what you got wrong Flashcards
A special-purpose deed used when title is transferred with little or no consideration is a:
Deed of gift
Which of the following BEST describes the difference between lien theory states and title theory states?
Lien theory states use deeds of trust, and title theory states use mortgages.
Lien theory states use mortgages, and title theory states use deeds of trust.
Lien theory states use promissory notes, and title theory states use deeds of trust.
Lien theory states use mortgages, and title theory states use promissory notes.
While both lien theory states and title theory states use promissory notes (the promise to pay), lien theory states use mortgages and title theory states use deeds of trust.
What is the doctrine of laches?
The doctrine of laches is a doctrine used by the courts to stop a legal claim or prevent the assertion of a right because of undue delay, negligence, or failure to assert the claim or right.
What is the difference between commingling and conversion?
Commingling = putting personal funds into a trust funds account
Conversion = using trust fund money (aka money that does not belong to you) to buy things for yourself
What word is allowed to be used in a CMA/BPO in North Carolina?
Worth
Appraisal
Estimate
Value
Estimate
When was lead based paint banned?
1978
Sander bought an investment property for $200,000. He financed $160,000. At the time of purchase, he owned $40,000 outright. Five years later, he has paid down $20,000 worth of debt, and the home has increased in value to $250,000. He now owns $110,000 of the property outright. What concept does this illustrate?
Equity buildup is an increase in equity over time, often due to a property’s appreciation or paying down mortgage debt. As Sander’s property value increased and he paid off his loan, his equity in the property increased.
When measuring for square footage from the inside of the house, how many inches would you add? Why do you add these inches?
6
Because the exterior wall is thicker than the interior wall.
Which of the following would be considered a private land-use control?
building code
protective covenant
zoning ordinance
subdivision regulation
protective covenant
What is an independent contractor real estate agent?
A sole proprietor
What is price fixing, collusion, and boycotting?
- Price Fixing: When competitors collude to set or control prices, rather than letting market forces determine them. It’s illegal as it reduces competition and harms consumers by artificially inflating prices.
- Boycotting: When competitors agree not to do business with certain parties, restricting their access to markets. It can be illegal if it hinders competition.
- Collusion: Illicit cooperation between competitors, often done in secret, to gain mutual benefits at the expense of consumers or other market participants. It includes practices like price fixing and boycotting, and it’s generally illegal.
Radon gas can enter a home through:
cracks in the foundation
The soft, perforated underside of an eave is called what?
soffit
What does HVAC stand for?
Heating, ventilation, and air conditioning systems
Which of the following is true regarding the Residential Property Owners Association Disclosure Statement (RPOADS)?
The RPOADS and the Mineral Oil and Gas Rights Disclosure should be given prior to the buyer’s first offer to purchase to avoid a three day right of rescission.
Sellers may be subject to misrepresentations if they check no representation when they know that a system is not functioning properly.
Agents are required to answer all questions as either “yes” or “no” and are not allowed to check “no representation” when selling their own homes.
Agents may complete the RPOADS for the clients if the client has limited technical knowledge on the systems of the house.
The RPOADS and the Mineral Oil and Gas Rights Disclosure should be given prior to the buyer’s first offer to purchase to avoid a three day right of rescission.
An agent is working in an open house that is listed by another agent in her firm. Because of the attractiveness of the property, the agent experiences significant traffic and several unrepresented buyers. Which of the following is most accurate regarding this scenario?
Buyers could freely enter the house and discuss certain features of the house and leave without having reviewed the WWREA disclosure with the agent.
The agent should present the Working With Real Estate Agents disclosure to all persons who walk through the door.
The agent could share the seller’s confidential information with an interested buyer since it is not her listing.
Unrepresented buyers must be referred to an agent with another firm to avoid the improper practice of agency.
The correct answer is that buyers could freely enter the house and discuss certain features of the house and leave without having reviewed the WWREA disclosure with the agent. No agency discussions or disclosures would be necessary if first substantial contact was never reached.
What two elements must be present in order for a contract to be considered executor?
An executor contract is a valid contract that is still ongoing, so an executor contract requires that there be a binding contract on multiple parties (so that would require ALL of the essential elements of a contract), PLUS one or more parties has yet to perform their contractual duties.
What does “debit” and “credit” mean in the context of a settlement statement/closing disclosure
Debit = take
Credit = give
A buyer is purchasing a house that currently has a tenant. The tenant pays the rent in advance on the first of the month. A closing takes palace on August 20th, how would the rent proration appear on the settlement statement or closing disclosure?
The answer is debit seller, credit buyer in equal amounts. Think of it this way. The seller has the rent in his pocket for the whole month because the tenant paid in advance on the first of the month. The buyer deserves the rent for the days of the month that he owns. Therefore, the last 11 days of the month (August 21 – 31) should be taken (debited) from the seller’s proceeds and the exact same amount should be given (credited) to the buyer.
What type of maintenance involves periodic, routine inspections to catch minor issues before they worsen, and to keep equipment and property in good working order?
Preventative maintenance
What is routine maintenance vs preventative maintenance?
Routine maintenance is monitoring, assessing, and attending to the needs of a facility’s most necessary features. Preventative maintenance involves periodic, routine inspections to catch minor issues before they worsen, and to keep equipment and property in good working order.
Why is urea-formaldehyde foam insulation (UFFI) dangerous?
Because when it hardens, it releases dangerous gases. But DO NOT confuse this danger with radon gas danger, which comes from underground and enters the home through cracks in the foundation, not from UFFI!
A buyer’s agent assists the buyer in making an offer on a unique property. Because of the property’s unusual characteristics, the most commonly used offer to purchase (NCAR form 2-T) does not address many of the issues of the contemplated purchase. What strategy would the buyer’s agent suggest to best serve the client in making an offer?
Addendums
What is the doctrine of caveat emptor?
The doctrine of caveat emptor is a legal principle that means “let the buyer beware.” It places the responsibility on the buyer to be cautious, thorough, and diligent when purchasing goods or property. In other words, it implies that the seller is not obligated to disclose defects or issues with the item being sold, and the buyer should conduct their own investigations and assessments before making a purchase. However, it does not allow the seller to misrepresent or mislead the buyer.
Which listing agreement is characterized by providing an agent the sole right to list the property but allows for the seller to sell the property himself and avoid paying compensation?
Exclusive Agency
Commission Rule 58A.0104(o) specifically prohibits agents from
acting as dual agents on their own homes.
What is the difference between an “exclusive right to sell “ agreement and an “exclusive agency” agreement?
Exclusive Right to Sell Agreement: “Hi, I’m the exclusive right to sell agreement. I’m the go-to choice for sellers who want a single agent to exclusively market and sell their property.”
Exclusive Agency Agreement: “Greetings, I’m the exclusive agency agreement. I allow sellers to work with one agent while retaining the option to sell their property independently without paying a commission.”
Explain each of these:
zoning amendment
special use permit
variance
non-conforming use
- Zoning Amendment: “Hello, I’m a zoning amendment. I’m a change or modification to existing zoning laws and regulations. I can alter the permitted land uses, building requirements, or other zoning rules in a particular area. I help adapt zoning codes to evolving needs and priorities.”
- Special Use Permit: “Hi there, I’m a special use permit. I grant permission for a property owner to use their land in a way that’s not typically allowed by the current zoning regulations. I’m often required when a proposed use is compatible with the surrounding area but requires a closer review to ensure it meets specific conditions.”
- Variance: “Greetings, I’m a variance. I provide relief from certain zoning restrictions when strict application of the zoning rules would cause undue hardship for a property owner. I allow for exceptions to the established regulations, like setbacks or height limits, under specific circumstances.”
- Non-Conforming Use: “Hey, I’m a non-conforming use. I refer to a property or use of a property that was legally established under previous zoning regulations but no longer complies with the current zoning code. I’m often allowed to continue as a ‘grandfathered’ use, but I may have restrictions on expansion or alteration.”
What is a security deposit in the context of a leased property?
Payments for damages done by tenants that go beyond the normal “wear and tear” damages. Any amount not used will be refunded to the tenant at the termination of the lease within 30 days.
What is the clause in a listing agreement that protects the agent from a seller circumventing an agent’s commission by waiting until the agreement expires and then selling the property to a buyer that the agent introduced to the property?
Extender clause
The mechanism for municipalities to pay for the amenities and services such as schools, police, and fire services offered to its citizens?
Ad valorem taxes
The broker in charge can delegate the functions of money handling but the BIC cannot delegate the
responsibility
A North Carolina broker properly explains agency options to a prospective buyer, and the buyer chooses to enter into a written buyer agency agreement with the broker. The agreement does not authorize dual agency. The broker shows the buyer-client 15 houses listed by other companies before the client asks to see a property listed by the broker’s firm. Given these circumstances, what kind of authority to act as a dual agent must the broker obtain in order to proceed?
written authority to act as a dual agent from both the seller and the buyer before showing the in-house listed property.
Do non-provisional brokers need to be paid through their BIC?
Yes
An agent working under an exclusive buyer agency agreement is acting in what capacity in his relationship with the buyer?
Special agents
What is the clause in a listing agreement that protects the agent from a seller circumventing an agent’s commission by waiting until the agreement expires and then selling the property to a buyer that the agent introduced to the property?
Extender clause
Empire Realty is a large real estate firm that caters to seller clients. Which of the following acts would cause an Exclusive Right to Sell Listing Agreement with Empire Realty to terminate?
The death of the sole owner of the property would cause the listing agreement to terminate because it is a personal services contract.
Fiduciary duties to clients or customers?
Clients only
A seller is happy with all of terms of an offer except for the settlement date, which is scheduled on a day when the seller has a conflict. The seller signs the offer to purchase but scratches through the settlement date and replaces it with a date that is a week in the future. Can he do this?
Yes, and it constitutes as a counteroffer.
A provisional broker, Judy, leaves Firm A to join Firm B while she has a transaction in process at Firm A. Firm A appoints another agent to complete the transaction and agrees to compensate the provisional broker (Judy) a 50% commission at the closing. Which of the following most accurately describes how Judy will be compensated?
Judy may be compensated by Firm A despite the fact that she no longer is supervised by the Firm A BIC.
Provisional brokers can dually affiliate for a limited period of time to close out transactions at the firms that they leave.
Firm A must pay the commission to Firm B so that Firm B can pay Judy, as the Firm B BIC is the only one that can pay Judy for real estate activity.
Firm A would be forbidden to pay Judy as she can have only one broker in charge at a time and can only be compensated by the BIC at Firm B.
Judy may be compensated by Firm A despite the fact that she no longer is supervised by the Firm A BIC.
A North Carolina real estate license would be required in which of the following circumstances?
An employee of a public housing authority who assists low-income clients in the purchase or leasing of homes owned by the housing authority.
An attorney selling real property for a bank, for compensation while acting as a trustee in a foreclosure sale.
A seller selling real property that he/she is flipping for a profit.
A person with an MBA assisting his brother in selling his home in exchange for $500 in compensation for his business and marketing expertise.
A person with an MBA assisting his brother in selling his home in exchange for $500 in compensation for his business and marketing expertise.
An agent with ABC Realty takes a listing and places it in the multiple listing service. Which of the following statements is most accurate?
Any agent in the firm may show the property to their buyer client as an exclusive buyer agent.
All agents within the firm are considered subagents of the seller.
If an agent in the firm brings a buyer to the listing, that agent is automatically designated for the buyer.
No agents in the firm can show the property unless they have an agreement for designated agency.
All agents within the firm are considered subagents of the seller.
An agent with ABC Realty working under a verbal buyer agency agreement with his client finds a house listed by his firm. Because ABC is a small firm, most of its sellers have not consented to dual agency since it is a rare occurrence. The buyer agent would like to show the house, and potentially make an offer, but wants to comply with Commission rules in doing so. Which of the following is correct?
Verbal dual agency could apply in this circumstance if the buyer and seller have given the oral authority to practice dual agency.
Once the property goes under contract, the agent could complete the written buyer agency agreement with dual agency.
The buyer agent would not be able to show the buyer this home as there is a high-level conflict of interest.
All parties must agree to dual agency in writing before the buyer can be shown the home.
Verbal dual agency could apply in this circumstance if the buyer and seller have given the oral authority to practice dual agency.
You cannot show a buyer client a property listed with your firm until you get what in writing?
Dual agency agreement
A builder offered a $3,000 bonus to a buyer’s agent for a successful transaction, closing by the end of the month. This bonus was on top of the commission that the buyer agent had previously disclosed to the buyer. Which of these statements is true?
The buyer agent would be entitled to the bonus if the bonus was disclosed in a timely manner and reduced to writing no later than the offer to purchase.
This bonus would be a violation of RESPA and therefore, the buyer agent would not be able to legally accept it.
The buyer agent could accept this bonus but would not be allowed to share any of the bonus with her client.
Bonuses from third parties are not acceptable because they create an unacceptable conflict of interest.
The buyer agent would be entitled to the bonus if the bonus was disclosed in a timely manner and reduced to writing no later than the offer to purchase.
All are the following are true regarding drafting a contract, except what?
Parties to the contract may have addenda created by attorneys included in offers and contracts.
Parties to the contract may give agents the required permission to draft provisions into the offer and contract.
Parties to the contract may draft their own offers and contracts.
Parties to the contract may alter, delete, or change any provision in the standard forms.
Parties to the contract may give agents the required permission to draft provisions into the offer and contract.
What is constructive eviction?
The landlord’s actions or failures to act make a rental property uninhabitable or significantly interfere with a tenant’s ability to enjoy the property. In such cases, the tenant may have the right to terminate the lease without penalty or obligation to pay rent.
A provisional broker with ABC Realty has a buyer client who is interested in viewing a property listed by her broker in charge. Which of the following statements is accurate regarding this scenario?
The correct answer is that the provisional broker and the broker in charge could legally be dual agents of their respective clients, with their clients’ permission. Even though designated agency would not be an option because of the PB and BIC relationship (i.e. a PB cannot be designated for one party if his/her BIC is designated for the other party), the agents could still be dual agents and basically neutral to both parties.
The NC Real Estate Commission’s main goal is to protect who?
Consumers/clients
