller b. Specific evidence rules c. Handwritten changes d. Articles of constructive notice

Answer 32

c. Handwritten changes

Question 33

Which of the following is a basic rule for interpreting a contract: a. Previous oral negotiations and statements are superseded by a written contract b. Words that are ambiguous are best understood in the most abstract and unexpected way c. A contract is interpreted piece by piece, never as a whole d. Printed text outweighs handwritten provisions

Answer 33

a. Previous oral negotiations and statements are superseded by a written contract

Question 34

What constitutes acceptance of the property: a. Due diligence money b. Accepting an offer c. Closing d. Drafting a contract

Answer 34

c. Closing

Question 35

All of the following are able to be changed using the Agreement to Amend Contract form 4-T EXCEPT: a. Due diligence fee and due diligence period b. (Additional) Earnest money c. Settlement date d. Closing date

Answer 35

d. Closing date The closing date occurs after settlement and is not amendable using form 4-T. (LO: Remember the vocabulary that is involved with contracts, including special assessments, fixtures, and the details of the offer to purchase and contract form 2-T as well as the amend agreement form 4-T)

Question 36

The closing date is the: a. Period in which the buyer is able to investigate the property b. Day when all signatures and initials have been placed and communicated to all parties c. Day of the proper execution and delivery to the closing attorney of all documents necessary to complete the transaction d. Day of completion of the legal process which results in the transfer of the title to the property from seller to buyer

Answer 36

d. Day of completion of the legal process which results in the transfer of the title to the property from seller to buyer The closing date is the final completion of the legal process and results in the property being transferred from the seller to the buyer. (LO: Remember the vocabulary that is involved with contracts, including special assessments, fixtures, and the details of the offer to purchase and contract form 2-T as well as the amend agreement form 4-T)

Question 37

What happens if the buyer has not received the RPOADS or the MOG disclosures at the time of making an offer: a. The buyer has a 3 business day right of rescission and a full refund of all monies b. The buyer has a 3 calendar day right of rescission and a full refund of all monies c. The buyer has a 3 calendar day right of rescission but forfeits all monies d. The buyer has no right of rescission

Answer 37

b. The buyer has a 3 calendar day right of rescission and a full refund of all monies

Question 38

The settlement date is the: a. Period in which the buyer is able to investigate the property b. Day when all signatures and initials have been placed and communicated to all parties c. Day of the proper execution and delivery to the closing attorney of all documents necessary to complete the transaction d. Day of completion of the legal process which results in the transfer of the title to the property from seller to buyer

Answer 38

c. Day of the proper execution and delivery to the closing attorney of all documents necessary to complete the transaction When all necessary documents have been delivered to the closing attorney and have been property executed, that is the settlement date. (LO: Remember the vocabulary that is involved with contracts, including special assessments, fixtures, and the details of the offer to purchase and contract form 2-T as well as the amend agreement form 4-T)

Question 39

Which of the following regarding Purchase Price and Money is FALSE: a. Can be paid in any valid currency b. Due diligence fee made payable and delivered to the seller by the Effective date c. Initial earnest money deposit made payable and delivered to escrow agent d. Balance of the purchase price in cash due at settlement

Answer 39

a. Can be paid in any valid currency

Question 40

What happens to a contract if the property is damaged by a storm or fire prior to closing: a. The contract is void b. The contract is voidable c. The seller must repair the property at the seller’s expense d. The buyer is obligated to collect the full amount of insurance to restore the property

Answer 40

b. The contract is voidable If the property is damaged by a storm or fire prior to closing, the contract is voidable by the buyer. (LO: Explain the process by which a property exchanges hands from a seller to a buyer after a contract is signed)

Question 41

Which of the following is NOT a valid source of standard forms for a broker: a. North Carolina Bar Association b. NC association of REALTORS® c. Joint task forces d. Wikipedia

Answer 41

d. Wikipedia

Question 42

Which of the following agreements is NOT an employment agreement: a. Exclusive right to sell listing agreement between seller and broker b. Exclusive buyer agency agreement between the buyer and the broker c. Property management agreement between the owner and the broker d. Offer to purchase and contract between the buyer and seller

Answer 42

d. Offer to purchase and contract between the buyer and seller

Question 43

Who is liable for unclear or ambiguous language in a contract: a. The buyer and seller agents b. The BIC of both firms c. Attorney representing the injured party d. Drafter of the document

Answer 43

d. Drafter of the document