North Carolina Real Estate Broker Exam — All Questions

A buyer and seller dispute the earnest money a North Carolina broker holds. When may the broker deposit it with the clerk of superior court?

• a.Immediately, as soon as either party disputes the disbursement
• b.Not until 90 days after the claimants are notified✓
• c.Not until 30 days after the contract has been terminated
• d.Only after a court of competent jurisdiction has ordered it

An escrow agent may deposit disputed monies, other than a residential security deposit, with the clerk of court in the county where the property lies, but not until 90 days after notifying the persons claiming ownership. Cite: N.C.G.S. 93A-12(a)-(d).

How early may a North Carolina broker transfer earnest money from the firm's trust account to the closing attorney?

• a.At any time after the due diligence period expires
• b.Only on the day of settlement, never before then
• c.No more than 10 days before the anticipated settlement✓
• d.No more than 30 days before the settlement date is anticipated

A broker may transfer an earnest money deposit to the closing attorney or other settlement agent no more than 10 days prior to the anticipated settlement date, and may not otherwise disburse earnest money before settlement without the parties' written consent. Cite: 21 NCAC 58A .0116(e).

What is the largest security deposit a North Carolina landlord may take on a month-to-month residential tenancy?

• a.Two months' rent, the same cap as for a one-year lease
• b.Two weeks' rent, the same cap as for a weekly tenancy
• c.One month's rent, with any pet fee counted inside that cap
• d.One and one-half months' rent, exclusive of any pet fee✓

The Tenant Security Deposit Act caps deposits at two weeks' rent week to week, one and one-half months' rent month to month, and two months' rent for terms longer than month to month. A reasonable nonrefundable pet fee is charged separately. Cite: N.C.G.S. 42-51(b); 42-53.

A North Carolina tenancy ends and the landlord cannot yet determine the full extent of the damage claim. What does the Act require?

• a.An interim accounting at 30 days and a final one at 60 days✓
• b.A single accounting at any time within 90 days of move-out
• c.An interim accounting at 15 days, a final one at 45
• d.No accounting until the tenant demands one in writing

The itemized accounting and any balance are normally due within 30 days after termination of the tenancy and delivery of possession. If the claim cannot be determined in that time, the landlord provides an interim accounting by 30 days and a final accounting within 60 days. Cite: N.C.G.S. 42-52.

When must a North Carolina landlord or agent tell the tenant where the security deposit is held?

• a.Within 10 days after the security deposit is received
• b.Only if the tenant asks for it in writing before move-in
• c.Within 30 days after the beginning of the lease term✓
• d.At the end of the tenancy, with the itemized accounting

Deposits go into a trust account with a licensed, federally insured depository institution or trust institution authorized here, or are bonded; the landlord or agent must name the bank or bonding company to the tenant within 30 days after the lease term begins. Cite: N.C.G.S. 42-50.

What may a North Carolina residential landlord charge for a tenant's pet, on top of the statutory security deposit?

• a.A refundable pet deposit, capped at one full month's rent
• b.A reasonable nonrefundable fee for pets on the premises✓
• c.A pet charge only if counted inside the deposit cap
• d.No pet charge of any kind beyond the security deposit

The Tenant Security Deposit Act expressly permits a reasonable, nonrefundable fee for pets kept on the premises, and that fee is not part of the security deposit subject to the caps in G.S. 42-51(b). Cite: N.C.G.S. 42-53.

Under the North Carolina Vacation Rental Act, how much of the total rent may be disbursed before the tenant occupies the property?

• a.The entire rent, if the rental agreement says so
• b.Nothing at all until the tenancy has actually ended
• c.Up to 25 percent of the total rent, plus a cleaning fee
• d.Up to 50 percent of the total rent, plus third-party fees✓

A landlord or broker may not disburse more than fifty percent of the total rent before occupancy, though fees owed to third parties for goods or services procured for the tenant may also be paid out if the vacation rental agreement expressly authorizes it. Cite: N.C.G.S. 42A-16(a).

A North Carolina provisional broker personally receives a tenant's rent payment. What must the provisional broker do with it?

• a.Deliver them to his affiliated broker upon receipt✓
• b.Deposit them in his own trust account within three banking days
• c.Hold them until the landlord authorizes a disbursement
• d.Deliver them directly to the landlord who owns the property

The three-banking-day trust deposit rule does not apply to a provisional broker: all monies received by a provisional broker must be delivered upon receipt to the broker with whom he or she is affiliated, who then handles the deposit. Cite: 21 NCAC 58A .0116(b)(1).

From whom may a North Carolina provisional broker accept compensation for brokerage services?

• a.From any cooperating firm that agrees to share a fee
• b.From his broker-in-charge or employing licensed broker✓
• c.From the seller directly, at the closing table
• d.From the buyer, if the buyer agency agreement allows it

Accepting a commission or valuable consideration from anyone other than the provisional broker's broker-in-charge or the licensed broker by whom he or she is employed is a ground for discipline under the License Law. Cite: N.C.G.S. 93A-6(a)(5).

A North Carolina broker stops serving as broker-in-charge of an office. When must the Commission be notified in writing?

• a.Within 30 days of ceasing to serve as broker-in-charge
• b.At the firm's next annual license renewal, in writing
• c.Within 10 days of ceasing to serve as broker-in-charge✓
• d.Only if the Commission requests confirmation of the change

A designated BIC must notify the Commission in writing that he or she is no longer serving as BIC of a particular office within 10 days following the change. A provisional broker and BIC likewise report a supervision termination within 10 days. Cite: 21 NCAC 58A .0110(g)(8); .0506(e).

How many brokers-in-charge may supervise a single North Carolina provisional broker at one time?

• a.One, subject to a narrow co-listing exception✓
• b.Two, in every case, so supervision is never absent
• c.As many as the provisional broker chooses to serve
• d.None, once Postlicensing education is completed

A provisional broker is supervised by one BIC at a time. The single exception allows two BICs of two licensed affiliated firms in the same physical location acting as co-listing or co-selling agents, and then both bear full supervisory responsibility. Cite: 21 NCAC 58A .0506(a).

What is the North Carolina excise tax on instruments conveying real property, and who owes it?

• a.$1.00 per $1,000 of consideration, paid by the buyer
• b.$2.00 per $500 of consideration, paid by the buyer
• c.$1.00 per $100 of the consideration, paid by the transferor
• d.$1.00 per $500 of consideration, paid by the transferor✓

The revenue-stamp tax is one dollar on each five hundred dollars, or fractional part thereof, of the consideration or value conveyed, and the transferor must pay it to the register of deeds of the county where the property lies before the instrument is recorded. Cite: N.C.G.S. 105-228.30(a).

Which conveyance is exempt from North Carolina's excise tax on instruments?

• a.A sale of a vacant lot between two unrelated private parties
• b.A transfer of a house in exchange for a cash payment
• c.A transfer by gift, will, or intestacy, with no consideration✓
• d.A sale of standing timber under a recorded timber deed

Article 8E does not apply to transfers by operation of law, by lease for a term of years, by will, by intestacy, by gift, where no consideration is due or paid, by merger or conversion, or by an instrument securing indebtedness. Timber deeds are expressly taxed. Cite: N.C.G.S. 105-228.29; 105-228.30(a).

How are North Carolina excise tax proceeds divided after the register of deeds collects them?

• a.All of it stays in the general fund of the county that collected it
• b.Half to the county's general fund, half to the State✓
• c.All of it is remitted to the State Department of Revenue
• d.Two-thirds to the State, one-third to the municipality

The register of deeds remits collections to the county finance officer, who credits one-half to the county general fund and sends the other half to the Department of Revenue monthly, less refunds and a county administrative allowance of up to two percent. Cite: N.C.G.S. 105-228.30(b).

What is the most the North Carolina Real Estate Education and Recovery Fund will pay on a single transaction, and what happens to the broker's license?

• a.$10,000, and the license is unaffected by the payment
• b.$100,000, with the broker's license placed on inactive status
• c.$25,000, and the broker may keep practising while repaying
• d.$50,000, and the broker's license is automatically suspended✓

The Fund pays no more than fifty thousand dollars per transaction regardless of how many people were harmed, and any license held by the broker is automatically suspended on the effective date of the payment order until the Fund is repaid in full with interest. Cite: N.C.G.S. 93A-21(b)(2); 93A-20.

What limit does the License Law place on the North Carolina Real Estate Commission's rulemaking power over compensation?

• a.It sets the minimum commission rate that brokers may charge
• b.It arbitrates commission splits between competing firms
• c.It may not adopt rules regulating commissions or fees✓
• d.It approves each firm's published fee schedule annually

The Commission may make reasonable rules not inconsistent with the Chapter, but it shall not make rules regulating commissions, salaries or fees charged by licensees, and by rule it does not arbitrate disputes over commission rates or splits. Cite: N.C.G.S. 93A-3(c); 21 NCAC 58A .0109(f).