Free North Carolina Real Estate Practice Exam

Q1.A grantor in North Carolina executes a deed conveying 'Blackacre to my daughter and her heirs, but if she ever uses the property for commercial purposes, then to my son and his heirs.' What type of future interest does the son hold?

• A.A reversion in fee simple
• B.A right of re-entry (power of termination)
• C.An executory interest (shifting executory interest)
• D.A remainder interest contingent upon a condition subsequent

Q2.A listing broker drafts an addendum to a purchase contract stating that if the buyer defaults, the seller retains the earnest money as 'full and final liquidated damages, and the seller waives all other remedies at law or in equity.' The buyer subsequently defaults. The seller now wishes to sue for specific performance. Which contract law principle MOST directly governs whether the seller can pursue specific performance?

• A.The parol evidence rule, which bars introduction of prior negotiations that contradict the written addendum.
• B.The doctrine of merger, which absorbs all prior agreements into the deed at closing.
• C.The election of remedies and liquidated damages clause, which—if enforceable—limits the seller to retaining the earnest money and precludes simultaneous pursuit of specific performance.
• D.The statute of frauds, which requires all real estate contracts to be in writing and would invalidate the oral waiver of remedies.

Q3.Under CERCLA (Comprehensive Environmental Response, Compensation, and Liability Act), what obligation does a state real estate licensing board have regarding environmental disclosure requirements?

• A.Mandate that all licensees become certified environmental assessors
• B.Establish continuing education requirements about environmental hazard disclosure obligations
• C.Require licensees to conduct soil contamination tests on all properties
• D.Directly enforce CERCLA cleanup requirements against property owners

Q4.North Carolina is known as an 'attorney closing state.' What does this mean for residential real estate transactions?

• A.An attorney must list all residential properties for sale on behalf of owners who are not licensed brokers
• B.A licensed North Carolina attorney must supervise and conduct the closing, including the examination of title and disbursement of funds
• C.An attorney must represent both the buyer and the seller at closing to ensure neutral oversight of the transaction
• D.An attorney is required only when the purchase price exceeds a statutory threshold set by the North Carolina State Bar

Q5.A seller's agent learns during a listing appointment that the home's HVAC system has a crack in the heat exchanger that could allow carbon monoxide to enter the living space. The seller asks the agent to keep this information confidential. Under North Carolina law, the agent must:

• A.Honor the seller's request because the agent owes the seller a duty of confidentiality as a client
• B.Disclose this defect to any prospective buyer because it constitutes a material fact that is also a safety hazard
• C.Disclose the defect only if the buyer's inspector fails to discover it during due diligence
• D.Advise the seller to repair the HVAC before listing and take no further action

Q6.A judgment creditor who obtains a final civil court judgment against a licensed North Carolina broker for a real estate transaction involving fraud wishes to apply to the Real Estate Recovery Fund. Under NC General Statutes § 93A-16, which of the following conditions must be satisfied BEFORE the Commission is required to pay from the Fund?

• A.The claimant must file the application within one year of the fraudulent act, regardless of when judgment was obtained
• B.The claimant must have first obtained a final judgment, attempted execution and shown the judgment is unsatisfied, and the broker's license must be revoked upon payment from the Fund
• C.The claimant may apply directly to the Fund without obtaining a court judgment if the fraud is admitted by the broker in writing
• D.The Fund will pay up to the full amount of the judgment without any per-transaction or per-licensee cap, provided the claimant is a North Carolina resident

Q7.A property management company discovers that a rental property was built in 1975 and contains lead-based paint. Under EPA regulations, what disclosure requirement must be met before executing a lease agreement?

• A.Give tenants the EPA pamphlet 'Protect Your Family From Lead In Your Home' and allow a 10-day period to conduct lead inspection
• B.Provide tenants with a lead inspection report conducted within the past 12 months
• C.Immediately remediate all lead hazards before any tenant occupancy
• D.Post visible warnings about lead paint in common areas only

Q8.Which of the following best describes the purpose of the 5 D's bystander intervention framework?

• A.To provide five concrete options so that witnesses have a plan before a harassing situation arises
• B.To give bystanders five legal defenses if they are accused of harassment
• C.To establish five mandatory reporting steps required under Arizona law
• D.To define the five elements of a hostile environment harassment claim

Q9.Under the North Carolina Residential Rental Agreements Act, which of the following is a landlord's duty with respect to the rental property?

• A.Provide and maintain the premises in a fit and habitable condition
• B.Pay all utility costs regardless of lease terms
• C.Allow tenants to sublet the property without prior approval
• D.Furnish all appliances at no additional cost to the tenant

Q10.Under the North Carolina Real Estate License Law, what is the minimum age requirement for an applicant seeking a real estate salesperson (broker) license?

• A.16 years old
• B.18 years old
• C.19 years old
• D.21 years old

Q11.A mortgage lender offers a broker a $250 per-closing payment in exchange for steering buyers to the lender's loan products. The broker believes the arrangement is permissible because the payments are disclosed on the Closing Disclosure. Which of the following most accurately describes the legality of this arrangement under federal law?

• A.It is permissible because RESPA only prohibits undisclosed kickbacks, and the payment appears on the Closing Disclosure
• B.It is permissible if the broker provides an affiliated business arrangement disclosure to each buyer
• C.It is a violation of RESPA Section 8(a) regardless of disclosure, because it constitutes a fee for a referral rather than for services actually performed
• D.It is permissible as long as the payment does not exceed 1% of the loan amount

Q12.Under the Fair Housing Act, housing for older persons is exempt from familial status protections if the housing is intended for and solely occupied by persons who are:

• A.60 years of age or older
• B.65 years of age or older
• C.70 years of age or older
• D.55 years of age or older

Q13.Under RESPA's affiliated business arrangement (ABA) disclosure requirements, when must a real estate brokerage provide the required written disclosure if they refer clients to their affiliated mortgage company?

• A.Within three business days after the mortgage application is submitted
• B.No later than the delivery of the Loan Estimate to the borrower
• C.At the time of the referral or when the referral is first discussed
• D.At closing when all settlement service providers are disclosed

Q14.Under the federal Equal Credit Opportunity Act (ECOA), which of the following actions by a mortgage lender would constitute a clear violation that a knowledgeable broker should recognize and advise a buyer-client about?

• A.Requiring a co-signer when the applicant's debt-to-income ratio exceeds standard underwriting guidelines.
• B.Declining to count a borrower's verified, documented alimony income when evaluating creditworthiness because it is 'too unpredictable.'
• C.Charging a higher interest rate to a borrower with a lower credit score than to a borrower with a higher credit score.
• D.Requesting two years of tax returns from a self-employed loan applicant.

Q15.The Faragher-Ellerth affirmative defense allows a brokerage to limit vicarious FHA liability by showing all of the following EXCEPT:

• A.A written anti-harassment policy distributed to all agents
• B.An accessible complaint procedure including an alternate contact if the broker is the alleged harasser
• C.Documented training and prompt investigation of complaints
• D.The policy was created after the complaint was received