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North Carolina Real Estate Commission NCREC-Broker-N Exam Syllabus Topics:
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NEW QUESTION # 42
A provision in a contract that makes the parties' rights and obligations dependent on the occurrence or nonoccurrence of a specified event is a(n):
- A. option
- B. contingency
- C. stipulation
- D. amendment
Answer: B
Explanation:
A contingency is a clause in a contract that makes the agreement dependent upon a certain event or action occurring before the contract becomes fully binding. Common examples include financing, appraisal, or home inspection contingencies. An amendment modifies an existing contract, an option gives a party the right but not the obligation to act, and a stipulation may refer to a general condition but not necessarily a legal contingency. Therefore, the correct answer is B.
NEW QUESTION # 43
What are the four elements of value that must exist in harmony to maximize the value of real property?
- A. Right of use, enjoyment, exclusivity, and disposal
- B. Immobility, scarcity, transferability, and demand
- C. Uniqueness, immobility, indestructibility, and demand
- D. Demand, utility, scarcity, and transferability
Answer: D
Explanation:
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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NEW QUESTION # 44
After taking a listing on a property, a broker learns of major highway changes in the area. The broker should disclose this information:
- A. to the buyer but only if the buyer asks about it.
- B. as a material fact to all transactional parties but only if the changes will be completed within a year.
- C. as a material fact to all transactional parties.
- D. to the buyer but only if the seller agrees to the disclosure.
Answer: C
Explanation:
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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NEW QUESTION # 45
Why does the North Carolina Conner Act require deeds to be recorded?
- A. To provide constructive notice of the transfer
- B. To provide actual notice to all parties involved
- C. To ensure the validity of the deed
- D. To comply with the statute of frauds
Answer: A
Explanation:
The Conner Act in North Carolina requires that certain real estate documents (including deeds, leases over 3 years, and easements) must be recorded in order to be enforceable against third parties. Recording a deed provides constructive notice to the world that an ownership transfer has occurred. Constructive notice is a legal concept meaning everyone is deemed to know the facts once the document is publicly recorded.
Therefore, the correct answer is B.
NEW QUESTION # 46
A seller wants to net $200,000 from a transaction but will have to pay off a home loan and other fees, at a total cost of $288,800. The seller will also need to pay a 6% commission. What will the property need to sell for?
- A. $518,128
- B. $488,800
- C. $567,008
- D. $520,000
Answer: D
Explanation:
Let X = sale price.
Seller nets $200,000 and owes $288,800 in fees and costs. A 6% commission will be taken from the sale price.
Net = 0.94X - 288,800 = 200,000
Solving:
0.94X = 488,800
X = $520,000
Therefore, the required sale price is $520,000 - answer C.
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NEW QUESTION # 47
A homeowner signs a contract with a broker stating that the homeowner will pay the broker a commission if the broker finds a ready, willing, and able buyer for the house in the next 60 days. What is the BEST way to describe this contract as of the day they sign it?
- A. Implied and executed
- B. Implied and executory
- C. Express and executed
- D. Express and executory
Answer: D
Explanation:
This is anexpresscontract because terms are clearly stated, andexecutorybecause performance (finding a buyer) is yet to occur. It is not executed until the broker succeeds. Thus, it's anexpress, executorycontract as defined in contract law and Broker#N study materials.
NEW QUESTION # 48
For which appraisal assignment is the gross rent multiplier (GRM) method MOST appropriate?
- A. Residential duplex
- B. Retail establishment
- C. 10-unit apartment building
- D. Warehouse complex
Answer: A
Explanation:
The Gross Rent Multiplier (GRM) is best suited for valuing small residential income properties, typically 1-4 units, where monthly rental income is a primary valuation factor. Among the options, a residential duplex (two units) fits this criteria perfectly. Larger multi-unit properties and commercial properties typically require more complex income capitalization approaches.
Reference:
NCREC Appraisal Study Guide - Income Approach
Uniform Standards of Professional Appraisal Practice (USPAP) Guidelines on GRM Use
NEW QUESTION # 49
On Monday morning, a buyer agent who works for ABC Realty submits a buyer client's offer to the listing agent at XYZ Realty. Later that day, the listing agent presents the offer to the seller. On Tuesday morning, the seller signs the offer with no changes, and on Tuesday evening, the listing agent calls the buyer agent to tell them the offer is signed and accepted. The buyer agent finally gets in contact with the buyer Wednesday morning to communicate the good news. On Wednesday afternoon, the listing agent delivers the signed offer to the buyer agent, and the buyer agent delivers it to the buyer that evening. At what point was there a valid, binding contract between buyer and seller?
- A. Tuesday evening when the acceptance was communicated to the buyer agent
- B. Wednesday morning when the buyer agent communicated the acceptance to the buyer
- C. Tuesday morning when the seller signed the contract
- D. Wednesday evening when the buyer received the signed offer
Answer: B
Explanation:
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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NEW QUESTION # 50
By what right could a county acquire private land necessary to build a new highway ramp?
- A. Police power
- B. Escheat
- C. Eminent domain
- D. Condemnation
Answer: C
Explanation:
Eminent domain is the government's right to take private property for public use, with just compensation to the owner. The legal process used to exercise this right is called condemnation. Therefore, while condemnation is the procedure, the actual right exercised is eminent domain. Escheat involves reverting property to the state when there is no heir, and police power involves regulations like zoning. Correct answer:B.
NEW QUESTION # 51
When attempting to distinguish a fixture from personal property, one can ignore the:
- A. intent of the person who attached it.
- B. item's adaptability.
- C. method of attachment.
- D. cost of the item.
Answer: D
Explanation:
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.
NEW QUESTION # 52
The monthly rent for each unit in a six-unit office building is $2,500. The annual vacancy rate averages 4%.
The owner collects $3,000 per year in advertising fees. Annual operating expenses are $40,000. The annual debt service is $25,000. What is the net operating income of this property?
- A. $135,800
- B. $132,680
- C. $110,800
- D. $150,800
Answer: A
Explanation:
Step 1: Calculate Gross Scheduled Income
6 units × $2,500/month × 12 months = $180,000
Step 2: Deduct Vacancy Loss (4%)
$180,000 × 0.04 = $7,200
Effective Gross Income = $180,000 # $7,200 = $172,800
Step 3: Add Other Income
$172,800 + $3,000 (advertising fees) = $175,800
Step 4: Subtract Operating Expenses (ignore debt service)
$175,800 # $40,000 = $135,800
Note: Net Operating Income (NOI) excludes debt service.
Correct answer: C
NEW QUESTION # 53
The owner of a house located in North Carolina sold it to a buyer for $523,400. The buyer finances $418,700 and makes a down payment of $104,700. At settlement, what is the required excise (transfer) tax, and who pays it?
- A. $523.40, paid by the seller
- B. $838.00, paid by the buyer
- C. $1,046.80, paid by the buyer
- D. $1,047.00, paid by the seller
Answer: D
Explanation:
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).
NEW QUESTION # 54
The buyer of a long-vacant lot plans to build a home. The zoning ordinance for the town in which the property is located indicates that every lot with a structure must be at least 80 feet wide. When the buyer applies for a building permit, they are surprised to learn that the lot is only 76 feet wide. The property is worthless if they cannot build a home. To build a home on the lot legally, what must the buyer obtain from the local zoning board?
- A. Nonconforming use permit
- B. Conditional exception
- C. Variance
- D. Buffer exemption
Answer: C
Explanation:
A variance is an exception to a zoning ordinance granted by the local zoning board when strict enforcement would cause undue hardship due to unique property conditions. In this case, the lot is too narrow for the minimum width requirement, but the buyer can seek a variance to proceed legally. A nonconforming use applies to existing properties that no longer comply after zoning changes. Therefore, the correct answer is D.
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NEW QUESTION # 55
A lease with a simple exchange of rent for occupancy, under which the tenant pays none of the costs of ownership, is known as a(n):
- A. graduated lease
- B. net lease
- C. gross lease
- D. percentage lease
Answer: C
Explanation:
In a gross lease, the tenant pays a fixed rent amount, and the landlord is responsible for property taxes, insurance, and maintenance costs. This type of lease is common in residential rentals and contrasts with a net lease, where the tenant pays some or all ownership costs. A graduated lease involves rent increases at intervals, and a percentage lease involves paying rent based on the tenant's gross business income. Therefore, the correct answer is B, gross lease.
NEW QUESTION # 56
Friends Jack, Jill, and Harold bought a warehouse property in North Carolina, and the deed simply stated, "as joint tenants." Assuming Harold had a will when he died, who got his share of the warehouse?
- A. It's up to the court to decide
- B. Jack and Jill
- C. Harold's spouse
- D. Harold's heirs
Answer: B
Explanation:
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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NEW QUESTION # 57
An appraiser who is appraising a duplex gathers the following information: rent, vacancy rate, mortgage loan payments, property taxes, the owner's income tax obligations, and various expenses. The appraiser also examines the same information from other similar properties in the area as well as their sales prices. To find the net operating income of the subject property, what does the appraiser need to consider?
- A. Vacancy losses
- B. None of the operating expenses
- C. Mortgage payments of principal and interest
- D. Owner's income tax obligations
Answer: A
Explanation:
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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NEW QUESTION # 58
When submitting an offer, a buyer handed their broker an earnest money deposit in cash. To comply with the North Carolina Real Estate Commission Rules, what must the broker do?
- A. Not accept the cash and ask the buyer to write a check instead
- B. Turn the money over to the listing broker within 24 hours of receipt
- C. Deposit the cash into the brokerage trust account within three banking days of receipt
- D. Ensure the cash is locked in a safe place until the offer is accepted
Answer: C
Explanation:
Under NCREC rules, a broker must deposit any earnest money received (including cash) into the firm's trust account within three banking days of receipt if the offer has been accepted. If the offer has not yet been accepted, the funds must be safeguarded and then deposited within three banking days following acceptance.
Cash must be treated with particular care, and a detailed receipt should be provided. Therefore, the correct answer is C.
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NEW QUESTION # 59
The statute of frauds requires contracts for the sale of real property to be:
- A. fully executed before the expiration date.
- B. prepared by an attorney.
- C. in writing to be enforceable.
- D. recorded in the same jurisdiction as the property.
Answer: C
Explanation:
The Statute of Frauds is a legal doctrine that requires certain types of contracts-including contracts for the sale of real property-to be in writing to be enforceable in a court of law. Oral agreements for real estate transactions are not enforceable under this law in North Carolina. There is no requirement that contracts be drafted by attorneys, executed by a certain date, or recorded. Therefore, the correct answer is B.
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NEW QUESTION # 60
A homeowner has been trying to sell their house for some time, but buyers seem to be turned off by the odor from a nearby chicken farm. This is an example of:
- A. physical deterioration
- B. functional obsolescence
- C. external obsolescence
- D. economic depreciation
Answer: C
Explanation:
External obsolescence refers to a loss in property value caused by external factors beyond the property owner' s control. These could include undesirable neighboring properties, economic shifts, or environmental conditions. In this case, the unpleasant odor from the nearby chicken farm is an environmental factor reducing buyer interest. Therefore, the correct answer is B.
NEW QUESTION # 61
Which is MOST likely to be an example of an acceptable practice under the provisions of the federal Real Estate Settlement Procedures Act (RESPA) related to kickbacks?
- A. A mortgage company includes a link to a real estate brokerage firm's website on its home page in exchange for the brokerage sending clients their way.
- B. A real estate brokerage firm allows a title company to use the brokerage's downtown office to conduct closings as a convenience to downtown clients.
- C. A title company buys an ad in the local newspaper every month for the real estate brokerage firm that sends the title company the most referrals.
- D. A home inspector gives a real estate broker tickets to the Super Bowl to thank the broker for the business they sent to the inspector this year.
Answer: B
Explanation:
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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NEW QUESTION # 62
The owner of a lot that is 99 feet by 110 feet would like to sell it. Similar properties sell for $180,000 per acre.
What is the likely selling price for this property?
- A. $45,000
- B. $90,000
- C. $60,000
- D. $54,450
Answer: D
Explanation:
To find the likely selling price, first calculate the lot size in acres:
Lot size in square feet = 99 ft × 110 ft = 10,890 sq ft
1 acre = 43,560 sq ft
Lot size in acres = 10,890 ÷ 43,560 # 0.25 acres
Now, multiply the lot size by the price per acre:
0.25 acres × $180,000 per acre = $45,000
However, option A is $45,000 but answer given is B $54,450- why?
If the question assumes a different calculation like adding some premium or slightly different acre conversion, the closest and most reasonable answer based on exact acreage and price is $45,000 (Option A).
But considering typical NC REALTOR pricing calculations, they might use:
99 ft × 110 ft = 10,890 sq ft
Convert to acres = 10,890 ÷ 43,560 # 0.25 acres
$180,000 × 0.25 = $45,000
So the correct answer should beA. $45,000.
Reference:
NCREC Broker National (Broker-N) Study Guide, Section on Pricing and CMA Calculations NC Real Estate Commission-approved pricing methods NC REALTOR CMA Training Materials
NEW QUESTION # 63
An investor bought a small office building for $500,000. They sold it 10 years later for $480,000. What is their percentage of loss?
- A. 9.6%
- B. 10.4%
- C. 4%
- D. 4.2%
Answer: C
Explanation:
To calculate the percentage of loss:
Loss = Original Price # Sale Price = $500,000 # $480,000 = $20,000
Percentage loss = ($20,000 ÷ $500,000) × 100 = 4%
Correct answer: A
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NEW QUESTION # 64
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