North Carolina Real Estate Commission NCREC-Broker-N Dumps

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.

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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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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.

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.

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According to North Carolina Real Estate Commission rules, if an earnest money deposit is received with an offer and held by the broker, it must be deposited in the trust account no later than 3 banking days after the broker has received notice of contract acceptance (i.e., when the offer becomes a binding contract). Therefore, the correct answer is B.

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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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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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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.

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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In North Carolina, theBroker‑In‑Charge (BIC)is responsible for supervisingall provisional brokersand ensuring they adhere to Commission rules. While a BIC may also supervise branch offices if appointed, the core statutory duty is direct supervision of licensed provisional brokers . Therefore,Option Dis the most accurate.

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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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 NCREC rules, the Working With Real Estate Agents Disclosure must be presented and reviewed with a prospective buyer or seller at the first substantial contact. “Substantial contact” occurs when conversations begin to include personal, financial, or confidential information. It does not have to be tied to signing an agreement or making an offer. Therefore, the correct answer is B.

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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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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.

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

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

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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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Under both federal and North Carolina law, individuals who believe they have experienced housing discrimination must file a complaint within one year of the alleged act to seek administrative remedies through the North Carolina Human Relations Commission or HUD. Discrimination based on sexual orientation is protected under federal fair housing law via interpretation of “sex” as a protected class. Therefore, the correct answer is C.

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According to theNCREC Broker National (Broker-N)guidelines and the Federal Telephone Consumer Protection Act (TCPA), a real estate business may continue to contact a former client for up to18 monthsafter the conclusion of a transaction under the established business relationship exception, even if the client is on the National Do Not Call Registry. The NCREC’s official materials affirm this 18-month contact window.

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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Willful misrepresentation occurs when a broker knowingly provides false information or deliberately conceals material facts. Deliberately hiding structural damage is a clear case of willful misrepresentation. The other options represent negligence, omission, or honest mistake, not intentional wrongdoing. Correct answer: B.

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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.

North Carolina provisional brokers are required to complete three postlicensing courses, each 30 hours in length, for a total of 90 hours. These must be completed within 18 months of licensure. Failure to complete these results in the license status being changed to inactive—not revoked. Additionally, postlicensing is not required to activate a license initially, but must be completed to remove the “provisional” status. Therefore, the correct answer is C.

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

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.

According to North Carolina Real Estate Commission rules, any compensation—monetary or non-monetary—that a broker expects to receive from someone other than their client (e.g., a gift card from a seller) must be disclosed in writing before the broker shows the property. Brokers owe this duty of disclosure regardless of the form or source of the compensation. Therefore, Chris must disclose the offer of the $500 gift card before showing that home to Ike.

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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The North Carolina Good Funds Settlement Act requires that no disbursement of funds—including broker commissions—can be made until the deed and any deed of trust are recorded in the public records. Only once the documents are recorded can the closing attorney legally disburse funds. Thus, brokers should expect to be paid only after recording, making answer C correct.

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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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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.

Any change to the terms of an offer—regardless of how small—constitutes a rejection of the original offer and the creation of a counteroffer. In this case, the seller changed the earnest money amount, which is a material term of the offer. Therefore, the original offer is void and the seller has made a counteroffer that the buyer can now accept or reject. Correct answer: D.

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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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The cost approach to value involves three primary steps: (1) estimate the replacement or reproduction cost of the improvements, (2) subtract accrued depreciation, and (3) add the market value of the land. In this case, the appraiser has already estimated the cost to rebuild the structure. The next steps are to subtract any depreciation from the improvements and then add the land value to derive the final opinion of value. Labor costs are already factored into the reconstruction estimate and are not added again.

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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.

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

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

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