NC Agency Contracts (Sales) and Related Practices

Question 1

A home has a guesthouse out back with a kitchen, bath, and bedroom. The size is about 600 square feet. How should it be reported per the North Carolina Real Estate Commission guidelines?

A)
List it as “additional space,” but do not combine it with the house’s square footage
B)
Add it to the house’s square footage
C)
All of these; no set guideline
D)
Not shown at all

Answer 1

A)
List it as “additional space,” but do not combine it with the house’s square footage

Explanation
The guideline is to report the square footage of the guesthouse separately. It is not part of the main house.

Reference: Agency Contracts (Sales) and Related Practices

Question 2

If the first substantial contact with a prospective seller or buyer occurs by telephone or other electronic means that make it impractical to give the person the written brochure, the licensee is required to mail or otherwise transmit a copy of the Working with Real Estate Agents Disclosure form in no event later than

A)
7 calendar days.
B)
5 calendar days.
C)
10 calendar days.
D)
3 calendar days.

Answer 2

D)
3 calendar days.

Explanation
The disclosure form must be transmitted no later than three calendar days to the prospect. The agent should review the disclosure form at the earliest possible time of meeting the prospect. However, if first substantial contact occurs during the initial conversation, the agent is still required to review the content and concepts of the disclosure form and then follow that up with providing the contact the disclosure form within three calendar days.

Reference: Agency Contracts (Sales) and Related Practices

Question 3

When must a nonexclusive buyer agency relationship be reduced to writing?

A)
Before prequalifying the buyer
B)
Before showing the buyer properties
C)
Before presentation of the first offer
D)
Before writing an offer for the buyer

Answer 3

C)
Before presentation of the first offer

Explanation
The rules allow nonexclusive buyer agency to be verbally established first; the agency agreement must be reduced to writing before presentation of the first offer.

Reference: Agency Contracts (Sales) and Related Practices

Question 4

If an agent in North Carolina is working with both the buyer and the seller in the same transaction, is that dual agency?

A)
Only if the agent has representation agreements with both
B)
Yes, always
C)
No, not if the parties said they’d be unrepresented
D)
It’s illegal

Answer 4

A)
Only if the agent has representation agreements with both

Explanation
To be a dual agent, the licensee must have agency agreements with both parties.

Reference: Agency Contracts (Sales) and Related Practices

Question 5

The type of listing in which the broker and the seller are LEAST likely to know the amount of money that will be received as commission for the sale of the property is

A)
an open listing.
B)
a multiple listing.
C)
a net listing.
D)
an exclusive authorization to sell.

Answer 5

C)
a net listing.

Explanation
In a net listing, the broker will receive an amount in excess of an agreed-on sales price. Net listings are legal in North Carolina as long as the agreement meets the requirements of agency agreements. Net listings are not recommended because the commission amount is not an agreed-upon percentage or amount.

Reference: Agency Contracts (Sales) and Related Practices

Question 6

A home being marketed by a real estate broker is located next door to a registered sex offender. In North Carolina, who must disclose this information?

A)
No one must disclose this information.
B)
Both agents are held to disclose this information to any prospective buyer.
C)
The listing agent must disclose this information.
D)
The selling agent must disclose this information.

Answer 6

A)
No one must disclose this information.

Explanation
This is not a material fact in North Carolina.

Reference: Agency Contracts (Sales) and Related Practices

Question 7

In which document can the details of the broker/firm’s commission be found for a sales transaction?

A)
The Residential Property and Owners’ Association Disclosure Statement
B)
The Standard Form 2-T
C)
The Exclusive Right-to-Sell Listing Agreement
D)
The Professional Services Disclosure and Election Form

Answer 7

C)
The Exclusive Right-to-Sell Listing Agreement

Explanation
The listing agreement is the contract between the seller and the firm that outlines the responsibilities of both parties, including the negotiated commission. The standard for 2-T is a prohibited form having any provision regarding the payment of commission to any broker or firm.

Reference: Agency Contracts (Sales) and Related Practices

Question 8

Brokerage commission fees are

A)
always negotiable.
B)
set by the local association.
C)
set by the market.
D)
set by the Commission.

Answer 8

A)
always negotiable.

Explanation
According to the Sherman Antitrust Act, commissions may not be set. License law specifically prohibits the North Carolina Real Estate Commission from setting rates or arbitrating commission disputes.

Reference: Agency Contracts (Sales) and Related Practices

Question 9

A real estate provisional broker might lawfully accept an extra commission in a difficult sale from

A)
a thankful buyer.
B)
a broker-employer.
C)
a mortgage lender.
D)
an appreciative seller.

Answer 9

B)
a broker-employer.

Explanation
A provisional broker cannot receive compensation directly from anyone other than his broker-employer. Although the extra commission may be paid by the principal, it must flow through the broker-employer to the provisional broker.

Reference: Agency Contracts (Sales) and Related Practices

Question 10

Which of the following agency agreements must be in writing at first substantial contact?

A)
Buyer agency agreement
B)
Dual agency agreement
C)
Tenant representation agreement
D)
Listing agreement

Answer 10

D)
Listing agreement

Explanation
All listing agreements in North Carolina must be in writing from their inception. When representing the buyers, dual agency agreements may be oral, but they must be in writing no later than the time of presentation of the first offer. When representing sellers, dual agency agreements must be signed by the sellers when the agent undertakes dual agency.

Reference: Agency Contracts (Sales) and Related Practices

Question 11

A broker may provide for which of the following in an exclusive listing contract?

A)
An automatic continuation of the term of the listing beyond the final termination date specified in the contract
B)
Permission to post a sign on the property being listed
C)
Permission to conceal presence of radon
D)
Permission for the licensee to show the listing only to U.S. citizens

Answer 11

B)
Permission to post a sign on the property being listed

Explanation
Courts do not favor automatic extension provisions in listings, especially because many unsophisticated sellers end up having to pay two commissions. For example, an owner thinks the 90-day listing has expired and so signs a new listing with broker B. When B finds the buyer, A also claims a commission under the earlier exclusive listing that had never been canceled in writing by the owner. Radon is a material fact the broker must disclose to the buyer.

Reference: Agency Contracts (Sales) and Related Practices

Question 12

A listing agent is listing a house and needs to know the square footage. What is the MOST accurate means of determining square footage?

A)
Listing agent needs to measure the house personally
B)
By consulting tax records
C)
By asking the seller
D)
By checking the previous listing agreement

Answer 12

A)
Listing agent needs to measure the house personally

Explanation
If the listing agent uses any other number and it is wrong, then the North Carolina Real Estate Commission will consider that the listing agent did not use reasonable efforts and the listing agent can be disciplined. Although the North Carolina Real Estate Commission does not require an agent to report square footage, if the agent chooses to do so (or is required per the local MLS), then the Commission expects the agent to accurately measure the home.

Reference: Agency Contracts (Sales) and Related Practices

Question 13

An agent will usually be entitled to receive a commission if the agent

A)
presents a written offer to purchase during the term of a valid listing.
B)
holds an exclusive agency listing contract and the property is sold by the seller.
C)
is the procuring cause of the sale.
D)
has an open listing and the property is sold by another broker with an open listing.

Answer 13

C)
is the procuring cause of the sale.

Explanation
The written offer must be either on the listing terms or acceptable to the seller. Note, however, that under an exclusive right-to-sell listing, the listing agent is assured a commission no matter who sells the property or is the procuring cause. An open or exclusive agency listing would require proof of procuring cause. Finally, note that in all cases the agent must have an active license at the time of the offer to receive a commission. Inactive licensees may not act on behalf of others in real estate transactions in North Carolina.

Reference: Agency Contracts (Sales) and Related Practices

Question 14

All written listing agreements in North Carolina must include

A)
a definite period.
B)
a photo of the property.
C)
a listing period of at least 180 days.
D)
an automatic right of renewal.

Answer 14

A)
a definite period.

Explanation
All written listing agreements in North Carolina must include a definite period in which they are valid. Automatic right of renewal is not allowed in North Carolina, except under specific conditions in property management agreements.

Reference: Agency Contracts (Sales) and Related Practices

Question 15

The North Carolina Real Estate Commission residential square-footage guidelines advise the calculation of square footage by measuring

A)
the exterior of the heated, contiguous living areas and subtracting any area that is not adequately cooled by the central HVAC system.
B)
the interior rooms and adding the areas together to obtain the total.
C)
all areas, including decks and porches and other living areas, and adding them to the square footage of the house.
D)
the exterior of the home and subtracting the nonliving areas, such as the garage, from the total.

Answer 15

D)
the exterior of the home and subtracting the nonliving areas, such as the garage, from the total.

Explanation
The exterior of the home minus nonheated areas comprise the square footage; only heated, contiguous living area, including walls, floors and ceilings, finished in like-kind quality and workmanship counts as square footage. There is no requirement in the guidelines for cooling, only heating of the residence.

Reference: Agency Contracts (Sales) and Related Practices

Question 16

The acceptable method for obtaining the square footage of a home is which of the following?

A)
Use what the last listing agent used
B)
Get your assistant to measure it
C)
Use what the seller tells you
D)
Measure it in accordance with the North Carolina Square Footage Guidelines

Answer 16

D)
Measure it in accordance with the North Carolina Square Footage Guidelines

Explanation
Using other’s numbers is not acceptable unless the agent has hired an appraiser to measure for that transaction. Otherwise, the agent must measure it.

Reference: Agency Contracts (Sales) and Related Practices

Question 17

All of the following are requirements for a listing contract EXCEPT

A)
it must be for a definite period of time.
B)
it must include the broker’s license number.
C)
it must be signed by all parties no later than presentation of offers to the seller.
D)
it must include anti-discrimination language.

Answer 17

C)
it must be signed by all parties no later than presentation of offers to the seller.

Explanation
It must be signed at the time of its formation.

Reference: Agency Contracts (Sales) and Related Practices

Question 18

If the North Carolina Residential Property and Owners’ Association Disclosure Statement is delivered to the purchaser before or at the time the purchaser makes an offer, the purchaser

A)
has no right under the law to cancel any resulting sales contract.
B)
can void the contract.
C)
has rights under the law to cancel any resulting sales contract.
D)
can sue the seller.

Answer 18

A)
has no right under the law to cancel any resulting sales contract.

Explanation
The law says that the purchaser does not have the right under the law to cancel any resulting contract after receiving the document within the time frame specified by law.

Reference: Agency Contracts (Sales) and Related Practices

Question 19

A homeowner tells the listing broker he thinks the covenants for his neighborhood have expired. What obligations will the listing broker have for disclosure of this fact?

A)
Ask the seller to truthfully complete the property disclosure and homeowners association addendum. This puts the liability on the seller if the covenants are still in effect.
B)
Ask the seller to contact the homeowners association and ask for copies of all current covenants. The broker can also check public records or ask an attorney to search at the register of deeds for a copy of any recorded documents.
C)
Put on the MLS and other advertising that a buyer’s agent should verify the existence of restrictive covenants.
D)
Tell any prospective buyers that it is their responsibility to find a copy of the restrictive covenants.

Answer 19

B)
Ask the seller to contact the homeowners association and ask for copies of all current covenants. The broker can also check public records or ask an attorney to search at the register of deeds for a copy of any recorded documents.

Explanation
The broker can also check public records or ask an attorney to search at the register of deeds for a copy of any recorded documents. The North Carolina Association of REALTORS®/North Carolina Bar Association, North Carolina’s standard exclusive right-to-sell listing agreement, and the Offer to Purchase and Contract (NCAR/NCBA) all obligate the seller and the listing agent to provide this information to a buyer.

Reference: Agency Contracts (Sales) and Related Practices

Question 20

Which of the following agency relationships may be oral before being reduced to writing?

A)
An exclusive right-to-sell agreement
B)
An exclusive buyer agency agreement
C)
An exclusive agency listing agreement
D)
A nonexclusive buyer agency agreement

Answer 20

D)
A nonexclusive buyer agency agreement

Explanation
Per North Carolina license law, all exclusive agreements must be in writing at the onset of the relationship. An oral buyer agency agreement must be reduced to writing before presentation of the first offer. An oral buyer agency agreement is not exclusive.

Reference: Agency Contracts (Sales) and Related Practices

Question 21

If the firm wishes to bind the buyer to the firm and restrict the buyer, then

A)
an oral buyer agency agreement is allowed.
B)
a written buyer agency agreement is required.
C)
any of these will restrict the buyer.
D)
a dual agency agreement is required.

Answer 21

B)
a written buyer agency agreement is required.

Explanation
An oral buyer agency agreement cannot bind the buyer and firm.

Reference: Agency Contracts (Sales) and Related Practices

Question 22

A recently listed home was the scene of a brutal murder. Who must disclose this information to a prospective buyer?

A)
The listing agent must disclose this information.
B)
No one must disclose this information.
C)
The selling agent must disclose this information.
D)
Both brokers are held to disclose this information to any prospective buyer.

Answer 22

B)
No one must disclose this information.

Explanation
This is not a material fact in North Carolina. A buyer’s agent may disclose if she thinks it will make a difference in the buyer’s decision to purchase.

Reference: Agency Contracts (Sales) and Related Practices

Question 23

A buyer has asked the listing broker if the price of the home is negotiable. What would be the BEST way for the listing broker to respond to the buyer?

A)
The price is very negotiable.
B)
The seller really needs to sell and close by the end of the month.
C)
The seller will not take one cent less than asking price.
D)
I will take the seller any offer you would like me to write up.

Answer 23

D)
I will take the seller any offer you would like me to write up.

Explanation
A listing agent may not insinuate that a price is or is not negotiable without the permission of the principal. Simply offering to write an offer is not a breach of agency responsibilities.

Reference: Agency Contracts (Sales) and Related Practices

Question 24

An agent with a valid listing is generally considered to have earned a commission

A)
only if title is transferred.
B)
only when the principal signs a contract of sale.
C)
when a ready, willing, and able buyer who offers to buy on the principal’s listing terms, or other terms the seller finds acceptable, has been produced.
D)
when an offer has been secured from a prospective buyer.

Answer 24

C)
when a ready, willing, and able buyer who offers to buy on the principal’s listing terms, or other terms the seller finds acceptable, has been produced.

Explanation
Even if the principal decided not to sign, the broker who was the procuring cause may have.

Reference: Agency Contracts (Sales) and Related Practices

Question 25

Which of the following statements about exclusive listings is TRUE? A) An exclusive agency contract can be terminated before the expiration date only by the sale of the property by the listing broker. B) If the property is destroyed, the listing remains active. C) An exclusive right-to-sell listing must be in writing. D) Death of the owner will not terminate the listing.

Answer 25

C) An exclusive right-to-sell listing must be in writing. Explanation North Carolina requires all listing agreements to be in writing. Agency agreements can be terminated by completion (accomplishment) of the agreement, expiration of the terms, mutual agreement, breach by one of the parties, operation of law (such as bankruptcy of the principal), destruction or condemnation of the property, or death or incapacity of either party. Reference: Agency Contracts (Sales) and Related Practices

Question 26

A ranch house is shaped like a rectangle. What would be the MOST likely way an agent would ascertain square footage? A) Use what the MLS provides B) Measure the length and width and multiply them, ignoring unheated areas C) Go inside, measure each room and add for walls D) Measure the outside length and width and multiply them, subtracting unheated areas

Answer 26

D) Measure the outside length and width and multiply them, subtracting unheated areas Explanation While an agent could go inside, measure each room, and add for walls, the most likely way to measure is to pull a tape around on the outside and subtract unheated areas. Reference: Agency Contracts (Sales) and Related Practices

Question 27

The buyer decides not to sign a buyer agency agreement with a firm but wants to see property. The agent must A) refer the buyer to another firm. B) refuse to show the property. C) provide the buyer with the North Carolina Real Estate Commission’s Working with Real Estate Agents Disclosure form and have a meaningful discussion of agency. D) remember to have the Disclosure to Seller's Agent or Subagent form signed at the time of closing.

Answer 27

C) provide the buyer with the North Carolina Real Estate Commission’s Working with Real Estate Agents Disclosure form and have a meaningful discussion of agency. Explanation The North Carolina agency disclosure form must be provided to every buyer and seller at first substantial contact, and a meaningful discussion of agency must follow. The buyer can then tell the agent how he wants to proceed. If the buyer wants representation, that person must be told to sign a buyer agency agreement no later than when an offer is made. It is highly recommended that the agent have a written buyer agency agreement before then. Reference: Agency Contracts (Sales) and Related Practices

Question 28

All written listing agreements in North Carolina must include A) an automatic right of renewal. B) a cancellation clause. C) a disclaimer regarding representations of the agent. D) a definite period.

Answer 28

D) a definite period. Explanation All written listing agreements in North Carolina must include a definite period in which they are valid. Automatic right of renewal is not allowed in North Carolina, except under specific conditions in property management agreements. Reference: Agency Contracts (Sales) and Related Practices

Question 29

If the buyer does not receive the North Carolina Residential Property and Owners' Association Disclosure form before contract, the buyer A) has three days from receipt or three days from contract (whichever occurs first) to cancel. B) cannot cancel the contract. C) has three days from contract to rescind the contract. D) has three days from receipt to rescind the contract.

Answer 29

A) has three days from receipt or three days from contract (whichever occurs first) to cancel. Explanation If the buyer does not receive the North Carolina Residential Property and Owners' Association Disclosure form before contract, the buyer may cancel the contract either by the end of the third calendar day following receipt, the end of the third calendar day following the date of the contract, or before settlement, whichever occurs first. Reference: Agency Contracts (Sales) and Related Practices

Question 30

The North Carolina Real Estate Commission requires that an agency agreement A) specify that the seller pay the real estate commission. B) limit all commissions to no more than 6%. C) include nondiscrimination language as part of the agreement. D) be a standard form that is used by all licensees.

Answer 30

C) include nondiscrimination language as part of the agreement. Explanation All written agency agreements must be for a definite period and have the nondiscrimination language as part of the agreement. (Property management agreements may automatically renew if they meet the guidelines.) There is no state-required agreement form, and all commissions are negotiable. To suggest that commission rates are set or fixed is improper and violates the law. Reference: Agency Contracts (Sales) and Related Practices

Question 31

Which of the following statements is TRUE concerning the North Carolina Residential Property and Owner's Association Disclosure Statement? A) For sale by owners are excluded from this law. B) It is required for all commercial real estate transactions. C) With few exceptions, all sellers are required by law to provide this form to a buyer. D) It is required for new construction, never occupied.

Answer 31

C) With few exceptions, all sellers are required by law to provide this form to a buyer. Explanation The law clearly states that all sellers are required by law to provide this form to a buyer when selling a residential property that has been occupied. For sale by owners are included in this law. The law allows for 11 exceptions, such as a newly constructed home that has never been occupied. Reference: Agency Contracts (Sales) and Related Practices

Question 32

The North Carolina Mineral and Oil and Gas Rights Mandatory Disclosure form is used A) with all transactions. B) on all vacant land. C) every time the North Carolina Residential Property and Owners’ Association Disclosure Statement is used. D) with all of these.

Answer 32

C) every time the North Carolina Residential Property and Owners’ Association Disclosure Statement is used. Explanation There are also three other times the form is used. The form is not required for vacant land or commercial transactions. Reference: Agency Contracts (Sales) and Related Practices

Question 33

Barry has a tract of land in Monroe, North Carolina. It will likely be purchased by a developer who will develop lots and sell to homebuilders to build homes on the site. The Mineral and Oil and Gas Rights Mandatory Disclosure form must be provided to whom by whom? A) Homebuilder must provide to homebuyer B) Barry’s seller must provide to developer C) Developer must provide to homebuilder D) All of these

Answer 33

A) Homebuilder must provide to homebuyer Explanation The MOG disclosure must be given to any buyer of a dwelling, including the first purchase. It is not required for land purchases. Reference: Agency Contracts (Sales) and Related Practices

Question 34

Which of the following buyer agency agreements is allowed in North Carolina? A) All of these B) Exclusive buyer agency agreement C) A buyer agency agreement for a day D) Nonexclusive buyer agency agreement

Answer 34

A) All of these Explanation As long as the agreement conforms to the rules of the North Carolina Real Estate Commission, it can have business terms the parties wish. It can be for a year, six months, one day, et cetera. There is no standard agreement. Reference: Agency Contracts (Sales) and Related Practices

Question 35

A listing agent had a listing under contract. During an inspection, a problem with the air-conditioning unit was discovered. The seller had the unit repaired, but the buyer withdrew during due diligence because his loan fell through. A second buyer purchased the home, and the listing agent said nothing about the previous inspection. The listing agent is guilty of which of the following? A) Willful omission B) The listing agent did not violate NCREC rules C) Willful misrepresentation D) Negligent omission

Answer 35

B) The listing agent did not violate NCREC rules Explanation The unit was repaired and there was nothing to disclose. Reference: Agency Contracts (Sales) and Related Practices

Question 36

A broker is in a hurry, so she persuades the seller to sign a blank listing agreement so she can fill it out in a few days. This is A) a commonly accepted business practice. B) a bad business practice. C) a valid contract. D) a violation of the labor laws.

Answer 36

B) a bad business practice. Explanation It is also a violation of North Carolina Real Estate Commission rules that could lead to disciplinary action by the Real Estate Commission against the agent. The proper practice is to complete the essential portions of the agreement before the seller signs it. Reference: Agency Contracts (Sales) and Related Practices

Question 37

A broker states in his marketing that he will buy a home warranty for any buyer who purchases a home through him. After closing, the broker refuses to buy the home warranty. What can the buyers do in this situation? A) File a complaint for unethical behavior with the North Carolina Association of REALTORS® B) File a complaint with the North Carolina Real Estate Commission for making false promises C) Sue the agent for breach of contract D) Any of these

Answer 37

D) Any of these Explanation Consumers have multiple avenues available to them for complaining about the behavior of a real estate broker. Reference: Agency Contracts (Sales) and Related Practices

Question 38

A buyer purchased a house and later discovered that one of the proposed routes for a new freeway crosses his property. When he confronted his buyer agent, the agent said he had no knowledge of the proposed route, and the listing agent never mentioned it. Which of the following is TRUE ? A) The NCREC could find both the buyer agent and listing agent guilty of a negligent misrepresentation. B) The NCREC could find both the buyer agent and listing agent guilty of a negligent omission. C) The NCREC could find the listing agent guilty of a willful misrepresentation if it discovered he knew about the proposed route. D) The agents were not required to disclose this information because the route is proposed and not confirmed.

Answer 38

B) The NCREC could find both the buyer agent and listing agent guilty of a negligent omission. Explanation The information is easy to discover and both agents should have known. Reference: Agency Contracts (Sales) and Related Practices

Question 39

Ideally, when should an offer be presented to an offeree? A) Immediately B) Within three calendar days C) Within seven business days D) Within three business days

Answer 39

A) Immediately Explanation The rules require presentation "immediately but, in no event, later than five days." Reference: Agency Contracts (Sales) and Related Practices

Question 40

A buyer in North Carolina agreed that her representing firm could accept 4% in commission. A new home just came on the market. The seller is offering a 4% commission plus a $5,000 bonus. Can the buyer's firm receive this bonus? A) Only if the buyer agrees B) No, the buyer agency agreement limited the firm’s compensation to 4% C) Yes, but the firm needs to give the buyer a disclosure of the amount over 4% that the firm will receive D) Yes, the firm need not say anything about it because it’s a bonus, not commission

Answer 40

C) Yes, but the firm needs to give the buyer a disclosure of the amount over 4% that the firm will receive Explanation Once an amount is agreed upon, overages (and underages) must be addressed before the buyer makes a decision. Reference: Agency Contracts (Sales) and Related Practices

Question 41

To be counted as heated square footage of a home, a space must have which of the following? A) All of these B) Be heated by the house’s system(s) C) At least 5 feet of headroom D) Be accessible from the interior of the home

Answer 41

A) All of these Explanation If it doesn't meet these criteria, it can't be counted as additional space. Reference: Agency Contracts (Sales) and Related Practices

Question 42

Failing to advise a principal of an impending zoning change is an example of A) negligent misrepresentation. B) willful misrepresentation. C) willful omission. D) negligent omission.

Answer 42

C) willful omission. Explanation A zoning change is a material fact that must be disclosed to all parties. Failure to disclose is considered an omission. When the broker is aware, this is a willful act. Reference: Agency Contracts (Sales) and Related Practices

Question 43

A broker can accept commissions from both buyer and seller under which of the following conditions? A) Only if both consent after full disclosure B) Only if there is a written listing from both C) Only if the total amount is less than $10,000 D) Under no circumstances

Answer 43

A) Only if both consent after full disclosure Explanation Dual agency is permitted, provided both buyer and seller give their informed consent in writing after full disclosure. Reference: Agency Contracts (Sales) and Related Practices

Question 44

In addition to the Residential Property and Owners' Association Disclosure Statement, what other disclosures must be given on a five-year-old home? A) Lead-based paint disclosure B) None of these C) Sexual offender registry disclosure D) Oil, gas, and mineral rights disclosure

Answer 44

D) Oil, gas, and mineral rights disclosure Explanation Lead-based paint disclosure is for homes built before 1978, and there is no sexual offender disclosure requirement. Reference: Agency Contracts (Sales) and Related Practices

Question 45

If a buyer and an agent agree to an oral buyer agency agreement and before writing the offer to purchase and contract, the buyer wants to make an offer but does not want to sign a buyer's agency agreement as the buyer promised, the agent A) must always write the offer immediately and for all parties to agree to the agency status at closing. B) should not write the offer at that time. C) should immediately tell the buyer that the agent is now a subagent of the seller. D) should document that oral buyer agency was agreed to and have the buyer initial it.

Answer 45

B) should not write the offer at that time. Explanation If the buyer does not sign the buyer agency agreement at the time of the offer, then the agent must obtain permission of all parties for the agent to be a subagent of the seller and disclose confidential information obtained from the buyer to the seller or the seller's agent. The agent cannot present the offer under oral buyer agency. Reference: Agency Contracts (Sales) and Related Practices

Question 46

John represents a buyer in a transaction with a $185,000 sales price. John's firm splits the 7% commission with the listing firm 50/50. John will receive 45% of the firm's 50%. How much commission will John be paid, rounded to the nearest dollar? A) $12,950 B) $2,914 C) $3,561 D) $6,475

Answer 46

B) $2,914 Explanation The answer is $2,914. $185,000 × 7% = $12,950 total commission. $12,950 ÷ 2 = $6,475 firm's share of the commission. $6,475 (× 45% = $2,913.75 John's portion of the firm's share. $2,913.75 rounded to the nearest dollar = $2,914 Reference: Agency Contracts (Sales) and Related Practices > State

Question 47

Regarding reported square footage, if an addition were added to a home without obtaining permits, how should a listing broker report the area? A) Advise the seller that he must, by law, obtain a certificate of occupancy for the area before he can pass clear title, and it cannot be listed until this is done. B) Include the area of the addition in the total reported square footage. North Carolina is a ''caveat emptor'' state, and it is the buyer's responsibility to ensure that all permits were obtained. C) Decline the listing because it cannot be sold with unpermitted space. D) Not include the area of the addition in the total reported square footage and disclose that the area is unpermitted.

Answer 47

D) Not include the area of the addition in the total reported square footage and disclose that the area is unpermitted. Explanation Unpermitted space or additions are a material fact that must be disclosed to all parties. While it is not illegal to sell unpermitted space, the space cannot be included in the total reported square footage. Reference: Agency Contracts (Sales) and Related Practices

Question 48

A bonus room over a garage is partially heated. The roof slopes and some areas have less than 5 feet of headroom. The room can only be accessed by using an outside set of stairs. How much of the bonus room square footage can be counted in with the home? A) Can’t count any of it but can note it in the property description B) The part that has more than 5 feet of headroom and is heated C) The floor area that has headroom of 5 feet or more only D) The part of the room that is heated

Answer 48

A) Can’t count any of it but can note it in the property description Explanation Because one has to go outside to access it, it cannot be counted in with the square footage of the home. Reference: Agency Contracts (Sales) and Related Practices

Question 49

When is it legal for a listing agent to start marketing a listing in North Carolina? A) When the seller gives the OK B) Immediately C) When the listing agent has the listing agreement in place D) Whatever the MLS rules states

Answer 49

C) When the listing agent has the listing agreement in place Explanation Although the agent will need to reach agreement with the seller on when to start, nothing can start until the written listing agreement is in place. Reference: Agency Contracts (Sales) and Related Practices

Question 50

In North Carolina, an oral buyer agency agreement is allowed until A) an offer is presented on the property, at which time the buyer agency agreement must be in writing. B) closing. C) a contract is agreed to by all parties. D) the agent first shows a property.

Answer 50

A) an offer is presented on the property, at which time the buyer agency agreement must be in writing. Explanation An oral buyer agency agreement must be put in writing no later than the time the buyer makes an offer on the property. Although an agent can write an offer under an oral buyer agency agreement, it's unusual to do so because that agency agreement must be reduced to writing before the agent can present the offer. Also, should the buyer refuse to agree to written buyer agency, the agent would have to serve as a subagent of the seller with the permission of all parties. Confidential information known about the buyer would then be reported to the seller. Most buyers would not agree to this. Reference: Agency Contracts (Sales) and Related Practices

Question 51

Which of the following statements about a broker's entitlement to a commission is NOT true? A) The broker must disclose to his principal any compensation, incentive, bonus, or other consideration he will receive from any other party. B) The broker will be entitled to a commission when he produces a ready, willing, and unstable buyer. C) The broker must be actively licensed in North Carolina when the commission is earned. D) The broker may still be entitled to a commission when the seller has a spouse who refuses to sign the deed.

Answer 51

B) The broker will be entitled to a commission when he produces a ready, willing, and unstable buyer. Explanation The broker has earned the commission when he produces a ready, willing, and able buyer. She must disclose to her client any compensation received as a result of the transaction. The broker may be entitled to a commission when the seller cannot produce marketable title because the spouse refuses to sign the deed. A broker must be active when a commission is earned but does not have to be active when the commission is paid. Reference: Agency Contracts (Sales) and Related Practices

Question 52

A broker is holding an open house for a property she listed. In the listing, the seller authorized dual agency. A prospective buyer at the open house approaches the broker and indicates an interest in the property. The broker reviews the Working with Real Estate Agents Disclosure form with the prospective buyer, who signs it. The prospective buyer then tells the broker that she had been working with another broker under an oral buyer agency agreement but that she doesn't like the other agent and doesn't want to work with him anymore. Which of the following is TRUE ? A) The listing agent cannot prepare an offer for this buyer. B) Only the agent who had the oral buyer agency agreement can prepare an offer for this buyer. C) The listing agent cannot prepare an offer for this buyer unless the buyer signs an agency agreement with the listing agent. D) The listing agent can prepare an offer for this buyer with or without an agency agreement with the buyer.

Answer 52

D) The listing agent can prepare an offer for this buyer with or without an agency agreement with the buyer. Explanation The listing agent could be a dual agent or the buyer could be unrepresented. A listing agent may prepare an offer as a customer service. Reference: Agency Contracts (Sales) and Related Practices

Question 53

Per the North Carolina Real Estate Commission Square Footage Guidelines, which of the following would be considered below-grade basement space? A) A split foyer lower level, accessible via a half flight of stairs, with one wall not in contact with the slope of the yard B) The lower level of a split-level home, containing a full bath and bedroom, family and laundry room, accessed by six steps leading down from the main level of the home C) The lower level of a home that is accessible from a full flight of stairs to the first floor, three sides with patio doors to an outdoor patio area, and one wall in contact with the slope of the yard D) A finished garage that has only a painted floor and a space heater instead of carpet and central air-conditioning

Answer 53

C) The lower level of a home that is accessible from a full flight of stairs to the first floor, three sides with patio doors to an outdoor patio area, and one wall in contact with the slope of the yard Explanation A basement is defined as any area accessed by a full flight of stairs that has any area that is below the grade of the yard, even one wall. Reference: Agency Contracts (Sales) and Related Practices

Question 54

If a buyer and an agent have agreed to an oral buyer agency agreement, this agreement is A) exclusive. B) nonexclusive. C) valid through closing. D) valid for only 30 days.

Answer 54

B) nonexclusive. Explanation Oral buyer agency agreements are considered nonexclusive. A buyer must enter into a written buyer agency agreement before an offer is written. Reference: Agency Contracts (Sales) and Related Practices

Question 55

Advising a consumer that her real estate purchase will double in value might result in which charges against the agent? A) Conflict of interest B) Willful misrepresentation and false promises C) Misrepresentation and false promises, conflict of Interest, and attempted fraud D) Willful misrepresentation, practicing law, and incompetence

Answer 55

B) Willful misrepresentation and false promises Explanation Speaking without regard to the facts or the truth is typically regarded as willful misrepresentation and making a false promise. Reference: Agency Contracts (Sales) and Related Practices

Question 56

When measuring a standard two-story brick home, use outside measurements and deduct A) all stairs. B) all of these. C) any space with less than 5 feet of headroom. D) all closets.

Answer 56

C) any space with less than 5 feet of headroom. Explanation Stairs and closets are included as long as they meet the rest of the criteria. Reference: Agency Contracts (Sales) and Related Practices

Question 57

A broker has just signed an exclusive right-to-sell listing agreement with a town house owner. When measuring the square footage of the unit, how should the inaccessibility of the exterior common walls be considered? A) Measure the inside areas and add 12 inches to each measurement to account for the common walls and the interior walls B) Measure the inside areas, factoring that each wall has a depth of 6 inches, and include the walls in the square footage C) Measure the inside areas ''paint-to-paint'' and calculate the interior D) Consult the tax records and the previous MLS sheets to get an average of the estimated area of the unit

Answer 57

B) Measure the inside areas, factoring that each wall has a depth of 6 inches, and include the walls in the square footage Explanation The common walls of a town house are included in the square footage and ownership. A condo owner owns only ''paint to paint.'' North Carolina Real Estate Commission guidelines allow 6 inches for each interior or exterior wall depth. Reference: Agency Contracts (Sales) and Related Practices

Question 57

To count space in a home as heated living floor space, it must be A) all of these. B) finished. C) meant for a living area. D) heated and cooled by a conventional system.

Answer 57

A) all of these. Explanation Rooms heated with space heaters and unheated rooms will not be included. Reference: Agency Contracts (Sales) and Related Practices

Question 58

To establish a firm legal contract between a broker and a seller, the prudent broker must A) file a suit in a court of law. B) wait until a buyer is found and then seek to put the listing in written form. C) obtain an oral listing agreement from the seller. D) have the broker’s employment contract (the listing) in writing.

Answer 58

D) have the broker’s employment contract (the listing) in writing. Explanation In North Carolina, listing agreements for all sales transactions must be in writing from their inception. A lawsuit is only necessary in cases where a seller breaches the terms of an enforceable listing agreement. Reference: Agency Contracts (Sales) and Related Practices

Question 59

When would a seller of residential property be exempt from completing a Residential Property and Homeowners Association Disclosure Statement? A) When selling new construction B) When an investor is listing a home that was purchased as a foreclosure that has now been remodeled C) When an investor is selling a home without a real estate company, as a For Sale by Owner D) When a homeowner is selling the property in as-is condition

Answer 59

A) When selling new construction Explanation New construction is exempt from the disclosure requirement. A foreclosure is exempt while owned by a lending institution, not once title has passed. Neither a For Sale by Owner (FSBO) nor an as-is property affects the requirement to complete the form for a buyer's consideration. Reference: Agency Contracts (Sales) and Related Practices

Question 60

A real estate broker has measured the square footage of a home and included it in all marketing. The MOST likely reason the broker has given the square footage of the property is because A) the North Carolina Real Estate Educators Association (REEA) recommends measuring. B) the North Carolina Real Estate Commission mandates square footage. C) the North Carolina Association of REALTORS® mandates that houses be measured. D) some MLS systems will not accept a listing without square footage.

Answer 60

D) some MLS systems will not accept a listing without square footage. Explanation Some multiple listing services will not accept a brokerage listing without the square footage reported; others do not have this requirement. Ultimately, the North Carolina Real Estate Commission mandates that any information, including square footage, a licensee puts out to the public be accurate. Reference: Agency Contracts (Sales) and Related Practices

Question 61

A traditional two-story home has a large staircase. Which is TRUE about the measurement of the stairs? A) There is a standard square-footage number to use that is part of the Appendix C: Residential Square Footage Guidelines. B) Stairs are not part of the heated square footage. C) Include the stairway with the area from which it descends, not to exceed the area of the opening in the floor. D) Each step is measured, and they are added up.

Answer 61

C) Include the stairway with the area from which it descends, not to exceed the area of the opening in the floor. Explanation If the opening for the stairway exceeds the length and width of the stairway, deduct the excess open space from the upper-level area. Reference: Agency Contracts (Sales) and Related Practices

Question 62

A written buyer agency agreement may be A) signed at closing. B) automatically renewed. C) for an indefinite period. D) exclusive or nonexclusive.

Answer 62

D) exclusive or nonexclusive. Explanation Written buyer agency agreements may be either exclusive or nonexclusive. Reference: Agency Contracts (Sales) and Related Practices

Question 63

In North Carolina, soliciting another broker's exclusive client A) is all of these. B) is not illegal per se but could lead to legal action. C) could be a violation of the REALTOR® Code of Ethics. D) could result in a commission dispute.

Answer 63

A) is all of these. Explanation If someone is exclusively listed with another broker, a broker interfering with the arrangement could be sued for tortious interference of a contract. If a buyer or a seller ends up with two brokers for the same transaction, there will likely be some dispute on payment. If the broker is a REALTOR® and the clients are represented exclusively by another REALTOR®, then it could be a violation of Article 16 of the REALTOR® Code of Ethics. Reference: Agency Contracts (Sales) and Related Practices

Question 64

A home has a huge bonus room over the garage. Under which conditions can it be counted and added to the home's square footage? A) It must be heated by a conventional system. B) It must be finished and directly accessible from inside the home. C) It must have a certain percentage of the ceiling height 7 feet or more. D) All of these.

Answer 64

D) All of these. Explanation Also, space less than 5 feet must not be counted because it is dead space. Reference: Agency Contracts (Sales) and Related Practices

Question 65

Oral buyer agency agreements are A) either exclusive or nonexclusive. B) nonexclusive. C) used up until closing. D) exclusive.

Answer 65

B) nonexclusive. Explanation Under an oral buyer agency agreement, the buyer may work with other agents or the buyer's own. Reference: Agency Contracts (Sales) and Related Practices

Question 66

A property sold for $260,000. The listing firm received 50% of the total commission, and the listing broker received 60% of the firm's share. If the listing broker received $3,900, what was the commission rate? A) 7% B) 6% C) 5% D) 4%

Answer 66

C) 5% Explanation $3,900 ÷ 60% = $6,500 firm's share of the commission. $6,500 ÷ 50% = $13,000 total commission. $13,000 ÷ $260,000 = 0.05 or 5% Reference: Agency Contracts (Sales) and Related Practices

Question 67

An agent will usually be entitled to receive a commission if the agent A) holds an exclusive agency listing contract and the property is sold by the seller. B) is the procuring cause of the sale. C) has an open listing and the property is sold by another broker with an open listing. D) presents a written offer to purchase during the term of a valid listing.

Answer 67

B) is the procuring cause of the sale. Explanation The written offer must be either on the listing terms or acceptable to the seller. Note, however, under an exclusive right-to-sell listing, the listing agent is assured a commission no matter who sells the property or is the procuring cause. An open or exclusive agency listing would require proof of procuring cause. Finally, note that in all cases the agent must have an active license at the time of the offer to receive a commission. Inactive licensees may not act on behalf of others in real estate transactions in North Carolina. Reference: Agency Contracts (Sales) and Related Practices

Question 68

A two-story home has a finished third floor. How would the areas occupied by the stairs be reported, or calculated, when computing the home's square footage? A) The area under the stairs, as well as the staircases, is included on each floor. No deduction is made. B) The area under the first-floor stairs is included, but the third-floor staircase is subtracted. C) The area under the stairs counts on each level, but the actual staircase is subtracted from each level from which it descends. D) The area under both flights of stairs is subtracted.

Answer 68

A) The area under the stairs, as well as the staircases, is included on each floor. No deduction is made. Explanation No deduction is made. Per the North Carolina Real Estate Commission Square Footage Guidelines, if you can walk on it, it is included. This means the stairwell is included in the same way that the dead space behind walls, duct work areas, mechanical areas, and closets are included. Reference: Agency Contracts (Sales) and Related Practices

Question 69

When a provisional broker enters into a listing contract as an agent of a broker, the provisional broker must do all of the following EXCEPT A) give a copy of the listing contract to the broker with whom the provisional broker is associated. B) execute the contract by signing the broker's name. C) carefully explain all the terms of the contract to the seller. D) give a copy of the listing contract to the owner.

Answer 69

B) execute the contract by signing the broker's name. Explanation The provisional broker should not sign using the broker's name unless authorized, in writing, by the broker to do so. The subagent does sign the listing contract using his own name acting as a representative of the firm, but it is important to remember that it is the firm that is the agent of the seller. Reference: Agency Contracts (Sales) and Related Practices

Question 70

A broker meets with a seller regarding listing a home. While at the listing appointment, the broker decides that he wishes to purchase the property. What would be the MOST appropriate statement to the owner? A) The market is really declining in your area. What is your absolute bottom line on this house? B) We don't need to put this on the market. What do you owe on the house? C) I may be interested in purchasing your home; perhaps we should speak to an appraiser. D) Based on my market analysis, I believe the value of your home is $212,500.

Answer 70

C) I may be interested in purchasing your home; perhaps we should speak to an appraiser. Explanation Brokers are not allowed to call a market analysis a value of the home, only the estimated sales price range. The other answers are a breach of agency responsibility to the seller. A broker may purchase the listing; however, to avoid a conflict of interest, the broker should make certain the seller is aware of the value of the property (i.e., hire an appraiser). A broker could then make an offer to the seller and purchase the property. Reference: Agency Contracts (Sales) and Related Practices

Question 71

Regarding financial agreements made by the client during contract negotiations, the agent A) is ethically bound to see that all contracts express the specific written agreement of parties concerning the details of the transaction. B) need not see that those agreements are put in writing. C) may delegate this responsibility to the sales manager. D) is limited to setting the sales price and brokerage fee.

Answer 71

A) is ethically bound to see that all contracts express the specific written agreement of parties concerning the details of the transaction. Explanation Practically speaking, in most states the parties rely on the broker, not an attorney, to protect them in their contract negotiations, especially regarding the financial commitments of the transaction (purchase contract terms, such as price, financing, contingencies). Licensees have a duty to make sure that all contracts express the specific agreement of the parties in writing. The statute of frauds requires sales contracts to be in writing to be enforceable in a court of law. Reference: Agency Contracts (Sales) and Related Practices

Question 72

A real estate broker may NOT collect a commission if A) charging a 13% commission on raw land. B) the broker fails to give the owner a copy of the listing at the time it is signed. C) charging more than 6% commission on residential land. D) the commission is earned while on inactive license.

Answer 72

D) the commission is earned while on inactive license. Explanation There is no limit on the amount of commission. Under most state license laws, the broker must give the owner a copy of the listing at the time it is signed. Failure to do so usually will not affect the right to a commission, but it might result in suspension or revocation of the license. Reference: Agency Contracts (Sales) and Related Practices

Question 73

A home is pretty standard except for a two-story foyer. How can this home be measured? A) Use outside measurements and subtract the missing second-story foyer B) Use an industry average C) Pace it off D) Measure all rooms, halls, et cetera, and add 2 inches for all exterior walls

Answer 73

A) Use outside measurements and subtract the missing second-story foyer Explanation The recommended way is to use outside measurements and subtract the missing second-story foyer, but if the person measuring does not think that will work, all rooms, halls, et cetera can be measured and 6 inches added for all exterior walls. Reference: Agency Contracts (Sales) and Related Practices

Question 74

An unheated basement is 700 square feet. How would that be counted in the square footage of the home? A) It would not be counted but could be noted in the property description. B) It would be added to the home’s square footage. C) Only half of it could be counted in the home’s square footage. D) If it has windows and a door, it can be counted.

Answer 74

A) It would not be counted but could be noted in the property description. Explanation It needs to be heated to be counted in the home's square footage. Reference: Agency Contracts (Sales) and Related Practices

Question 75

A real estate firm is marketing a new neighborhood without disclosing that many of the lots are within the floodplain and will require flood insurance. Which of the following would be subject to disciplinary action by the North Carolina Real Estate Commission? A) The broker-in-charge and all brokers at the listing firm B) The broker-in-charge of the listing firm C) The broker-in-charge and any broker at the firm who sells one of the subject homes D) The broker-in-charge, all brokers at the listing firm, and the developer of the neighborhood

Answer 75

C) The broker-in-charge and any broker at the firm who sells one of the subject homes Explanation The broker-in-charge is responsible for all advertising by the firm. Any broker that was a party to the withholding of information would also be subject to action by the North Carolina Real Estate Commission. The North Carolina Real Estate Commission has no jurisdiction over developers, unless they also have a real estate license. Reference: Agency Contracts (Sales) and Related Practices

Question 76

The listing agent had a listing under contract. During an inspection, small crack in the foundation was discovered. The buyer withdrew during due diligence because his loan fell through. A second buyer purchased the home, and the listing agent said nothing about the previous inspection. Which of the following is TRUE ? A) The listing agent is guilty of a willful omission. B) The listing agent is guilty of a negligent omission. C) The listing agent was not required to disclose the results of the previous inspection because that was not the reason the first deal did not close. D) The listing agent is guilty of a willful misrepresentation.

Answer 76

A) The listing agent is guilty of a willful omission. Explanation Once discovered, all material facts must be disclosed by the broker. The broker was silent about a known material fact. This is a willful omission. Reference: Agency Contracts (Sales) and Related Practices

Question 77

Which method of obtaining the square footage of a home is acceptable? A) Use what the previous appraiser used B) Use what the seller tells you C) Get your assistant to measure it D) Hire an appraiser to measure it for you

Answer 77

D) Hire an appraiser to measure it for you Explanation Using other's numbers is not acceptable unless the agent has hired an appraiser to measure. If the agent reports the square footage, the agent is responsible for the accuracy of the measurement even if someone else provided the numbers. Reference: Agency Contracts (Sales) and Related Practices

Question 78

When determining which properties to show to a buyer, when must a buyer's agent disclose that one of the properties has a $300 bonus? A) Disclosure must be made before to showing the property. B) Disclosure must be made before closing. C) No disclosure is required because the bonus is less than $500. D) No disclosure is required.

Answer 78

A) Disclosure must be made before to showing the property. Explanation The buyer's agent would want to make sure to give verbal disclosure before the buyer sees the house. The disclosure must be in writing before presentation of the first offer. Reference: Agency Contracts (Sales) and Related Practices

Question 79

In listing and marketing real property, it is important for the licensee to do all of the following EXCEPT A) select a closing attorney. B) determine who is in actual possession of the property. C) where possible, check the survey stakes and boundaries. D) obtain the signature of the seller(s).

Answer 79

A) select a closing attorney. Explanation By locating the stakes, the licensee might discover obvious encroachment problems. The licensee also should ascertain if parties in possession, if any, are just tenants, or if they might be claiming some superior title to the premises. Selecting an attorney should be left to the buyer, the seller, or both. Reference: Agency Contracts (Sales) and Related Practices

Question 80

In North Carolina, when can a broker represent both the buyer and the seller in the same transaction? A) When the broker tells both B) When both parties agree in writing C) When the broker assigns an agent to work with each of them D) Never

Answer 80

B) When both parties agree in writing Explanation Representing both sides is dual agency and is allowed only when both parties understand and agree in writing. The broker must have informed consent. Reference: Agency Contracts (Sales) and Related Practices

Question 81

In order to cancel a real estate contract under the North Carolina residential property and owner's disclosure law, the purchaser must, within time requirements of the law, give written notice to the A) the closing attorney. B) the purchaser's agent. C) the North Carolina Real Estate Commission. D) the owner or the owner’s agent.

Answer 81

D) the owner or the owner’s agent. Explanation Delivery may occur with the owner, with the owner's agent, or both. Reference: Agency Contracts (Sales) and Related Practices

Question 82

A property has a playhouse in the backyard, which has electricity. How would that square footage be counted? A) It would be added only if it was within 50 feet of the house. B) It would not be counted, but the playhouse could be noted in the property description. C) It would be counted only if there was a heating unit in the playhouse. D) It would be added into the primary residence’s square footage.

Answer 82

B) It would not be counted, but the playhouse could be noted in the property description. Explanation It could be measured and reported separately. In order to be counted as heated living area square footage, it must meet the criteria in the Appendix C: Residential Square Footage Guidelines. Reference: Agency Contracts (Sales) and Related Practices

Question 83

Which of the following statements is TRUE? A) The broker should present the first offer and then wait until that is accepted or rejected before presenting the next one. B) A listing broker can tell a prospective buyer that the seller will accept less than the asking price if the seller will, in fact, accept the lower figure. C) The broker must present all offers as soon as the broker receives them. D) A listing broker can refuse to transmit an offer to the seller if she thinks it is too low.

Answer 83

C) The broker must present all offers as soon as the broker receives them. Explanation A broker cannot quote a price less than the price authorized by the seller (usually the listing price), even though the broker knows the seller will accept less. The broker has a duty of undivided loyalty and should encourage the buyer to make an offer, which the broker will transmit to the seller. The broker must transmit all offers (not just the high ones), and let the seller make the final decision. Reference: Agency Contracts (Sales) and Related Practices

Question 84

In North Carolina, square footage of a home is measured A) total interior dimension. B) room to room. C) from the exterior. D) because it is required by the North Carolina Real Estate Commission.

Answer 84

C) from the exterior. Explanation Although the North Carolina Real Estate Commission does not require the measurement of heated living area, many local MLS systems do require it. Further, if an agent does measure a home, the agent is expected to use the accepted practices for measurement and accurately measure the home. Reference: Agency Contracts (Sales) and Related Practices

Question 85

If a broker does not provide full disclosure and obtain informed consent of all parties in a dual agency situation in North Carolina, the consequences include all of the following EXCEPT A) a fine by the North Carolina Real Estate Commission. B) rescission of the sales contract. C) filing a suit for damages in a court of law. D) forfeiture of the commission.

Answer 85

A) a fine by the North Carolina Real Estate Commission. Explanation The North Carolina Real Estate Commission cannot fine a broker; it can only fine a time-share developer. Reference: Agency Contracts (Sales) and Related Practices

Question 86

A broker knows of a plumbing problem in the property being shown but tells the prospective buyer that all systems are working properly. The agent is probably guilty of A) negligent omission. B) willful misrepresentation. C) negligent misrepresentation. D) willful omission.

Answer 86

B) willful misrepresentation. Explanation The broker had information that was a material fact and intentionally lied to the buyer. An agent has an affirmative duty to discover and disclose material facts to all parties. Reference: Agency Contracts (Sales) and Related Practices

Question 87

A provisional broker has decided to change firms. Which of the following is TRUE in regard to the provisional broker's listings? A) The provisional broker is free to take her listings with her, if the seller is wishing to go. B) The provisional broker's current listings will be transferred to the new company. C) The existing broker-in-charge may keep all the provisional broker's listings and refuse to pay the provisional broker for any pending business. D) Before moving her license, the provisional broker should book any new listings at the new company and finish any current listings.

Answer 87

C) The existing broker-in-charge may keep all the provisional broker's listings and refuse to pay the provisional broker for any pending business. Explanation All listing agreements belong to the brokerage firm, not specific brokers. Reference: Agency Contracts (Sales) and Related Practices

Question 88

Which of the following would NOT be included with the house's heated square footage? A) None of these B) Area added onto home that is heated by house’s second system, properly permitted, and finished like the rest of the home C) Finished lower level area heated and cooled by the house’s main system with 9-foot ceilings D) Finished room over the garage with 8 feet of head room, accessible only from the outside

Answer 88

D) Finished room over the garage with 8 feet of head room, accessible only from the outside Explanation The issue here is the accessibility from the outside. To be counted with the home's heated square footage, it must be accessible from the inside of the home. Reference: Agency Contracts (Sales) and Related Practices

Question 89

A provisional broker is showing a property listed by her broker-in-charge. Which of the following agency options are available in this scenario? A) Nonexclusive buyer representation, if the firm practices dual agency B) Subagency of the seller by the provisional broker C) Exclusive buyer representation, if the firm practices designated agency D) Subagency of the buyer by the broker-in-charge

Answer 89

B) Subagency of the seller by the provisional broker Explanation A provisional broker cannot be designated to negotiate opposite her broker-in-charge, nor can she be a buyer's agent if the firm only practices dual agency. Reference: Agency Contracts (Sales) and Related Practices

Question 90

The buyer decides not to sign an exclusive buyer agency agreement with a firm but wants to see property. The agent must A) refer the buyer to the listing agent of the property. B) provide the buyer with the North Carolina Real Estate Commission’s Working with Real Estate Agents Disclosure form and have a meaningful discussion of agency. C) not show property until the agreement is signed. D) remember to have the disclosure to seller's agent or subagent form signed at the time of closing.

Answer 90

B) provide the buyer with the North Carolina Real Estate Commission’s Working with Real Estate Agents Disclosure form and have a meaningful discussion of agency. Explanation The North Carolina agency disclosure form must be provided to every buyer and seller at first substantial contact, and a meaningful discussion of agency must follow. The buyer can then tell the agent how she wants to proceed. If the buyer wants representation, that person must be told to sign a buyer agency agreement no later than when an offer is made. It is highly recommended that the agent have a written buyer agency agreement before then. Reference: Agency Contracts (Sales) and Related Practices

Question 91

If the North Carolina Residential Property and Owners' Association Disclosure form is NOT delivered to the purchaser before or at the same time the purchaser makes an offer, the purchaser has a right to A) all of these. B) cancel the agreement if cancellation is made by the end of the third calendar day following the purchaser's receipt of the disclosure statement. C) cancel before the settlement or occupancy by the purchaser in the case of a sale or an exchange. D) cancel the agreement by the end of the third calendar day following the date the contract was made.

Answer 91

A) all of these. Explanation All three situations are correct. The law clearly states the time of delivery of the document. Note, however, that the buyer must cancel the contract by the date of the event that occurs first. Reference: Agency Contracts (Sales) and Related Practices