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

In the rectangular (government) survey system, north-south lines (called principal meridians and range lines) and east-west lines (called base lines and township lines) intersect to form squares known as townships. Townships are 6 miles by 6 miles and are further divided into 36 sections. Therefore, the correct answer is D – townships.

Under NC General Statutes Chapter 42A (Vacation Rental Act), a landlord may employ theexpedited eviction process(using magistrate and four-hour notice) when a tenant under a vacation rental agreement (30 days or fewer) breaches the contract—such as overstaying, failing to pay rent, or materially violating terms. A two-week vacation rental falls under this provisionsog.unc.edufairhousingnc.org+14ncleg.gov+14nclamp.gov+14fairhousingnc.org. Option A is standard eviction, not expedited; B and C don't qualify under expedited procedures.

Capital gain is determined by subtracting theadjusted basis(original cost plus improvements minus depreciation) from theamount realized(selling price minus selling costs). This matchesAmount Realized – Adjusted Basisas per the Broker‑N Financing and Taxation section.

Under North Carolina Real Estate Commission (NCREC) rules, a broker may begin working with a buyer under oral buyer agency but must have a signed, written buyer agency agreement in place before presenting any offer on behalf of that buyer. Oral agency cannot be exclusive or have a defined time frame. Additionally, the broker must provide the Working with Real Estate Agents Disclosure at first substantial contact. Therefore, oral buyer agency is permissible temporarily but must convert to a written agreement before drafting or presenting an offer, making option C correct.

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

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A general agent is authorized to handle a broad range of matters for a client, such as property management or handling day-to-day operations of a business or estate. In this case, the broker is managing all aspects of the investor’s real estate portfolio, which qualifies as a general agency relationship. A special agent performs only specific tasks (like listing or selling a single property), and a universal agent has unlimited authority, which is rare. Therefore, the correct answer is B.

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An option contract gives the buyer (optionee) the exclusive right, but not the obligation, to purchase a property at a predetermined price within a specified time. The seller (optionor), however, is bound by the terms of the contract and must sell if the buyer exercises the option. Consideration (often a non-refundable option fee) is required to make the option enforceable. Therefore, the seller is obligated to sell if the buyer chooses to exercise the option, making statement B true.

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According to North Carolina law, brokers are not required to disclose psychological stigmas such as death, illness, or belief in haunting. However, the manufacture of methamphetamine is a material fact due to health and safety hazards and must be disclosed. Therefore, answer B is correct.

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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When a broker represents both the buyer and the seller in the same transaction, dual agency arises. In North Carolina, dual agency must be disclosed and agreed to in writing by both parties before it can occur. If the agent is acting for both parties (listing and buyer agency) and this relationship has not been formally disclosed and agreed upon, it creates an undisclosed and therefore illegal dual agency. Correct answer: D.

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Under the federal Residential Lead-Based Paint Hazard Reduction Act, sellers of residential property built before 1978 must:

Disclose any known lead-based paint or hazards.

Provide copies of any available reports or records.

Provide the EPA’s lead hazard information pamphlet.

Allow the buyer a 10-day inspection period (unless waived).

Sellers are not required to test for or remove lead paint. Therefore, the correct answer is B.

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In North Carolina, a nonexclusive buyer agency agreement that does not include a specific time period can initially be oral. However, before writing or presenting any offers on behalf of the buyer, the agreement must be put into writing and signed. Exclusive buyer agency agreements and any agreement that includes a fixed term must be in writing from the beginning. Therefore, the correct answer is D.

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In appraisal practice, when adjusting a comparable property to reflect differences from the subject property, the adjustment is always made to the comparable. Since the comparable has a finished basement worth $10,000 and the subject does not, we subtract $10,000 from the comparable's sale price to estimate what it would have sold for if it were more like the subject.

$300,000 − $10,000 = $290,000.

Therefore, the correct answer is A.

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Under the federal Lead-Based Paint Hazard Reduction Act, for residential properties built before 1978, sellers must provide buyers with a lead-based paint disclosure, a copy of any existing reports, and a federally approved lead hazard information pamphlet. In addition, buyers must be given a 10-day period to conduct their own lead inspection or risk assessment (unless waived in writing). Sellers are not required to test or remediate. Therefore, the correct answer is B.

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A Comparative Market Analysis (CMA) is a tool used by real estate brokers to estimate the probable selling price of a property based on recently sold, active, and expired listings of similar properties. The primary purpose is to assist a seller in determining a reasonable and competitive listing price. Unlike a formal appraisal, a CMA is not intended for use by appraisers, insurers, or lenders. Therefore, the correct answer is C.

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A slab-on-grade foundation is a flat concrete slab poured directly on the ground, often used in warmer climates where ground freezing is not an issue. It supports the building structure directly and does not include a crawl space or basement. Pier and beam and post and beam refer to elevated structures, while platform construction refers to framing, not the foundation. Therefore, the correct answer is D.

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The total commission earned was 7% of the final sales price ($695,000 × 0.07 = $48,650).

The cooperating (buyer’s) broker received 3% ($695,000 × 0.03 = $20,850).

The listing brokerage firm retained the difference:

$48,650 – $20,850 = $27,800.

So, the listing firm earned $27,800 — answer C.

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Anexclusive right to selllisting gives one broker the sole authority to market and sell a property. The broker is entitled to a commissionno matter who procures the buyer, even if the seller finds the buyer independently during the listing period commission payment upon sale within the term—matchingoption A. Option B is false (that applies to exclusive agency); C applies to open or exclusive-agency; and D conflicts with the exclusivity provision.

According to the North Carolina Real Estate Commission Rules, a broker must present all offers “immediately, but in no event later than three calendar days from the date of receipt.” This rule ensures timely communication with clients, particularly in fast-moving markets. While best practice is to present the offer as soon as possible, the legal maximum is three calendar days. Therefore, the correct answer is D.

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Under theNorth Carolina Condominium Act (N.C.G.S. Chapter 47C), the buyer of a condominium unit has a7-day right of rescission only for new condominiums, meaning units offered for sale in a project not yet completed or occupied. For units in a condominium community that are more than one year old,there is no statutory right to rescind the contractonce signed. Since this is a 10-year-old unit, the buyer doesnothave a rescission period.

In North Carolina, salaried employees working under a licensed brokerage or property management firm may engage in certain administrative or ministerial tasks without a real estate license—such as showing rental units, collecting rent, and accepting applications. However, negotiating lease terms or the amount of a security deposit involves brokerage-level activity and requires a real estate license. Therefore, the correct answer is C.

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Commingling is the illegal act of mixing a client’s funds—such as earnest money—with the broker’s personal or business funds. North Carolina law strictly prohibits brokers from depositing trust money (like earnest deposits) into the firm’s general operating account. In this case, the broker used the funds to pay rent, which could also constitute conversion (intentional misuse). But since the question specifically addresses the deposit, the correct answer is B – commingling.

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NC brokers are bound by an affirmative duty to both discover and disclose material facts to all parties in a transaction, not just their clients. This includes facts they know or should reasonably know, such as structural defects, zoning violations, or environmental issues. This duty exists regardless of whom the broker represents. Therefore, option A is correct.

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Encroachmentis a physical intrusion by a structure onto neighboring property. A garage that crosses property lines without permission is the textbook definition of encroachment, matching optionD. Options A and B involve non-physical use rights (easements), and C describes trespass or nuisance—but not an encroachment. Thus,Dis accurate per NCREC definitions.

In the sales comparison approach, appraisers always make adjustments to the comparable properties — never to the subject property — to reflect how they differ from the subject. This ensures that all comparables are on an equal footing with the subject being appraised. Thus, answer B is correct.

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

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

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Under the federal Fair Housing Act, religious organizations may limit occupancy of their non-profit housing to persons of the same religion, provided the property is not operated commercially and there is no discrimination based on race, color, or national origin. Thus, option D is correct — the charity may lawfully restrict tenancy to members of its own faith.

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FHA mortgage qualification uses two ratios:

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

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

Step 1: Calculate max housing (front-end)

31% × $6,800 = $2,108

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

43% × $6,800 = $2,924

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

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

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

Correct Answer: A

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

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A bill of sale is the legal instrument used to transfer ownership of personal property—such as a tractor—from one party to another. While a deed is used for real property, and a personal property addendum may list included items in a real estate contract, the actual transfer of ownership for non-real items like equipment requires a bill of sale. Therefore, the correct answer is D.

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Redlining refers to the illegal practice by lenders of denying loans or altering loan terms based on the racial or ethnic composition of a neighborhood. This violates federal fair housing laws and is discriminatory in nature. Blockbusting involves inducing sellers to sell by suggesting that a minority group is moving in; steering involves directing buyers to or from neighborhoods based on race; boycotting is an antitrust violation. Therefore, C is the correct answer.

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Under the NC Tenant Security Deposit Act, for leases longer than month-to-month, landlords may charge a maximum security deposit equal to two months’ rent. In this case:

$1,500 × 2 = $3,000 maximum allowed.

However, the correct answer option closest to this is C: $2,250. Let's re-check.

Upon review:

If the lease is longer than month-to-month (e.g., annual lease), the maximum deposit is 2 months' rent:

$1,500 × 2 = $3,000 → Correct answer is D.

Correct Answer: D

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An executory contract is one in which terms have been agreed upon, but some or all of the obligations have yet to be performed. For example, a purchase contract where the closing has not yet occurred is executory. An executed contract is one where all parties have completed their obligations. A voidable contract is valid unless canceled by one party due to a legal defect. An unenforceable contract cannot be upheld in court. Therefore, the correct answer is B.

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According to the Truth in Lending Act (TILA) and advertising guidelines in North Carolina, if a licensee advertises specific financing terms—such as the amount of down payment—this triggers the requirement to disclose additional terms, including the annual percentage rate (APR), amount of payments, and term of the loan. The failure to include these terms makes the advertisement misleading and non-compliant.