NC Real Estate License Law and Commission Rules

Question 1

Three agents from a large firm decide to leave and start their own company. They decide on an LLC structure. All three are brokers. What will they need to do?

A)
All of these
B)
Have a qualifying broker
C)
Appoint a broker-in-charge
D)
Acquire a real estate firm license from the NCREC

Answer 1

A)
All of these

Explanation
To operate as a real estate brokerage company (other than a sole proprietorship), they must first get a firm license. The firm license will require a qualifying broker and a broker-in-charge.

Reference: Real Estate License Law and Commission Rules

Question 2

In North Carolina, all of the following are trust monies EXCEPT

A)
broker’s personal funds covering service charges.
B)
monies for final settlements.
C)
earnest money deposits.
D)
down payments.

Answer 2

A)
broker’s personal funds covering service charges.

Explanation
All the other monies are clients’ monies in a real estate transaction.

Reference: Real Estate License Law and Commission Rules

Question 3

If an applicant for a real estate license has a previous criminal conviction, the North Carolina Real Estate Commission could do all of the following EXCEPT

A)
deny the license of anyone with any criminal conviction of any kind without a hearing.
B)
consider the circumstances of the conviction and request the applicant’s explanation about the situation.
C)
ask the applicant to meet with the North Carolina Real Estate Commission for a character conference.
D)
deny the license application even after the applicant successfully passes the exam.

Answer 3

A)
deny the license of anyone with any criminal conviction of any kind without a hearing.

Explanation
Legislation prohibits the automatic elimination of any applicant based on previous convictions. The North Carolina Real Estate Commission may deny the license application even after the applicant has successfully passed the exam; request a character hearing before deciding whether or not to issue the license; and take into consideration any extenuating circumstances of the conviction.

Reference: Real Estate License Law and Commission Rules

Question 4

To comply with current North Carolina Real Estate Commission Rule .0102 regarding time-shares, there must be a

A)
project broker and a time-share registrar.
B)
project developer and a project broker.
C)
project broker and a broker-in-charge.
D)
broker-in-charge and a registrar.

Answer 4

A)
project broker and a time-share registrar.

Explanation
Current rules call for each time-share project to have a time-share registrar and a project broker.

Reference: Real Estate License Law and Commission Rules

Question 5

Can restrictions be placed on someone’s North Carolina real estate license?

A)
Yes, but only if authorized by North Carolina’s attorney general.
B)
Yes.
C)
Yes, but only for new licensees.
D)
No.

Answer 5

B)
Yes.

Explanation
The NCREC may issue a license with restrictions (the applicant can appeal to the NCREC) and if a current licensee has issues, such as committing a crime or misdemeanor, the NCREC can offer restrictions which allows the licensee to keep their license. Again, the licensee can appeal, and ask for a hearing.

Reference: Real Estate License Law and Commission Rules

Question 6

All of the following require a real estate license in North Carolina EXCEPT

A)
offering to buy for another as agent.
B)
selling one’s own property.
C)
listing property for others as agent.
D)
auctioning real estate.

Answer 6

B)
selling one’s own property.

Explanation
One need not be licensed to sell one’s own property. Agents, acting for another in a real estate transaction, must be licensed.

Reference: Real Estate License Law and Commission Rules

Question 7

An agent in North Carolina was holding an earnest money deposit check on an offer. It was accepted on Thursday. What must the agent do with the check?

A)
Give it to the seller
B)
Give it to the closing attorney
C)
Give it to the broker-in-charge
D)
Deposit it in a trust account within three banking days

Answer 7

C)
Give it to the broker-in-charge

Explanation
Only a broker has a trust account. The broker must deposit it within three banking days of acceptance of a contract. All cash must be deposited immediately but in no event later than three banking days.

Reference: Real Estate License Law and Commission Rules

Question 8

A property owner has five rental properties in Greensboro, North Carolina. His brother lives in one of the properties rent free. In exchange for the free rent, the brother helps with the rental properties. The brother shows properties to prospective tenants, completes preprinted leases, arranges for repairs, collects rents, and generally keeps an eye on the properties. Which of the following is TRUE?

A)
The property manager’s brother does not need a real estate license because he is not being paid a management fee.
B)
The property manager’s brother does not need a license because he is managing fewer than 10 properties.
C)
The property manager’s brother does not need a real estate license because he is a family member, and therefore, the property manager’s brother is covered by the ownership exemption whereby owners can manage their own property without a license.
D)
The property manager’s brother needs a real estate license.

Answer 8

D)
The property manager’s brother needs a real estate license.

Explanation
It is a violation of GS 93 to engage in a brokerage transaction without a license. This is a textbook example of a brokerage activity. The property manager’s brother is being compensated (free rent), for others (his brother), real property (leasing, collecting rent…).

Reference: Real Estate License Law and Commission Rules

Question 9

Which of the following would be legally allowed by a North Carolina real estate broker?

A)
Offer a $100 dinner gift certificate to any of her past clients who send business her way
B)
Pay the closing costs for the buyer of one of her listings, with lender approval
C)
Accept payment from her lender for her annual errors and omissions insurance
D)
Offer a $100 dinner gift certificate to any of her friends who send business her way

Answer 9

B)
Pay the closing costs for the buyer of one of her listings, with lender approval

Explanation
GS 93A and Commission rules allow payment to a broker with an active license or a principal in any transaction in which the broker is a part as long as the lender approves it. North Carolina license law prohibits a broker from paying a referral fee to an unlicensed individual other than a principal in the transaction. The Real Estate Settlement Procedures Act prohibits brokers from receiving kickbacks for referrals to service providers.

Reference: Real Estate License Law and Commission Rules

Question 10

Effective July 2020, how long do active provisional brokers have to complete their postlicensing in North Carolina once licensed?

A)
18 months
B)
Two years
C)
One year
D)
Three years

Answer 10

A)
18 months

Explanation
There is no due date for each course, but all three must be completed within 18 months of original licensure.

Reference: Real Estate License Law and Commission Rules

Question 11

Which of the following is NOT a responsibility of a BIC?

A)
Making sure all advertising is accurate
B)
Supervising all provisional brokers
C)
Ensuring compliance with all trust account requirements
D)
Supervising limited nonresident commercial brokers

Answer 11

D)
Supervising limited nonresident commercial brokers

Explanation
Affiliated broker responsibility does not require a BIC.

Reference: Real Estate License Law and Commission Rules

Question 12

Which of the following is a legal referral fee?

A)
A Johnston County broker sends a buyer to a Wake County broker and asks for a 40% referral fee for referring the buyer to the Wake County broker.
B)
A lender offers to share the expense of an ad with a broker for shared visibility in the ad.
C)
A title company offers to pay annual insurance costs for any broker who uses its services during the year.
D)
A lender offers to pay for one page of advertising for every closing a broker does with it.

Answer 12

A)
A Johnston County broker sends a buyer to a Wake County broker and asks for a 40% referral fee for referring the buyer to the Wake County broker.

Explanation
If the lender has equal visibility, it is simply shared advertising. North Carolina license law prohibits a broker from paying a referral fee to an unlicensed individual other than a principal in the transaction. The Real Estate Settlement Procedures Act prohibits brokers from receiving kickbacks for referrals to service providers.

Reference: Real Estate License Law and Commission Rules

Question 13

Unlicensed assistants of a broker may do all of the following EXCEPT

A)
show rental property to prospective tenants, complete and sign preprinted lease forms, and collect rents.
B)
enter information provided by the broker into the MLS.
C)
agree to a prospective tenant’s suggestion to reduce the monthly rent by $100 if the tenant cuts the grass every week.
D)
schedule showings for property listed by the broker.

Answer 13

C)
agree to a prospective tenant’s suggestion to reduce the monthly rent by $100 if the tenant cuts the grass every week.

Explanation
Unlicensed W-2 employees of a broker doing property management may not negotiate lease price or terms.

Reference: Real Estate License Law and Commission Rules

Question 14

In North Carolina, if a broker-in-charge fails to renew his license by June 30,

A)
he will be fined.
B)
he can pay a fee and be immediately reinstated as broker-in-charge.
C)
he has a 30-day grace period.
D)
he will have to renew his license but will not be broker-in-charge until he meets the current requirements.

Answer 14

D)
he will have to renew his license but will not be broker-in-charge until he meets the current requirements.

Explanation
He will start all over again meeting the broker-in-charge requirements.

Reference: Real Estate License Law and Commission Rules

Question 15

Which of the following statements about broker-in-charge education courses is TRUE?

A)
If the broker-in-charge attends the GENUP in January, and he is designated as BIC in February, he will not be required to take the BICUP until after July 1.
B)
Brokers-in-charge must attend both the BICAR and BICUP courses each year.
C)
All brokers-in-charge must attend the 12-hour Broker-in-Charge course within 120 days of designation as a BIC, as well as take the Basic Trust Account Procedures course every four years.
D)
Brokers who are broker-in-charge eligible must take both the GENUP and BICUP mandatory update courses each year to keep their BIC-eligible status.

Answer 15

A)
If the broker-in-charge attends the GENUP in January, and he is designated as BIC in February, he will not be required to take the BICUP until after July 1.

Explanation
Brokers-in-charge must attend the BICUP and a four-hour elective course each year. Brokers who have declared themselves as a BIC must attend the 12-hour BIC course within 120 days of designation as a BIC. There is no requirement for a BIC to attend the Basic Trust Account Procedures course.

Reference: Real Estate License Law and Commission Rules

Question 16

A North Carolina licensee takes a total of four hours of continuing education and pays the privilege license fee, license renewal fee, and the MLS fees. It is now July 3. What is the status of this person’s license?

A)
None of these
B)
Active
C)
Inactive
D)
Expired

Answer 16

C)
Inactive

Explanation
The licensee will have to make up the four hours of continuing education that were missed from the previous license year, plus take the current year’s continuing education, as well as send in an activation form to get the license back on active status.

Reference: Real Estate License Law and Commission Rules

Question 17

A provisional broker who wants to remain active must do which of the following?

A)
Complete 30 hours of post-licensing classes by June 30 of each year
B)
Complete eight hours of continuing education by June 30 of each year
C)
Pay $45 to the North Carolina Real Estate Commission by June 30 of each year
D)
Complete eight hours of continuing education before the second license renewal

Answer 17

D)
Complete eight hours of continuing education before the second license renewal

Explanation
In order to remain active, a broker is required to complete eight hours of continuing education annually before June 10. The broker is required to start taking the continuing education before the second license renewal. Failure to pay the renewal fee of $40 results in an expired license.

Reference: Real Estate License Law and Commission Rules

Question 18

When is the last day a North Carolina licensee can take continuing education in a license year?

A)
It depends when the license was issued
B)
June 10
C)
December 31
D)
June 30

Answer 18

B)
June 10

Explanation
No continuing education can be offered between June10 and June 30.

Reference: Real Estate License Law and Commission Rules

Question 19

A licensee has just been convicted of a driving while impaired (DWI). According to GS93A, reporting to the North Carolina Real Estate Commission

A)
must be within 30 days of conviction.
B)
should occur as soon as reasonably possible.
C)
must be within 60 days of conviction or pleading guilty.
D)
must be within 10 days of the arrest warrant.

Answer 19

C)
must be within 60 days of conviction or pleading guilty.

Explanation
Criminal convictions must be reported within 60 days.

Reference: Real Estate License Law and Commission Rules

Question 20

North Carolina General Statute 93A states all of the following concerning the North Carolina Real Estate Commission EXCEPT

A)
at least three members cannot be involved in the real estate business, either directly or indirectly.
B)
at least three members must be real estate brokers.
C)
the governor, the speaker of the house, and the president pro tem of the senate each appoint members.
D)
the members serve three-year staggered terms.

Answer 20

A)
at least three members cannot be involved in the real estate business, either directly or indirectly.

Explanation
Two members cannot be licensed as brokers or be involved in the real estate business, either directly or indirectly.

Reference: Real Estate License Law and Commission Rules

Question 21

In North Carolina, brokers must pay their renewal fee by June 30 or their license is

A)
inactive.
B)
on hold.
C)
not affected.
D)
expired.

Answer 21

D)
expired.

Explanation
To keep a current license, brokers must pay the renewal fee by June 30.

Reference: Real Estate License Law and Commission Rules

Question 22

A provisional broker on active status has a friend who is a full broker with a different firm. The full broker has several lots listed in a new subdivision. The provisional broker shows a buyer the lots and tells the buyer they would be a great investment. The buyer decides to purchase three of the lots. At closing, the entire commission is paid to the full broker, and after closing, the full broker pays the provisional broker half of the commission. Which of the following is TRUE?

A)
The full broker could refuse to pay any commission.
B)
The full broker should have paid the money to the provisional broker’s BIC after closing, not directly to the provisional broker.
C)
Because the provisional broker was on active status, he could be paid directly as a “finder’s fee.”
D)
The provisional broker could receive this payment as long as the buyer gave written authorization.

Answer 22

B)
The full broker should have paid the money to the provisional broker’s BIC after closing, not directly to the provisional broker.

Explanation
It is a violation of the NCREC rules to pay a provisional broker directly. The commission must be paid to the BIC of the provisional broker.

Reference: Real Estate License Law and Commission Rules

Question 23

Two firms get into a commission payment dispute over the buyer side of the transaction. Both have current buyer agency agreements. Who cannot help them settle this dispute?

A)
All of these can help
B)
The North Carolina Courts
C)
NCREC
D)
REALTOR® Association if they are REALTORS®

Answer 23

C)
NCREC

Explanation
The NCREC is not permitted to settle disputes regarding commissions between firms. The firms would need to seek help from the court, or, if they are REALTORS®, their REALTORS® Association may be able to help.

Reference: Real Estate License Law and Commission Rules

Question 24

Which of the following statements about a broker-in-charge is TRUE?

A)
Broker-in-charge is a separate type of license required by the NCREC.
B)
No broker may be broker-in-charge at more than one office location at a time.
C)
Two or more firms may never share the same office space with separate brokers-in-charge.
D)
There are two brokers-in-charge at each office in case one gets sick.

Answer 24

B)
No broker may be broker-in-charge at more than one office location at a time.

Explanation
There is no separate license for a broker-in-charge. There may only be one declared broker-in-charge at each office within a firm.

Reference: Real Estate License Law and Commission Rules

Question 25

Time-shares in North Carolina are defined as A) beachfront property. B) at least five periods of use. C) periods lasting five years or less. D) at least five separate periods over five or more years.

Answer 25

D) at least five separate periods over five or more years. Explanation Time-shares are defined as at least five separate periods over five or more years. Reference: Real Estate License Law and Commission Rules

Question 26

Which of the following would need a North Carolina real estate license? A) An auctioneer handling the sale of a family farm and all equipment B) An auctioneer handling the sale of personal property of an heir C) An attorney-in-fact handling the sale of a family member's home D) A trustee handling the sale of a foreclosed property under a deed of trust

Answer 26

A) An auctioneer handling the sale of a family farm and all equipment Explanation An auctioneer in North Carolina also needs a real estate broker license to handle the sale of real estate. Reference: Real Estate License Law and Commission Rules

Question 27

A North Carolina real estate agent wants to place an advertisement. May an agent do so? A) No B) Yes, with the approval of the agent’s broker-in-charge C) Yes, as long as the agent is a REALTOR® D) Yes, but the ad cannot have the agent's name or the name of the firm in it

Answer 27

B) Yes, with the approval of the agent’s broker-in-charge Explanation The advertisement must have the name of the firm. Reference: Real Estate License Law and Commission Rules

Question 28

A change of business location must be reported to the North Carolina Real Estate Commission within A) 180 days. B) 60 days. C) 10 days. D) 30 days.

Answer 28

C) 10 days. Explanation Name or address changes must be reported within 10 days. Reference: Real Estate License Law and Commission Rules

Question 29

An active broker failed to pay renewal fees. Six years later, she wishes to begin using her license again. What are the requirements for reactivating the license? A) Complete all prelicensing courses and exams as though she were never licensed B) Complete 90 hours of post-licensing for license reinstatement C) Complete 16 hours of CE for license reinstatement, including the current year's mandatory update course D) Complete and send a reactivation form to the North Carolina Real Estate Commission requesting reactivation

Answer 29

A) Complete all prelicensing courses and exams as though she were never licensed Explanation The commission typically treats such applicants after a two year lapse as of July 2018. Reference: Real Estate License Law and Commission Rules

Question 30

A broker license on provisional status was issued on August 1, 2022. The provisional broker immediately affiliated with a firm, and the BIC sent the appropriate forms to the NCREC. On June 4, 2023, the provisional broker paid the license renewal fee but did not take any CE. What is the license status on August 2, 2023? A) Current and active B) Current and inactive C) Expired and inactive D) Expired

Answer 30

A) Current and active Explanation CE is required prior to June 10 in the second license renewal year and every active renewal thereafter. Reference: Real Estate License Law and Commission Rules

Question 31

Under which circumstance would it be considered legal for a North Carolina broker to pay or receive money for receiving or making a referral? A) A lender pays monthly MLS fees for any broker that closes three transactions a month with the lender. B) An apartment complex gives its residents a $100 reduction in rent for procuring a new tenant for the complex. C) A real estate broker pays a travel agent for sending a vacation tenant to one of his properties. D) An attorney gives a broker free personal legal services if he schedules at least one closing a month.

Answer 31

C) A real estate broker pays a travel agent for sending a vacation tenant to one of his properties. Explanation The North Carolina Vacation Rental Act allows payment of a referral fee to a travel agent for procuring a tenant, provided that no other acts requiring a real estate license are performed by the travel agent. North Carolina license law prohibits a broker from paying a referral fee to an unlicensed individual other than a principal in the transaction. The Real Estate Settlement Procedures Act prohibits brokers from receiving kickbacks for referrals to service providers. Reference: Real Estate License Law and Commission Rules

Question 32

The requirements to obtain a limited nonresident commercial license in North Carolina include which of the following? A) Passing the North Carolina state-specific part of the exam B) A license in good standing in any state or U.S. territory outside of North Carolina C) A broker-in-charge willing to sponsor the nonresident D) Passing the Intro to Commercial segment of post-licensing

Answer 32

B) A license in good standing in any state or U.S. territory outside of North Carolina Explanation A broker-in-charge is not required, but a sponsoring broker is required to oversee the limited nonresident commercial licensee. Reference: Real Estate License Law and Commission Rules

Question 33

A criminal conviction must be reported to the North Carolina Real Estate Commission within A) 30 days. B) 60 days. C) 180 days. D) 10 days.

Answer 33

B) 60 days. Explanation The North Carolina Real Estate Commission rules do not require reporting of criminal charges, only convictions within 60 days. Reference: Real Estate License Law and Commission Rules

Question 34

A provisional broker writes an offer to purchase for a buyer and receives an earnest money deposit check payable to the escrow agent. What should the provisional broker do with the check? A) Immediately give the check to the escrow agent B) Immediately give the check to the broker-in-charge C) Put the check with the offer in a safe place until the response is received from the seller D) Tell the buyer to hold the check until the offer is accepted

Answer 34

B) Immediately give the check to the broker-in-charge Explanation The North Carolina Real Estate Commission requires the surrender to the broker-in-charge of any funds that come into the provisional broker's possession. Reference: Real Estate License Law and Commission Rules

Question 35

The listing broker can do all of the following with the earnest money deposit EXCEPT A) return the money to the buyer if the seller is unable to provide marketable title. B) deposit the money in the broker's general operating account. C) place it in a client trust account until closing. D) apply it as liquidated damages on buyer's default.

Answer 35

B) deposit the money in the broker's general operating account. Explanation It is commingling to place a client's money in the broker's general account. An earnest money deposit is not essential for a valid contract, but it is customary to show the buyer's good faith and intent to perform. Should the buyer default, the seller may keep the earnest money as liquidated damages. If the seller defaults, the money is returned to the buyer. Note, however, that even with a seller default, the seller would still have to agree and sign the release form before the earnest money could be returned to the buyer. If the buyer performs, it is applied toward the purchase price and reflected on the settlement statement as a credit to the buyer. Reference: Real Estate License Law and Commission Rules

Question 36

Sally is a full broker. She is farming a neighborhood in Raleigh, North Carolina, and using a "recently sold" flyer, showing what has recently sold in the area. What must be in her flyer per NCREC rules? A) Her firm’s phone number B) Her name C) A recent picture of her D) Name of her firm or BIC

Answer 36

D) Name of her firm or BIC Explanation Sally must have the permission of her BIC to advertise. Further, she must have the name of her BIC or her firm in all advertising and everything she says must be accurate and show a true picture. It is up to her and her BIC what else she will put in her flyer. Reference: Real Estate License Law and Commission Rules

Question 37

Which of the following is TRUE ? A) The North Carolina Real Estate Commission provides the standard forms used by most real estate brokers in residential transactions. B) The North Carolina Real Estate Commission advises consumers on their legal rights in real estate transactions. C) The North Carolina Real Estate Commission approves real estate instructors. D) The North Carolina Real Estate Commission is partially funded with excise taxes from the sale of property in the state.

Answer 37

C) The North Carolina Real Estate Commission approves real estate instructors. Explanation The North Carolina Real Estate Commission approves instructors and education providers. Reference: Real Estate License Law and Commission Rules

Question 38

The NCREC requires a broker-in-charge A) at the firm’s principal office and each branch office. B) at each branch office only. C) at the firm’s principal office only. D) on each team within the firm and at the firm’s principal office.

Answer 38

A) at the firm’s principal office and each branch office. Explanation The firm's principal office must have a BIC. Each branch office must also have a BIC. Teams within a firm will work under the BIC at the principal office or the BIC at a branch office. Some teams may also have a BIC. Reference: Real Estate License Law and Commission Rules

Question 39

A provisional broker has just been charged with theft of property from his part-time employer. What reporting requirements by the provisional broker are mandated by the North Carolina Real Estate Commission? A) If convicted, the North Carolina Real Estate Commission must be notified within 60 days of conviction on a form available from the North Carolina Real Estate Commission. B) The charges must be reported within 10 days on a form available from the North Carolina Real Estate Commission. C) The North Carolina Real Estate Commission must be notified within 10 days of conviction or dismissal of the charges. D) The North Carolina Real Estate Commission must be notified within 180 days of final verdict.

Answer 39

A) If convicted, the North Carolina Real Estate Commission must be notified within 60 days of conviction on a form available from the North Carolina Real Estate Commission. Explanation North Carolina Real Estate Commission rules do not require reporting of criminal charges, only convictions within 60 days. Reference: Real Estate License Law and Commission Rules

Question 40

What is the number of real estate commissioners in North Carolina? A) 10 B) 5 C) 7 D) 9

Answer 40

D) 9 Explanation Each term is for three years, and terms are staggered. Seven commissioners are appointed by the governor, one by the North Carolina Senate President Pro Tempore, and one by the North Carolina Speaker of the House. Reference: Real Estate License Law and Commission Rules

Question 41

The purpose of the North Carolina Real Estate Commission is to A) draft approved contract forms. B) protect brokerage firms. C) protect the public. D) set minimum real estate commission amounts.

Answer 41

C) protect the public. Explanation The purpose of the North Carolina Real Estate Commission is to protect the public in real estate transactions in their dealings with licensees. The North Carolina Real Estate Commission may not set commissions or draft contract forms. Reference: Real Estate License Law and Commission Rules

Question 42

A buyer gives a broker an earnest money deposit in cash. When must the earnest money deposit be deposited into the trust account? A) Within three banking days of receipt B) Within five banking days of receipt C) Within five banking days of contract formation D) Within three banking days of contract formation

Answer 42

A) Within three banking days of receipt Explanation All cash monies and all rent received by the firm must be deposited in the appropriate accounts within three days of receipt. Reference: Real Estate License Law and Commission Rules

Question 43

A woman is both a North Carolina licensed appraiser and a North Carolina real estate licensee. She was recently disciplined by the Appraisal Board for an appraisal assignment done improperly. Does she have to notify the NCREC of this? A) No B) Yes C) No, the appraisal board notifies the NCREC D) Only if her appraisal license was suspended or revoked

Answer 43

B) Yes Explanation She must notify the NCREC of disciplinary action from another board or licensing authority. Reference: Real Estate License Law and Commission Rules

Question 44

A North Carolina licensee tells a buyer that a property is served by city water because the licensee sold a property nearby last year, and it was on city water. The property is NOT on city water. The licensee is guilty of A) fraud. B) negligent misrepresentation. C) willful misrepresentation. D) nothing, because it was an honest mistake.

Answer 44

B) negligent misrepresentation. Explanation The licensee was wrong and should have known about the situation. Willful misrepresentation and fraud are deliberate actions. Reference: Real Estate License Law and Commission Rules

Question 45

A buyer wants to see several new homes. The agent has a written buyer agency agreement with the buyer, authorizing his firm to accept compensation from the seller or the seller's agent of 2.5% of the sales price plus a bonus of up to $1,000. The home the buyer likes best is paying cooperating firms 3% plus a $5,000 bonus. How should this be handled in North Carolina? A) The agent’s firm cannot accept commission in excess of that stated in the buyer agency agreement. B) The agent must tell the buyer about the amount of compensation before the buyer makes any decision. C) The agent must tell the buyer about the amount of compensation before closing. D) The agent must tell the buyer about the amount of compensation at closing.

Answer 45

B) The agent must tell the buyer about the amount of compensation before the buyer makes any decision. Explanation The initial disclosure may be oral but it must be in writing before any offer is made or accepted by the buyer. The rules say, "The disclosure may be made orally, but must be confirmed in writing before the principal makes or accepts an offer to buy or sell. Full disclosure must include a description of the compensation, incentive, bonus, rebate, or other consideration including its value and the identity of the person or party by whom it will or may be paid. A disclosure is timely when it is made in sufficient time to aid a reasonable person's decision-making." Reference: Real Estate License Law and Commission Rules

Question 46

A listing broker knows that the previous owner of the listed home died from a heart attack. In North Carolina, the broker must A) say that he does not know the status of the owner. B) disclose the death to all buyers and agents. C) keep the death confidential even if asked. D) disclose honestly if asked.

Answer 46

D) disclose honestly if asked. Explanation It is not required to disclose, but the broker must answer honestly if asked. Reference: Real Estate License Law and Commission Rules

Question 47

The North Carolina Real Estate Commission holds a broker-in-charge responsible for all the following EXCEPT A) supervision of full brokers associated with that office. B) maintenance of trust accounts. C) supervision of unlicensed staff. D) supervision of part-time provisional brokers.

Answer 47

A) supervision of full brokers associated with that office. Explanation The broker-in-charge is responsible for all activities of provisional brokers and staff that are affected by the license law but is not responsible for other brokers, except for advertising and agency agreements and disclosures. Reference: Real Estate License Law and Commission Rules

Question 48

How long is the term of a real estate commissioner in North Carolina? A) Three years B) Four years C) Two years D) One year

Answer 48

A) Three years Explanation Each term is for three years, and terms are staggered. Seven commissioners are appointed by the governor, one by the North Carolina Senate President Pro Tempore and one by the North Carolina Speaker of the House. Reference: Real Estate License Law and Commission Rules

Question 49

To receive compensation in a real estate transaction as an agent in North Carolina, you must A) be a member of an MLS. B) have an exclusive agency agreement. C) have had an active license at the time of the transaction. D) have passed the exam and have an active, expired, or inactive license.

Answer 49

C) have had an active license at the time of the transaction. Explanation You also must have some type of compensation agreement. Reference: Real Estate License Law and Commission Rules

Question 50

The different types of real estate licenses in North Carolina include A) brokers. B) all of these. C) commercial real estate. D) time-share sales.

Answer 50

A) brokers. Explanation North Carolina has only broker licenses, but until certain qualifications are met, a new broker will hold a broker license on provisional status. Reference: Real Estate License Law and Commission Rules

Question 51

Which of the following statements is TRUE regarding time-shares? A) A purchaser must be given 10 days to rescind the contract on a time-share. B) To sell time-shares, a developer must have a real estate license. C) A public offering statement must be given to a purchaser within five days of signing a purchase agreement. D) Selling time-shares requires a real estate license.

Answer 51

D) Selling time-shares requires a real estate license. Explanation A public offering statement must be given before signing the sales contract, and a buyer has a five-day right of rescission. The developer does not need a real estate license, but anyone selling the time-share must have a license. Reference: Real Estate License Law and Commission Rules

Question 52

A licensee must carry her pocket card for all of the following EXCEPT A) for entrance into CE classes. B) to prove to anyone who asks that her license is active. C) for entrance into post-licensing classes. D) to produce it whenever requested by a consumer or a broker-in-charge.

Answer 52

B) to prove to anyone who asks that her license is active. Explanation A pocket card is issued to all current licensees, regardless of whether they are on active status. Reference: Real Estate License Law and Commission Rules

Question 53

A listing broker receives an offer from a buyer's agent on a single family residential home at 5:00 pm on Wednesday, June 25. The offer is written on an NCAR/NCBA standard form 2-T. The offer indicates that an earnest money deposit in the form of a personal check in the amount of $5000 will be paid "five days from the effective date of this contract" and will be held by the listing broker. There is a 45-day due diligence period and a $500 due diligence fee. The sellers sign the offer at 9:30 pm on June 25 and communicate acceptance at 9:00 am on Thursday, June 26. Which of the following is TRUE? A) The earnest money check must be deposited into the listing broker’s trust account no later than Tuesday, July 1. B) The due diligence fee must be deposited into the listing broker’s trust account no later than three banking days from contract acceptance. C) If the earnest money check is delivered on the last day allowed in the contract, the check must be deposited into the listing broker’s trust account no later than Monday, July 7. D) The earnest money check must be delivered to the listing firm no later than Thursday, July 3.

Answer 53

C) If the earnest money check is delivered on the last day allowed in the contract, the check must be deposited into the listing broker’s trust account no later than Monday, July 7. Explanation The buyer had until July 1 to deliver the check because of the five-day clause. The latest of the three banking days would be July 4, but since that is a holiday, and July 5–6 fall on a weekend, the third banking day would be Monday, July 7. Reference: Real Estate License Law and Commission Rules

Question 54

Which of the following would be a legal action by a North Carolina real estate broker? A) Draft a condition to the contract, at the buyer's request B) Pay outside of the closing for repairs to the property C) Pay the closing costs for the buyer of one of its listings, without lender approval D) With lender approval, pay for the buyer's home inspection

Answer 54

D) With lender approval, pay for the buyer's home inspection Explanation GS 93A and North Carolina Commission rules allow payment to any principal in any transaction in which the broker is a part in paying for repairs outside of closing or paying closing costs for the buyer without lender approval. Drafting a condition to the contract constitutes practicing law without a license and is not allowed. Reference: Real Estate License Law and Commission Rules

Question 55

A North Carolina time-share is defined as A) a leasehold periodic estate. B) the right to occupy property a minimum of five times over a minimum of five years. C) the right to occupy a property a minimum of three times over a minimum of three years. D) a freehold estate with conditions subsequent.

Answer 55

B) the right to occupy property a minimum of five times over a minimum of five years. Explanation The definition of a time-share is the right to occupy a property a minimum of five separated intervals over a minimum of five years. Reference: Real Estate License Law and Commission Rules

Question 56

North Carolina Real Estate Commission may do all of the following EXCEPT A) regulate real estate business activities. B) approve real estate instructors. C) fine licensees who violate license law. D) educate the public.

Answer 56

C) fine licensees who violate license law. Explanation The North Carolina Real Estate Commission's powers include regulating real estate business and brokers, educating the public and brokers, and approving real estate schools and instructors. The North Carolina Real Estate Commission may not fine licensees who violate license law. Reference: Real Estate License Law and Commission Rules

Question 57

A time-share developer in North Carolina must A) have a project broker. B) be a licensee. C) obtain a certificate of registration and have a project broker. D) obtain a certificate of registration.

Answer 57

C) obtain a certificate of registration and have a project broker. Explanation The developer need not be licensed but must have a project broker. Reference: Real Estate License Law and Commission Rules

Question 58

A broker license on provisional status was issued on August 1, 2022. The provisional broker immediately affiliated with a firm, and the BIC sent the appropriate forms to the NCREC. On January 24, 2023, the provisional broker took a 30-hour post-licensing class. The provisional broker did not pay the annual renewal fee. What is her license status on August 2, 2023? A) Current and inactive B) Expired and inactive C) Active D) Expired

Answer 58

D) Expired Explanation To maintain an inactive license, you must pay the renewal fee. Reference: Real Estate License Law and Commission Rules

Question 59

A broker wanting to become a broker-in-charge would be required to complete which of the following? A) Experience in all aspects of real estate, including commercial and residential B) 90 hours of post-licensing classes C) An undergraduate degree from an accredited institution D) Two years of full-time experience within the last 10 years

Answer 59

B) 90 hours of post-licensing classes Explanation To become a broker-in-charge, the broker must have successfully completed 90 hours of post-licensing classes and have the equivalent of two years of experience within the past five years, in any aspect of real estate. Reference: Real Estate License Law and Commission Rules

Question 60

An Arizona broker, Jill, wants to help her client purchase commercial real estate in North Carolina. She is with a national firm that has an office in Charlotte. How can she legally practice real estate in North Carolina? A) All of these. B) She can acquire a Limited Nonresident Commercial Broker License. C) She can stay in Arizona and refer her client to a North Carolina licensed broker. D) She can take the state portion of the exam and apply for a North Carolina license.

Answer 60

A) All of these. Explanation If Jill steps into North Carolina to practice real estate, she must have a North Carolina real estate license. There are two ways for her to acquire a license. Another option is for her to refer her client and receive commission or a referral fee. Reference: Real Estate License Law and Commission Rules

Question 61

For each violation of North Carolina Real Estate Commission rules, a time-share developer may be eligible for A) nonrenewal of the project registration by the North Carolina Real Estate Commission. B) any of these. C) revocation of the registration. D) a fine per violation.

Answer 61

B) any of these. Explanation All the statements are powers granted to the North Carolina Real Estate Commission. Reference: Real Estate License Law and Commission Rules

Question 62

When money is deposited in a client trust account, part of which will be used to pay the broker's commission, A) the broker can withdraw her rightful share of the money before the real estate transaction is consummated or terminated. B) all interest belongs to the broker and does not need to be removed from the trust account. C) the broker can recover the advertising expenses of the sale out of this account before closing. D) accurate records must be kept on the account.

Answer 62

D) accurate records must be kept on the account. Explanation The broker cannot withdraw money even though the commission has been earned. The standard Offer to Purchase and Contract does allow the broker to earn interest on monies placed in the trust account, but the interest must be removed at least every 30 days; otherwise it is considered commingling. Reference: Real Estate License Law and Commission Rules

Question 63

A broker is holding an earnest money deposit equal to the amount of the commission. The seller, at the closing, not only refuses to pay the broker a commission, but also demands that the broker pay him the entire deposit. The broker should A) pay the earnest money to the seller and then sue for the commission. B) retain the earnest money as commission. C) refuse to permit the closing of the deal. D) file a complaint with the real estate licensing agency.

Answer 63

A) pay the earnest money to the seller and then sue for the commission. Explanation The broker has a fiduciary duty of obedience and a duty to account for all the client's money. The broker cannot use client monies to set off or satisfy personal claims. A lawsuit may be the only answer. Reference: Real Estate License Law and Commission Rules

Question 64

On the seller's default, what should happen to the earnest money? A) It should be returned to the buyer. B) It should be placed in an escrow fund. C) It belongs to the broker. D) It should be retained by the seller.

Answer 64

A) It should be returned to the buyer. Explanation The earnest money is to protect the seller against the buyer's default. If the seller defaults, the money must be returned to the buyer. However, the seller will still have to sign the release form to return the monies to the buyer. If the seller refuses, the firm must hold the monies until both the seller and the buyer have resolved their dispute or follow NCREC trust account guidelines regarding turning monies over to the clerk of court. If the buyer elects to sue the seller for specific performance, the money will most likely be held in escrow. Reference: Real Estate License Law and Commission Rules

Question 65

A buyer makes an offer with a $2,500 earnest money deposit. The seller makes a counteroffer. The buyer sees another property and decides to pursue it. Which is TRUE in North Carolina? A) If the seller objects, the broker must hold the earnest money until the parties agree. B) The seller can decide to accept the buyer's first offer, thus creating a binding contract. C) The seller gets the $2,500 because the buyer withdrew. D) The buyer is entitled to the return of the $2,500 immediately.

Answer 65

D) The buyer is entitled to the return of the $2,500 immediately. Explanation There is no contract. The counteroffer by the seller rejected the buyer's offer and that offer is no longer valid. The buyer is under no obligation to continue negotiations. Reference: Real Estate License Law and Commission Rules

Question 66

A broker who fails to pay a renewal fee to the North Carolina Real Estate Commission would result in his license becoming A) expired. B) reprimanded. C) suspended. D) inactive.

Answer 66

A) expired. Explanation The only way to maintain a current license is to pay the renewal fee. Reference: Real Estate License Law and Commission Rules

Question 67

Which of the following would need a North Carolina real estate license? A) An investor who gives advice to friends, assists in negotiations on properties, and is paid a finder's fee on properties they purchase B) An advisor who recommends real estate as an investment C) An unpaid friend offering to negotiate the sales price of a home D) An investor selling property deeded in his name who asks the listing brokerage for a portion of the commission

Answer 67

A) An investor who gives advice to friends, assists in negotiations on properties, and is paid a finder's fee on properties they purchase Explanation Anyone offering to negotiate the sale of real estate for others for compensation needs a license. Reference: Real Estate License Law and Commission Rules

Question 68

A change of name must be reported to the North Carolina Real Estate Commission within A) 180 days. B) 60 days. C) 30 days. D) 10 days.

Answer 68

D) 10 days. Explanation Name or address changes must be reported within 10 days. Reference: Real Estate License Law and Commission Rules

Question 69

Which of the following is exempt under North Carolina Real Estate licensing laws? A) Individuals selling their own home B) A limited partner selling the limited partnership’s property C) A member of an LLC selling the LLC’s property D) None of these

Answer 69

A) Individuals selling their own home Explanation Individuals need not be licensed to sell their own property. Reference: Real Estate License Law and Commission Rules

Question 70

What is the requirement for retaining copies of all contracts and documentation related to the sale of a time-share? A) The three-year retention period begins at the date of the last activity in the transaction. B) The three-year retention period begins at closing. C) The five-year retention period begins at contract formation. D) The five-year retention period begins at the date of the last activity in the transaction, whether closed or not.

Answer 70

A) The three-year retention period begins at the date of the last activity in the transaction. Explanation The statute for record retention for time-shares is three years from the date of the last activity in the transaction. Reference: Real Estate License Law and Commission Rules

Question 71

A limited nonresident commercial license in North Carolina would be beneficial to which of the following? A) A licensee from another state wishing to assist a commercial client with North Carolina purchases B) A North Carolina licensee wishing to do commercial real estate in other states C) A resident of another state wishing to do commercial real estate in North Carolina D) A licensee from another state wishing to assist residential buyers in North Carolina

Answer 71

A) A licensee from another state wishing to assist a commercial client with North Carolina purchases Explanation The limited nonresident commercial license is available to an active licensee from any other state or U.S. territory as long as it is obtained before coming to North Carolina. Reference: Real Estate License Law and Commission Rules

Question 72

Which of the following is exempt from licensing requirements in North Carolina? A) Attorney-in-fact B) Trustee C) All of these D) Guardian

Answer 72

C) All of these Explanation All of these are acting in place of a principal, and a principal need not be licensed to handle his own real estate transactions. Reference: Real Estate License Law and Commission Rules

Question 73

A North Carolina broker's unlicensed assistant violates a real estate license law. What can happen? A) The head of the firm will be disciplined. B) The broker will be disciplined. C) Nothing. The rules do not pertain to assistants. D) The assistant will be disciplined.

Answer 73

B) The broker will be disciplined. Explanation The broker is responsible for supervision of unlicensed people under the broker's control. Reference: Real Estate License Law and Commission Rules

Question 74

Unlicensed assistants may do which of the following tasks for their property manager? A) Prepare and explain operating budgets to the property owner B) Show rental units to prospective tenants C) Explain the pretax cash flow estimate of the apartment building to investors D) Show rental homes to prospective investor buyers

Answer 74

B) Show rental units to prospective tenants Explanation Unlicensed assistants may show rentals and answer the phones, but they cannot attempt to market, negotiate leases, or perform any other activity requiring a real estate license. Reference: Real Estate License Law and Commission Rules

Question 75

Which of the following statements about trust accounts is TRUE? A) Trust accounts are for holding money belonging to others. B) All of these. C) No one who has funds in the account has access to the account. D) The terms trust account and escrow account are synonymous for Commission purposes.

Answer 75

B) All of these. Explanation The trust account, or escrow account, is for holding other people's money. No person who has money in the account will have access to the account. Reference: Real Estate License Law and Commission Rules

Question 76

The North Carolina Real Estate Commission has the power to do which of the following? A) Require brokers to reimburse sellers for lost funds B) Determine the validity of contracts C) Settle disputes between brokerage firms D) Set minimum requirements for real estate contract forms

Answer 76

D) Set minimum requirements for real estate contract forms Explanation The North Carolina Real Estate Commission has the power to set requirements for real estate contract forms. The North Carolina Real Estate Commission may not settle disputes between brokers, determine whether a contract is valid, or require brokers to reimburse members of the public. Reference: Real Estate License Law and Commission Rules

Question 77

For violating GS93A, which of the following are TRUE ? A) The North Carolina Real Estate Commission could revoke a license, fine the licensee, and seize his commissions as restitution for the victims. B) If sued, the agent automatically loses his license and has to pay for court costs. C) The North Carolina Real Estate Commission could revoke a license. If sued, the licensee could face monetary damages. You don’t face criminal charges if you get sued. D) The court system can revoke the license, fine the licensee, and send the broker to prison.

Answer 77

C) The North Carolina Real Estate Commission could revoke a license. If sued, the licensee could face monetary damages. You don’t face criminal charges if you get sued. Explanation If sued, the licensee could face monetary damages. You don't face criminal charges if you get sued. The North Carolina Real Estate Commission can revoke a license, but it cannot fine a licensee. The court system may fine a licensee or provide for incarceration of a licensee. Reference: Real Estate License Law and Commission Rules

Question 78

The members of the North Carolina Real Estate Commission A) are appointed to serve three-year terms. B) are replaced with every new administration, to serve four-year terms. C) elect a new chairperson every eight years. D) are state employees.

Answer 78

A) are appointed to serve three-year terms. Explanation The nine members are not employees but are appointed to serve three-year terms, electing a new chairperson annually. Reference: Real Estate License Law and Commission Rules

Question 79

An inactive broker has just gotten married, changed her name, and moved. What notification, if any, must be made to the North Carolina Real Estate Commission? A) No notice is required until the licensee goes back to active status. B) No address change must be reported, but a name change must be reported within 10 days. C) Notice of the new name and address must be sent within 10 days. D) Notice must be sent within 30 days of both changes.

Answer 79

C) Notice of the new name and address must be sent within 10 days. Explanation All changes must be reported within 10 days, whether the broker is active or inactive. Reference: Real Estate License Law and Commission Rules

Question 80

Examples of trust money include A) tenant security deposits, rents, and homeowner association dues and assessments. B) homeowner association dues and assessments, earnest money deposits, and interest earned on the trust account. C) parking fees in apartment complexes, rents, and tenant security deposits. D) earnest money deposits, parking fees in apartment complexes, and interest earned on the trust account.

Answer 80

A) tenant security deposits, rents, and homeowner association dues and assessments. Explanation Interest earned on the trust account and parking fees in apartment complexes go into the firm's operating account. The trust account is to be reconciled at least every 30 days and any interest earned must be moved to the operating account. Reference: Real Estate License Law and Commission Rules

Question 81

Under which conditions may a North Carolina agent put a For Sale sign in an owner's yard? A) With permission from the owners B) With a written listing agreement, signed by the buyers C) With permission from the neighbors D) With a written listing agreement signed by the sellers

Answer 81

D) With a written listing agreement signed by the sellers Explanation A North Carolina agent is prohibited by rule from placing a For Sale or For Rent sign on a property without an agreement signed by the sellers. Reference: Real Estate License Law and Commission Rules

Question 82

Which statement is false regarding a time-share developer? A) A time-share developer must pay a renewal fee for the time-share registration. B) A time share developer must register the time-share with the North Carolina Real Estate Commission before offering any sales to the public. C) A time-share developer must pay a fine of 10% of the purchase price, up to $3,000, to a purchaser who is not given a public offering statement before signing a sales contract. D) A time-share developer must hold the earnest money deposit in escrow for five days to allow the buyer time to rescind before the funds are transferred into the operating account.

Answer 82

D) A time-share developer must hold the earnest money deposit in escrow for five days to allow the buyer time to rescind before the funds are transferred into the operating account. Explanation Earnest money deposits must be held in escrow for 10 days to allow time for rescission. Reference: Real Estate License Law and Commission Rules

Question 83

How much continuing education is required in North Carolina? A) None, if the licensee is a REALTORS® B) Eight hours every year C) Depends upon the type of license D) Four hours per year

Answer 83

B) Eight hours every year Explanation The eight hours consists of the four-hour update course and four hours of state-approved electives. Reference: Real Estate License Law and Commission Rules

Question 84

Under North Carolina Real Estate Commission rules, the time clock for retention of real estate records begins from the date of A) settlement. B) first substantial contact. C) last activity in the file. D) contract.

Answer 84

C) last activity in the file. Explanation The time clock starts at the date of last activity. Reference: Real Estate License Law and Commission Rules

Question 85

An unlicensed salaried assistant of a real estate broker is responsible for soliciting listings for the broker. Is this acceptable in North Carolina? A) No, this activity requires a real estate license. B) No, only the broker-in-charge may solicit listings. C) Yes, that is what an assistant is for. D) Yes, as long as the broker does not pay the assistant a commission.

Answer 85

A) No, this activity requires a real estate license. Explanation Soliciting listings is one of the activities requiring a real estate license. Reference: Real Estate License Law and Commission Rules

Question 86

A real estate license applicant applying for a North Carolina real estate license must complete all educational requirements, pass the license exam, and be A) registered to vote. B) 21 years of age. C) a resident of North Carolina. D) 18 years of age.

Answer 86

D) 18 years of age. Explanation There is no state residency requirement, but the applicant must be a U.S. citizen, a noncitizen national, or a qualified alien under federal law; at least 18 years of age; and have a Social Security number. Reference: Real Estate License Law and Commission Rules

Question 87

When provisional brokers leave a firm, what happens to their license status in North Carolina? A) It is on hold. B) It is not affected. C) It is inactive. D) It is expired.

Answer 87

C) It is inactive. Explanation The provisional broker must have a broker-in-charge to remain active. Reference: Real Estate License Law and Commission Rules

Question 88

Which of the following is exempt under North Carolina real estate licensing laws? A) None of these B) A member of an LLC selling the LLC’s property C) A managing member selling the LLC’s property D) A limited partner selling the limited partnership’s property

Answer 88

C) A managing member selling the LLC’s property Explanation A person need not be licensed to sell their own property and the managing member is considered the owner. The managing member is the one so named in the LLC's document and who is typically responsible for the day-to-day operations of the LLC. Reference: Real Estate License Law and Commission Rules

Question 89

North Carolina law allows for criminal penalties for which of the following activities related to time-shares? A) Building time-shares without first registering the project with the North Carolina Real Estate Commission B) Closing time-shares without first registering the project with the North Carolina Real Estate Commission C) Selling time-shares without first registering the project with the North Carolina Real Estate Commission D) Offering time-shares without first registering the project with the North Carolina Real Estate Commission

Answer 89

D) Offering time-shares without first registering the project with the North Carolina Real Estate Commission Explanation Offering to sell time-shares without first registering with the North Carolina Real Estate Commission is a felony. Reference: Real Estate License Law and Commission Rules

Question 90

A licensee must notify the North Carolina Real Estate Commission (NCREC) of A) a change of address within 10 days. B) sales volume her first calendar year as a licensee. C) all traffic tickets received each license year. D) a name change within 30 days.

Answer 90

A) a change of address within 10 days. Explanation A licensee must notify the NCREC within 10 days of change in name, address, or trade name. Reference: Real Estate License Law and Commission Rules

Question 91

The North Carolina Real Estate Commission is authorized to issue a fine in which of the following situations? A) A broker with an inactive license continues to sell real estate. B) A bookkeeper embezzles trust account funds from the broker-in-charge. C) A broker fails to explain the Working with Real Estate Agents Disclosure form to a consumer before first substantial contact. D) An unlicensed time-share developer violates Commission rules.

Answer 91

D) An unlicensed time-share developer violates Commission rules. Explanation The only entities that the North Carolina Real Estate Commission is empowered to fine are time-share developers. Reference: Real Estate License Law and Commission Rules

Question 92

How many real estate commissioners does the North Carolina governor appoint? A) Nine B) Seven C) Three D) Five

Answer 92

B) Seven Explanation Each term is for three years, and terms are staggered. Seven commissioners are appointed by the governor, one by the North Carolina Senate President Pro Tempore, and one by the North Carolina Speaker of the House. Reference: Real Estate License Law and Commission Rules

Question 93

May a North Carolina real estate licensee working for a firm accept compensation from another firm? A) Yes, only if the licensee is a full broker and it is with the consent of the licensee's broker-in-charge. B) Yes, if it is under $50. C) No, a licensee may not accept compensation from another firm. D) Yes, only if listed in the MLS.

Answer 93

A) Yes, only if the licensee is a full broker and it is with the consent of the licensee's broker-in-charge. Explanation If the licensee is a provisional broker, all compensation must be paid through the broker-in-charge. A broker may receive compensation from another firm with the consent of the broker's broker-in-charge. Reference: Real Estate License Law and Commission Rules

Question 94

A firm in North Carolina manages several residential rentals plus seven residential homeowners associations. How many trust accounts must they have? A) Eight accounts B) One account C) Two accounts—one for rentals and one for the HOAs D) One account for each rental and one account for each HOA

Answer 94

A) Eight accounts Explanation One for each homeowners association and one for the rentals equals eight total accounts. Reference: Real Estate License Law and Commission Rules

Question 95

A broker-in-charge of an office stepped down to have more time to care for an ill relative. The broker-in-charge is still an active broker with the firm and wants to resume broker-in-charge duties in the next 12–18 months. This can be achieved in North Carolina if the broker-in-charge A) serves two years under the current broker-in-charge before reapplying. B) takes eight hours of continuing education when due. C) takes the 12-hour broker-in-charge course before being named broker-in-charge again. D) keeps a current license and takes the BIC Update and an elective.

Answer 95

D) keeps a current license and takes the BIC Update and an elective. Explanation To remain a BIC, the BIC must take the correct update: the Broker in Charge Update (BICUP) and an approved elective. The license must also remain in active status. Reference: Real Estate License Law and Commission Rules

Question 96

Which of the following is NOT a requirement to be a BIC? A) Take the BICUP each year B) Have at least two years of full-time brokerage experience after the removal of the provisional status C) Be a nonprovisional broker on active status D) Take the NCREC’s 12 hour broker-in-charge class within 120 days of filing the BIC declaration

Answer 96

B) Have at least two years of full-time brokerage experience after the removal of the provisional status Explanation Active experience as a provisional broker counts as experience to declare as a BIC. Reference: Real Estate License Law and Commission Rules

Question 97

A broker's unlicensed real estate assistant may be rewarded for his work by getting paid with a A) $100 bonus for each house that the broker sells. B) base salary plus 0.25% of the commissions for every month the broker sells three or more houses. C) raise in his base salary. D) percentage of the commission that the broker earns on each closing.

Answer 97

C) raise in his base salary. Explanation Unlicensed assistants may not share or be paid any part of a broker's commission; they may only be paid salaries. Reference: Real Estate License Law and Commission Rules

Question 98

Which is TRUE concerning an earnest money deposit? A) It is essential to the contract for the sale of real property. B) It may be kept by the broker as compensation if the offer is accepted. C) It must equal 10% of the purchase price. D) It serves as a source of payment of damages to the seller in case of a buyer's breach.

Answer 98

D) It serves as a source of payment of damages to the seller in case of a buyer's breach. Explanation It is also considered liquidated damages in North Carolina's standard sales contract for residential property. Use of earnest money is both customary and prudent. It is not essential because the buyer's promise to perform is sufficient consideration to support the seller's promise to sell. Reference: Real Estate License Law and Commission Rules

Question 99

Which of the following does NOT meet the North Carolina statutory description of a time-share? A) The right to occupy a beach condo one week a year for the next 15 years B) A non-freehold estate for five weeks during the next six years C) A freehold estate for 10 weeks during the next 10 years D) A vacation bond to occupy a property three times in the next three years

Answer 99

D) A vacation bond to occupy a property three times in the next three years Explanation The definition of a time-share is the right to occupy a property a minimum of five separated intervals over a minimum of five years. Reference: Real Estate License Law and Commission Rules

Question 100

In North Carolina, a licensee's annual renewal card should be A) carried by the licensee while engaging in brokerage activities. B) filed with the North Carolina secretary of state. C) nicely framed to match pictures in the office. D) displayed in public in the office.

Answer 100

A) carried by the licensee while engaging in brokerage activities. Explanation In addition, all licensed real estate entities must display their licenses (or copies) in each office. Brokers-in-charge must display their license in their office. Reference: Real Estate License Law and Commission Rules

Question 101

Which of these is NOT required for a provisional broker to be on active status? A) Take at least one post-licensing class before their first license renewal. B) Take the General Update class and a four-hour elective each year after their first license renewal. C) Pay their license renewal fee each year by June 30. D) Have a BIC.

Answer 101

A) Take at least one post-licensing class before their first license renewal. Explanation Provisional brokers are required to take all three postlicensing courses within 18 months of original licensure, effective July 1, 2020. Reference: Real Estate License Law and Commission Rules

Question 102

A North Carolina licensee was taken to court by an unhappy seller. The court found in favor of the seller. All of the following could occur EXCEPT A) the court could ask the chairman of the North Carolina Real Estate Commission to consider disciplinary action against the licensee. B) the seller could also file a complaint to the North Carolina Real Estate Commission. C) the licensee could be fined. D) the court may revoke the licensee's license.

Answer 102

D) the court may revoke the licensee's license. Explanation The courts cannot revoke a license but can recommend such action to the chairman of the North Carolina Real Estate Commission. Reference: Real Estate License Law and Commission Rules

Question 103

A man just received a letter of inquiry from the North Carolina Real Estate Commission. What should happen next? A) The man is entitled to an attorney and can wait until he hires one to respond. B) The man must respond to any inquiry within 14 days. C) The man can wait until the inquiry becomes a complaint to respond. D) The man must respond to any inquiries within 60 days.

Answer 103

B) The man must respond to any inquiry within 14 days. Explanation He is entitled to an attorney and the attorney can ask for an extension, but the man cannot ignore the inquiry. Reference: Real Estate License Law and Commission Rules

Question 104

In North Carolina, when can you pay a real estate referral fee to someone? A) To any licensee B) Never C) Only to or through an actively licensed broker D) If it is $50 or less

Answer 104

C) Only to or through an actively licensed broker Explanation Only an active licensee may receive real estate referral fees, and all monies should go through the employing broker. You may share commission with the buyer or the seller (who need not be licensed) with proper disclosure to your client, approval from the buyer's lender, and if shown on the settlement statement. Reference: Real Estate License Law and Commission Rules

Question 105

Which of the following is a legal referral fee? A) A North Carolina attorney assists a friend in finding a home and writing and negotiating the contracts and gets paid commissions from the listing agent. B) A California broker brings a client to North Carolina to find a home and asks the buyer to pay a finder's fee. C) A California broker brings a client to North Carolina and assists with finding a property, asking for 50% of the buying side. D) A South Carolina broker sends a buyer to a North Carolina broker and gets paid a percentage of the North Carolina broker’s commission as a referral.

Answer 105

D) A South Carolina broker sends a buyer to a North Carolina broker and gets paid a percentage of the North Carolina broker’s commission as a referral. Explanation A broker with an active license from South Carolina or any state may send a referral to a North Carolina broker and receive a referral fee. An attorney in North Carolina receiving commissions is required to have a broker license if his involvement is outside of his law practice and he is practicing general brokerage. The California broker may not be present in North Carolina to receive payment. If the California broker stayed in California and sent the prospect to North Carolina, a North Carolina broker could pay the California broker a fee. Reference: Real Estate License Law and Commission Rules

Question 106

When must an earnest money check be deposited by the escrow agent? A) Immediately upon receipt of an offer B) Within five business days of offer and acceptance C) Within three business days of receipt of an offer D) Within three business days of contract acceptance

Answer 106

D) Within three business days of contract acceptance Explanation The rules allow an earnest money deposit to be deposited earlier but requires that the funds be deposited within three business or banking days of offer acceptance. Reference: Real Estate License Law and Commission Rules

Question 107

Leslie is a hairdresser who is also a broker-in-charge. She receives many leads from clients who come to her for her hairdresser services. None of her clients have a real estate license. How can she legally thank them? A) None of these. B) Pay them a small fee. C) Give them fee hair services. D) Buy them a gift for each referral.

Answer 107

A) None of these. Explanation A broker cannot give an unlicensed person anything of value for an activity which requires a license. Reference: Real Estate License Law and Commission Rules

Question 108

In North Carolina, when must trust monies be deposited? A) As directed in the sales contract B) No later than three banking days from receipt C) The same day received D) Depends on the type of trust monies

Answer 108

D) Depends on the type of trust monies Explanation Earnest monies must be deposited three days from the date the offer was accepted; security deposits must be deposited three days from the date the lease accepted. All cash and all other trust monies must be deposited no later than three banking days from receipt. Reference: Real Estate License Law and Commission Rules

Question 109

A time-share developer fails to give a purchaser the public offering statement as required by rule. Which of the following could result? A) The buyer could receive funds from the developer, levied by the North Carolina Real Estate Commission as a fine. B) The buyer could receive the time-share for free. C) The buyer could rescind the contract for up to 30 days for unfair and deceptive trade practices. D) The buyer could receive funds from the selling broker, levied by the North Carolina Real Estate Commission as a fine.

Answer 109

A) The buyer could receive funds from the developer, levied by the North Carolina Real Estate Commission as a fine. Explanation The North Carolina Real Estate Commission is empowered to assess a fine against a time-share developer for failure to timely provide the public offering statement. This fine is given to the buyer. Reference: Real Estate License Law and Commission Rules

Question 110

Which of these is NOT a requirement for a person with a limited nonresident commercial license? A) Maintain an active broker license from another U.S. state or territory. B) Have two years of full-time commercial brokerage experience in the previous five years. C) Affiliate with a resident North Carolina broker. D) Only engage in commercial transactions.

Answer 110

B) Have two years of full-time commercial brokerage experience in the previous five years. Explanation There is no experience requirement for nonresident commercial broker. Reference: Real Estate License Law and Commission Rules

Question 111

Interest-bearing trust accounts are A) permissible in North Carolina when the interest is paid to the buyer or the seller. B) none of these. C) permissible in North Carolina when the buyer and the seller are told by letter. D) permissible in North Carolina under certain rules.

Answer 111

D) permissible in North Carolina under certain rules. Explanation The buyer and the seller must agree, and certain disclosures must be made in a clear and conspicuous manner. Reference: Real Estate License Law and Commission Rules

Question 112

A firm has failed to honor the offer of compensation to a cooperating broker. The firm that has not been paid has asked the Commission settle the dispute. In this instance, the North Carolina Real Estate Commission will MOST likely A) act as the counsel for the plaintiff. B) arbitrate the dispute and render a verdict. C) ask the defendant to submit an answer to the complaint. D) not take any action.

Answer 112

D) not take any action. Explanation The Commission is charged with protecting the public and never enters into disputes between brokers or brokerage firms. Reference: Real Estate License Law and Commission Rules

Question 113

A broker must retain copies of all documents in his file A) for a minimum of three years. B) for a maximum of five years. C) forever. D) for a minimum of five years.

Answer 113

A) for a minimum of three years. Explanation Copies of all documentation in transaction files are required to be retained by both the broker and the firm for a minimum of three years from the last activity of any transaction. Reference: Real Estate License Law and Commission Rules

Question 114

A North Carolina licensee is convicted of embezzlement. What may happen to her real estate license? A) She can be fined by the North Carolina Real Estate Commission. B) The North Carolina Real Estate Commission can require the courts to put her in jail. C) She can be disciplined by the North Carolina Real Estate Commission. D) Nothing, if the conviction is not related to a real estate issue.

Answer 114

C) She can be disciplined by the North Carolina Real Estate Commission. Explanation If a licensee has been convicted of certain criminal offenses, the real estate commission has the authority to discipline. The North Carolina Real Estate Commission cannot fine or put one in jail. Reference: Real Estate License Law and Commission Rules

Question 115

A family member has offered to pay another family member a small salary to manage some rental homes. Which of the following activities would require the family member to have a real estate license? A) Showing the properties to prospective buyers or tenants B) Changing air filters and light bulbs as needed C) Selecting the appliances for the kitchen remodel of one of the homes D) Mowing the grass and doing the landscaping as needed

Answer 115

A) Showing the properties to prospective buyers or tenants Explanation Anytime people are acting as brokers and receiving money, they must have a real estate license. The other items are maintenance issues that do not require a license. Reference: Real Estate License Law and Commission Rules

Question 116

Which of these situations would result in an expired license? A) A broker takes two electives for a total of eight hours CE by June 10. B) A broker takes the GENUP and the BICUP. C) A BIC takes the GENUP and the BICUP for a total of eight hours CE before June 10. D) A provisional broker is up to date on all CE and post-licensing requirements, but forgot to pay the renewal fee by June 30.

Answer 116

D) A provisional broker is up to date on all CE and post-licensing requirements, but forgot to pay the renewal fee by June 30. Explanation Failure to pay a renewal fee results in an expired license. Reference: Real Estate License Law and Commission Rules

Question 117

A licensee was convicted of a driving under the influence (DUI). How long does the licensee have to notify the North Carolina Real Estate Commission of this conviction? A) 60 days B) 30 days C) 14 days D) 10 days

Answer 117

A) 60 days Explanation The licensee must send in the details of such a conviction within 60 days. Reference: Real Estate License Law and Commission Rules

Question 118

An agent in North Carolina is asked to deposit an owner's rent proceeds directly into the owner's account. What is the process? A) The agent cannot do this. All monies must first go into the firm’s trust account. B) The agent must sign the appropriate bank documents. C) The agent must ensure it is in the management agreement. D) The agent makes copies of the rent checks before making the deposit.

Answer 118

A) The agent cannot do this. All monies must first go into the firm’s trust account. Explanation All monies must first go into the firm's trust account. Monies of others the agent touches must go into the firm's trust account, even if the owner wants to save a step and have the rent monies go directly into a personal account. Reference: Real Estate License Law and Commission Rules

Question 119

What is the paid salary of North Carolina real estate commissioners? A) $750 per month B) Depends upon their tenure C) $500 per month D) No salary, only a per diem and expenses

Answer 119

D) No salary, only a per diem and expenses Explanation The commissioners are paid a per diem and expenses to attend meetings. Reference: Real Estate License Law and Commission Rules

Question 120

Which of the following is TRUE? A) All other brokers showing the property must have written authority to do so. B) A broker may place a sign on the property without written authority. C) A broker may not advertise the property without the written authorization of the owner. D) A broker must obtain the signatures of all property owners on the buyer agency agreement.

Answer 120

C) A broker may not advertise the property without the written authorization of the owner. Explanation A broker may not advertise the property without the written authorization of the owner. Other brokers may show the property as a subagent of the seller or in acting under an oral or written buyer agreement. Reference: Real Estate License Law and Commission Rules

Question 121

What license is required to legally sell time-shares? A) A North Carolina time-share license B) A North Carolina developer's license C) A North Carolina contractor's license D) A North Carolina real estate broker's license

Answer 121

D) A North Carolina real estate broker's license Explanation A real estate broker's license is required to sell time-shares in North Carolina. Reference: Real Estate License Law and Commission Rules

Question 122

A North Carolina licensee takes the correct eight hours of continuing education and pays the privilege license fee and MLS fees. The licensee does not pay the license renewal fee when due. It is now July 3. What is the status of the licensee's license? A) Current B) None of these C) Expired D) Inactive

Answer 122

C) Expired Explanation The licensee will have to pay a special renewal fee to get the license back on active status. Reference: Real Estate License Law and Commission Rules

Question 123

Which of the following offenses is possible grounds for a disciplinary action on a real estate licensee? A) A listing agent fails to notify a buyer that the new highway will be in the backyard of the home. B) A broker uses outdated forms for a transaction. C) A provisional broker accepts payment for staffing an open house from a broker at another firm. D) Any of these.

Answer 123

D) Any of these. Explanation Using outdated forms is incompetence. A provisional broker is not allowed to accept payment of any kind from any broker except the broker-in-charge. Failing to notify a consumer of a new highway is omission of a material fact. All these situations might lead to revocation. Reference: Real Estate License Law and Commission Rules

Question 124

A provisional broker has just received his digital pocket card in an email. In order for him to now legally begin his new career, which of the following is NOT a legal requirement? A) A broker-in-charge willing to sponsor him B) Join the local board of REALTORS® and become a REALTOR® C) Notification to the North Carolina Real Estate Commission of affiliation with a firm D) No brokerage advertising without the firm's name

Answer 124

B) Join the local board of REALTORS® and become a REALTOR® Explanation There is no legal requirement of REALTOR® status for a licensee to become an active provisional broker. Reference: Real Estate License Law and Commission Rules

Question 125

A provisional broker who wants to have the provisional status removed from her license will be required to have which of the following? A) Two years of full-time experience B) Three years of post-licensing classes C) 90 hours of post-licensing classes D) Three years of experience

Answer 125

C) 90 hours of post-licensing classes Explanation The required 90 hours of post-licensing education may be completed immediately upon receiving a real estate license; however, it must be successfully completed before the broker's 18-month anniversary of licensure, effective July 1, 2020. Reference: Real Estate License Law and Commission Rules

Question 126

A listing broker receives on offer from a buyer's agent on Thursday. The offer includes earnest money in the amount of $1,000 and a check for this earnest money is delivered with the offer. The contract states that the earnest money will be held by the listing broker. The seller signs the offer on Thursday evening, and the listing agent communicates acceptance to the buyer's agent Friday morning. Which of the following is TRUE ? A) The earnest money check must be deposited into the listing broker’s trust account no later than Monday. B) The earnest money check must be deposited into the listing broker’s trust account no later than Wednesday, if the bank is not open on Saturday. C) The earnest money check must be deposited into the listing broker’s trust account on Friday. D) The earnest money check must be deposited into the listing broker’s trust account no later than Tuesday.

Answer 126

B) The earnest money check must be deposited into the listing broker’s trust account no later than Wednesday, if the bank is not open on Saturday. Explanation This is three banking days from acceptance. The day of acceptance is not counted. Reference: Real Estate License Law and Commission Rules

Question 127

On the seller's default, what should happen to the earnest money? A) It should be placed in an escrow fund. B) It belongs to the broker. C) It should be returned to the buyer. D) It should be retained by the seller.

Answer 127

C) It should be returned to the buyer. Explanation The earnest money is to protect the seller against the buyer's default. If the seller defaults, the money must be returned to the buyer. However, the seller will still have to sign the release form to return the monies to the buyer. If the seller refuses, the firm must hold the monies until both the seller and the buyer have resolved their dispute or the firm must follow NCREC trust account guidelines regarding turning monies over to the clerk of court. If the buyer elects to sue the seller for specific performance, the money will most likely be held in escrow. Reference: Real Estate License Law and Commission Rules

Question 128

You received your North Carolina license in February. When will you need continuing education? A) Not until there is disciplinary action against me B) When I renew my license the second time C) Every five years D) When I renew my license the first time

Answer 128

B) When I renew my license the second time Explanation Continuing education is required to renew the second time and every year thereafter. Reference: Real Estate License Law and Commission Rules

Question 129

A sole proprietor who is not a broker in charge may advertise in which of the following ways? A) Explaining to customers in a grocery store line that she can help them with their real estate needs B) None of these C) Putting an announcement on social media that she offers limited real estate services D) Distributing business cards saying she is a real estate broker

Answer 129

B) None of these Explanation A sole proprietor who is not a BIC is prohibited from advertising in any way, including distributing business cards, passing out promotional items, soliciting business in conversations, or posting notices on social media. Reference: Real Estate License Law and Commission Rules

Question 130

In order to have the provisional status removed from their license, brokers must do which of the following? A) Take one post-licensing class each year for the first three years after licensure B) Have at least two years of full-time experience in the previous five years C) Take all three post-licensing courses by the 18-month anniversary of licensure D) Take all three post-licensing courses plus eight hours of CE each year

Answer 130

C) Take all three post-licensing courses by the 18-month anniversary of licensure Explanation To remove provisional status, you must take all three post-licensing courses, in any order and at any time within 18 months of original licensure, effective July 1, 2020. The only requirement to remove provisional status is 90 hours of post-licensing. Reference: Real Estate License Law and Commission Rules

Question 131

A man has been broker-in-charge of his firm since 1998. What type of continuing education must he take to remain in his current position in North Carolina? A) Four-hour General Update and four-hour elective of his choice B) Four-hour BIC Update and four-hour elective C) Four-hour General Update and Code of Ethics course D) Twelve-hour Broker-in-Charge course

Answer 131

B) Four-hour BIC Update and four-hour elective Explanation If the man takes the General Update and an approved elective, he will be renewed as an active broker but no longer the broker-in-charge. Reference: Real Estate License Law and Commission Rules

Question 132

Regarding the North Carolina Real Estate Commission, A) seven of the members are appointed by the governor for a three-year term. B) members are paid a monthly salary, plus expenses. C) there are seven members, all of whom must be active in real estate. D) members are appointed by the North Carolina Association of REALTORS®.

Answer 132

A) seven of the members are appointed by the governor for a three-year term. Explanation There are nine members. A minimum of three must be active in real estate. A minimum of two are to be public members who are not licensed. Seven are appointed by the governor, and two are appointed by the General Assembly. Reference: Real Estate License Law and Commission Rules

Question 133

The annual license renewal fee must be received by the North Carolina Real Estate Commission by midnight on A) December 31. B) June 10. C) the anniversary date of licensure. D) June 30.

Answer 133

D) June 30. Explanation The fee must be received by the North Carolina Real Estate Commission by June 30 or the license expires. The mailbox rule does not apply. Reference: Real Estate License Law and Commission Rules

Question 134

How much personal money may a broker in North Carolina keep in his trust account? A) $100 B) Whatever is necessary to cover service charges on the account each month C) None of these D) None

Answer 134

B) Whatever is necessary to cover service charges on the account each month Explanation The rules say "may deposit and maintain in his trust account a maximum of $100 . . . or such amount as may be required." Reference: Real Estate License Law and Commission Rules

Question 135

A time-share developer has failed to give a prospective buyer a public offering statement as required by law. When was the developer required to give the document to the buyer? A) Anytime from when the property goes under contract but before closing B) After the property goes under contract but before the end of the due diligence period C) Upon first showing and presentation D) Before the buyer signs the purchase agreement

Answer 135

D) Before the buyer signs the purchase agreement Explanation The buyer must be given the public offering statement before signing the sales contract, or the developer may be fined 10% of the purchase price, up to $3,000. Any funds received as a fine are given to the consumer. Reference: Real Estate License Law and Commission Rules

Question 136

What jurisdictional entity can suspend a real estate license? A) North Carolina Real Estate Commission B) Local board of REALTORS® C) Local MLS D) North Carolina Association of REALTORS®

Answer 136

A) North Carolina Real Estate Commission Explanation Only the North Carolina Real Estate Commission has the power to give, or take, a real estate license. Reference: Real Estate License Law and Commission Rules

Question 137

Every purchaser of a time-share in North Carolina must be given A) a three-day right of rescission. B) a free weekend to "try before you buy." C) a guarantee that weeks can be traded at any time. D) none of these.

Answer 137

D) none of these. Explanation The purchaser must be given a five-day right of rescission, a public offering statement, and accurate information on any exchange program. Reference: Real Estate License Law and Commission Rules

Question 138

Provisional broker post-licensing coursework is A) mandatory for all provisional brokers, whether active or inactive, before they may actively sell real estate. B) optional for inactive licensees, unless they wish to become active. C) a mandatory 30 hours of courses that must be completed by June 30 of each year. D) mandatory for all licensees, whether active or inactive.

Answer 138

B) optional for inactive licensees, unless they wish to become active. Explanation The penalty for not completing post-licensing courses by the required deadline is for the provisional broker's license to be placed on inactive status by the North Carolina Real Estate Commission. Reference: Real Estate License Law and Commission Rules

Question 139

Of the statements below, which is not true? A) a travel agent from Michigan calls a vacation rental manager in Wrightsville Beach, North Carolina, and indicates she has clients who are looking for a vacation rental. The travel agent can receive a referral fee. B) a Tennessee broker in Knoxville calls a broker in Asheville, North Carolina. She says she has clients who have just returned from a weekend trip to Asheville. They told her they looked at a property listed with the Asheville broker and they want to submit an offer. The Tennessee broker emails an offer to the broker in Asheville and the sellers accept this offer. The Asheville broker can share her commissions with the Tennessee broker. C) a Virginia broker in Norfolk calls a broker in Kitty Hawk, North Carolina. He says he and his clients have just returned from a weekend trip to Kitty Hawk, and during this trip, they looked at a property listed with the Kitty Hawk broker. The Virginia broker’s clients want to submit an offer. The Virginia broker emails an offer to the broker in Kitty Hawk and the sellers accept this offer. The Kitty Hawk broker can share her commissions with the Virginia broker. D) a South Carolina broker calls a broker in Charlotte, North Carolina, and tells her he has a friend who wants to buy a house in the Charlotte area. The South Carolina broker can receive a referral fee.

Answer 139

C) a Virginia broker in Norfolk calls a broker in Kitty Hawk, North Carolina. He says he and his clients have just returned from a weekend trip to Kitty Hawk, and during this trip, they looked at a property listed with the Kitty Hawk broker. The Virginia broker’s clients want to submit an offer. The Virginia broker emails an offer to the broker in Kitty Hawk and the sellers accept this offer. The Kitty Hawk broker can share her commissions with the Virginia broker. Explanation He says he and his clients have just returned from a weekend trip to Kitty Hawk, and during this trip, they looked at a property listed with the Kitty Hawk broker. The Virginia broker's clients want to submit an offer. The Virginia broker emails an offer to the broker in Kitty Hawk and the sellers accept this offer. The Kitty Hawk broker can share her commissions with the Virginia broker. When an out-of-state broker sets foot into North Carolina, the individual needs a North Carolina license on active status. The Virginia broker should have stayed in Virginia. Reference: Real Estate License Law and Commission Rules

Question 140

When North Carolina licensees move out of state, they must A) get a license in the new state to keep their North Carolina license. B) notify the North Carolina Real Estate Commission of the move within 10 days. C) surrender their North Carolina license if the state they move to does not offer reciprocity. D) pay a special nonresident fee.

Answer 140

B) notify the North Carolina Real Estate Commission of the move within 10 days. Explanation They can be a nonresident licensee and renew the nonresident North Carolina license annually by paying the fee and satisfying the continuing education requirements. Reference: Real Estate License Law and Commission Rules

Question 141

A provisional broker has been avoiding agency disclosure with potential clients and has had a complaint filed against him. Who is subject to disciplinary action from the North Carolina Real Estate Commission? A) The broker-in-charge only B) The experienced agent assigned to train the provisional broker C) The provisional broker only D) Both the broker-in-charge and the provisional broker

Answer 141

D) Both the broker-in-charge and the provisional broker Explanation The broker-in-charge is to actively supervise the provisional broker; this liability cannot be delegated to another experienced broker. Reference: Real Estate License Law and Commission Rules

Question 142

An agent with ABC Realty in North Carolina lists a friend's home. The friend asks the agent to put up a For Sale sign right away. All ABC Realty signs are gone, so the agent uses a sign intended for yard sales by papering over the yard sale part. The sign now reads House for Sale, with the agent's phone number. The agent plans to replace the sign with a company sign as soon as one is available. Is this OK? A) Yes, as long as the sign doesn’t stay up for more than a week. B) No, the sign doesn’t include the name of the agent’s firm. C) Yes, the agent is following the seller’s instructions. D) No, the sign doesn’t have the company’s phone number.

Answer 142

B) No, the sign doesn’t include the name of the agent’s firm. Explanation It is a blind ad—that looks like a For Sale by Owner sign. She can use whichever phone number her broker-in-charge approves. Reference: Real Estate License Law and Commission Rules

Question 143

Under North Carolina Real Estate Commission rules, a broker is required to retain all of the following buyer records EXCEPT A) a Working with Real Estate Agents Disclosure form that the buyer refused to sign. B) an offer written but not accepted. C) an advertisement for a home the buyer wished to preview. D) disclosures received.

Answer 143

C) an advertisement for a home the buyer wished to preview. Explanation Copies of advertising on listings the buyer opted not to buy do not need to be retained. Any offers written and the Working with Real Estate Agents Disclosure form (signed or not) must be retained by both the broker and the firm for three years. Reference: Real Estate License Law and Commission Rules

Question 144

In North Carolina, a broker must have a trust account A) if needed. B) always. C) for every client. D) never.

Answer 144

A) if needed. Explanation A broker must have one if needed and may have more than one. Reference: Real Estate License Law and Commission Rules

Question 145

A developer decides to broker not only his property but properties of others. The developer is not licensed. What can happen to the developer? A) The NCREC can sue the developer. B) The NCREC can fine the developer. C) Nothing; the developer isn’t licensed. D) The NCREC can get an injunction to stop the developer from brokering others’ properties.

Answer 145

D) The NCREC can get an injunction to stop the developer from brokering others’ properties. Explanation While the developer may not need to be licensed to sell his own properties, he must be licensed to sell other peoples' properties. The NCREC cannot fine nor sue for money, but can ask the courts to make the developer stop illegal activity. Reference: Real Estate License Law and Commission Rules

Question 146

A broker is trying to help a client set some conditions in an offer. There is no preprinted form available. What should the broker NOT do? A) Have the firm’s attorney draft something B) Have the clients draft something C) Have the buyer’s attorney draft something D) Use something from a previous client’s contract

Answer 146

D) Use something from a previous client’s contract Explanation Using terms that are not on a preprinted form, or terms drafted for others is considered drafting and is against the law and commission rules. Reference: Real Estate License Law and Commission Rules

Question 147

In North Carolina, in the event of a dispute between buyer and seller over trust monies that a broker is holding, the broker A) must turn the monies over to an attorney. B) must return them to the buyer. C) will split them between the buyer and the seller. D) must hold the monies until the parties agree.

Answer 147

D) must hold the monies until the parties agree. Explanation In addition, the broker may disburse the funds if a court orders it or if one of the disputing parties abandons its claim. Effective October 2005, the broker may deposit disputed funds with the clerk of court. Reference: Real Estate License Law and Commission Rules

Question 148

An active broker in North Carolina leaves her firm before a closing takes place. The firm wants to pay her after the closing. Can they? A) It depends on the status of the broker’s license when they want to pay her. B) Yes, the firm can pay the broker. C) No, not unless the broker has a new broker in charge. D) No, the broker left too soon.

Answer 148

B) Yes, the firm can pay the broker. Explanation As long as the broker was actively licensed when the contract was completed, it's up to her firm, but she can be paid. Reference: Real Estate License Law and Commission Rules

Question 149

A sole proprietor is NOT required to be designated as broker-in-charge A) when there are other brokers affiliated with the broker’s firm. B) when the broker will only receive referral fees. C) when the broker engages in transactions requiring a trust account. D) when the broker advertises his services as a broker.

Answer 149

B) when the broker will only receive referral fees. Explanation A sole proprietor of a real estate firm must be a BIC if there are any other parties associated with the firm, if the firm does any activity that requires a trust account, or if the sole proprietor advertises his services in any way. Reference: Real Estate License Law and Commission Rules

Question 150

What party is responsible for the proper maintenance of real estate trust accounts and records? A) The firm’s owner B) The broker-in-charge C) The escrow account manager D) The firm’s bookkeeper

Answer 150

B) The broker-in-charge Explanation The broker-in-charge is responsible for ensuring the trust account is reconciled at least every 30 days to verify it is being properly maintained. Reference: Real Estate License Law and Commission Rules

Question 151

A change of residence address must be reported to the North Carolina Real Estate Commission within A) 60 days. B) 30 days. C) 180 days. D) 10 days.

Answer 151

D) 10 days. Explanation Name or address changes must be reported within 10 days. Reference: Real Estate License Law and Commission Rules

Question 152

A licensee has allowed her license to lapse this year by neglecting to pay the renewal fee by June 30 because she has not used the license in years. Five months later, in November, she decides she would like to reinstate her license. The licensee is required to A) complete an application. B) complete all prelicensing courses and pass the license exam. C) apply for reinstatement and pay twice the renewal fee. D) complete 90 hours of post-licensing for license reinstatement.

Answer 152

C) apply for reinstatement and pay twice the renewal fee. Explanation Any license expired for less than six months may be reinstated by paying two times the current renewal license fee. Reference: Real Estate License Law and Commission Rules

Question 153

A provisional broker wants to show all his North Carolina listings on his Facebook business page. What is required to be in compliance with NCREC Rule a.0105? A) All of these B) Permission of his BIC to place the ad C) All information accurate and verified in the ad D) Name of Firm or BIC in his ad

Answer 153

A) All of these Explanation The provisional broker must have the permission of his BIC to advertise. Further, he must have the name of his BIC or his firm in all advertising and everything he says must be accurate and show a true picture. Reference: Real Estate License Law and Commission Rules

Question 154

New licensees in North Carolina can begin practicing real estate as soon as A) they complete their continuing education. B) they get their on-the-job training. C) their broker activates their license. D) they get their test results showing they passed the class exam.

Answer 154

C) their broker activates their license. Explanation A provisional broker must always be under a broker's supervision. Reference: Real Estate License Law and Commission Rules

Question 155

As a licensee in North Carolina, you could be A) a buyer's agent. B) all of these. C) a dual agent. D) a subagent of the seller.

Answer 155

B) all of these. Explanation Your relationship with a client is per your agreement. You may not have a choice in certain situations. Reference: Real Estate License Law and Commission Rules

Question 156

A licensee in North Carolina must maintain records for three years. These records would include all of the following EXCEPT A) unaccepted offers. B) a receipt for a new fax machine. C) canceled trust account checks. D) contracts that fell through.

Answer 156

B) a receipt for a new fax machine. Explanation All the others relate to clients' real estate transactions and monies. Reference: Real Estate License Law and Commission Rules

Question 157

The North Carolina Real Estate Commission has the authority to A) fine licensees. B) discipline a REALTOR® for a Code of Ethics breach. C) enact rules and regulations affecting homebuilders. D) suspend a licensee's real estate license.

Answer 157

D) suspend a licensee's real estate license. Explanation The North Carolina Real Estate Commission has the authority to govern the conduct of its licensees and to regulate the business activities of licensees. Reference: Real Estate License Law and Commission Rules

Question 158

What must take place for a buyer's agent in North Carolina to receive a $10,000 bonus on the sale of new construction? A) The buyer’s agent must offer the bonus to the buyer first. B) The buyer’s agent cannot receive bonuses. C) The buyer must have knowledge of total compensation the firm will receive, including any bonus. D) The buyer’s agent must have secured an exceptionally good deal for the buyer.

Answer 158

C) The buyer must have knowledge of total compensation the firm will receive, including any bonus. Explanation Rule A.0109 states that clients must agree to the firm's compensation, and additional compensation in excess of the agreed-upon amount must be disclosed to the buyers before they make the decision to buy. Reference: Real Estate License Law and Commission Rules

Question 159

A licensee on inactive status is required to A) satisfy post-licensing requirements. B) complete the general update class. C) pay the annual renewal fee to the North Carolina Real Estate Commission. D) satisfy all CE requirements.

Answer 159

C) pay the annual renewal fee to the North Carolina Real Estate Commission. Explanation Failure to renew a license results in an expired license. An inactive license may be retained indefinitely by simply paying the renewal fee, and the licensee is not required to complete CE; however, the licensee may be required to complete at least 16 hours of CE in order to activate the license at a later date. Reference: Real Estate License Law and Commission Rules

Question 160

All violations of North Carolina license law are generally A) felonies. B) grounds for license revocation. C) misdemeanors. D) no big deal.

Answer 160

C) misdemeanors. Explanation Only a few time-share issues are felonies. Not all violations will result in license revocation. Reference: Real Estate License Law and Commission Rules

Question 161

The North Carolina Real Estate Commission has the power to do all of the following EXCEPT A) order a broker to pay for needed repairs that were not disclosed by the broker. B) suspend a broker’s license for two years. C) fine a time-share developer for using unlicensed sales agents. D) reprimand a broker.

Answer 161

A) order a broker to pay for needed repairs that were not disclosed by the broker. Explanation The NCREC may not order a broker to pay an injured member of the public, nor can the NCREC fine a broker. Reference: Real Estate License Law and Commission Rules

Question 162

In order to become an active broker, a newly licensed provisional broker must A) carry her real estate license for the public to see. B) join a board of REALTORS® and pay for MLS service. C) have a broker-in-charge. D) complete all post-licensing classes.

Answer 162

C) have a broker-in-charge. Explanation The broker-in-charge sends signed paperwork to the North Carolina Real Estate Commission agreeing to directly supervise the provisional broker and asking that the license be made active. Reference: Real Estate License Law and Commission Rules

Question 163

Which of the following statements about trust accounts is TRUE? A) A firm that does property management must maintain a separate trust account for each property owner. B) Earnest money checks must be deposited into the trust account within three banking days of receipt by the listing firm. C) A broker may not commingle trust funds with her own personal funds or the operating funds of the firm. D) If a property owner does not have enough money in the trust account to cover a repair, the broker-in-charge, with permission, may temporarily borrow funds from another property owner’s trust funds.

Answer 163

C) A broker may not commingle trust funds with her own personal funds or the operating funds of the firm. Explanation A firm that does property management does not need a separate account for each property owner. Earnest money checks do not have to be deposited within three days of receipt by the listing firm, but any cash and any rent does need to be deposited within three days of receipt. Firms may never borrow money in the trust account. Reference: Real Estate License Law and Commission Rules

Question 164

A time-share developer in North Carolina must obtain a registration certificate A) or be guilty of a felony. B) before 10% of the units are committed. C) from a real estate broker. D) from the registrar of deeds in the county in which the property is located.

Answer 164

A) or be guilty of a felony. Explanation The developer must acquire the registration certificate from the North Carolina Real Estate Commission before offering units for sale. Reference: Real Estate License Law and Commission Rules

Question 165

A broker has just received notice that his license is inactive. What should the broker do? A) Notify clients and customers that they cannot take on new business at this time B) Cease and desist any activities that require a license until the license is returned to active status C) Attend a closing that was scheduled while he was on active status D) Finish any uncompleted transactions, as long as they are done under the supervision of a broker-in-charge

Answer 165

B) Cease and desist any activities that require a license until the license is returned to active status Explanation An inactive license may not be used beyond the point the broker is notified that he failed to meet the requirements; he must immediately cease all real estate activities. Reference: Real Estate License Law and Commission Rules

Question 166

A prospective purchaser has a legal right to demand which of the following? A) A copy of appraisals previously done on the property B) A copy of the broker's employment contract with the seller C) Copies of offers from other interested buyers D) The return of the earnest money deposit before the seller's acceptance of the offer to purchase

Answer 166

D) The return of the earnest money deposit before the seller's acceptance of the offer to purchase Explanation The buyer can revoke before acceptance. The listing is a confidential employment agreement between the seller and the broker. Reference: Real Estate License Law and Commission Rules

Question 167

In North Carolina, time-share project brokers who violate the time-share laws in G.S. 93A are subject to disciplinary action by the A) SEC. B) NASD. C) Time-Share Commission of North Carolina. D) North Carolina Real Estate Commission.

Answer 167

D) North Carolina Real Estate Commission. Explanation These regulations are part of the real estate license laws and are under the jurisdiction of the North Carolina Real Estate Commission. A project broker might break other laws, but the broker is not part of G.S. 93A. Reference: Real Estate License Law and Commission Rules

Question 168

Which of the following is NOT allowed as a disciplinary action by the North Carolina Real Estate Commission? A) Suspension B) Revocation C) A fine equal to three times the plaintiff’s loss D) Reprimand

Answer 168

C) A fine equal to three times the plaintiff’s loss Explanation The Commission is not allowed to fine licensees; the court system usually allows treble damages for the plaintiff. Reference: Real Estate License Law and Commission Rules

Question 169

Brokers must open a separate account A) into which they may place both the client's money and their personal money. B) into which they must place all clients' monies they receive. C) for each separate earnest money deposit handled. D) for each condominium project handled.

Answer 169

B) into which they must place all clients' monies they receive. Explanation Many brokers use one client trust account but have separate ledgers for each transaction. Note that in North Carolina, the broker may also deposit $100 or whatever amount is necessary to pay bank fees to keep the account open. Funds beyond this amount would be considered commingling of the firm's monies and the client's monies. Reference: Real Estate License Law and Commission Rules

Question 170

To have an active license, one must A) pay state privilege tax. B) be current on one’s continuing education. C) belong to a REALTOR® Association. D) all of these.

Answer 170

B) be current on one’s continuing education. Explanation There are other requirements also. Reference: Real Estate License Law and Commission Rules

Question 171

Mary has had her broker's license for 21 years, but has not taken any continuing education for the past five years. She has paid her renewal every June. She now wants to practice real estate again. What will she need to do? A) All of these B) Take the current year’s continuing education C) Send in an activation form D) Take two postlicensing classes

Answer 171

A) All of these Explanation This is easier than if she had let her license expire. Reference: Real Estate License Law and Commission Rules

Question 172

An agent in North Carolina manages several owners' properties, some of which are residential. How should the firm's trust accounts be set up? A) Unless there are HOAs being managed, the firm can use its one trust account. B) The agent may not need trust accounts. C) There must be a trust account for each owner. D) There must be a separate trust account for the residential properties.

Answer 172

A) Unless there are HOAs being managed, the firm can use its one trust account. Explanation The firm can put different clients' monies in one trust account. Reference: Real Estate License Law and Commission Rules

Question 173

In North Carolina, a time-share purchaser's monies must be kept in escrow for at LEAST A) 7 days. B) 5 days. C) no days because there is no statutory requirement. D) 10 days.

Answer 173

D) 10 days. Explanation The purchaser has a five-day right of rescission. If the purchaser exercises that by the U.S. mail, the 10-day escrow requirement helps assure that the money will be there to return. Reference: Real Estate License Law and Commission Rules

Question 174

In North Carolina, the person charged with the responsibility of recording the time-share-conveying instruments is the A) developer. B) registrar of deeds. C) project broker. D) registrar.

Answer 174

D) registrar. Explanation This is a natural person charged with this duty, as well as with recording the release of liens. This person need not be licensed if not performing acts of real estate. Reference: Real Estate License Law and Commission Rules

Question 175

A broker license on provisional status was issued on August 1, 2022. The provisional broker immediately affiliated with a firm, and the BIC sent the appropriate forms to the NCREC. On June 4, 2023, the provisional broker paid the license renewal fee. What is the license status on July 1, 2023? A) Active B) Expired C) Expired and inactive D) Current and inactive

Answer 175

A) Active Explanation CE is not required before first renewal. Reference: Real Estate License Law and Commission Rules

Question 176

If an out-of-state licensee wants to get a North Carolina real estate license, the licensee could A) be from a state with whom North Carolina has reciprocity. B) come to North Carolina and take the prelicense class and pass it. C) submit the required paperwork and pass the North Carolina portion of the licensing exam and perhaps take some additional education classes. D) do all of these.

Answer 176

C) submit the required paperwork and pass the North Carolina portion of the licensing exam and perhaps take some additional education classes. Explanation North Carolina does not have reciprocity with other states. Another choice is the licensee could come into North Carolina as a provisional broker depending upon the licensee's qualifications. Reference: Real Estate License Law and Commission Rules