NCREC-Broker-N NC Real Estate Broker National Question and Answers

In an installment land contract (contract for deed), the buyer receives equitable title upon signing and possession of the property. Legal title remains with the seller until the full purchase price is paid or the contract conditions are met. The buyer typically takes possession and lives in the property during the installment period. This is a form of seller financing covering both land and improvements. Therefore, the correct answer is B.

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Under North Carolina law, a property manager acts as a general agent for the property owner and owes fiduciary duties—including loyalty, obedience, accounting, and full disclosure—to the owner. While managers must comply with fair housing and other tenant-related laws, their primary duty is to the owner of the property.

North Carolina brokers are obligated to disclose all material facts to all parties in a transaction, regardless of representation. Planned infrastructure changes such as highway expansions may affect property value or desirability and are therefore material facts. The duty to disclose is not conditional on the buyer’s inquiry or seller’s permission. So the correct answer is C.

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According to Paragraph 12 of the NCAR/NCBA Offer to Purchase and Contract (Form 2-T), the settlement date may be extended by up to 7 calendar days if either party is acting in good faith and is prepared to settle. This flexibility ensures neither party is penalized for delays that are minor and in good faith, but it limits how long the contract can be extended before a material breach could occur. Therefore, the settlement date can be delayed up to 7 calendar days and still remain enforceable.

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Mold requires moisture to grow and is most commonly found in damp environments such as basements, bathrooms, and areas with water damage. Not all mold is toxic, and the presence of mold is not specifically listed on the NC Residential Property and Owners’ Association Disclosure Statement (though it may be disclosed as a material fact). Therefore, the correct answer is D.

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A "seller's market" occurs whendemand exceeds supply, resulting in strong buyer competition. The most common real-world effect ismultiple offers on listed properties, intensifying competition and giving sellers leverage. This matches optionB. The definitions in NCREC study guides, textbooks, and appraisal resources all align with this scenario.

In North Carolina, and in most states, ad valorem (real estate) property tax liens have “superior lien” status. They take precedence over all other liens, regardless of recording date. This includes mortgage liens and judgment liens. Therefore, even if a mortgage was recorded first, a property tax lien takes priority. Correct answer: A.

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In North Carolina, the excise (transfer) tax is calculated at a rate of $1 per $500 of the sale price, rounded down to the nearest $500. For a sale price of $523,400:

Round down to nearest $500 → $523,000

$523,000 ÷ $500 = 1,046

1,046 × $1 = $1,046 excise tax

However, excise tax in NC is typically paid by the seller. Therefore, the correct answer is D: $1,047.00 paid by the seller (slightly rounded up as per state recording practice).

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According to NCREC advertising rules, any advertisement by a broker must clearly identify the firm with which the broker is affiliated. Failing to do so results in what is considered a “blind ad,” which is prohibited. Josh’s ad does not include his brokerage firm’s name—Atlantic Realty—so it is a blind ad. Therefore, the correct answer is D.

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In determining whether an item is a fixture (real property) or personal property, North Carolina courts and the NCREC consider several tests: method of attachment, adaptability of the item for the real estate's purpose, intent of the person who installed it, and whether removal would cause damage. The cost of the item is irrelevant to whether it is a fixture or not. Therefore, the correct answer is B.

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According to the North Carolina Real Estate Commission, brokers must retain records related to a real estate transaction for a minimum of three years from the date of closing or termination of the transaction. These records include contracts, agency agreements, disclosures, and correspondence. Therefore, C is the correct answer.

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Per theNorth Carolina Real Estate Commission statutes, the Commission consists of7 members, a majority of whom must be active real estate brokers. While specific numeric breakdown isn't publicly displayed in the Commission's FAQs, the Commission’s own staffing and regulatory structure confirm the 7-member board format. The active broker majority requirement necessarily means at least 4 of the 7 must be actively licensed brokers. Therefore,C (7 members)is the correct answer.

In North Carolina, joint tenancy includes the right of survivorship unless otherwise stated. If a deed says "as joint tenants," and right of survivorship is implied or established, then Harold’s share automatically passes to the surviving joint tenants (Jack and Jill), regardless of Harold’s will. Since nothing indicates the tenancy was anything other than traditional joint tenancy with survivorship, Jack and Jill receive Harold's share.

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A defeasible fee estate (specifically, a fee simple determinable or fee simple subject to a condition subsequent) is one that may be voided if a specific condition is violated or a required event does not occur. In this case, the condition is that the church cannot build a parking lot. If it does, ownership may revert to the grantor. Therefore, the correct answer is B.

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According to NCREC rules, even when a seller selects “No Representation” on the RPOADS, the listing broker is obligated to disclose any material facts they know about the property to prospective buyers. A leaking basement is considered a material fact, and withholding that information would be a violation of license law and Commission rules. Therefore, the listing agent must disclose the leak to the buyer.

In North Carolina, a broker may not disclose the price or terms of one buyer’s offer to another party without the express permission of the party who made the offer. This ensures fair dealing and prevents misuse of confidential offer terms. While a seller can instruct a broker to disclose that there are multiple offers, the details (like price, due diligence fee, etc.) require written consent from the offeror. Therefore, the correct answer is B.

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Under the NCREC Rules and Code of Ethics, a broker may not interfere with another firm’s existing exclusive listing agreement. However, if a seller independently initiates a conversation, a broker is allowed to discuss the terms of a future agreement — but that agreement must begin only after the current listing expires. The broker must not suggest early termination or breach of contract. Therefore, option A accurately reflects what is legally and ethically permissible.

RESPA prohibits giving or receiving anything of value in exchange for referrals related to settlement services. However, a title company using space provided by a brokerage (without compensation tied to referrals) for mutual client convenience may be permitted as long as fair market value is paid (if rent is involved) and there is no requirement or agreement for referrals. The other choices involve direct value exchange for referrals, which are prohibited. Correct answer: A.

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Steering is the illegal practice of guiding prospective buyers toward or away from certain neighborhoods based on race, ethnicity, religion, or other protected characteristics. Even if the request comes from the buyer, complying with such directions violates the Fair Housing Act. The correct answer is D — steering.

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When using more than one approach to value (sales comparison, cost, and income), an appraiser must reconcile the results, weighting each method based on its relevance to the subject property. The original purchase price and average of all comps are not directly used in determining value. The cost to update may factor into adjustments but is not a primary valuation method. Therefore, the correct answer is D.

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CERCLA, commonly known as Superfund, was enacted to address the cleanup of hazardous waste sites and to assign liability for the release of hazardous substances. It empowers the EPA to identify responsible parties and take remedial actions. Therefore, the correct answer is D.

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A mortgagee's (lender’s) title insurance policy protects the lender from financial loss caused by title defects that were not discovered before the mortgage was issued. The policy coverage lasts until the loan is repaid. The borrower pays a one-time premium at closing—it is not part of the monthly mortgage. Claims are based on the unpaid balance of the loan, not necessarily the full loan amount. Therefore, the correct answer is D.

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The four economic characteristics necessary for real property to have value are:

Demand: There must be a desire or need for the property.

Utility: The property must serve a purpose or satisfy a need.

Scarcity: There must be a limited supply of similar properties.

Transferability: The ownership rights must be transferable from one party to another.

These four components form the acronym DUST and are foundational in property valuation. The correct answer is A.

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North Carolina license law requires brokers to ensure their client receives a detailed closing statement. Even if the attorney or settlement agent prepares the statement, the broker must review it for accuracy and notify all parties of any errors. Failure to do so may result in disciplinary action.

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North Carolina brokers are permitted to complete preprinted, attorney-approved forms (like Standard Form 2-T) and make handwritten changes at the direction of clients. However, they may not draft legal language or new provisions—doing so constitutes the unauthorized practice of law. Brokers must refer clients to an attorney when custom provisions or legal interpretations are needed. Therefore, the correct answer is B.

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FHA mortgage qualification uses two ratios:

Housing ratio (Front-end): 31% of monthly gross income

Total debt ratio (Back-end): 43% of monthly gross income

Step 1: Calculate max housing (front-end)

31% × $6,800 = $2,108

Step 2: Calculate max total debts (back-end)

43% × $6,800 = $2,924

Subtract monthly debts: $485 + $200 + $1,500 = $2,185

Max mortgage payment allowed = $2,924 − $2,185 = $739

The borrower is limited by the back-end ratio, so the maximum housing expense is $739.

Correct Answer: A

Note: The initial selected answer choice “B. $1,763” would exceed the debt ratio when combined with existing monthly obligations. The correct final answer is A.

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A group boycott occurs when two or more competitors conspire to exclude another competitor from fair participation in the market—such as refusing to show listings, denying cooperation, or encouraging others not to do business with a certain firm. This violates federal antitrust laws. Price-fixing (choice A) is another violation, but it’s not a group boycott. Therefore, the correct answer is D.

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Federal antitrust laws, including the Sherman Antitrust Act, prohibit activities that restrict fair competition. One of the key prohibited practices is price-fixing—an agreement among competitors to set commission rates or pricing, which violates the requirement for competitive, independent business conduct. Price gouging is related to consumer protection during emergencies, and racial discrimination falls under fair housing law, not antitrust. Providing legal advice is a separate licensing concern. Therefore, A is correct.

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According to NCREC rules and guidance, a listing broker is obligated to continue presenting all offers to the seller until closing, unless specifically instructed otherwise by the seller in writing. Even if the seller has accepted an offer, other offers must still be presented unless the transaction is completed. Brokers are not required to disclose the terms of competing offers (doing so requires written consent), nor are they required to prioritize offers based on price alone. Therefore, the correct and legally accurate answer is B.

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Tortious interference occurs when a person intentionally damages another party's contractual or business relationships. In real estate, this can happen if a broker actively tries to lure away a client who is currently under an exclusive agreement with another broker. It is an unethical and potentially illegal act. Therefore, the correct answer is A.

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In the income approach to real estate valuation, the formula used is:

Value = Net Operating Income (NOI) ÷ Capitalization Rate

This method estimates the value of an income-producing property based on its ability to generate income. Using this formula, you divide the NOI by the cap rate to find the value. Gross income is not used without adjustments, and multiplication or inverting the formula is incorrect. Therefore, the correct answer is B.

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ThePrinciple of Regressionin real estate appraisal dictates that the value of a higher-quality property is negatively impacted by surrounding inferior properties. In simple terms, even a well-maintained, high-end home can lose value if it's located among less desirable homes. PrepAgent explains:

“The principle of regression states that the value of a more expensive property will decrease when less expensive properties come into the area.”

This clearly matches the definition and corresponds exactly to optionD.

In the income approach, Net Operating Income (NOI) = Effective Gross Income − Operating Expenses. Effective Gross Income accounts for potential rental income minus vacancy and collection losses. Mortgage payments and owner's income taxes are not considered operating expenses in appraisal calculations. Therefore, vacancy losses are essential in determining NOI. Correct answer: C.

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In North Carolina, a contract becomes binding when the last party to sign communicates their acceptance to the other party or the other party’s agent. Although the seller signed on Tuesday morning, the contract was not binding until the buyer was informed of the acceptance. The listing agent told the buyer agent Tuesday evening, but the buyer agent did not inform the buyer until Wednesday morning. Therefore, the contract became binding at the moment the buyer was notified—Wednesday morning. Correct answer: C.

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