For a contract to be legally binding it must.

Mutual Assent, Legal Purpose, competent parties & consideration

What should a broker disclose to a client before entering into an agreement?

disclose to a client if there are any conflicts of interest

An offer becomes a legally binding contract when?

When it is signed and communicated back to the offeror

Trade fixtures are personal property unless the item was removed before?

The expiration date of the lease

What is Functional Obsolescence?

when your house is outdated or has an outdated feature

When a broker receives earnest money when should they deposit it?

Trust funds must be deposited within 3 days into the trust account

What powers does the real estate commission have?

Power to set fees and impose disciplinary actions.

How does an appraiser determine his or her appraiser fee?

amount of time, work and resources required for the job

At closing, how would a buyer best protect themselves from a title defect or cloud?

Owners Title Coverage Insurance

In an installment land sales contract, what type of title is given to purchaser? Kind does the seller have?

Equitable Title; seller has legal title

How should a listing agent handle a situation when they are under contract and receive another offer?

Make the new offer a back up offer

After squatting on another's land for a lengthy period of time, that person might file what?

Quiet title action to get adverse possession

Which of the following terminates an agency agreement?

Both parties agree to part ways

What is pre-approval? What does the lender do before issuing that approval letter?

Preliminary Qualifying Technique/check credit, income & debt

How are most encroachments found?

Surveys uncover most encroachments

What is Statute of Frauds?

Contracts in writing to be legally enforceable

What are the protected classes under Federal Fair Housing?

Family status, race, sex, handicapped, color, religion, national origin

What terms are used in a Metes and Bounds legal description?

monuments, point of beginning, point of end

When must offers be submitted to a seller?

Immediately or within 3 days max

How would a salesperson avoid entering into dual agency?

Treat one party as a customer and the other party as a client

When must an agent follow the instructions of the client?

Agents must obey the client unless, its unethical or illegal

What are the 4 elements to a contract?

Competent Parties Mutual Assent Consideration Lawful Purpose

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NC Real Estate Prelicensing Final Quiz 1

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Questions 91

Answers

1
For a contract to be legally binding it must.
Both B & C
Legal Purpose, Mutual Assent, Earnest money, consideration
Mutual Assent, Legal Purpose, competent parties & consideration
Be of sound mind, have competent parties, consideration and illegal purpose
2
When will earnest money be transferred to the closing attorney?
10 days before closing
All of the above
At the time of closing
within 30 days
3
What should a broker disclose to a client before entering into an agreement?
all of the above
disclose to a client if there are any conflicts of interest
disclose to a client if the area is predominantly one race
disclose to a client if they qualify to buy a home
4
An offer becomes a legally binding contract when?
When it is signed and communicated back to the offeror
When it is post marked and sent back to the original offeror
When the commissioner approves it
When it is filed in the courts
5
How is the priority of liens determined?
by the judge
The value of the lien
date of recordation
The date of recordation and the value of the lien
6
Can a restrictive covenant allow only a certain group of people in a subdivision?
Yes, if it is their belief
No
Yes if approved by the commissioner
Yes if it is in the brokers policy
7
Trade fixtures are personal property unless the item was removed before?
expiration date of the lease and the new tenant has moved in
The expiration date of the lease
all of the above
The new tenants move in
8
Earnest money can be in what forms?
certified funds
cashier's check
anything of value that both parties accept and agree to
all of the above
9
What is Functional Obsolescence?
when you have the worst house on the block
when your house is outdated or has an outdated feature
when you have the best house on the block
all of the above
10
When a broker receives earnest money when should they deposit it?
Trust funds must deposit before closing in brokers account
Trust funds must be deposited at closing in brokers account
Trust funds must be deposited within 3 days into the trust account
Trust funds must deposit within 7 days in brokers account
11
What powers does the real estate commission have?
Power to set fees and impose disciplinary actions.
The power to increase commission rates at a broker's firm
All of the above
Power to waive state testing
12
How many real estate commissioners are there
9
6
3
7
13
How does an appraiser determine his or her appraiser fee?
The address, amount of time, work and resources
amount of time, work and resources required for the job
Both A & B
A percentage of the market value of the house
14
Is North Carolina a lien theory or title theory state and are they judicial or non judicial?
title theory and non judicial
title theory and judicial
lien theory and non judicial
lien theory and judicial
15
Who does an agent owe loyalty to?
client and customer
broker, client and customer
client
broker and client
16
What violation is committed when two licenses conspire to set prices/fees?
Federal Housing Act
Equal Opportunity Act
All of the above
Anti-Trust laws
17
What are the benefits to a lender when receiving discount points?
It reduces the sellers cost
All of the above
It increases the brokers commission
It increases the lender yield
18
What would an appraiser begin with for a replacement cost approach when valuing a property?
Measuring Square Footage
How much the last similiar property sold for in the neighborhood
How many bathrooms the property has
How much the property last sold for
19
What are the trigger terms of Regulation Z?
All of the above
The total APR
The amount of the monthly payment
The amount of down payment
20
At closing, how would a buyer best protect themselves from a title defect or cloud?
Mortgage Cancellation Insurance
Owners Title Coverage Insurance
All of the above
Life Insurance
21
Why do lenders sell their mortgage notes on a secondary mortgage?
To write more mortgages
To get more capital to lend
all of the above
To be able to lower interest rates
22
What right gives an owner legal use of a water non navigable stream that adjoins his property?
Riparian and Littoral Rights
Littoral rights
Riparian right
None of the above
23
What are the requirements for one to be a grantee in a deed transfer?
They must be put in a will
They must be named
all of the above
They must be a living heir
24
Can a real estate licensee perform an appraisal?
Yes if they are a licensed appraiser
No, they cannot
Both C & D
Yes if their broker allows it
25
In an installment land sales contract, what type of title is given to purchaser? Kind does the seller have?
Legal Title; seller will have equitable title
Seller will have both equitable title and legal title
None of the above
Equitable Title; seller has legal title
26
Conspiring to fix list prices or commission rates are violating what?
Fair Housing Act
Sherman Anti-Trust
All of the above
Federal Commission By Laws
27
How should a listing agent handle a situation when they are under contract and receive another offer?
Accept both offers & close on the one with the soonest date
Make the new offer a back up offer
None of the above
Decide to take the new offer and cancel the accepted offer
28
Is a lease with an option to purchase a unilateral or bilateral contract? Who can be enforced to act?
Unilateral, owner/landlord
Bilateral, landlord
Unilateral, landlord
Bilateral, owner
29
After squatting on another's land for a lengthy period of time, that person might file what?
quit claim deed to get adverse possession
constructive eviction to get adverse possession
Quiet title action to get adverse possession
all of the above
30
Which of the following terminates an agency agreement?
If permission is granted from the commissioners office
If one party is tired of the other
None of the above
Both parties agree to part ways
31
What is pre-approval? What does the lender do before issuing that approval letter?
Guarantee Approval Technique/check credit, income & debt
None of the above
Preliminary Qualifying Technique/tax returns, credit, income
Preliminary Qualifying Technique/check credit, income & debt
32
Grantee fails to record a deed, his cousin races to the courthouse and records the deed in his name, who now owns it
1st person to move in
1st person to record the deed
1st person to record the deed and change address with USPS
1st person to change address with USPS
33
How are most encroachments found?
Appraisals uncover most encroachments
Surveys uncover most encroachments
All of the above
Mortgage Companies uncover most encroachments
34
Under RESPA, the lender has how long to get the applicant a loan estimate?
2 days
7 days
5 days
3 days
35
What is Statute of Frauds?
Contracts in writing to be legally enforceable
Contracts post marked to be legally enforceable
None of the above
Contracts accepted verbally to be legally enforceable
36
What are the protected classes under Federal Fair Housing?
Family status, race, sex, handicapped, color, religion, national origin
Race, relign, color, nat origin, sex, sexual preference
Race, relign, color, nat origin, sex, familiar status
None of the above
37
Does the real estate commission decide what commissions brokers can charge?
None of the above
No, the cannot
Yes, everything must be approved through them
Yes, it is based on the Security Bond the Broker has
38
What terms are used in a Metes and Bounds legal description?
lot and block
monuments, point of beginning, point of end
all of the above
township, baseline, meridian
39
When must offers be submitted to a seller?
withing 7 days of acceptance
Immediately or within 3 days max
Only between 8 am and 9 pm
All of the above
40
Another name for "meeting of the minds" is?
Mutual Consent
Mutual Assent
Statues de Fraudes
Cam Spam Act
41
Which of the following is a type of exaggeration?
all of the above
Over pricing the home
Slandering
Puffing
42
How would a salesperson avoid entering into dual agency?
Allow their spouse to work with the other client
Treat one party as a customer and the other party as a client
Dont represent either party and refer them out
Treat both parties as a customer
43
When must an agent follow the instructions of the client?
Agents must always obey the client
Agents must obey the client unless, its unethical or illegal
none of the above
Agents must never obey the client, only the broker
44
Joint tenant transfers ownership of their shares, what manner does the grantee take it?
joint tenancy
sole ownership
none of the above
tenants in common
45
What does the Federal Truth in Lending Act require?
All of the above
ANTI-TRUST LAWS
disclosure of all closing cost
POLAND
46
If an appraiser is using net operating income, he/she will be using what appraisal method?
GRM Rate
All of the above
Interest Rate
CAP Rate
47
What are the powers under the government rights to police power?
Zoning, building codes and lawful purpose
none of the above
Zoning and building codes
Zoning, building codes and non-conforming use.
48
What are the 4 elements to a contract?
Competent Parties Mutual Assent Back End Lawful Purpose
Competent Parties, Front End, Consideration, Lawful Purpose
Competent Parties Mutual Assent Consideration Lawful Purpose
Competent Parties, Earnest Money, Agreement, Lawful Purpose
49
As it relates to points, what does 1 point amount to as it relates to the amount paid?
1% of the commission
All of the above
1% of the appraisal value
1% of the loan amount
50
How do you calculate commission to be paid?
SP x Commission Rate
SP x Interest Rate
SP / Interest Rate
SP / Commission Rate
51
Is Fructus Industriales real or personal property?
Real and personal Property
Real property
personal property
It is not a property at all
52
How would one use GRM to value a property and how should they evaluate it?
Sold price of comp ÷ rent rate= GRM
Sold price of comp x rent ÷ interest rate=GRM
Sold price of comp X interest rate=GRM
Sold price of comp ÷ interest rate=GRM
53
Differences between general agency, universal agency and special agency?
Special agency the agent can perform one task
General Agency has the authority to perform continuously
All of the above
Universal Agency has authority to act as client
54
How long can a broker legally hold earnest money without depositing it?
14 days or less
10 days or less
7 days or less
3 days or less
55
What is a promissory note?
quiet action title
all of the above
A quit claim deed
Evidence of a debt
56
What are the duties a broker owes a customer?
Honesty (fairness), Accountability Reasonable care, Material facts
Honesty, Loyalty, Trustworthiness
Loyalty, Honesty, Integrity, Trustworthiness
Loyalty, Honesty, Integrity
57
What does a subordination clause means in a mortgage?
Both A & C
None of the above
all lenders dividing the money equally
one lender give another lender higher priority in lien
58
If an appraiser were valuing a church, what approach would be best suited for this property?
Income Capitalization Approach
Sales Comparison Approach
All of the above
Replacement Cost Approach
59
A purchase agreement is bilateral or unilateral? Expressed or Implied?
bilateral, expressed
unilateral, expressed
bilateral, implied
unilateral, implied
60
What are the remedies for a buyer if the seller defaults?
all of the above
Sue for specific performance
Return the earnest money
Report the broker to the commissioner
61
Which lien is superior to all others?
commercial broker lien
tax liens
mechanical liens
mortgage liens
62
How does supply and demand effect housing?
both A & B
When supply goes up, the cost of a property goes up
When supply goes down, the cost of a property goes up
When supply goes down, the cost of demand goes down
63
What kind of permission does a broker have to have to make changes to a listing?
Written agreement to make any changes to a listing.
Verbal consent from the seller.
A text or email from the seller
all of the above
64
In any advertising, the sales person must also include whose name?
None of the above
The sellers and the broker's
The broker's
broker and firm
65
Does an agent have to disclose a material fact that he/she knows about?
Yes they do
Only when a contract is received signed
Only if the customer asks
No, because they are not a client
66
What are the different types of depreciation?
All of the Above
Physical Deterioration
Functional Obsolescence
Economic Obsolescence
67
What is a Constructive Eviction?
None of the above
When the landlord does not need to go to court to evict
When the landlord takes the tenant to court to evict them
When the tenant goes to court to be let out of a lease.
68
Someone buys another's equal share of land that they own with 2 others, what ownership is this?
Tenant in common
sole owner
none of the above
joint tenancy
69
A licensee cannot come up with a list price due to a unique situation, who should they refer to
appraiser
courts
commissioner
broker
70
The only fee(s) RESPA will allow a lender to charge before receiving the loan estimate is
all of the above
credit report
application fee
appraisal fee
71
What is the required down payment of a VA loan?
2 %
10 %
0
3 %
72
When can an offer be treated as a Back-up contract?
When a property is already under contract
Before any offer is accepted
None of the above
After closing
73
What does the power of sale clause do?
Allows the courts to take possession of the house
None of the above
Provision that stops a lender to foreclose without filing
Provision that enables a lender to foreclose without filing
74
When is a commission earned by a broker?
When they produce a ready, willing and able buyer.
When they get the seller to sign the listing agreement
When they do an open house
All of the above
75
Does a R.E. license give a broker the right to draft an original contract?
No, brokers cannot draft original or complex contracts
Both A & B
Yes if they have taken the certification to draft contracts class
Yes, brokers can draft original or complex contracts
76
What does Regulation Z require?
Disclosure of simple interest rate or annual percentage rate based on loan
Disclosure of simple interest rate and annual percentage rate
Disclosure of annual percentage rate and loan costs
Disclosure of simple interest rate
77
An offeror can rescind their offer up until what time?
until communication of the accepted offer.
until the date of closing
none of the above
right after communication of the accepted offer
78
What will make an offer become a counter offer?
If the offeror makes any changes
If the offeree or the offeror makes any changes
None of the above
If the offeree makes any changes
79
If the seller doesnt discuss keeping a fixture, can they remove it after being under contract?
No, because it is attached to the home
Yes because it was not built with the house foundation.
No, it has to be excluded in writing in the offer to purchase
Yes, because they have the receipt for it.
80
What can a home owner do to stop another homeowners violation of a deed restriction?
Report it to their mortgage company
Put a mechanic lien on them
Take them to court
All of the above
81
As relating to landlords what does the covenant of quiet enjoyment mean to the tenant?
all of the above
The landlord will not sell the house while tenant is in it
The landlord will not interfere unduly or enter without prior notice
will not be interfered with anyone claiming superior title
82
What are some characteristics of a condominium?
you own everything in between the interior walls
You own the lot and everything in between the interior walls
all of the above
you own the common areas as a tenant in common
83
How long can a licensee call a person whom they once did business with?
Up to 18 months
Up to 6 months
Up to 3 months
Up to 12 months
84
What does the covenant of warranty forever say?
Grantor will not compensate the grantee
Grantor promises to compensate the grantee if title issues occur
None of the above
Grantor will go half with grantee on fees
85
Who signs and gives the mortgage note?
The lender signs and gives the agreement to the borrower
The borrower signs and gives the agreement to the lender
The FHA signs and gives to the borrower
The broker signs and gives to the borrower
86
What are the licensing requirements for a broker in North Carolina?
all of the above
The broker has to be at least 18 years old
The broker has to complete 75 hours of prelicensing education
Be of good moral character and pass the state exam
87
RESPA requires what fees to be listed on a closing statement?
None of the above
The mortgage note and appraisal price only.
All cost associated with financing the transaction.
The appraisal price, mortgage note and attorney fees.
88
What is an estate at sufferance?
Leasehold estate where the tenant becomes the new owner
Leasehold estate where the tenant files a quit claim deed
Leasehold estate where the tenant files a quiet action title
Leasehold estate where the tenant has over stayed the lease
89
How does a buyer get his earnest money back?
All of the above
Terminate before end of DDP or as a credit at closing
He can write a letter to the seller explaining his situation
Terminate after DDP or with seller permission
90
Who would be ordered to pay just compensation in eminent domain and why?
government; because of eminent domain must be for public good
lender; because of eminent domain must be for lower interest rate
Both B & C
government; because of police power
91
What would be the overall job of a broker working as the property Manager of an apt building?
Get all applicants qualified
Make sure the office is open at 8 am
All of the above
Maximize the return on the client investment

NC Real Estate Prelicensing Final Quiz 1 Flashcards | StudBud