North Carolina · state portion

Free North Carolina Contracts & Closing practice questions

10 original questions with full explanations. 7 of the 60 scored state-portion questions (about 12%) come from this area.

1. 1

   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
   Show answer & explanation

   Answer: D

   In North Carolina, real estate closings are conducted by a licensed attorney.

2. 2

   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
   Show answer & explanation

   Answer: D

   During the due diligence period, the buyer may terminate the contract for any reason and receive a refund of the earnest money, but not the due diligence fee, which is generally non-refundable.

3. 3

   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
   Show answer & explanation

   Answer: D

   The Due Diligence Period is a specific timeframe within the contract period during which the buyer may terminate the contract for any reason and receive a refund of their Earnest Money.

4. 4

   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
   Show answer & explanation

   Answer: D

   During the due diligence period, the buyer may terminate the contract for any reason and receive a refund of the earnest money.

5. 5

   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
   Show answer & explanation

   Answer: D

   If the buyer terminates the contract during the due diligence period, the earnest money deposit is refunded to the buyer, but the due diligence fee is not.

6. 6

   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
   Show answer & explanation

   Answer: D

   The due diligence fee is generally non-refundable and is forfeited to the seller if the buyer terminates the contract during the due diligence period.

7. 7

   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
   Show answer & explanation

   Answer: D

   The due diligence fee is a non-refundable payment made by the buyer to the seller, which compensates the seller for the time the property is off the market during the due diligence period.

8. 8

   In North Carolina, who is responsible for conducting the real estate closing?

   • A. A licensed real estate broker
   • B. A title insurance company
   • C. The buyer and seller themselves
   • D. A licensed attorney
   Show answer & explanation

   Answer: D

   In North Carolina, real estate closings are conducted by a licensed attorney, ensuring that the legal transfer of property is handled properly and in accordance with state laws.

9. 9

   If a buyer discovers a major defect in the property during the due diligence period, what can they do?

   • A. They must continue with the purchase
   • B. They can negotiate a repair credit with the seller
   • C. They can sue the seller for misrepresentation
   • D. They can terminate the contract and receive a refund of their earnest money
   Show answer & explanation

   Answer: D

   During the due diligence period, a buyer can terminate the contract for any reason, including discovering a major defect, and receive a refund of their earnest money.

10. 10

    In a North Carolina real estate transaction, what is the difference between the due diligence fee and the earnest money?

    • A. The due diligence fee is refundable, while the earnest money is non-refundable
    • B. The due diligence fee is paid to the broker, while the earnest money is paid to the seller
    • C. The due diligence fee is used for inspections, while the earnest money is used for appraisals
    • D. The due diligence fee is non-refundable, while the earnest money is refundable if the buyer terminates during the due diligence period
    Show answer & explanation

    Answer: D

    The due diligence fee is generally non-refundable and paid to the seller, while the earnest money is refundable if the buyer terminates the contract during the due diligence period.