§ 54.1-2106.1. Licenses required.A. No business entity, other than a sole proprietorship, shall act, offer to act, or advertise to act, as a real estate firm without a real estate firm license from the Board. Such firm may be granted a license in a fictitious name. No business entity shall be granted a firm license unless (i) every managing member of a limited liability company, officer of a corporation, partner within a partnership, or associate within an association who actively participates in the firm brokerage business holds a license as a real estate broker; and (ii) every employee or independent contractor who acts as a salesperson for such business entity holds a license as a real estate salesperson or broker. An individual holding a broker's license may operate a real estate brokerage firm which he owns as a sole proprietorship without any further licensure by the Board, although such individual shall not operate the brokerage firm in a fictitious name. However, nothing herein shall be construed to prohibit a broker operating a brokerage firm from having a business entity separate from the brokerage firm for such broker's own real estate business, provided that such separate business entity otherwise complies with this section. A non-broker-owned sole proprietorship shall obtain a license from the Board. Show B. No individual shall act as a broker without a real estate broker's license from the Board. An individual who holds a broker's license may act as a salesperson for another broker. A broker may be an owner, member, or officer of a business entity salesperson as defined in subsection C. C. No individual shall act as a salesperson without a salesperson's license from the Board. A business entity may act as a salesperson with a separate business entity salesperson's license from the Board. No business entity shall be granted a business entity salesperson's license unless every owner or officer who actively participates in the brokerage business of such entity holds a license as a salesperson or broker from the Board. The Board shall establish standards in its regulations for the names of business entity salespersons when more than one licensee is an owner or officer. D. No group of individuals consisting of one or more real estate brokers or real estate salespersons, or a combination thereof, shall act as a real estate team without first obtaining a business entity salesperson's license from the Board. A real estate team may hire one or more unlicensed assistants, as employees or independent contractors, as otherwise provided by law. E. If any principal broker maintains more than one place of business within the Commonwealth, such principal broker shall be required to obtain a branch office license from the Board for each place of business maintained. A copy of the branch office license shall be kept on the premises of the branch office. 1996, c. 993; 1998, c. 265; 1999, cc. 82, 105; 2008, c. 319; 2012, c. 750; 2018, cc. 223, 224; 2019, cc. 179, 395. What is the first point at which a provisional broker may begin practicing real estate in North Carolina? A. when the NCREC receives notification of the provisional broker's activation with a BIC LL1-1 A Once an applicant has passed the NC Licensing Examination, they are licensed, but their license is inactive until they affiliate with a brokerage. Provisional brokers are always inactive
when they are not affiliated. An unlicensed assistant may do all of the following activities, EXCEPT: A. assist the licensee with administrative duties and tasks LL1-2 C Unlicensed property management assistants are permitted to show rental properties to prospective tenants, however, we do not allow unlicensed assistants to show homes or conduct open houses in residential sales. With regard to timeshares, all of the following are true, EXCEPT: A. A timeshare developer and broker must maintain records of sales, rentals or exchange transactions for a minimum of three years. LL1-3 C You must be licensed to sell timeshares in North Carolina. All of the other answers are correct regarding the handling of funds and
monies concerning timeshares. Which of the following statements is true about timeshares? A. They do not have to be registered with the NC Real Estate Commission. LL1-4 C Timeshares must be registered and approved by the NC Real Estate Commission. They cannot be transferred or sold without that registration. All of the following statements are correct regarding the NCREC, EXCEPT: A. They shall be entitled
to the services of the Attorney General of North Carolina. LL1-5 D Their bylaws, rules and regulations must be "consistent" with the general statutes. It is true that the NCREC can use the services of the Attorney General. It is also true that they do not regulate the commissions or fees charged by licensees. Though referral fees generally cannot be paid to unlicensed people, the payment of a referral fee to a travel agent is the exception to the rule and is permitted. It is correct to say that the NC Real Estate Commission may not fine a real estate licensee. However, the NC Real Estate Commission may do which of the following? A. order licensees to pay clients for damages caused and arbitrate disputes over fees LL1-6 B The Commission cannot fine a licensee, but they can fine a developer. They do not get involved in fee disputes or dictate the commission which brokers may charge. If a broker failed to take CE,
their license would become "inactive." The commission would not revoke the license. General Statute 93A-2 states, in part, that a real estate broker is any person who, for compensation or valuable consideration or the promise thereof, lists or offers to list property. All of the following would constitute valuable consideration, EXCEPT: A. a listing agent is promised a weekend trip to
Myrtle Beach if the agent puts the home under contract before the end of the year LL1-7 D Brokerage activities are defined as acting on behalf of another for compensation. These nominal items would not be considered compensation or valuable consideration. However, vacations, trips, expensive jewelry and expensive food would all be considered valuable. All of the
following could result in disciplinary action by the NC Real Estate Commission for unworthiness or incompetence, EXCEPT: A. making any willful or negligent misrepresentation LL1-8 D There is a list of reasons why a licensee can be disciplined in Statute 93A-6. A provisional broker may always elect to complete post licensing classes on an earlier schedule than that required by the Commission A provisional broker is subject to two separate education requirements. They must complete postlicensing education of 90 hours within 3 years from the date of licensure. When must a provisional broker complete their first 8 hour CE requirement? A. Within 1 year of the date of licensure A nonprovisional real estate licensee is on inactive status. They are NOT holding themselves out to be available to help others buy, sell, rent or auction property. A friend asks for their help in a real estate transaction. Which of the following is TRUE? A. Because they did not actively advertise or solicit the business the licensee may assist their friend, but they will have to be paid directly, not through the brokerage firm. LL1-10 C A licensee on inactive status may not earn any fees or be involved in brokerage activities. The commission is concerned with the status of the license at the time the money was earned, not when it was received. In the event that a licensee's annual renewal fee is returned unpaid, the North Carolina Real Estate Commission may take all of the following actions, EXCEPT: A. deny licensure renewal LL1-11 D NCREC does not fine licensees. If the fee is returned unpaid or the check was returned for insufficient funds the license would be expired because it was not properly renewed. The Commission could also take any of the actions listed in the other answers. All of the following would constitute an illegal action by an inactive licensee who is not affiliated with a firm, EXCEPT: A. telling members of a networking club that they are a broker and offering members of the club their services LL1-12 C A licensee who is inactive may not advertise, solicit business or engage in brokerage activities. Which of the following do not need a real estate license to sell property? A. a corporation that owns property and is using an employee to sell the property LL1-13 A A real estate license is never needed when handling your own property. A corporation's W2 salaried employees who are not paid on a commission basis are considered as dealing with the corporation's own property, therefore do not need a license. Which of the following is INCORRECT about the post licensing requirement of a provisional broker? A. the due date of the post licensing education is the anniversary date of licensure LL1-14 C This is the rule for continuing education courses, not post licensing. If a provisional broker fails to complete a postlicensing course as required by the anniversary date of their license, what is their license status once the anniversary date passes? A. active LL1-15 D Failure to complete any required education will result in an inactive license. An expired license occurs when a licensee fails to file their renewal or pay the license renewal fee. If a licensee does not pay their renewal fee on or before June 30 of the year, what is the time period for the licensee to reinstate their license without the imposition of additional educational requirements? A. 30 days LL1-16 C When a licensee fails to renew their license, it becomes expired. The licensee may renew up to 6 months late. They will have to pay a late fee and they may not practice or earn fees while it is expired. After 6 months, the NCREC may impose additional educational requirements. If an active provisional broker pays their renewal fee before their second renewal, but does not take their 8 hours of continuing education before their second renewal, what is their license status on July 1st? A. Active LL1-17 B Failure to renew the license results in the license being expired. Failure to complete required education makes the license inactive. A corporation selling its own properties through the actions of its own salaried W2 employees: A. is not required to have a firm license, but may not use its own employees LL1-18 C a corporation is exempt from licensure when dealing with its own property and using its own W2 salaried employees In regard to real estate fees and commissions between brokerages and clients what is the role of the North Carolina Real Estate Commission: A. only sets maximum limits on the fees and commissions LL1-19 B The NCREC plays no role in either the setting of commissions, the regulation of commissions or commission disputes All of the following are correct statements about the composition of the NCREC, EXCEPT: A. there are 9 appointed members of the NC Real Estate Commission LL1-20 C Members of the NCREC serve for 3 year terms and may be reappointed at the end of their term All of the following are required in order to obtain a NC real estate license, EXCEPT: A. a high school diploma LL1-21 A No specific level of education is required to obtain a NC real estate license. All of the following are true when a real estate license is inactive due to a CE deficiency, EXCEPT: A. the licensee must cease all real estate activity as of July 1st LL1-22 C A licensee may remain on inactive status indefinitely. When returning to active status NCREC will only require a maximum of 16 hours of CE and the filing of an activation form. The license will not be considered expired regardless of the period of inactivity. Which of the following must have a NC real estate license? A. The executor of an estate selling their parent's property and receiving a fee as the executor LL1-23 C An auctioneer must have a NC real estate license when selling real estate. Criers of sales are exempt. All of the following are requirements of licensure for a NC Real Estate license, EXCEPT: A. Possess a social security number LL1-24 D An applicant does not have to reside in NC. Many people who live outside of NC have a North Carolina real estate license. An unlicensed individual who transacts real estate for another or participates in the sale, lease or exchange of another for compensation is subject to which of the following penalties? A. They will likely be issued a cease and desist order LL1-25 A Practicing real estate and operating as a real estate agent without a license is a felony. An individual licensed in another state may receive a waiver of the NC education requirement to complete the 75 hour Broker Prelicense course if they meet which of the following criteria: A. Successful completion of another state's prelicense course of at least 75 hours within the last 3 years. LL1-26 A An individual who completed a prelicense course of at least 75 hours in another state within the last 3 years may obtain an education waiver and directly take the NC Licensing Examination. Judy is an unlicensed individual. Her parents are selling their own home as For Sale by Owner without the representation of a real estate licensee. While her parents are on vacation, Judy shows the home to some interested potential buyers and has long conversations with them about the conditions under which they may purchase her parent's home. Judy's parents do not pay her in cash but instead offer to send her on an upcoming vacation. Is Judy in violation of NC Licensing Law? A. No because the home is her parent's own property and it is therefore exempt from the licensure requirement. LL1-27 C She is receiving compensation or valuable consideration and is assisting another on a property she does not own. Henri is the manager and owner of his own LLC. He has a full time salaried staff person, Sheila, that he employs to work for his LLC. Henri's company is buying homes, renovating them and putting them back on the market. He has Sheila show the properties to prospective buyers. Who is in violation of NC Licensing Law? A. Only Henri LL1-28 D There is no license law violation. Both the managers of the LLC and the W2 employees are exempt when dealing with property in the name of the LLC All of the following are TRUE about the character issue of an applicant for a NC Real Estate License, EXCEPT: A. an
applicant must possess honesty, integrity and good moral character LL1-29 C The background check must be ordered and in the possession of NCREC prior to examination, but the Commission makes a determination on any character issue only AFTER the applicant has successfully passed the examination How long is an applicant's Examination Eligibility Period to take the NC Real Estate Examination once the Commission has approved their application A. 60
days LL1-30 C Once an individual has successfully completed the 75 hour course and their application has been processed by NCREC, the applicant will receive notification that they are eligible to take the examination within the next 180 days. All of the following require the refiling of an applicant's application for a NC Real Estate license, EXCEPT: A. If the applicant delays taking the examination until after the 180 day expiration of their examination eligibility period LL1-31 D A licensee may remain inactive indefinitely. There is never a requirement to refile an application for a licensee to move from inactive to active status, regardless of the time period of inactivity. An applicant will forfeit both their examination and license application fees and their license will be canceled for all of the following, EXCEPT: A. Failure to take the examination within the 180 day period LL1-32 C Once an examination appointment has been scheduled it may be rescheduled by contacting AMP one time. Applicants are not permitted to reschedule a second time. A NC provisional broker's real estate license is initially issued on what type of status? A. active LL1-33 B The initial license is issued on inactive status. In order to activate the license a provisional broker must affiliate with a BIC and the proper license activation form must be filed with NCREC. So long as it is part of his or her duties, is it legal for an unlicensed assistant to solicit listings for the broker? A. Yes, if it is part of a
written job description LL1-34 D Cold calling, prospecting and soliciting of real estate business requires a license. An unlicensed assistant may schedule appointments, but they cannot solicit or cold call for business. When a corporation is involved in the sale or leasing of property that is owned by the corporation, who is exempt from the requirement to possess a real estate license? A. Only the officers of the corporation LL1-35 D The officers and directors of the entity are exempt. Only in corporate entities are the W2 salaried employees also exempt from licensure. All of the following are considered exempt from licensure and considered to be dealing with their own property, EXCEPT? A. the general partners of a partnership LL1-36 D Only the sole proprietor would be exempt. No exemption would apply to the W2 salaried employees of a sole proprietorship, an LLC or a partnership A provisional real estate broker must remove the provisional status of their license by taking 90 hours of post licensing courses. The 90 hour courses are divided into three 30 hour courses. A provisional broker must take at least one of these thirty hour courses by which date? A. the annual renewal date of their real estate license LL1-37 B Postlicensing deadlines have nothing to do with the month of June. The June deadlines are for CE courses. Postlicensing due dates are on the anniversary date that the license was issued. A provisional broker obtains their NC real estate license on April 15th and joins a real estate firm. In order to remain active, the broker must pay the renewal fee to the NC Real Estate Commission on or before: A. June 30 of the current year LL1-38 A Although provisional brokers are not required to complete any CE until the 2nd renewal of their license, they must still renew the license on June 30th. This is accomplished by going to the NCREC website, filing the form and paying the renewal fee. All of the following are powers of the NC Real Estate Commission, EXCEPT: A. to conduct announced or unannounced audits of licensees LL1-39 D The NCREC does not levy fines or order the repayment of monies to clients. In North Carolina under the Residential Property Disclosure Act, sellers of 1-4 unit residential properties must complete a MOG (Mineral, Oil & Gas Disclosure). The purposes of this law includes all of the following, EXCEPT: A. to require sellers to disclose to buyers if mineral, oil and gas rights have been severed from the
property. LL1-40 B Mineral, oil and gas rights to real estate can always be sold or leased separately from a real estate transfer. The requirement is one of disclosure and does not prevent the seller from severing such rights. All of the following are true under the NC Condominium Act, EXCEPT: A. the units are usually separately taxed and assessed LL1-41 C The definition of a condominium is when an individual owns both their unit and shared ownership of the common area. In a NC condominium project, only certain owners have reserved parking spaces and garages. Under the NC Condominium Act, these areas would be known as: A. Shared special assessments LL1-42 B Condominium owners own an interest in their unit and shared ownership of the common areas. There can be certain areas only available to some specified residents. These are called limited condominium areas. All of the following are true of a project broker within a NC Time Share, EXCEPT: A. the project broker is designated by the developer or owner of the time share LL1-43 C a provisional broker may not serve as the project broker in a NC timeshare. However, a provisional broker may work as a time share salesperson under the supervision of the project broker All of the following are TRUE if a time share is not properly registered in NC and a public offering statement is not provided to a buyer prior to contract under the NC Time Share Act, EXCEPT: A. the purchaser has a five day rescission period to cancel their purchase without penalty LL1-44 D A buyer and a developer may not waive either the 5 day cancellation period or the providing of a public offering statement How long does a provisional broker have to activate their license from the date of licensure? A. 180 days LL1-45 B There is no required time frame for a provisional broker to activate their license. A licensee may remain on inactive status indefinitely. Can a real estate licensee renew an inactive license? A. Yes, but they must pay a penalty for being inactive LL1-46 B Inactive and expired are two different statuses for the license. A licensee should always renew a license on or before June 30th whether active or not. Failure to renew will change the status to expired. Under the NC Mechanic's Lien statute an owner of property must designate a mechanic's lien agent (MLA) under which of the following situations? A. an owner who is making improvements to public buildings LL1-47 D An mechanic's lien agent is designate by the owner of the property to receive notice of the lien. This is not required for improvements to a primary residence or when the improvements are less than $30,000. Because these improvements are not to a primary residence and exceed $30,000 a lien agent must be designated under the statute The NC Homestead Exemption would be of importance and have the greatest impact on: A. a borrower who is in default on their property and facing foreclosure LL1-48 B The NC homestead exemption applies to personal residences and provides protection against judgment creditors Jack is a licensed real estate professional in Illinois. He has been a broker for many years, but is not licensed in NC. Jack has a friend who wants to purchase a home in Charlotte, NC. In regard to the representation of this buyer all of the following are TRUE, EXCEPT: A. Jack may refer the buyer to a licensed NC broker and receive a referral fee even though he is not licensed in NC. LL1-49 C An out of state licensee cannot set foot in NC and participate in the real estate transaction without having a NC real estate license Sherry is a provisional broker who works for a residential sales BIC and firm in North Carolina. Sherry has a couple of clients who want her to manage their rental properties. What are Sherry's options? A. Sherry can manage the properties on her own outside of her existing firm LL1-50 D Sherry can make a referral and collect a referral fee so long as the referral fee is paid to her through her BIC. The broker-in-charge of a real estate office is responsible for all of the following, EXCEPT: A. Appointing a BIC at every location where the firm operates LL2-1 A BIC's are appointed by the Qualifying Broker who holds a firm's license. Jack, a licensee wants to make an offer to the seller on a property which Jack has listed on behalf of his firm ABC. Which of the following is CORRECT? A. A licensee may not make an offer on a property which they have listed Sally has had a buyer sign the Working with Real Estate Agents Brochure and execute an Exclusive Buyer Representation Agreement. How long does Sally have to deliver these documents to her Broker-in-Charge? A. Immediately LL2-3 C All transaction documents must be delivered to the firm or the BIC within 3 calendar days of their receipt by a broker Regarding nonresident commercial licensees, all of the following statements are TRUE, EXCEPT: A. They must affiliate with an in-state brokerage firm. LL2-4 C A license is issued to nonresident commercial licensees who submit the application and meet other requirements. They do not have to take any courses or pass any examinations. The license does have to be renewed on an annual basis on June 30th. A real estate agent is representing a buyer under a written buyer agency agreement. The buyer would like to see a builder's home. The builder is offering a $1,000 bonus to agents who sell at least 3 homes in the neighborhood. The real estate agent has not yet made a sale in that neighborhood. Which of the following actions should the agent take regarding disclosure of the bonus? A. Because the agent has not made a sale, they are not required to notify the buyer of a bonus until they are eligible for it. LL2-5 D Licensees can receive bonuses if they have disclosed the bonus to the principal and have their consent. This consent is required before the licensee writes an offer. When dealing with multiple offers, which of the following is a correct statement regarding North Carolina statutes and rules? A. The existence of multiple offers is a material fact and must be disclosed LL2-6 D A licensee must always communicate all offers to their client. Multiple offers are not a material fact and their existence does not need to be disclosed to competing buyers unless the seller directs the licensee to do so. However, the terms and conditions of the offers cannot be disclosed without the consent of the offeror. A broker has received an offer from a prospective buyer on a property that the broker has listed for sale. How long does the broker have to deliver the offer to their seller/client? A. Immediately, but never later than 5 banking days LL2-7 D All documents and offers in real estate transactions must be provided to the client, "immediately, but never later than 3 days." The three days are calendar days. Generally speaking, the time frames dealing with documents are always calendar days. The time frames dealing with deposits and money are always banking or business days. Under the NC Machinery Act, which of the following is a TRUE statement about North Carolina real property taxes? A. They are not levied on an ad valorem basis. LL2-8 C NC real estate taxes ARE levied on an ad valorem basis "according to value." They become a lien on January 1st and are due on September 1st. The Machinery Act requires an appraisal every 8 years (octennial appraisal).
All of the following are true regarding the North Carolina Working With Real Estate Agents brochure, EXCEPT: A. The consumer is not required to sign the brochure. LL2-9 C Use of the brochure is mandatory in all residential and commercial transactions. It is not mandatory in lease transactions. The North Carolina Working With Real Estate Agents brochure must be given: A. to property owners upon initial
contact LL2-10 D The timing for use of the brochure is "first substantial contact." First substantial contact is defined as when the client begins discussing personal, financial, confidential information or motivations, needs and wants. Which of the following can be contained in the Standard 2T Offer to Purchase & Contract? A. A disclaimer of liability for actions of the firm or broker LL2-11 D The amounts of compensation and fees are properly contained in the agency employment agreements, not the purchase contract between the seller and buyer. Real estate licensees may not disclaim liability for their conduct in regard to the transaction. Such limitation of liability clauses may not be utilized in either the Offer to Purchase and Contract nor any agency employment agreements. Jane is a non-provisional broker who is affiliated with ABC Realty. Jane wants to form an LLC entity for legal or tax purposes and have her BIC make her commission checks payable to her LLC. Which of the following is correct? A. A broker affiliated with a firm is prohibited from forming their own entity LL2-12 B Every entity must obtain a firm license. So long as the entity is for compensation only it does not have to have a Broker-in-Charge After being active in the real estate business for three years, Broker Sallie wants to become a broker-in-charge. All of the following are requirements that Sallie must meet to become a BIC, EXCEPT: A. have two out of the last five years of active real estate practice LL2-13 B Sallie must take the 12 hour BIC course, however, she does not have to complete the course before becoming a BIC. If she meets the other eligibility requirements she will have 120 days within which to take the 12 hour course. A licensee can act as the Broker-in-Charge of more than one firm, when: A. the office is an approved national franchise LL2-14 C Usually each location has one BIC and there is only one BIC per location. There is an exception which allows a licensee to be a BIC for more than one firm when the two firms are in the same location. In regard to the use of standard forms and contracts by real estate professionals and the role of the North Carolina Real Estate Commission, NCREC: A. requires the use of specific forms and contracts LL2-15 C The NCREC does not create, write or prescribe the standard forms. Standard forms are created by a joint committee of the bar association and the REALTOR Association. However, the Commission does dictate that certain provisions must be included in the forms and contracts. Real estate licensees and firms can create entities. Which of the following is INCORRECT regarding real estate entities in North Carolina? A. Every entity, other than a sole proprietorship must have a firm license LL2-16 C A licensee can create an entity such as an LLC or a Subchapter S corporation and be affiliated with a firm. However, every entity in NC that is involved in real estate brokerage must have a firm license. Which of the following is INCORRECT in regard to brokerage advertising? A. Provisional brokers cannot advertise without broker-in-charge approval and consent. LL2-17 B Brokers-in-Charge ARE required to supervise all firm advertising. Which of the following does NOT need a firm license in North Carolina? A. a national franchise that is licensed to do business in multiple states and has formed a corporation to do real estate business in North Carolina LL2-18 B A sole proprietorship does not need a firm license because it is not an entity. Every entity that is formed, such as a corporation, partnership or LLC must have a firm license. If a provisional broker terminates their affiliation with a BIC and does not reaffiliate with another BIC or firm, their license is considered: A. terminated LL2-19 D A provisional broker may not engage in real estate brokerage activities or earn fees unless they are affiliated with a firm. If the provisional broker leaves the firm or their affiliation is terminated, they will become inactive. They may not engage in the practice of real estate or earn fees until they have re-affiliated with another firm. When can an unlicensed person receive fees for real estate referrals in North Carolina? A. when the
individual is a past client of the broker LL2-20 C The general rule is that an unlicensed person may never receive fees for the referral of real estate business to a licensee. The only exception is that a travel agent who does not have a real estate license may receive a referral fee when making a vacation rental referral. All of the following are required for an individual to become a broker-in-charge, EXCEPT: A. They must complete a 12-hour BIC course taught by the Commission within 120 days of designation. LL2-21 D It is not possible to become a broker-in-charge until ALL post licensing requirements have been met and the licensee has removed their provisional status. A real estate licensee must notify the North Carolina Real Estate Commission of any changes in address within: A. 3 days LL2-22 C Any change of address, name change or change in the affiliation of a provisional broker must be reported to NCREC within 10 days. A real estate licensee in North Carolina must comply with which of the following rules in regard to any criminal activity: A. report all arrests within 60 days LL2-23 C Note that the 60 day reporting requirement is from the date of the conviction, not the date of the court hearing or the arrest. When must a firm practicing "designated agency" disclose to the seller the name of the agent representing the buyer. A. at first
substantial contact with the seller LL2-24 D This is different from "first substantial contact." First substantial contact mandates the use of the WWREA brochure. When a firm is practicing designated agency and one licensee is designated as the seller's representative and another licensee is designated as the buyer's representative in the same firm, in the same transaction, the disclosure of the name of the agent representing the buyer and their designated status is provided at the time of offer. When a provisional broker terminates their relationship with a firm or BIC, what is the requirement for notification of the termination to NCREC? A. the provisional broker must notify the BIC within 10 days LL2-25 B Brokers-in-Charge must notify NCREC within 10 days of changes in the affiliation of provisional brokers. A real estate broker is aware that the highway department has adopted a long range plan for a new interstate beltway to be constructed. Anticipating that such actions will increase the surrounding land values, the broker seeks out buyers and encourages them to buy property in that area, suggesting they would be able to make substantial profits. The broker begins submitting offers, but never discloses the proposed developments with any of the property owners. Which of the following statements is true? A. The broker must disclose this information as a material fact even though acting as a buyer's agent. LL2-26 A The construction of the highway is a material fact. Material facts must always be disclosed to all parties in the transaction regardless of whom the licensee represents. All of the following statements is correct regarding "designated agency?, EXCEPT: A. Only the agents in the transaction are designated, the other agents are dual agents A real estate broker is working with a buyer as a seller's subagent. All of the following are duties that the broker owes to the buyer, EXCEPT: A. confidentiality LL2-28 A The agent is working for the seller. The licensee owes fiduciary duties to the seller including the duty of confidentiality. No such duty extends to customers which is the role of a buyer when the licensee is working as a subagent of the seller. A real estate broker is working with a buyer client. The broker wants to show a property that is listed with a competing real estate firm. When must the real estate broker, working with the buyer disclose their agency status to the listing licensee? A. first substantial contact with the firm when the buyer shows serious interest in the property LL2-29 B Licensees must disclose their agency status to other licensees at initial contact. Other licensees deserve to know at the time of initial contact whom the agent represents. Charlene is an active sole proprietor independent broker who teaches school full time. Charlene gives referrals to brokers and she receives referrals. Charlene is not required to be a broker-in-charge or affiliated with a firm so long as she does not: A. Receive any commissions LL2-30 D a full broker is not required to affiliate with or be a BIC unless they: 1) advertise or market in any way 2) maintain a trust account 3) hire other licensees Nonresident commercial licensees are allowed to conduct business in North Carolina if they obtain a limited non-resident commercial brokerage license. Which of the following statements is NOT correct regarding nonresident commercial licensees? A. A nonresident licensee may
advertise in North Carolina, but must indicate in the advertisement "limited nonresident commercial real estate broker." LL2-31 D A limited nonresident commercial licensee must be affiliated with a NC resident broker. All monies must pass through the firm and may not be paid directly to the non-resident licensee. They must file a declaration of affiliation, agree to be subject to the jurisdiction and discipline of the NCREC and their advertising must indicate that they have a "limited nonresident commercial broker license." With regard to brokers-in-charge, all of the following statements are correct, EXCEPT: A. A broker-in-charge may supervise more
than one firm as long as the firms are in the same building LL2-32 B A broker-in-charge is not required to take General Update. They must take Broker Update (BICUP) and one elective. The license is not cancelled. If any licensee fails to complete the proper and required CE, their license becomes "inactive." Even BIC's who do not represent clients must take the CE courses. There are no exceptions. If the BIC becomes inactive, the firm would also become inactive, because a firm cannot operate without a BIC. Which of the following is NOT a correct statement when describing agents and firms responsibilities regarding pocket cards: A. an agent must keep their pocket card on them at all times when conducting real estate business All of the following statements are correct regarding commission rules, EXCEPT: A. should a broker or provisional broker change their name, address or
broker affiliation, they must notify the NCREC within 30 days LL2-34 A Address changes by any licensee must be reported to the NCREC within 10 days. In the event that a licensee fails to deliver, within a reasonable time, a completed copy of any purchase agreement or offer to buy and sell real estate to the buyer and to the seller, the NCREC may take all of the following actions, EXCEPT: A. revoke the agent's license LL2-35 D The NCREC does not set licenses to inactive or expired status. These occur because a licensee failed to complete required education or renew the license, not as a result of disciplinary action A real estate broker is working for more than one firm and more than one broker-in-charge. This would not be a violation of licensing law and commission rules as long as: A. the broker has the consent of both firms and the broker is not a provisional broker Which of the following would result in a conflict of interest for which the licensee could be disciplined by the NCREC? A. an agent working for the buyer notifies the listing agent that the buyer is their sister LL2-37 C The licensee is acting as an agent of the seller. They would need to disclose any family relationship with the buyer and should not be assisting the buyer because a licensee cannot be a sub-agent of the seller and a buyer representative at the same time A buyer's representative is required to reveal their agency status to the seller or listing agent: A. no later than time of offer LL2-38 B The WWREA brochure must be provided to consumers at first substantial contact, however, a licensee is required to disclose their status to the other agent in the transaction at initial contact. An agent is working under an oral buyer's agency agreement. The agent knows the buyer is strongly interested in one of the homes seen by the buyer. The buyer is ready to write the offer, but refuses to sign a buyer's agency agreement. At this point, the agent may: A. write the offer, but advise the buyer they are now a sub-agent of the seller and anything the buyer has revealed must be provided to the seller LL2-39 B Oral buyer agency (non-exclusive agency) may only exist up until the time that the buyer submits an offer. If the licensee does not have a written buyer representation agreement they may not write the offer. With regard to advertising, which of the following is INCORRECT? A. a licensee must have a client's permission before placing a sign in a yard LL2-40 D A licensee may not advertise or market a property without a written listing agreement Which of the following ads would be considered a blind ad? A. Sheila Jones, REALTOR, is available for your assistance. LL2-41 B A blind ad is an advertisement which gives no indication that a licensee or brokerage is involved in the sale of the home. With regard to a real estate agent's pocket card, all of the following are CORRECT, EXCEPT: A. The card indicates whether the agent is a provisional broker or broker. LL2-42 B The pocket card contains the license number, license type and expiration date. It does not contain any information about whether the license is active or inactive. It does not contain the firm name and it does not indicate any education successfully completed by the licensee. All of the following would constitute an illegal action by an inactive broker who is not affiliated with a firm, EXCEPT: A. telling members of a networking club that they are a broker and offering members of the club their services LL2-43 C A licensee who is inactive cannot engage in real estate activity including hosting open houses, advertising and marketing An agent must discuss agency with a prospective buyer or seller at "first substantial contact." This is the moment the consumer begins talking about confidential information, motivation, personals wants, needs and desires or any terms and conditions they would accept regarding purchase of the home. All of the following information is required to be discussed/provided, EXCEPT: A. the agent must discuss their compensation LL2-44 C It is not required for the consumer to sign the brochure panel, but the agent must indicate that it was provided, date the panel and place it in the real estate transaction folder In a NC real estate development subject to the NC subdivision requirements all of the following can occur prior to approval or recordation of the final plat map, EXCEPT: A. offers to purchase and contract may be written and accepted LL2-45 D Transfer of title, closing and coveyance cannot occur until approval of the final plat map John, a North Carolina licensee has completed all of his required post-licensing courses and is currently an active and current North Carolina Broker. He just terminated his affiliation with a BIC. Which of the following is TRUE regarding John. A. He must reaffiliate with a BIC in order to engage in the practice of real estate and in the meantime his license is inactive LL2-46 D John can engage in real estate without affiliation and without becoming a BIC so long as he does not: 1) maintain a trust account 2) hire other licensees or 3) engage in advertising or marketing of any kind A BIC must retain records for the firm for how long? A. 5 years Under the NC Residential Property Disclosure Act, a licensee should inform and request that all of the following sellers complete the Mineral, Oil & Gas (MOG) disclosure, EXCEPT: A. an investor selling a SFR vacation rental unit LL2-48 B The NC Residential Property Disclosure Act applies to all sellers of residential 1-4 unit properties. The MOG disclosure is not required on the transfer of vacant land because it is not considered residential property A buyer has requested that their real estate broker make substantial changes to the offer to purchase and contract. What should the licensee do? A. make certain that any and all changes properly reflect the direction and instructions of their client LL2-49 D Licensees are prohibited from the drafting of contracts and these changes and alterations should be made by an attorney How long does a provisional broker have to dispose of the earnest money check once it has been delivered to them? A. the provisional broker must deposit the money in the trust account no later than 3 banking days from the date of receipt of the money LL2-50 B All monies received by a provisional broker must be delivered to the BIC immediately. The deposit and holding rules are for full brokers and the BIC, not provisional brokers The "delivery of instruments" rule applies to all documents; however a lease is an "exception" to this rule. The property manager, however, must give written notice to the owner of the name of the tenant, the property address and the rental amount within how many days after lease acceptance? A. 7 days Which of the following is correct regarding the handling of money by a provisional broker? A. Earnest money deposits and tenant
security deposits received by a provisional broker must be delivered immediately to their broker-in-charge LL3-2 A Provisional brokers must turn ALL monies over to their BIC immediately. It is true that the due diligence fee is made payable to the seller and does not get deposited into the trust account, but provisional brokers may not hold onto this money. According to the NC Good Funds Settlement Act, when is the settlement agent allowed to disburse money to the seller and the commission check to the broker? A. at settlement LL3-3 D No funds may be dispersed by the settlment agent (usually a closing attorney) until the deed has been recorded. The primary duty of a property manager is to: A. evict disruptive tenants LL3-4 D The property manager is the agent of the owner. The property manager must fulfill fiduciary duties to the owner and is expected to maximize the net revenue consistent with the owner's instructions A provisional broker decides to leave one firm and join a different firm. Which of the following statements best describes the agent's situation: A. the agent must notify the NCREC within five days of their move LL3-5 B Whether the provisional broker will be paid will be determined by their independent contactor agreement with their previous firm. The previous firm can pay the money directly because that is the firm the agent was working for at the time the commission was earned. Real estate agents should carefully follow the guidelines set out in the Residential Square Footage Guidelines brochure. Which of the following is NOT true regarding these guidelines: A. the NCREC requires licensees to measure square footage LL3-6 A NCREC does not require a licensee to measure a home. The Commission rules require a licensee to verify square footage if they are going to report it Joe, a licensee with an active and current real estate license. Joe is selling his house as a For Sale by Owner. All of the following are TRUE, EXCEPT: A. Joe is subject to discipline by NCREC in selling his own property LL3-7 C Joe does not have the same option as a seller to keep silent and check "no representation" regarding defects. He is a licensee and must disclose everything he knows and everything he should have known about the property. A real estate agent has which of the following responsibilities for the Closing Disclosure? A. The agent is responsible for reviewing the Closing Disclosure for their client to make certain it is accurate and complete LL3-8 A A broker has an obligation to review the Closing Disclosure for its accuracy and completeness. All of the following are TRUE in regard to trust accounts and the earning of interest on such monies, EXCEPT: A. the accounts must be balanced and reconciled monthly LL3-9 D A broker may have a trust account with the consent of the client and disperse the interest as agreed. A real estate licensee may perform which of the following activities? A. Draft a legal document on behalf of a client LL3-10 D All of the other answers would be considered the unauthorized practice of law. Since NC is an attorney state, licensees do not engage in any of those activities. Licensees are permitted to fill in preprinted forms including the offer to purchase and contract. A buyer makes an earnest money deposit of $1,500 on a $15,000 property and then withdraws the offer before the seller can accept it. The broker is responsible for disposing of the earnest money by: A. turning it over to the seller LL3-11 C A buyer may always withdraw an offer prior to the seller's acceptance. If the buyer withdraws their offer all due diligence fees and earnest money deposits should be returned to the buyer All of the following could result in disciplinary action by the NC Real Estate Commission for unworthiness or incompetence, EXCEPT: A. failure of the agent to properly complete an offer to purchase and contract LL3-12 D Property managers do not provide depreciation schedules or tax information to the owners of property that they manage A large investment group is interested in purchasing commercial property in North Carolina. They have utilized the services of a properly licensed and active real estate agent from the state of California for many years. They have asked the agent to come to North Carolina to search for and write offers on any commercial properties that meet their needs. Given this information, which of the following statements is correct? A. since the California agent is representing the owners of the investment group and it is the investment groups own property no NC license is required LL3-13 C A non-resident who is licensed in another state and wishes to practice in NC may obtain a non-resident commercial real estate license A listing agent who was a BIC and a sole proprietor received a $500.00 weekend get-away to the North Carolina Mountains from their seller because of the outstanding service the listing agent provided. According to the NC Real Estate Commission Rules this would be acceptable because: A. any amount $500 or less is considered nominal LL3-14 C Licensees may receive compensation in the form of bonuses with the permission of their client and their BIC. Here the sole proprietor is the BIC and can receive the bonus
When is a broker allowed to draft their own lease agreement? LL3-15 C The drafting of leases and contracts is considered the unauthorized practice of law. Licensees only complete preprinted forms approved by the bar association. However, clients may draft their own contracts and agreements, and in this instance the broker is handling their own property, not representing another. With regard to property management agreements, which of the following is NOT correct? A. a property management agreement is a
personal services contract LL3-16 B A property management agreement is not with the licensed leasing agent. It is with the property manager (who must be a full broker) or the property management firm. Regarding BPO's (Broker Price Opinions) all of the following statements are correct, EXCEPT: A. a broker may conduct a BPO for a bank and charge a fee even if the broker has no reasonable chance of getting the listing LL3-17 D Either a broker or a provisional broker may perform a BPO. However, a provisional broker may not charge a fee for doint so. Which of the following would be considered commingling? A. a real estate licensee owns and manages his own investment property. He has placed all security deposits in a trust account, but places each month's rent in his personal checking account LL3-18 C Commingling is the mixing of a client's monies with those belonging to the broker or firm. The broker should not place their own rent into the trust account which is designated for the holding of money belonging to another. When a tenant dies who is the sole occupant of the lease the NC Residential Agreements Act provides that: A. This lease is automatically terminated upon the
death of the tenant and the security deposit may be retained by the landlord or property manager LL3-19 C This is a special provision in the NC Residential Rental Agreements Act that is different than national real estate principles When must a lease be in writing? A. All leases are required to be in writing by the NC Real Estate Commission LL3-20 B The statute of frauds only requires leases to be in writing when they are longer than 3 years. The NC Vacation Rental Act also requires leases subject to that law which are less than 90 days to also be in writing. All of the following properties are exempt from the NC Residential Rental Agreements Act, EXCEPT: A. an investor renting a beach house to an out of state resident for a period of 60 days A landlord is renting a duplex rental unit. All of the following are TRUE regarding utilities connected to the property, EXCEPT: A. the landlord can charge separately for water, sewage and electricity LL3-22 C A landlord is prohibited from disconnecting utilities due to the non-payment of the bills. A disconnection would be considered a "constructive eviction". If the bills are unpaid and the lease provided for their payment, the landlord must pursue an actual eviction of the tenant for breach of the lease. All of the following would be considered an "eminently dangerous" condition which the landlord or property manager must remedy in a reasonable time, EXCEPT: A. lack of an operable toilet LL3-23 D Because inoperable smoke and carbon monoxide detectors pose a direct threat to health and safety both the NC Residential Agreements Act and the NC Residential Rental Contract requires these items to be repaired within 15 days of the receipt of notice of them being inoperable. Which of the following is TRUE regarding tenant security deposits? A. Any licensee or property manager must place such monies into a trust account LL3-24 A Tenant security deposits must be placed into a trust account regardless of whether the owner or landlord is or uses a licensed property manager. Even a private owner must place tenant security deposits in a trust account, although a private owner who is not a licensee is permitted to obtain a bond Janice leased a property that was owned by an investor and managed by a licensed property manager. Janice was recently the victim of a domestic violence assault by her boyfriend who is also named in the lease. All of the following are TRUE, except: A. If request is made of the property manager they must change the locks and the owner must pay for the new locks on the property LL3-25 A Victims of domestic violence have a right to have locks changed within 48 hours or they must be permitted to do so. The person who requested that the locks be changed can be required to pay those costs. Under the NC Residential Rental Agreements Act all of the following can terminate a lease early by giving thirty days notice and without additional penalties for the remainder of the lease, EXCEPT: A. military personnel who receive a station change order 50 miles away LL3-26 B The NC Residential Rental Agreements Act does not create an exception for someone who is transferred by their employer unless that person is a military personnel Jane is a non-provisional broker who is affiliated with ABC Realty. Jane wants to form an LLC entity for legal or tax purposes and have her BIC make her commission checks payable to her LLC. Which of the following is correct? A. A broker affiliated with a firm is prohibited from forming their own entity LL3-27 B Every entity must obtain a firm license. So long as the entity is for compensation only it does not have to have a Broker-in-Charge The North Carolina Real Estate Commission may take which of the following action(s) against a broker-in-charge who has converted and embezzled trust account monies for his own personal use? A. Fine the broker-in-charge LL3-28 B The NCREC does not not get involved in monetary disputes between licensees and consumers. NCREC would not order the licensee to pay damages, reimburse a consumer or return money to a trust account. Those actions may occur by a lawsuit or criminal prosecution, but the Commission's authority is limited to actions that affect the professional license, such as a suspension or revocation. If there is an earnest money dispute between the buyer and seller over the return or forfeiture of earnest money held by the broker, the broker must: A. Release the funds to the proper party according to the terms of the contract LL3-29 C A broker must not release money from a trust account that is in dispute. When there is a dispute the broker must receive an agreement from the parties as to the distribution of funds or a court order. After 90 days the broker may deposit the money with the clerk of courts in the county where the property is located. In verifying and reporting square footage, a real estate licensee may rely on which of the following measurements? A. The square footage determined by the listing agent and placed into MLS. LL3-30 A Real estate licensees should not rely on the owner's representations or any past measurements contained in public records, appraisals or surveys from a previous transaction. They may rely on the measurements performed by other licensees, including the listing agent. Earnest money given in the form of a check on an Offer to Purchase and Contract must be deposited by the BIC into an escrow account: A. No later than three banking days after acceptance of contract The owner of a property tells her listing agent that the home is 2,500 square feet. The listing agent enters this information into the local MLS. A buyer presents an offer which is subsequently accepted by the seller. The appraisal report for the buyer indicates that the home is only 1,500 square feet. The buyer is unhappy and reports the agents to the NC Real Estate Commission. Who would be most subject to disciplinary action and why? A. the listing agent because they have primary responsibility to ensure the accuracy of data. The listing agent would be guilty of negligent
misrepresentation LL3-32 C Although the listing agent had primary responsibility to verify the square footage that they reported for the home, a difference of over a 1,000 square feet is something that the buyer's agent should have known A property manager may: A. advise the owner as to the tax consequences of rental income LL3-33 D Concessions are inducements to attract or retain tenants. With the owner's permission this is permissible. Unlicensed employees cannot negotiate. Property managers do not give tax advice and if the property manager is negotiating rents, they should have authority and approval from the owner before the fact, not after the fact. A builder is offering a $100 gift card to real estate agents if they simply bring a buyer to look at the model home. In this case: A. if an agent has an oral buyer agency agreement, they do not need to disclose to the buyer the possibility of receiving a gift card LL3-34 B An agent can receive gifts or bonuses with the consent of their client. Disclosure should occur prior to the writing of an offer. The receipt of such compensation needs to be put into writing when the licensee has a written employment agreement with the client. The firm holding the earnest money is allowed, by the NC Real Estate Commission to write a check from the trust account to the attorney: A. 3 days before the anticipated settlement
date All of the following are TRUE regarding pet deposits in North Carolina, EXCEPT: A. the landlord or property owner may make the deposit refundable LL3-36 B A property manager or landlord can prohibit pets and charge either refundable or non-refundable deposits. A service animal is not a pet and no deposit may be imposed nor can such animals be prohibited A tenant rents a residential property in an area that has no HOA and in which zoning allows for small businesses to exist in the residences. The landlord stated in the lease agreement that the property could only be used for residential purposes. The tenant wants to open a barbershop. Can the tenant operate the business out of the property? A.
Yes, because the property is zoned for such use LL3-37 B Landlords and tenants can place restrictions in leases that are more restrictive than zoning and HOA requirements. The lease evidences a mutual agreement by the parties as to use of the property A tenant signs a two year residential lease. The landlord or owner subsequently sells or transfers the property eight months later. The new owner has issued the tenant a notice of lease termination. Can the new owner terminate the lease? A. Yes, because sale of a property terminates a lease LL3-38 C Sale of a property does not end a lease and the new owner must honor all existing leases A licensee who is issued a disciplinary notice by the North Carolina Real Estate Commission: A. Must request a hearing within 14 days of the notice LL3-39 D A licensee is always entitled to a hearing in regard to any disciplinary action by the NCREC Which of the following properties are subject to the NC Vacation Rental Act? A. a summer vacation rental that is rented for 180 days LL3-40 D The VRA act applies to residential properties leased to out of state residents for less than 90 days and who are renting the property for vacation, recreation or leisure Sam is selling a NC residential property that is being used as a vacation rental and is subject to the NC Vacation Rental Act. All of the following are true about the sale of this property, EXCEPT: A. the new buyer must honor all existing leases LL3-41 A On a vacation rental unit the new buyer must only honor leases for occupancy that occurs within 180 days of closing The standard form NC Residential Rental Contract provides for all of the following, EXCEPT: A. lead based paint disclosure LL3-42 D Regardless of how a lease ends there is no automatic forfeiture of a security deposit. It must be accounted for and only those deductions permitted by the Tenant Security Deposit Act are permitted. All of the following would be examples of a licensee committing mortgage fraud, EXCEPT: A. misrepresenting on a purchase contract the occupancy of the property to the lender LL3-43 D A licensee can always share commissions with a client so long as the client is not performing brokerage services. How are members of the NC Real Estate Commission chosen? A. they
are elected by the public at large All of the following are true of a firm license, EXCEPT: A. every real estate brokerage that is employing licensees must have a firm license LL3-45 A A firm license is only required in NC when an entity is formed. Every entity must have a firm license, but a brokerage could operate as a sole proprietorship and as such would not be required to have a firm license An unlicensed person who is managing their own rental property is subject to all of the following statutes, EXCEPT: A. Residential Agreements Act LL3-46 C All owners, landlords and managers whether licensed on not must comply with the Residential Rental Agreements Act, the Security Deposit Act and the Vacation Rental Act. Only licensees are subject to the jurisdiction of the NCREC. What is the maximum late fee that a landlord, owner or property manager may charge a tenant for delinquent rent? A. $15
or 5% of the rent, whichever is greater Which of the following statements is correct? A. A broker and a firm must retain all records for three years LL3-48 A All records must be kept for a period of three years. When a broker is delivering 3rd party checks such as the earnest money made payable to a closing attorney and the due diligence fee made payable to the seller. If the contract is accepted and the broker is still in possession of the funds, which of the following is CORRECT: A. the checks must be delivered within 3 banking days LL3-49 C The broker when acting as a courier must follow the buyer's instructions until delivery of the checks has occurred Which of the following 3rd party checks may a broker have in their custody? A. the due diligence fee made payable to the seller and an earnest money check made payable to a 3rd party escrow agent such as the closing attorney LL3-50 A These are the only 3rd party checks that should ever be in the custody of a licensee Who does not need a firm license in NC?Any type of business entity, other than a sole proprietorship, must have a firm license to engage in brokerage.
What is not a requirement to become a broker in Virginia quizlet?What is NOT a requirement to become a broker in Virginia? (minimum qualifications for individual licenses) A broker candidate must have 180 credit-hours of classroom, correspondence, or distance learning study. Buying, selling, or leasing on your own behalf does not require licensure.
Which of the following is a requirement for brokerYou must be 18 years old and above. You must have a Social Security Number (SSN) You must have a high school diploma or its equivalent. You must have two years full-time real estate brokerage experience within the last five years.
Which of the following is a requirement of a brokerWhich of the following is a requirement of a broker-in-charge in South Carolina? c. Must have an ownership interest in the brokerage and be actively engaged in its management and operations.
|