Practice Exam 4

Question 1

A licensee must report which of the following items to the NCREC within 60 days?

Answer 1

a conviction for DUI

Question 2

Concerning a timeshare violations in NC, which of the following is true?

Answer 2

a timeshare developer can be fined and a licensee can have his licensed revoked

Question 3

The Interstate Land Sales Full Disclosure Act

Answer 3

exempts the sale of lots in a subdivision containing fewer than 25 lots

Developer must provide a property report and register the subdivision with HUD

Question 4

Basic economic principle of value which states that if house A and house B are equally desirable properties with similar assets and house A is selling for $160K and house B is selling for $170K, virtually every buyer will choose house A.

Answer 4

SUBSTITUTION

Question 5

COST

Answer 5

Actual amount paid

Question 6

Value

Answer 6

aka WORTH

Question 7

Anne was showing properties and while driving through a specific neighborhood told the prospective buyer that, “This is a neighborhood in which you would probably not want to live” Annes conduct would be

Answer 7

STEERING and illegal

Question 8

Bill is managing an apartment complex which as a no pets policy. A woman with a seeing eye dog has completed an application and meets the credit and income criteria to rent a unit. Under federal fair housing law, Bill may

Answer 8

Rent the unit to the woman and he may NOT charge her any additional deposit for the dog

Question 9

Stanley Smith is purchasing a property which is currently being utilized as a restaurant. The restaurant contains a number of trade fixtures, equipment, utensils, dishes, tables and chairs used in the business. The seller provides Stanley with a Bill of Sale for the separate transfer of all of these items. If Stanley wants to finance both the purchase of the real estate and these additional items into one loan, what type of loan should he obtain from his lender?

Answer 9

PACKAGE LOAN

Question 10

When a lender requires mortgage insurance with a loan, and the loan is sold on the secondary mortgage market,

Answer 10

the mortgage insurance goes with the loan to protect all future purchases of the loan

Question 11

When a home is sold “subject to an existing mortgage”,

Answer 11

The SELLER remains liable for the repayment of the loan unless the lender provides the seller with a separate lease.

Question 12

Broker Anne obtains a listing on a property in Boone NC and she signs a Listing Contract with the seller. She later finds a buyer for the same property and agrees to represent the buyer in a written Buyer Agency Contract.

Answer 12

Anne is practicing DUAL AGENCY and must obtain written permission from both parties.

Question 13

A broker is interested in purchasing a home. The home is listed with his/her firm.

Answer 13

The broker must communicate to the property owner he/she is a licensed broker.

Question 14

Assignment of a contract in NC

Answer 14

A contract can be assigned if there is no clause prohibiting assignment

Question 15

A PB runs a newspaper ad which contains willful misrepresentation. Whose license could be suspended or revoked by the NCREC ?

Answer 15

BIC

Provisional Broker

Question 16

In a lease the COVENANT OF QUIET ENJOYMENT indicates that the landlord

Answer 16

warrants that no one will disturb the tenants possession of the property

Question 17

In NC an UNlicensed assistant

Answer 17

may show rental properties in a property management office

MAY NOT show properties or hold open houses in a sales office

Question 18

A firm selling its own property through the actions of its own employees

Answer 18

is NOT required to have a real estate license

Question 19

Requires a Real Estate License

Answer 19

an Auctioneer of real estate

an out of state licensee who is showing properties and writing offers in NC

A licensee who manages a neighbors rental property and collects a fee

Question 20

Bob a real estate broker has a listed property for sale. While in the property conducting an open house, Bob noticed that the hot water faucet was not operating properly. In regard to questions on the Residential Property Disclosure Statement, Bobs seller has checked all of the boxes with “No Representation”. When a prospective buyer expresses interest in the home what are Bob’s obligations?

Answer 20

Disclose the faucet issue as a material fact to his seller and he must also disclose it to any prospective buyer even if the seller objects to such disclosure

Question 21

In measuring square footage in a home and the buyer has indicated it is a material fact the real estate may rely on the NCREC Residential Square Footage Guidelines and rely on the

Answer 21

amount of square footage that the listing agent has indicated in the MLS listing.

Question 22

A corporation owns several residential properties and has placed them into an entity known as Prime Properties LLC. The corporation is not licensed by the NCREC. None of the companies salaried employees have real estate licenses. The LLC wants to sell several of its rental properties. Which of the following is correct?

Answer 22

The LLC may sell these properties using its own salaried employees and does not need to place any of the earnest money deposits into a trust account.

Question 23

DUAL AGENCY

Answer 23

always requires consent and disclosure of all parties

designated agency is a form of dual agency

Dual agency will only exist when there is one firm involved

Question 24

If designated agency occurs, when must the seller know the name of the designated agent working with the buyer?

Answer 24

At the time of first offer to purchase property

Question 25

DESIGNATED AGENCY

Answer 25

No personal confidential information or the motivations of the parties are known by the agents being named as designated agents

A listing agent can practice designated agency with both his seller and buyer clients as long as both have consented in writing

Question 26

When a purchase contract contains a provision for the release of liability of all parties to the contract should a stated event either occur or fail to occur, such a provision is considered to be

Answer 26

A CONTINGENCY

Question 27

Who is entitled to a VA Loan.

Answer 27

The veteran and certain unmarried widows and widowers

Question 28

George enters into an agreement to buy a farm from Jack for 350K. In the agreement, Jack requires that George put 10K down and make monthly payments to Jack at 8% interest over a 20 year period of time. The parties record the agreement and Jack promises to provide to George the DEED TO THE PROPERTY ONCE THE FINAL PAYMENT HAS BEEN MADE. This is

Answer 28

Contract for Deed

Question 29

Under what circumstances may and ORAL BUYER AGENCY AGREEMENT exist in NC?

Answer 29

When the agency agreement is reduced to writing by the time of an offer

Question 30

Material Fact in NC

Answer 30

Pending foreclosure (filing of a notice of sale)

Question 31

NC Residential Property Disclosure Statement

Answer 31

Purchases are not required by law to sign the NC Residential Property Disclosure Statement in order to acknowledge receipt of the form

Seller and Buyer may mutually agree that the NC Residential Property Disclosure Statement is not required in that transaction

Question 32

VA and FHA Loans

Answer 32

VA allows 100% LTV Loans

Discount Points may be charged in FHA loans and these discount points increase the lenders yield

If an FHA or VA loan is fully amortized, it means the borrower will have a constant payment amount each month through the life of the loan.

Question 33

In NC if a buyer purchases a tenant occupied property investment purchase, the buyer may do which of the following?

Answer 33

Purchase the property subject to honoring the current lease agreement

Question 34

VA LOANS

Answer 34

the widow of a veteran may obtain a VA loan

A non veteran may assume a VA Loan

A CRV will need to be issued before the VA loan can occur

(NOT true- if a veteran wishes to purchase an 80K laon and their Certificate of Eligibility is max of 75K the veteran may not purchase the home)

Question 35

CMA Comparable Market Analysis

Answer 35

CMA does NOT need to be in writing

CMA is based on the principle of substitution

CMA is aka Broker Price Opinion (BPO)

(NOT true PB may receive a fee for a BPO)

Question 36

Under what circumstances would a veteran receive restoration of their VA loan Benefits?

Answer 36

Upon full repayment of the loan or full assumption of the loan.

Question 37

What is the document called that verifies both the condition of the property and the value of the property in an FHA loan?

Answer 37

A CONDITIONAL COMMITMENT

Question 38

In regards to the payment of commissions in NC

Answer 38

If a broker or PB receives a listing referral or a buyer referral from another broker, the referring broker can be “INACTIVE” at the time of the referral is paid so long as they were ACTIVE AT THE TIME THE REFERRAL WAS MADE.