Choose “Save as PDF” as the destination to keep a copy. Answers and explanations start on a new page.
North Carolina Contracts & Closing — Printable Practice Pack
North Carolina state portion · NC Commission rules, provisional broker status and agency agreements · 20 questions · Answer key on the last page · agentexamcoach.com
1.What is the purpose of contingencies in the NC Offer to Purchase and Contract?
(A)To provide a way for the buyer to terminate the contract without penalty
(B)To require the seller to make repairs to the property
(C)To specify the terms of the buyer's financing
(D)To determine the amount of the Due Diligence Fee
2.What happens to the Earnest Money in a North Carolina real estate transaction if the buyer terminates the contract within the Due Diligence Period?
(A)It is forfeited to the seller
(B)It is split between the buyer and seller
(C)It is held in escrow until a new buyer is found
(D)It is refundable to the buyer
3.In North Carolina, who typically conducts the settlement in a real estate transaction?
(A)A licensed real estate broker
(B)A title insurance company
(C)A lender's representative
(D)A licensed attorney
4.If a buyer fails to perform their obligations under a North Carolina real estate contract, what may the seller do?
(A)Terminate the contract and retain the earnest money deposit
(B) Sue the buyer for specific performance
(C)Both A and B
(D)Neither A nor B
5.What is the difference between the due diligence fee and the earnest money deposit in a North Carolina real estate transaction?
(A)The due diligence fee is refundable, while the earnest money deposit is non-refundable
(B)The due diligence fee is paid at closing, while the earnest money deposit is paid at the time of the offer
(C)The due diligence fee is paid to the buyer, while the earnest money deposit is paid to the seller
(D)The due diligence fee is non-refundable, while the earnest money deposit is refundable if the buyer terminates during the due diligence period
6.What happens if the buyer fails to comply with the contractual deadlines in a North Carolina real estate contract?
(A)The buyer may be in breach of contract and liable for damages
(B)The seller is required to refund the earnest money deposit
(C)The buyer is entitled to an extension of time
(D)The contract becomes null and void
7.If a buyer terminates a contract during the due diligence period, what happens to the earnest money?
(A)It is forfeited to the seller
(B)It is used to pay for the seller's damages
(C)It is held in escrow until the seller finds a new buyer
(D)It is returned to the buyer
8.A buyer and seller enter into a contract with a due diligence period of 15 days. If the buyer discovers a major issue with the property on the 10th day, what can they do?
(A)They can terminate the contract and receive a refund of the earnest money
(B)They must terminate the contract and forfeit the earnest money
(C)They must negotiate a repair credit with the seller
(D)They must complete the purchase and then pursue a claim against the seller
9.Who is responsible for conducting the settlement in a North Carolina real estate transaction?
(A)A licensed attorney
(B)The title insurance company
(C)The real estate broker
(D)The buyer and seller themselves
10.What is the purpose of the due diligence period in a North Carolina Offer to Purchase and Contract?
(A)To allow the seller to find a backup buyer
(B)To complete the financing process
(C)To negotiate the price of the property
(D)To give the buyer time to inspect and investigate the property
11.A buyer includes a contingency for financing in the Offer to Purchase and Contract. What does this mean?
(A)The buyer must secure financing within a certain time frame or the contract is terminated
(B)The seller must provide financing for the buyer
(C)The buyer is not required to secure financing
(D)The contract is not contingent on anything
12.In North Carolina, what is the significance of the phrase 'time is of the essence' in a real estate contract?
(A)It means that the buyer and seller must negotiate the terms of the contract in good faith
(B)It means that the buyer and seller can terminate the contract at any time
(C)It means that the buyer and seller can extend the due diligence period if necessary
(D)It means that the buyer and seller must close the transaction on the specified date
13.Which of the following is a characteristic of the due diligence period in a North Carolina real estate transaction?
(A)The buyer may only terminate for financial reasons
(B)The seller may terminate for any reason
(C)The buyer may terminate for any reason and receive a refund of the earnest money
(D)The due diligence fee is refundable if the buyer terminates
14.In North Carolina, who typically conducts the settlement and closing process?
(A)A licensed real estate broker
(B)A title insurance company
(C)A licensed attorney
(D)A lender's representative
15.What is the significance of the phrase 'time is of the essence' in a North Carolina real estate contract?
(A)It means the contract can be terminated at any time
(B)It means the buyer and seller must negotiate in good faith
(C)It means the contract must be performed on the specified date or it will be considered breached
(D)It means the buyer and seller can extend the closing date without penalty
16.What is the effect of the 'time is of the essence' clause in a North Carolina Offer to Purchase and Contract?
(A)It allows the buyer to extend the closing date without penalty
(B)It requires the seller to provide a warranty of title
(C)It makes the closing date a critical deadline, with failure to meet it potentially terminating the contract
(D)It waives the buyer's right to inspect the property
17.If a contingency in a North Carolina Offer to Purchase and Contract is not satisfied, what is the likely outcome?
(A)The buyer's earnest money is forfeited
(B)The seller must remediate the issue
(C)The transaction is terminated, and the buyer's earnest money is refunded
(D)The buyer must waive the contingency
18.If a buyer discovers a defect in the property during the due diligence period, what can they do?
(A)They must notify the seller and attempt to negotiate a repair
(B)They can sue the seller for damages
(C)They must complete the purchase and then seek compensation from the seller
(D)They can terminate the contract and receive a refund of the earnest money
19.In a North Carolina real estate transaction using the standard Form 2-T Offer to Purchase and Contract, what is the primary purpose of the due diligence fee paid by the buyer to the seller?
(A)To demonstrate the buyer's good faith in the transaction
(B)To pay for the seller's attorney fees at closing
(C)To secure the buyer's position in the transaction and make the offer more attractive to the seller
(D)To compensate the seller for allowing the buyer to conduct due diligence
20.What is the effect of the 'time is of the essence' clause in a North Carolina real estate contract?
(A)It allows the buyer to extend the closing date
(B)It requires the seller to provide a warranty of title
(C)It makes the closing date a critical deadline, and failure to meet it may result in breach of contract
(D)It eliminates the need for a due diligence period
Answer key & explanations
1. A — Contingencies provide a way for the buyer to terminate the contract without penalty if certain conditions are not met.
2. D — If the buyer terminates the contract within the Due Diligence Period, they are entitled to a refund of their Earnest Money, as this period allows them to back out of the purchase for any reason without penalty, except for the loss of the Due Diligence Fee.
3. D — In North Carolina, real estate closings are conducted by a licensed attorney.
4. C — If a buyer fails to perform their obligations under a North Carolina real estate contract, the seller may terminate the contract and retain the earnest money deposit, and/or sue the buyer for specific performance.
5. D — The due diligence fee is a non-refundable payment made by the buyer to the seller, while the earnest money deposit is refundable if the buyer terminates the contract during the due diligence period.
6. A — If the buyer fails to comply with the contractual deadlines, such as the settlement date, the buyer may be in breach of contract and liable for damages.
7. 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.
8. A — During the due diligence period, the buyer can terminate the contract for any reason, including discovering a major issue with the property, and receive a refund of the earnest money.
9. A — In North Carolina, real estate closings are conducted by a licensed attorney.
10. D — The due diligence period allows the buyer to inspect and investigate the property, and to terminate the contract for any reason during this time.
11. A — A contingency for financing means the buyer must secure financing within a certain time frame or the contract may be terminated.
12. D — The phrase 'time is of the essence' in a North Carolina real estate contract means that the buyer and seller must close the transaction on the specified date, and failure to do so can result in breach of contract.
13. C — 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.
14. C — In North Carolina, real estate closings are conducted by a licensed attorney.
15. C — The phrase 'time is of the essence' in a contract means that the parties must perform their obligations on the specified date or the contract will be considered breached.
16. C — The 'time is of the essence' clause emphasizes the importance of meeting the closing date, and failure to do so may result in the contract being terminated.
17. C — If a contingency is not satisfied, the transaction is typically terminated, and the buyer's earnest money is refunded, allowing the buyer to withdraw from the contract without penalty.
18. D — During the due diligence period, the buyer can terminate the contract for any reason, including discovery of a defect, and receive a refund of the earnest money.
19. D — The due diligence fee is paid to the seller and is generally non-refundable, compensating the seller for taking the property off the market during the due diligence period.
20. C — The 'time is of the essence' clause emphasizes the importance of meeting the closing date, and failure to do so may result in breach of contract.
Want unlimited adaptive practice?
Take the free diagnostic to see which areas are costing you the most points — then drill exactly those.
