North Carolina Real Estate Broker Exam — All Questions

A buyer is purchasing a home in a federally designated Special Flood Hazard Area with a federally backed mortgage. What is typically required?

• a.Private mortgage insurance instead of flood coverage
• b.Flood insurance as a condition of the loan✓
• c.A waiver of all hazard insurance
• d.Nothing, because flood insurance is always optional

When a property in a Special Flood Hazard Area is financed with a federally backed or federally regulated loan, the lender must require flood insurance. Standard homeowners hazard policies do not cover flood damage, so a separate flood policy is needed. Private mortgage insurance protects the lender against default and is unrelated to flood risk, so it cannot substitute for flood coverage.

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).