1. A property owner installs a new fence that encroaches onto a neighboring property. What type of issue is this?
- A. Encroachment
- B. Trespass
- C. Nuisance
- D. Easement dispute
2. Which of the following is an example of police power?
- A. Eminent domain
- B. Escheat
- C. Taxation
- D. Zoning ordinance
3. Which of the following is an example of a police power?
- A. Eminent domain
- B. Escheat
- C. Private property ownership
- D. Zoning ordinance
4. A property owner's failure to pay property taxes can result in what type of action?
- A. Foreclosure
- B. Escheat
- C. Eminent domain
- D. Tax lien sale
5. A property is located near a busy highway and is subject to noise pollution. What type of economic characteristic of land is this?
- A. External obsolescence
- B. Internal obsolescence
- C. Physical characteristic
- D. Governmental constraint
6. What is the term for a government's power to take private property for public use, with just compensation?
- A. Police power
- B. Taxation
- C. Escheat
- D. Eminent domain
7. A property owner installs a fence that encroaches onto neighboring property without permission. What is this an example of?
- A. Easement
- B. Encumbrance
- C. Lien
- D. Encroachment
8. A property is described as being located in a specific section, township, and range. What type of legal description is this?
- A. Metes and bounds
- B. Lot-block
- C. Monument
- D. Government survey
9. A property owner grants an easement to a neighbor to use a portion of their property. What type of interest is the neighbor receiving?
- A. Fee simple interest
- B. Leasehold interest
- C. Lien interest
- D. Easement interest
10. A bundle of rights includes the right to:
- A. Use, sell, and gift the property, but not lease it
- B. Lease, sell, and gift the property, but not use it
- C. Use, sell, gift, and lease the property
- D. None of the above
11. Which type of estate is created when a property owner grants a tenant the right to use the property for a specific period of time?
- A. Freehold estate
- B. Community property
- C. Tenancy in common
- D. Leasehold estate
12. What type of estate is created when a property owner leases their property to a tenant?
- A. Freehold estate
- B. Life estate
- C. Fee simple estate
- D. Leasehold estate
13. Which of the following types of estates is characterized by a bundle of rights that includes the right to use, sell, and dispose of the property?
- A. Leasehold estate
- B. Estate at will
- C. Estate for years
- D. Freehold estate
14. A general warranty deed
- A. Only warrants the title against defects that occurred during the seller's ownership
- B. Is used to transfer title to a property with a mortgage
- C. Is used to transfer title to a leasehold estate
- D. Warrants the title against all defects, past and present
15. What type of estate is created when a property owner grants a tenant the right to use the property for a specific period of time in exchange for rent?
- A. Freehold estate
- B. Joint tenancy
- C. Tenancy in common
- D. Leasehold estate
16. A title search is the process of:
- A. Examining the chain of title to verify ownership
- B. Researching the property's tax history
- C. Inspecting the property for defects
- D. Obtaining title insurance
17. A type of deed that warrants the title against all defects, including those that may have occurred before the seller acquired the property, is called a
- A. General Warranty Deed
- B. Special Warranty Deed
- C. Quitclaim Deed
- D. Deed of Trust
18. A real estate agent is asked to provide a Broker's Price Opinion (BPO) for a property. What is the primary purpose of a BPO?
- A. To provide a detailed appraisal of the property's value
- B. To estimate the property's value for lending purposes
- C. To determine the property's tax value
- D. To provide a quick and informal estimate of the property's value
19. A broker performs a BPO, or broker price opinion, for a client. What is the primary purpose of a BPO?
- A. To provide a detailed appraisal report
- B. To provide a written offer to purchase the property
- C. To determine the property's tax value
- D. To estimate the market value of a property for a client
20. What approach to appraisal involves estimating the value of a property based on the cost to replace or reproduce it, minus depreciation?
- A. Sales comparison approach
- B. Hybrid approach
- C. Income approach
- D. Cost approach
21. A residential neighborhood with a mix of old and new homes, where the older homes are being renovated and updated, is an example of
- A. Progression, as the older homes are increasing in value due to the surrounding new homes
- B. Regression, as the newer homes are decreasing in value due to the surrounding older homes
- C. Conformity, as the homes are being updated to match the surrounding properties
- D. Highest and best use, as the homes are being used for their intended purpose
22. Which approach to value focuses on the income a property generates?
- A. Sales comparison approach
- B. Cost approach
- C. Hybrid approach
- D. Income approach
23. Which of the following is a key factor in determining a property's value using the cost approach?
- A. Replacement cost
- B. Market value of comparable sales
- C. Gross income multiplier
- D. Capitalization rate
24. What is the primary purpose of a Broker's Price Opinion (BPO)?
- A. To provide an independent appraisal of a property's value
- B. To provide a detailed analysis of a property's condition and features
- C. To provide a comprehensive market analysis of a neighborhood
- D. To provide a quick estimate of a property's value for lending or marketing purposes
25. The principle of substitution in real estate appraisal suggests that
- A. A property's value is determined by its replacement cost
- B. A property's value is determined by its potential for future appreciation
- C. A property's value is maximized when it is used for its highest and best use
- D. A buyer will pay no more for a property than its replacement cost
26. What type of depreciation occurs when a property's design or layout is no longer functional or desirable?
- A. Physical depreciation
- B. Economic depreciation
- C. External depreciation
- D. Functional depreciation
27. What is a key requirement for ensuring appraiser independence in the appraisal process?
- A. The appraiser must be employed by the lender
- B. The appraiser must have a financial interest in the property
- C. The appraiser must be licensed by the state
- D. The appraiser must be free from influence or pressure from any party involved in the transaction
28. A property's market value is determined by its
- A. original purchase price
- B. replacement cost
- C. zoning classification
- D. what a willing buyer pays a willing seller
29. An agent represents a seller in a real estate transaction. What fiduciary duty requires the agent to act in the seller's best interest?
- A. Obedience
- B. Accounting
- C. Disclosure
- D. Loyalty
30. A real estate contract must be in writing to be enforceable under the Statute of Frauds. What is the primary purpose of this requirement?
- A. To provide a record of the transaction for tax purposes
- B. To prevent disputes over the terms of the contract
- C. To protect the buyer from making a mistake in their offer
- D. To prevent fraudulent transactions and ensure that all parties are clear on the terms of the contract
31. A seller lists their property with a real estate agent, but does not provide a written agreement. What type of agency is created?
- A. Special agency
- B. General agency
- C. Universal agency
- D. No agency is created
32. A buyer's agent fails to disclose a known defect in the property to the buyer. What is the likely result?
- A. The buyer will sue the seller for nondisclosure
- B. The seller will be required to repair the defect
- C. The transaction will be cancelled and the earnest money refunded
- D. The buyer's agent will be liable for any resulting damages
33. What happens to earnest money if a buyer backs out of a contract due to a contingency not being met?
- A. It is forfeited to the seller
- B. It is held in escrow until the dispute is resolved
- C. It is split between the buyer and seller
- D. It is returned to the buyer
34. A seller's agent has a fiduciary duty to disclose all known facts about the property to potential buyers. What does this duty require the agent to do?
- A. Keep all information confidential
- B. Disclose only positive facts
- C. Negotiate the price on behalf of the buyer
- D. Disclose all known facts
35. What is the effect of a buyer's failure to fulfill a contingency in a contract?
- A. The contract is automatically terminated
- B. The contract remains in effect, and the buyer is still obligated to purchase
- C. The seller can sue for damages
- D. The buyer can negotiate a new contract
36. An agent's fiduciary duty of loyalty requires them to act in the best interests of their client. What does this mean in practice?
- A. The agent must disclose all personal interests
- B. The agent must prioritize their own commission
- C. The agent must follow the instructions of the client's family
- D. The agent must act in the best interests of the client
37. A buyer makes an offer on a property, and the seller responds with a counteroffer. What is the effect on the original offer?
- A. It is automatically accepted
- B. It remains open for acceptance
- C. It becomes a contract
- D. It is terminated
38. What is the difference between a general agent and a special agent in real estate?
- A. A general agent has more authority
- B. A special agent represents the seller
- C. A general agent represents the buyer
- D. A special agent has more limited authority
39. What is the primary purpose of an earnest money deposit?
- A. To secure financing for the buyer
- B. To cover the seller's closing costs
- C. To pay for inspections and appraisals
- D. To demonstrate the buyer's good faith and commitment to the purchase
40. A buyer and seller enter into a contract with an earnest money provision. If the buyer breaches the contract, what can the seller do with the earnest money?
- A. Return it to the buyer
- B. Apply it to the purchase price
- C. Use it to pay the commissions
- D. Keep it as liquidated damages
41. A seller's agent has a duty of loyalty to the seller, but what other duty is also required?
- A. Disclosure
- B. Obedience
- C. Confidentiality
- D. All of the above
42. A buyer and seller enter into a contract with a financing contingency. If the buyer is unable to secure financing, what happens to the contract?
- A. The contract is terminated and the buyer forfeits their earnest money
- B. The contract remains in effect and the buyer must secure alternative financing
- C. The contract is amended to extend the financing deadline
- D. The contract is terminated and the buyer's earnest money is refunded
43. A seller breaches a contract to sell their property, and the buyer sues for specific performance. What is the likely outcome?
- A. The seller will be required to pay damages to the buyer
- B. The seller will be able to avoid the contract altogether
- C. The seller will be able to negotiate a new contract
- D. The seller will be required to sell the property to the buyer
44. A buyer's agent fails to disclose their agency relationship to the seller. What is the potential consequence?
- A. The buyer's offer is rejected
- B. The seller's offer is accepted
- C. The agent's license is revoked
- D. The transaction is voidable
45. The Americans with Disabilities Act (ADA) requires that real estate offices be accessible to people with disabilities. What type of modifications might a real estate office need to make to comply with the ADA?
- A. Installing a ramp or elevator
- B. Providing a sign language interpreter
- C. Making all marketing materials available in braille
- D. All of the above
46. A group of real estate agents agree to fix their commission rates at a certain percentage. What federal law are they potentially violating?
- A. Sherman Antitrust Act
- B. Federal Trade Commission Act
- C. Real Estate Settlement Procedures Act
- D. Truth-in-Lending Act
47. A real estate brokerage is handling a transaction and receives a kickback from a title company. This is a violation of
- A. the Federal Fair Housing Act
- B. the Americans with Disabilities Act
- C. antitrust laws
- D. the Real Estate Settlement Procedures Act
48. What is the main purpose of the Do-Not-Call registry?
- A. To prevent telemarketers from calling consumers who have opted out
- B. To regulate the hours during which telemarketers can call consumers
- C. To require telemarketers to provide consumers with a written script
- D. To prohibit telemarketers from calling consumers at all
49. A real estate agent is found to have engaged in price-fixing with other agents in the area. This is a violation of which federal law?
- A. Sherman Antitrust Act
- B. Federal Trade Commission Act
- C. Real Estate Settlement Procedures Act
- D. Truth in Lending Act
50. What is the term for the practice of lenders refusing to make loans to borrowers who live in certain neighborhoods or areas?
- A. Redlining
- B. Blockbusting
- C. Steering
- D. Price-fixing
51. Which federal law requires that handicapped individuals have equal access to commercial facilities and public accommodations?
- A. Fair Housing Act
- B. Civil Rights Act
- C. Equal Credit Opportunity Act
- D. Americans with Disabilities Act
52. Which federal law prohibits real estate licensees from making false or misleading statements about the racial, ethnic, or religious characteristics of a neighborhood to influence a buyer's decision?
- A. Fair Housing Act
- B. Americans with Disabilities Act
- C. Truth-in-Lending Act
- D. Real Estate Settlement Procedures Act
53. A sales agent is handling a transaction and receives earnest money from the buyer. The sales agent must
- A. deposit the earnest money into their personal bank account
- B. return the earnest money to the buyer
- C. give the earnest money to the seller
- D. hold the earnest money in a trust account until the transaction closes
54. A real estate agent is found to have engaged in price-fixing with other agents to artificially inflate commissions. What federal law has the agent likely violated?
- A. Sherman Antitrust Act
- B. Clayton Antitrust Act
- C. Federal Trade Commission Act
- D. Real Estate Settlement Procedures Act
55. A real estate broker is handling a transaction where the buyer is paying $500,000 for a property. The broker is also acting as the escrow agent and is holding the buyer's deposit in a trust account. What is the broker's responsibility regarding the deposit?
- A. To release the deposit to the seller as soon as possible
- B. To invest the deposit in a high-yield savings account
- C. To use the deposit to pay for the broker's commission
- D. To hold the deposit in the trust account until the transaction is closed
56. A sales agent is working with a seller who wants to sell their property 'as-is'. The sales agent
- A. must disclose all known defects in the property to potential buyers
- B. is not required to disclose any defects in the property because the seller is selling 'as-is'
- C. should recommend that the seller hire a home inspector to identify any potential issues
- D. can only disclose defects that are visible to the naked eye
57. A real estate agent is handling a transaction and is required to deposit the buyer's earnest money into a trust account. What is the primary purpose of this requirement?
- A. To protect the buyer's funds from misappropriation
- B. To facilitate the transaction by allowing the agent to use the funds for marketing expenses
- C. To provide the seller with immediate access to the funds
- D. To pay the agent's commission
58. A real estate broker fails to maintain accurate records of client funds in the trust account. What is the most likely consequence of this failure?
- A. The broker will be required to pay a fine to the state real estate commission
- B. The broker will be subject to a civil lawsuit by the clients
- C. The broker will be required to take additional continuing education courses
- D. The broker's license will be suspended or revoked
59. A buyer purchases a property that was formerly used as a gas station, and later discovers that the soil is contaminated with petroleum products. What law may hold the buyer responsible for the cleanup costs?
- A. CERCLA
- B. RCRA
- C. TSCA
- D. NEPA
60. A buyer is purchasing a property that was formerly used as a gas station. What is the buyer's primary concern regarding environmental hazards?
- A. Asbestos
- B. Radon
- C. Mold
- D. Underground storage tanks
61. What is the purpose of the CERCLA law in relation to residential real estate transactions?
- A. To require sellers to disclose the presence of lead-based paint
- B. To require sellers to disclose the presence of asbestos
- C. To require buyers to test for radon
- D. To hold property owners and buyers liable for environmental hazards on the property, even if they did not cause the hazard
62. A seller of a single-family home built in 1960 must provide a federal disclosure about what potential environmental hazard?
- A. Asbestos
- B. Radon
- C. Mold
- D. Lead-based paint
63. A buyer is purchasing a property built in 1950 and asks the seller about the presence of asbestos. What is the seller's obligation?
- A. To disclose any known presence of asbestos
- B. To test for asbestos
- C. To remove any asbestos
- D. To provide a clearance certificate
64. A property is located in a flood zone, but the seller does not disclose this information to the buyer. What can the buyer do?
- A. Sue the seller for damages
- B. Rescind the contract
- C. Obtain flood insurance
- D. Do nothing
65. What is the purpose of the lead-based paint disclosure form required for properties built before 1978?
- A. To disclose the presence of lead-based paint
- B. To disclose the risks associated with lead-based paint
- C. To provide the buyer with a 10-day period to inspect for lead-based paint
- D. All of the above
66. The Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) is a federal law that:
- A. Requires sellers to disclose environmental hazards on their property
- B. Provides funding for the cleanup of contaminated sites
- C. Regulates the use of asbestos in construction
- D. Holds property owners liable for environmental contamination
67. The Truth-in-Lending Act (TILA) requires lenders to disclose which of the following to borrowers?
- A. The loan's interest rate and terms
- B. The property's value and condition
- C. The borrower's credit score and history
- D. The lender's fees and commissions
68. What is the purpose of the Real Estate Settlement Procedures Act (RESPA)?
- A. To regulate the appraisal process for residential properties
- B. To require lenders to provide borrowers with a detailed breakdown of loan costs and terms
- C. To establish a national database of real estate transactions
- D. To prohibit kickbacks and referral fees in residential real estate transactions
69. What is the primary purpose of the Truth-in-Lending Act (TILA) and Regulation Z?
- A. To regulate loan interest rates
- B. To ensure lender compliance with RESPA
- C. To prohibit predatory lending practices
- D. To require lender disclosure of loan terms
70. What is the main difference between a conventional loan and an FHA loan?
- A. Conventional loans are insured by the government, while FHA loans are not
- B. FHA loans have stricter credit score requirements
- C. Conventional loans have higher down payment requirements
- D. FHA loans are insured by the government, while conventional loans are not
71. A lender agrees to subordinate its lien to a new loan, allowing the borrower to obtain additional financing. What is this process called?
- A. Subordination
- B. Defeasance
- C. Acceleration
- D. Assumption
72. A buyer is obtaining a mortgage with a loan-to-value ratio of 82%. What will the lender likely require to mitigate the risk of the higher LTV?
- A. A higher interest rate
- B. A shorter loan term
- C. A larger down payment
- D. Private Mortgage Insurance (PMI)
73. A borrower is considering a loan with a subordination clause. What does this clause do?
- A. Gives the lender a higher priority over other lienholders
- B. Allows the borrower to assume the loan without lender approval
- C. Requires the borrower to make a balloon payment at the end of the loan term
- D. Subordinates the lender's lien to another lienholder, such as a home equity lender
74. A lender charges 2 discount points on a $210,000 loan. One point equals 1% of the loan amount. What is the cost of the points?
- A. $8,400
- B. $6,300
- C. $420
- D. $4,200
75. A tenant paid $2,600 rent for the full month. The sale closes on day 14 of a 30-day month. How much unearned rent must the seller credit the buyer at closing?
- A. $1,386.67
- B. $1,473.33
- C. $1,213.33
- D. $1,212.33
76. A commercial property has a net operating income of $57,000 and the market cap rate is 6%. Using the income approach, what is its estimated value?
- A. $712,500
- B. $3,420
- C. $475,000
- D. $950,000
77. How many square feet are in a 1-acre parcel? (1 acre = 43,560 sq ft)
- A. 43,560 sq ft
- B. 87,120 sq ft
- C. 21,780 sq ft
- D. 43,650 sq ft
78. How many square feet are in a 0.5-acre parcel? (1 acre = 43,560 sq ft)
- A. 21,825 sq ft
- B. 43,560 sq ft
- C. 10,890 sq ft
- D. 21,780 sq ft
79. A commercial property has a net operating income of $49,000 and the market cap rate is 8%. Using the income approach, what is its estimated value?
- A. $306,250
- B. $490,000
- C. $3,920
- D. $612,500
80. Annual property taxes are $5,100. Using a 365-day year, the seller is responsible for 193 days. What is the seller's prorated share?
- A. $2,696.71
- B. $3,115.89
- C. $2,403.29
- D. $2,734.17
81. A provisional broker in North Carolina must complete how many hours of postlicensing education to remove their provisional status?
- A. 60 hours
- B. 75 hours
- C. 120 hours
- D. 90 hours
82. To become a licensed real estate broker in North Carolina, an individual must be at least how old?
- A. 18 years old
- B. 21 years old
- C. 25 years old
- D. 30 years old
83. What is the difference between an active and inactive license status in North Carolina?
- A. An active license allows a broker to work as a broker-in-charge, while an inactive license does not
- B. An active license requires continuing education, while an inactive license does not
- C. An active license is required for provisional brokers, while an inactive license is required for brokers-in-charge
- D. An active license allows a broker to engage in real estate activities, while an inactive license does not
84. A broker represents both the buyer and the seller in a transaction with their written consent. This is an example of
- A. Single agency
- B. Disclosed limited agency
- C. Designated agency
- D. Dual agency
85. What type of agency relationship is established when a broker designates an agent to represent the buyer and another agent to represent the seller?
- A. Single agency
- B. Dual agency
- C. No agency
- D. Designated agency
86. In North Carolina, which of the following is a fiduciary duty owed by a real estate agent to their client?
- A. To sell the property for the highest price possible
- B. To disclose all known facts about the property
- C. To recommend a particular lender or attorney
- D. To keep all information about the client confidential
87. What is the purpose of the 'WORKING WITH REAL ESTATE AGENTS DISCLOSURE' in North Carolina?
- A. To create a contractual relationship between the agent and the client
- B. To establish the terms of the sale
- C. To disclose the agent's commission rate
- D. To inform buyers and sellers about the different types of agency relationships
88. A broker has a duty of loyalty to their client. What does this duty require the broker to do?
- A. To disclose all material facts about the property to the customer
- B. To negotiate the best price for the customer
- C. To keep all information about the client confidential
- D. To act in the best interest of the client
89. In a designated agency relationship, which of the following is true?
- A. The broker represents only one party in the transaction
- B. The broker represents both parties in the transaction
- C. The broker is exempt from disclosing material facts about the property
- D. The broker designates an agent to represent the buyer and another agent to represent the seller
90. What is the requirement for a buyer-agency agreement in North Carolina when the buyer is ready to make an offer?
- A. It must be in writing
- B. It can be oral or written
- C. It can be an oral agreement
- D. It is not required
91. In a designated agency relationship, the broker-in-charge designates an agent to represent the
- A. Buyer only
- B. Seller only
- C. Both the buyer and the seller
- D. Either the buyer or the seller, but not both
92. What is required for a dual agency relationship in North Carolina?
- A. Oral consent from the client
- B. No disclosure is required
- C. A separate brokerage firm for each client
- D. Written consent from the client
93. A broker is working with a buyer who wants to purchase a property. The broker also represents the seller of that property. What type of agency relationship is this, and what is required for it to be valid?
- A. Single agency, which requires no written consent
- B. Transaction brokerage, which is not allowed in North Carolina
- C. Designated agency, which requires no written consent
- D. Dual agency, which requires written consent from both parties
94. What is the requirement for a provisional broker in North Carolina to provide the Working with Real Estate Agents Disclosure?
- A. At the time of the offer
- B. At the time of the closing
- C. At the time of the sale
- D. At first substantial contact
95. Which of the following is a fiduciary duty owed by a broker to their client in North Carolina?
- A. To negotiate the lowest possible price
- B. To guarantee a successful transaction
- C. To recommend a specific lender or attorney
- D. To disclose all material facts known to the broker
96. In North Carolina, what is the requirement for a buyer-agency agreement before a buyer makes an offer?
- A. It must be in writing before the offer
- B. It can be either oral or in writing before the offer
- C. It must be in writing at the time of the offer
- D. It can be oral until the buyer makes an offer
97. A buyer is working with a provisional broker who has a written buyer-agency agreement. What is the broker's duty to the buyer in this situation?
- A. To disclose all material facts about the property
- B. To negotiate the best price for the seller
- C. To keep all information about the buyer confidential
- D. To only show the buyer properties listed by the broker's firm
98. A broker has a client who is selling a property. What is the broker's duty to disclose to potential buyers?
- A. Only material facts that are known to the broker
- B. All facts about the property, regardless of their materiality
- C. No facts about the property, to avoid liability
- D. Only facts that are required by law to be disclosed
99. In North Carolina, what is the requirement for disclosing material facts about a property?
- A. The seller must disclose all known material facts in writing
- B. The seller and the real estate agent must disclose all known material facts to the buyer
- C. The buyer must disclose all known material facts to the seller
- D. The real estate agent must disclose all known material facts to the buyer
100. Who can receive a referral fee in a North Carolina real estate transaction?
- A. Only licensed brokers
- B. Only unlicensed assistants
- C. Only attorneys
- D. Only clients
101. May a North Carolina real estate broker pay a referral fee to an unlicensed person?
- A. Yes, as long as the fee is reasonable
- B. No, unless the person is a licensed broker in another state
- C. Yes, but only if the person is a family member
- D. No, referral fees may only be paid to licensed brokers
102. To be eligible for a Broker-in-Charge (BIC) designation in North Carolina, a broker must have
- A. 1 year of full-time experience and complete a BIC course
- B. 10 years of experience and hold a broker license
- C. 5 years of part-time experience and complete a real estate law course
- D. 2 years of full-time experience and complete a BIC course
103. To be eligible for a Broker-in-Charge designation in North Carolina, a broker must have how many years of full-time experience?
- A. 1 year
- B. 5 years
- C. 3 years
- D. 2 years
104. A buyer's agent is working with a buyer who wants to purchase a property listed by another brokerage. What must the buyer's agent do before advertising the property?
- A. Obtain the written permission of the listing broker
- B. Obtain the written permission of the seller
- C. Obtain the written permission of the buyer
- D. No permission is required, as long as the advertisement includes the listing broker's name
105. A North Carolina broker creates a social media advertisement for a listing without including the firm's name. What is the primary issue with this advertisement?
- A. It does not include the broker's name
- B. It does not include the property's price
- C. It was not approved by the broker-in-charge
- D. It does not include the firm's name
106. A broker is found to have engaged in misrepresentation in a real estate transaction. What is the possible consequence of this action?
- A. The broker's license will be suspended for 30 days
- B. The broker will be required to pay a fine of $1,000
- C. The broker will be subject to a warning letter
- D. The broker's license may be revoked
107. A buyer and seller agree on a purchase price, and the buyer submits earnest money. Where must the earnest money be deposited?
- A. The broker's personal bank account
- B. The seller's bank account
- C. The buyer's bank account
- D. The firm's trust account
108. A North Carolina broker is found to have engaged in self-dealing in a real estate transaction. What is a possible sanction from the North Carolina Real Estate Commission?
- A. A warning letter
- B. A reprimand
- C. A suspension of the broker's license
- D. All of the above
109. A broker is accused of misrepresenting a property's features to a buyer. What is the first step in the disciplinary process?
- A. The Commission will conduct a hearing
- B. The broker's license will be suspended
- C. The broker will receive a reprimand
- D. The Commission will investigate the complaint
110. A broker is advertising a property on social media and does not include the firm's name in the advertisement. What is the consequence of this action?
- A. The broker is allowed to advertise without the firm's name as long as it is on social media
- B. The broker can advertise without the firm's name as long as it is not a traditional advertisement
- C. The broker must include the firm's name in all advertisements, including social media
- D. The broker may be subject to disciplinary action by the Commission
111. A buyer and seller have entered into a contract, and the buyer has paid an earnest money deposit. Where must the broker deposit the earnest money?
- A. Into the broker's personal bank account
- B. Into the firm's operating account
- C. Into the seller's bank account
- D. Into the firm's trust account within 3 banking days
112. A broker is required to maintain transaction records for a certain period. What is the minimum duration for retaining these records?
- A. 1 year
- B. 2 years
- C. 5 years
- D. 3 years
113. A provisional broker receives earnest money from a buyer. What should the broker do with the funds?
- A. Deposit the funds into the broker's personal account
- B. Give the funds to the seller
- C. Hold the funds until the transaction closes
- D. Deposit the funds into the firm's trust account within 3 banking days
114. A North Carolina real estate broker is found to have commingled personal funds with client funds in the trust account. What is the most likely consequence of this action?
- A. The broker will be required to take additional education courses
- B. The broker will be subject to a fine and a reprimand
- C. The broker will be required to pay back the commingled funds with interest
- D. The broker's license will be suspended or revoked
115. A broker receives a complaint from a client alleging that the broker made a misrepresentation about a property. What is the first step the broker should take?
- A. Respond to the client and try to resolve the issue
- B. Ignore the complaint and hope it goes away
- C. File a counter-complaint against the client
- D. Report the complaint to the North Carolina Real Estate Commission
116. In North Carolina, which party is responsible for paying the excise tax at closing?
- A. Buyer
- B. Seller
- C. Both buyer and seller
- D. Neither buyer nor seller
117. Why is flood insurance required for some properties in North Carolina?
- A. Because the property is located in a high-risk area
- B. Because the property is located near a body of water
- C. Because the lender requires it
- D. Because the property is located in a flood zone, as designated by FEMA
118. How does the ad valorem tax system work in North Carolina?
- A. A fixed amount is paid annually by all property owners
- B. The tax rate is determined by the buyer
- C. The tax rate is determined by the seller
- D. A percentage of the property's value is paid annually by the owner
119. What is the purpose of the ad valorem tax in North Carolina?
- A. To fund local schools and government services
- B. To pay for the broker's commission
- C. To pay for the attorney's fee
- D. To fund the state's real estate commission
120. In North Carolina, who is responsible for conducting the settlement of a real estate transaction?
- A. The broker or agent
- B. A title insurance company
- C. The buyer and seller
- D. A licensed attorney
121. Which of the following statements about the due diligence period in a North Carolina Offer to Purchase and Contract is TRUE?
- A. The buyer may terminate the contract for any reason and receive a full refund of the earnest money and due diligence fee
- B. The due diligence period is a mandatory 30-day period that cannot be negotiated
- C. The buyer may only terminate the contract for a valid reason, such as a failed inspection, to receive a refund of the earnest money
- D. The buyer may terminate the contract for any reason and receive a refund of the earnest money, but not the due diligence fee
122. How does the Due Diligence Period differ from the overall contract period in the NC Offer to Purchase and Contract?
- A. The Due Diligence Period is the entire contract period
- B. The Due Diligence Period is when the seller must make any necessary repairs
- C. The Due Diligence Period is only for inspecting the property
- D. The Due Diligence Period is a subset of the contract period, during which the buyer may terminate for any reason
123. According to the NC Offer to Purchase and Contract (Form 2-T), what happens to the earnest money if the buyer terminates the contract during the due diligence period?
- A. It is forfeited to the seller
- B. It is held in escrow until the transaction is complete
- C. It is split between the buyer and seller
- D. It is refunded to the buyer
124. What happens to the earnest money deposit if the buyer terminates the contract during the due diligence period?
- A. It is forfeited to the seller
- B. It is held in escrow until the transaction closes
- C. It is split between the buyer and seller
- D. It is refunded to the buyer
125. What happens to the due diligence fee if the buyer terminates the contract during the due diligence period?
- A. It is refunded to the buyer
- B. It is applied to the buyer's closing costs
- C. It is held in escrow until the seller relists the property
- D. It is forfeited to the seller
126. In a North Carolina residential real estate transaction, what is the primary purpose of the due diligence fee paid by the buyer?
- A. To secure the buyer's earnest money
- B. To ensure the seller's cooperation during the transaction
- C. To pay for inspections and tests during the due diligence period
- D. To compensate the seller for the buyer's due diligence period
127. Is self-help eviction, such as changing the locks or removing a tenant's property, allowed in North Carolina?
- A. Yes, with prior notice
- B. Yes, without prior notice
- C. Only for non-payment of rent
- D. No, it is prohibited
128. How long does a landlord in North Carolina have to provide an accounting of a tenant's security deposit after termination of the rental agreement?
- A. 10 days
- B. 20 days
- C. 60 days
- D. 30 days
129. Where must a landlord in NC hold a tenant's security deposit?
- A. In the landlord's personal bank account
- B. In a separate account at a credit union
- C. With a third-party escrow service
- D. In a trust account at a bank
130. A real estate broker is working with a buyer who is looking for a home in a specific neighborhood. The buyer expresses a preference for a neighborhood with a certain racial composition. What should the broker do?
- A. Show the buyer only properties in neighborhoods that match their preferred racial composition
- B. Report the buyer to the NC Real Estate Commission
- C. Refuse to work with the buyer due to their discriminatory preferences
- D. Inform the buyer that they cannot discriminate based on race and show them properties in all available neighborhoods
131. What disclosure statement are sellers of residential property in North Carolina required to provide to buyers?
- A. Residential Property and Owners' Association Disclosure Statement
- B. Mineral, Oil, and Gas Rights Disclosure Statement
- C. Lead-Based Paint Disclosure Statement
- D. Property Condition Disclosure Statement
132. A seller in North Carolina fails to disclose the presence of mineral rights on their property. What disclosure are they likely required to provide?
- A. Mineral/Oil/Gas Rights Disclosure
- B. Residential Property and Owners' Association Disclosure Statement
- C. Property Condition Disclosure
- D. Environmental Hazard Disclosure
133. What is the Recovery Fund administered by the NC Real Estate Commission used for?
- A. To reimburse consumers for unsatisfied judgments against licensees
- B. To provide education to licensees
- C. To regulate the real estate industry
- D. To promote the real estate market
134. What is the name of the disclosure that sellers in North Carolina are required to provide to buyers regarding the property's ownership and any applicable associations?
- A. Residential Property Disclosure Statement
- B. Owners' Association Disclosure Statement
- C. Mineral Rights Disclosure Statement
- D. Residential Property and Owners' Association Disclosure Statement
135. What is the NC Real Estate Commission's role in rulemaking and enforcement?
- A. To create and enforce rules for the real estate industry
- B. To provide education for real estate professionals
- C. To promote the real estate industry
- D. To manage the licensing process
136. What type of disclosure is required of sellers in North Carolina regarding mineral, oil, and gas rights?
- A. A disclosure statement
- B. A warranty deed
- C. A title insurance policy
- D. A home inspection report
137. Which of the following statements about the NC Real Estate Commission is TRUE?
- A. It has 7 members
- B. It is responsible for regulating the insurance industry
- C. It is a federal agency
- D. It administers the Real Estate Education and Recovery Fund
138. How many members are on the North Carolina Real Estate Commission?
- A. 5 members
- B. 7 members
- C. 11 members
- D. 9 members
139. A real estate broker in North Carolina is subject to which of the following laws?
- A. Chapter 93A, which regulates the real estate profession
- B. Chapter 75, which regulates business practices
- C. Chapter 47, which regulates real property
- D. Chapter 105, which regulates taxation
140. What is the Recovery Fund established by the North Carolina Real Estate Commission used for?
- A. To reimburse consumers who have suffered losses due to a licensee's fraud or misrepresentation
- B. To provide financial assistance to real estate professionals who are experiencing financial difficulties
- C. To fund real estate education and training programs
- D. To pay for the operational expenses of the North Carolina Real Estate Commission