Untitled Quiz

Questions and Answers

What is direct supervision?

Direct supervision of all licensees that are affiliated with the firm.

Which action would violate the provisional broker's duties to his/her principal in an open house situation?

Informing about a potential highway close to the property

Informing the potential buyer about a foreclosure notice

Providing a comparative market analysis (correct)

Disclosing the buyer's willingness to pay more than the current offer

Which scenario triggers substantial contact requiring disclosure of the Working with Real Estate Agents brochure?

Neither A nor B

A buyer seeks to place a bid on an auctioned home

Both A and B

A buyer at an open house asks detailed questions (correct)

What must a provisional broker do to remain inactive?

Pay the renewal fee within the 45-day renewal period Signup and view all the answers

Which statement is FALSE regarding a provisional broker acting as a designated dual agent?

They cannot disclose confidential information about the seller Signup and view all the answers

Which statement regarding lease agreements is TRUE?

A landlord cannot charge a pet deposit for a service animal Signup and view all the answers

Which statement regarding timeshares is EXCEPTIONAL?

A licensee must obtain a timeshare license to list or sell Signup and view all the answers

Under the 1997 Taxpayer Relief Act, which item cannot be added to the basis for calculating capital gains?

Discount Points Signup and view all the answers

Which scenario would violate license law for a broker representing a buyer?

Provides the seller a copy of the protection agreement within 7 days Signup and view all the answers

Which statement about the North Carolina Real Estate Commission members is TRUE?

At least 3 must have a broker's license Signup and view all the answers

What is TRUE regarding a buyer's initial encounter with a prospective buyer?

Buyer can agree to terms of agency orally Signup and view all the answers

Which statement applies when a buyer is showing a property under an oral buyer agency agreement?

They can enter an oral dual agency agreement with the buyer's consent Signup and view all the answers

Which newspaper advertisement complies with appropriate rules?

3 Bedroom Downtown Condo for sale - fantastic view, contact ABC Realty Signup and view all the answers

According to NCAR/NCBA Standard Offer to Purchase, which statement is TRUE once the contract is formed?

Due diligence fee becomes the seller's property when contract is effective Signup and view all the answers

Using conventional financing ratios, what is the maximum non-housing debt a couple can have?

$580 Signup and view all the answers

What is the low value of the probable selling price range?

$275,000 Signup and view all the answers

Who is obligated to pay confirmed assessments prior to settlement?

The seller Signup and view all the answers

Who pays excise tax and how is it calculated?

The Seller pays based on sales price, divided by $500 and rounded up Signup and view all the answers

What is the monthly tax liability for the Kraemers' home?

$214.21 Signup and view all the answers

Which term is defined as the lowest wooden member in home construction?

Sill Signup and view all the answers

What will the buyer need to bring to closing for a home purchase?

$16,158 Signup and view all the answers

Which of the following BEST describes the arrangement between two neighbors regarding property offers?

Right of first refusal Signup and view all the answers

Which of the following BEST describes a material fact that should be disclosed to buyers who do not have an agent?

The seller owes special assessments on the property. Signup and view all the answers

An underwriter is LEAST likely to consider which of the following when determining the desirability of a loan?

Home warranty plan Signup and view all the answers

The terms stable income, net worth, and credit history describe factors used for what purpose?

In assessing the buyer's qualifications. Signup and view all the answers

The person who reviews all documentation and evaluates the risk of the loan is called the?

Underwriter Signup and view all the answers

In most states, which of the following contracts does NOT need to be in writing to be enforceable?

A three-month lease agreement on an apartment. Signup and view all the answers

A contract entered into based on a misrepresentation is?

Voidable by the aggrieved party. Signup and view all the answers

A capital gain is defined as?

A taxable profit that is realized from the sale or exchange of an asset. Signup and view all the answers

Regarding a seller who has not accepted a full price offer within three days, which of the following is TRUE?

The seller may reject the offer, but the commission is due the broker. Signup and view all the answers

What do the terms offer and acceptance, mutual assent, and meeting of the minds signify?

They mean there is an unqualified acceptance of an offer, which is an essential element of a contract. Signup and view all the answers

To legally place a revolving sign nine feet high when an ordinance restricts signs to three feet above the roof, one must get a?

Variance Signup and view all the answers

If the seller accepts a buyer's offer of $250,000 which includes a $1,000 earnest money check, is it a binding contract?

Yes, because the contract contained the consideration of her $250,000. Signup and view all the answers

The clause stating a broker will provide a list of names post-listing termination represents what type of clause?

An extender or broker protection clause. Signup and view all the answers

What federal tax rule BEST applies to a homeowner selling a home?

The homeowner may exclude the payment of the capital gains tax if the homeowner has lived in the home two out of the last five years and the exclusion does not exceed the government allowance. Signup and view all the answers

A percentage lease would MOST likely be negotiated in all the following spaces EXCEPT?

A duplex. Signup and view all the answers

What is the major difference between a short sale and a foreclosure?

Is a lender process, while the foreclosure is a legal process. Signup and view all the answers

All the following are grounds for actual eviction EXCEPT?

The lessor's breach of the lease. Signup and view all the answers

When Roger gave a life estate to his mother and named Brian as remainderman, the transfer of property to Jayce is valid as long as?

The mother is alive. Signup and view all the answers

An agent can call a For Sale by Owner (FSBO) on the Do Not Call List if the agent?

Has a buyer interested in seeing the property. Signup and view all the answers

Which of the following is NOT a type of foreclosure?

Redemption Signup and view all the answers

A provisional broker sells another firm's listing for $150,000 with a commission rate of 6.5%. What is the amount the broker would ultimately receive?

$2,632.50. Signup and view all the answers

Which statement regarding agency contracts is TRUE?

II Only Signup and view all the answers

All the following activities require a license EXCEPT?

Purchase of an investment property by a Limited Liability Company where seller pays a commission to the LLC. Signup and view all the answers

Which of the following would NOT be deemed a material fact for disclosure?

The previous owner was murdered in the home. Signup and view all the answers

According to the North Carolina Square Footage Guidelines, which statement is CORRECT regarding calculating living area?

It is not a requirement that the living area have a cooling system. Signup and view all the answers

Which statement is FALSE regarding the standard NCAR/ NCBA Offer to Purchase and Contract?

A party that is acting in good faith can delay settlement up to 10 days. Signup and view all the answers

Is it accurate that all firms are required to hold a firm license?

No. A sole proprietorship is the only form of ownership that would not require a separate firm license. Signup and view all the answers

Regarding designated agency, which of the following statements is CORRECT?

I only Signup and view all the answers

When handling funds in a real estate transaction, which statement is TRUE?

An earnest money deposit in cash must be deposited into the trust account immediately but no later than 3 banking days from receipt. Signup and view all the answers

If a non-provisional broker fails to complete continuing education on time, which statement is CORRECT about activating their license?

The broker must complete 8 hours of continuing education to request license activation. Signup and view all the answers

A married couple purchasing a property without noted title takers will take title as?

Tenancy by the Entirety Signup and view all the answers

What best describes the wooden board attached to the roof rafters and wall studs?

Sheathing Signup and view all the answers

Which statements are TRUE regarding the disclosure of a bonus to the selling agent?

Both I and II Signup and view all the answers

In which scenario would a provisional broker representing a buyer violate license law?

The agent designated for seller reveals the seller's upcoming foreclosure notice. Signup and view all the answers

Which of the following are NOT considered responsibilities of the broker-in-charge?

Enforcing marketing strategies for the firm's properties. Signup and view all the answers

Study Notes

Real Estate Concepts and Definitions

Fee Simple: Ownership that is inheritable, transferable, for an indefinite duration, and has no conditions imposing limitations on the title. Variants include fee simple absolute and fee simple determinable.
Radon: A recognized human carcinogen and is not confined to any geographical area; it can be found in homes across the U.S.
Listing Agreements: An exclusive agency listing allows owners to sell their property independently while still using a broker's services, distinguishing it from exclusive right-to-sell agreements.
Zoning Regulations: Bulk zoning guidelines may limit development density; in this case, only two houses per acre were permissible, conflicting with the developer's plan for five homes per acre.
Property Disclosure: Misrepresentation in property disclosures can lead to actual damages being charged against sellers, particularly if they fail to disclose significant property changes.

Real Estate Risks and Regulations

Lead Exposure: The primary source of lead poisoning in homes is old alkyd oil-based paints, particularly those in homes built before 1978.
Adjusting Appraisals: When determining property value, adjustments are made to comparable properties, not the subject property itself.
Right of Redemption: After foreclosure, a borrower retains a statutory right of redemption, allowing them to reclaim their property.
Anti-Discrimination Laws: The Civil Rights Act of 1866 specifically prohibits racial discrimination in property transactions. Actions like redlining occur when lenders deny loans based on neighborhood demographics.

Financial and Contractual Insights

Commission Payments: Typically, brokers receive their commission at the closing of a transaction, which can be negotiated and is not fixed by federal regulations.
Funding: Homeowners insurance is crucial in protecting against property destruction and liabilities, while underwriting assessments consider income stability, credit history, and net worth to determine loan viability.
Contract Types: An executed contract means all parties have fulfilled their obligations, while bilateral contracts bind both parties to perform respective duties.

Property Management and Agency Relationships

Real Estate Agency: Relationships can vary; a property manager acts as a general agent for the owner, a buyer’s agent may have a fiduciary relationship, while transaction brokerage does not create any fiduciary obligations.
Material Facts: Certain facts, like outstanding special assessments, must be disclosed to buyers without representation, ensuring fairness in real estate transactions.
Syndication: When investors pool resources for real estate investment, it is known as syndication, which allows collective investment strategies.

Legal Considerations in Real Estate

Contracts to be Written: Contracts related to property transactions must typically be written to be enforceable, with exceptions like short-term leases in residential settings.
Covenant Types: General warranty deeds include specific covenants providing guarantees about the title, excluding restrictions which are not categorized as covenants.
Right of First Refusal: An arrangement allowing a neighbor to propose a purchase should the property owner decide to sell is termed a right of first refusal, providing certain preemptive rights.

These notes encapsulate essential elements of real estate knowledge relevant for brokers, focusing on ownership types, regulations, financial considerations, and contractual obligations.### Definition of Contracts

Void contracts are unenforceable and create no legal obligations.
Voidable contracts can be canceled at the option of the aggrieved party.
A valid enforceable contract has all the necessary elements to be legally binding.

Capital Gains

A capital gain is a taxable profit realized from selling or exchanging an asset.
Gains are classified as long-term if the asset is held for more than six months.

Real Estate Offers

A seller may reject a full-price offer, but the broker's commission is still owed.
Offers require unqualified acceptance to constitute a valid contract.

Zoning Ordinances

To exceed height restrictions set by ordinances, one must apply for a variance.

Binding Contracts

A real estate offer with earnest money becomes binding if accepted by the seller.

Broker Agreements

Brokers must provide a list of potential buyers within 14 days of termination, as outlined by an extender or broker protection clause.

Home Sale Tax Rules

Homeowners can exclude capital gains tax if they've lived in the home for two out of the last five years, subject to government allowances.

Lease Negotiations

Percentage leases are most common in retail scenarios, not typically used for duplexes.

Short Sales vs. Foreclosures

Short sales involve lender approval but differ from foreclosures, which are legal processes.

Eviction Grounds

A lessor's breach of lease is not a valid reason for a tenant's actual eviction.

Life Estates

A life estate transfer remains valid only while the grantor is alive.

Do Not Call List

An agent can call a FSBO on the Do Not Call List if they have a buyer interested in the property.

Types of Foreclosure

Redemption is not classified as a type of foreclosure.

Broker Commissions

A provisional broker entitled to a specific commission can calculate their earnings from sale values and distribution percentages.

Agency Contracts

Agency contracts do not always need to be in writing from the start; there are provisions to disclaim measurements.

License Requirements

Several real estate activities necessitate a license, except for certain transactions involving family members.

Disclosure Obligations

Material facts that must be disclosed include non-structural issues but typically exclude specifics such as past crimes by the previous owner.

Square Footage Guidelines

In North Carolina, living area may include spaces without cooling systems but with a height of at least 7 feet.

Offer Agreement Terms

Contracts generally require that a buyer may delay earnest money up to a specified number of days after agreement execution.

Real Estate Firm Licenses

All firms, except sole proprietorships, must hold a firm license.

Designated Agency

Designated agency is permissible when agents do not hold private information about transactions.

Handling Funds in Real Estate

Earnest money must be delivered to brokerage and deposited in a trust account within regular banking days.

Continuing Education Requirements

Brokers must complete a minimum number of continuing education hours to reactivate a lapsed license.

Buyers and Title Ownership

Married couples in North Carolina will generally take title as Tenants by the Entirety unless specified otherwise.

Property Construction Terms

Roof rafters with attached plywood or boards constitute sheathing, critical for structural integrity.

Disclosure of Bonuses

Agents must disclose bonuses that affect the buyer during negotiations, ensuring transparency.

Agency Violations

Disclosing sensitive information undermines fiduciary duties and may constitute a violation of agency laws.

Lease Agreements

Landlords cannot charge additional pet deposits for service animals due to legal protections.

Timeshare Regulations

Timeshares require specific licensing, and deposits are regulated, needing to be held in trust for defined periods.### Timeshare Licensing
A timeshare license is required for listing or selling timeshares.

Taxpayer Relief Act

Under the 1997 Taxpayer Relief Act, qualified closing costs, capital improvements, and special assessments can be added to the basis for calculating capital gains.
Discount points cannot be added to the basis.

Broker and Buyer Representation

A broker must disclose their representation clearly with the seller signing a protection agreement, ensuring proper compensation agreement.
Providing the seller with a copy of the protection agreement outside of the specified 7-day window is a violation of license law.

North Carolina Real Estate Commission

The Governor appoints all members, with requirements ensuring representation from both active real estate professionals and those not involved in the field.
At least three members must possess a broker's license.

Working with Real Estate Agents (WREA) Brochure

Buyers can accept oral buyer agency terms by completing the WREA brochure's acknowledgment section.
A broker must review the WREA brochure with the prospective buyer before discussions about the purchase.

Advertisements by Real Estate Agents

Only advertisements that include a clear identification of the agent's firm comply with legal standards.
An advertisement for a condo with specific attributes complies, while one without proper identification does not.

NCAR/NCBA Standard Offer to Purchase

The due diligence fee becomes the seller's property once the contract is effective.
The buyer can receive earnest money refunds only under certain conditions specified in the contract.

Maximum Non-Housing Debt Calculation

A household with a yearly income of $82,000 can have a maximum non-housing debt of $580 when calculated using conventional financing ratios.

Property Value Estimation

The estimated probable selling price range for property valued at $272,000, considering comparable properties and adjustments for positive and negative features, is between $275,000 and $279,000.

Special Assessments Responsibility

The seller is responsible for paying confirmed special assessments before the settlement of the sale.

Excise Tax Payment Responsibility

The seller is required to pay excise tax based on the selling price, calculated by dividing by $500 and rounding up.

Monthly Tax Liability Calculation

For a home assessed at $202,400 with a combined tax rate of $1.27, the monthly tax liability equals $214.21.

Construction Terminology

The term "sill" refers to the lowest wooden member in home construction.

Closing Costs for FHA Loan

For the closing of a home purchased at $325,000 with an FHA loan, the buyer's total amount due at closing, after accounting for various debits and credits, is approximately $16,158.

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