North Carolina Real Estate Broker Exam — All Questions

A North Carolina broker receives an earnest money deposit. Where must those funds be held?

• a.In cash inside the office safe until the closing date
• b.In the broker-in-charge's personal investment account
• c.In a trust or escrow account, separate from own funds✓
• d.In the individual broker's personal checking account

North Carolina License Law requires client and customer money such as earnest money to be deposited in a trust or escrow account kept separate from the broker's personal or business funds. Commingling those funds with the broker's own money is prohibited and can lead to discipline. Holding deposits in cash or a personal account fails the safeguarding and record-keeping requirements the Commission enforces.

In North Carolina, what is the primary role of the broker-in-charge (BIC) at a real estate office?

• a.To supervise the brokers and the trust accounting at that office location✓
• b.To guarantee commissions to all affiliated brokers
• c.To act as the sole agent for all clients of the firm
• d.To personally close every transaction handled by the office

The broker-in-charge is responsible for supervising the brokers affiliated with an office and overseeing the office's trust account and advertising. The BIC does not have to personally close every deal or serve as agent for every client. The BIC also does not guarantee other brokers' commissions; the role is one of oversight and compliance, not payment guarantees.

A North Carolina broker receives a property management rent payment in cash. When must it reach a trust or escrow account?

• a.No later than three banking days after the broker receives it✓
• b.No later than five banking days following the broker's receipt
• c.By the close of the next business day following receipt
• d.Within seven calendar days, or at closing if sooner

All monies received by a broker acting in a fiduciary capacity must be deposited in a trust or escrow account no later than three banking days following receipt, subject to the narrow exceptions listed in the rule. Cite: 21 NCAC 58A .0116(a).

A North Carolina broker holds a buyer's earnest money check while the offer to purchase is still pending. What is the deposit deadline?

• a.Three banking days after the broker first receives the check
• b.Immediately upon receipt, before the offer is accepted
• c.Ten days before the anticipated settlement date arrives
• d.Three days following acceptance of the offer✓

Earnest money and tenant security deposits paid other than in currency on a pending offer are deposited no later than three days following acceptance of the offer, and the contract must state the date of acceptance. Cash still follows the three-banking-day rule. Cite: 21 NCAC 58A .0116(b)(3).

How much of a North Carolina broker's own company money may be kept in the firm's trust account?

• a.Five hundred dollars, regardless of what the monthly charges are
• b.One hundred dollars, plus enough to cover larger monthly charges✓
• c.No company funds at all may be kept in the trust account
• d.One thousand dollars, whenever the bank requires a minimum balance

A broker may keep a maximum of one hundred dollars of company funds in the trust account to pay account service charges, and may deposit enough each month to cover charges that exceed that amount. A separate ledger must track those company funds. Cite: 21 NCAC 58A .0117(c)(4)(C).

How often must a North Carolina broker reconcile a trust or escrow account?

• a.Quarterly, with a worksheet retained for each reconciliation
• b.Annually, unless the Commission requests one at an earlier date
• c.Monthly, with a retained reconciliation worksheet✓
• d.Only when the bank statement fails to match the journal

Brokers reconcile trust accounts monthly as of a cutoff date they select, comparing the trial balance of ledger balances, the reconciled bank statement balance and the journal balance, and must retain a worksheet showing the three in agreement. Cite: 21 NCAC 58A .0117(e).

How long must a North Carolina broker retain transaction records such as contracts, leases and trust records?

• a.Seven years, to match the federal tax record retention rule
• b.Five years after the funds are disbursed or the deal concludes
• c.Three years from the date on which the listing was signed
• d.Three years after the funds are disbursed or the deal concludes✓

Records of all sales, rental and other transactions, whether pending, completed or terminated, are retained for three years after all funds held by the broker are disbursed to the proper parties or the conclusion of the transaction, whichever is later. Cite: 21 NCAC 58A .0108(a).

What makes an advertisement a prohibited blind ad under North Carolina Commission rules?

• a.It omits any indication that a broker or firm placed it✓
• b.It names the firm but omits the individual listing agent's name
• c.It gives the property address without the list price
• d.It runs in a newspaper rather than on the internet

A broker may not advertise property of others in a way suggesting the offer comes from the principal alone. Every such ad must show it is a broker's or firm's ad and may not be confined to a post office box, phone number, street address, web address or email address. Cite: 21 NCAC 58A .0105(b).

Which act may a North Carolina broker perform without engaging in the unauthorized practice of law?

• a.Draft a deed of trust whenever both of the parties request it
• b.Rewrite a form's language when the parties tell him to
• c.Complete a preprinted sales contract at the parties' direction✓
• d.Draft a promissory note that fits the parties' negotiated terms

A broker may not draft offers, contracts, options, leases, notes, deeds or deeds of trust, but may complete preprinted offer, option, sales contract and lease forms when authorized or directed by the parties; the form's language may not be rewritten by the broker. Cite: 21 NCAC 58A .0111(a)-(b).