Free North Carolina Real Estate Practice Exam

Q1.A broker managing a residential apartment building learns that a unit's interior paint, disturbed during recent renovations, tested positive for lead-based paint. The affected unit is currently vacant and being re-listed for lease. Under the EPA/HUD Renovation, Repair and Painting (RRP) Rule and the Lead Disclosure Rule (42 U.S.C. § 4852d), which combination of obligations is MOST accurate for the broker before executing a new lease?

• A.The broker must provide prospective tenants with the EPA pamphlet 'Protect Your Family From Lead in Your Home,' disclose known lead-based paint hazards in writing, include a lead warning statement in the lease, and retain signed disclosure acknowledgments for no fewer than three years.
• B.The broker must verbally inform the prospective tenant of the lead hazard at the showing, but written disclosure is only required if the tenant is a family with children under age six.
• C.The broker's only obligation is to ensure an EPA-certified renovator remediated the paint before re-listing; once remediation is complete, no further lead disclosure is required in the lease.
• D.Federal lead disclosure requirements apply solely to sales transactions; residential lease transactions are governed exclusively by state law and require no federal disclosure form.

Q2.An appraiser applies the sales comparison approach and finds three comparable properties. Comparable A sold for $310,000 but lacks a garage valued at $12,000. Comparable B sold for $325,000 and has an extra bathroom valued at $8,000 more than the subject. Comparable C sold for $318,000 and is identical to the subject property. What is the reconciled indicated value of the subject property using a simple average of the adjusted comparables?

• A.$318,000
• B.$319,000
• C.$321,000
• D.$317,000

Q3.Under the Fair Housing Act, which of the following is NOT considered a protected class in rental housing discrimination?

• A.National origin
• B.Familial status
• C.Marital status
• D.Disability

Q4.A North Carolina licensee has been convicted of felony fraud. Which agency has the authority to discipline or revoke the licensee's real estate license based on this conviction?

• A.The North Carolina Department of Justice
• B.The North Carolina Real Estate Commission
• C.The North Carolina Association of REALTORS®
• D.The North Carolina Courts of Appeals

Q5.Under an Exclusive Right to Sell listing, the seller sells directly to a neighbor without the broker's involvement. Is the broker owed a commission?

• A.No — the broker only earns a commission if they procured the buyer
• B.Yes — under an Exclusive Right to Sell listing, the broker earns a commission regardless of who finds the buyer
• C.Only if the broker can prove they were the procuring cause of the neighbor's interest
• D.Only if the seller violated the safety clause provision

Q6.Under federal Truth-in-Lending Act (TILA) requirements, lenders must provide borrowers with which key disclosure to help them understand the true cost of credit?

• A.Annual Percentage Rate (APR)
• B.Loan-to-value ratio
• C.Private mortgage insurance rate
• D.Property tax assessment

Q7.A real estate team operating within a North Carolina brokerage wants to advertise using the team name 'The Sunrise Team.' According to North Carolina Real Estate Commission rules, which of the following is required in that advertisement?

• A.The team name alone is sufficient as long as it is registered with the Commission
• B.The advertisement must also prominently display the name of the firm with which the team is affiliated
• C.The advertisement must include the broker-in-charge's personal license number
• D.The team name must include the word 'Realty' or 'Properties' to be permissible

Q8.A property manager applies different lease approval criteria to applicants of different national origins, requiring higher credit scores from some groups than others. Under the Fair Housing Act and the Equal Credit Opportunity Act (ECOA), this practice is best described as:

• A.Permissible if the property manager can demonstrate a business necessity for the different standards
• B.Illegal disparate treatment discrimination based on national origin, a protected class under both the FHA and ECOA
• C.Legal, because private landlords have the right to set their own tenant qualification criteria
• D.A violation of RESPA, which governs all real estate settlement practices

Q9.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

Q10.Which government-sponsored enterprise (GSE) primarily purchases conventional mortgage loans to provide liquidity to the mortgage market?

• A.Fannie Mae
• B.Federal Housing Administration (FHA)
• C.Veterans Administration (VA)
• D.Department of Housing and Urban Development (HUD)

Q11.During a title search prior to closing, a broker discovers that the seller acquired the property through a quitclaim deed from a deceased relative's estate, but no probate proceeding was ever opened or completed in the state where the property is located. The buyer's lender is requiring a general warranty deed at closing. Which of the following statements BEST describes the title and transfer issue the broker must communicate to the parties?

• A.The seller likely cannot convey marketable title by general warranty deed because the interest was received through a quitclaim deed from an estate that was never probated, meaning the seller's chain of title may contain an unresolved defect that a title insurer or lender will reject.
• B.The quitclaim deed from the estate is sufficient to establish marketable title because quitclaim deeds convey whatever interest the grantor holds, and the lender must accept it in lieu of a warranty deed.
• C.The broker should advise the buyer to waive the general warranty deed requirement since no deed type can cure a probate defect, making the transaction impossible to complete.
• D.The issue is immaterial because RESPA requires lenders to close transactions within a mandatory timeline regardless of title defects discovered after the Loan Estimate is issued.

Q12.Under CERCLA (Comprehensive Environmental Response, Compensation, and Liability Act), which party can be held liable for environmental cleanup costs?

• A.Current owners, past owners, operators, and transporters of hazardous substances
• B.Only the party that originally caused the contamination
• C.Only current property owners
• D.Only parties who knowingly participated in creating the contamination

Q13.A North Carolina seller conveys title to Buyer A by general warranty deed. The deed is properly executed but Buyer A never records it. Three weeks later, the same seller conveys the same property to Buyer B by general warranty deed, and Buyer B immediately records. Buyer B had no actual knowledge of the earlier conveyance to Buyer A. Under the Connor Act, who holds superior title?

• A.Buyer A, because the first-in-time deed is always superior regardless of recording.
• B.Buyer B, because North Carolina is a race-notice state and Buyer B recorded first without notice of the prior conveyance.
• C.Buyer A, because the seller's second conveyance was fraudulent and void.
• D.Buyer B, because North Carolina is a pure race state and recording first is all that matters.

Q14.RESPA prohibits certain practices in federally related mortgage transactions. Which of the following scenarios would most likely constitute a RESPA violation?

• A.A lender charging a borrower an origination fee disclosed on the Loan Estimate
• B.A title company paying a real estate broker $200 for each referral of settlement business
• C.A real estate agent recommending a lender based on that lender's competitive interest rates
• D.A lender requiring an escrow account for property taxes and insurance

Q15.A property sold for $425,000. The listing agent receives 3% commission and the selling agent receives 2.5% commission. If the listing agent splits their commission 60/40 with their broker (agent keeps 60%), how much does the listing agent receive?

• A.$5,100
• B.$7,650
• C.$12,750
• D.$10,625