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EXAM REVIEW POST 303 NC LAW, RULES &
LEGAL CONCEPTS 100+ QUESTIONS AND
VERIFIED ANSWERS
"When does a firm license expire? - CORRECT ANSWER=> Firm licenses expire on June 30th"
"A sole proprietor is NOT required to obtain a - CORRECT ANSWER=> firm license"
"A (full) broker that is not on provisional status does NOT have to affiliate with a brokerage or broker-in-
charge so long as he - CORRECT ANSWER=> does not solicit the business."
"In order to earn compensation on behalf of another, even for referral fees, a broker must be -
CORRECT ANSWER=> on active status."
"In property management, an unlicensed assistant must be paid as a - CORRECT ANSWER=> W-
employee and not as an independent contractor." "A client and firm can agree in the property management agreement to permit rebates or additional fees
- CORRECT ANSWER=> the key point being that the client has agreed to the payments."
"Referral fees CAN be paid to brokers that - CORRECT ANSWER=> hold an active license in another
state"
"Brokers from another state can NOT - CORRECT ANSWER=> enter the state and view property as this
is providing brokerage services in North Carolina and would trigger NC licensing requirements." "A broker may be paid brokerage commission when they hold an inactive or expired license so long as -
CORRECT ANSWER=> they held an active license at the time compensation was earned."
"the broker cannot provide brokerage services while - CORRECT ANSWER=> the license is inactive or
expired." "A broker should review his/her independent contractor agreement (or employment contract) to
determine the treatment of - CORRECT ANSWER=> pending transactions and ability to ask a client to
move with them to a new firm." "The agency agreement are between the client and the firm and therefore the firm would have to give
permission to - CORRECT ANSWER=> transfer and the client would have to agree."
"Under the Commercial Real Estate Broker Lien Act only the listing broker/brokerage is permitted to -
CORRECT ANSWER=> file a lien for commission connected to the leasing or sale of a commercial
property."
"A broker must disclose 3rd party compensation in writing prior to the buyer - CORRECT ANSWER=>
making an offer and must orally disclose the bonus no later than when the buyer is considering an offer."
"A provisional broker can only be compensated for brokerage activity by - CORRECT ANSWER=> his/her
broker in charge. There are no exemptions to this rule."
"A full broker can receive an authorization for - CORRECT ANSWER=> compensation to be paid
directly."
"NC License Law / Rules do not required a broker to disclose that they are - CORRECT ANSWER=>
representing a family member;"
"the NAR Code of Ethics does require a broker to disclose that - CORRECT ANSWER=> they are
representing a family member" "If polybutylene has leaked, a nearby road is being widened - even if a matter of public record, and odor
issues are deemed material facts - CORRECT ANSWER=> that a broker must disclose (when known or
reasonably should have known)."
"What are the requirements for a Limited Non-Resident Commerical license? - CORRECT ANSWER=> 1)
Licensed in good standing in another state
- Affiliation with a NC Broker
- Declaration to the Commission
- Limited to commercial sales / leasing"
"What are the responsibilites of a qualifying broker? - CORRECT ANSWER=> 1) Ensure BICs are
appointed at each office location
- Renew the FIRM license
- Inform the Commission if the firm name or address changes or if there is a change in status as QB"
"Current License vs Expired License - CORRECT ANSWER=> currency - did the broker pay to renew
his/her license. Pay your currency and you have a current license. Don't pay your currency and your license expires."
"Active License vs Inactive License - CORRECT ANSWER=> Active = affiliation (if provisional), completed
CE, completed POST (if provisional)"
"The following does NOT need a license - CORRECT ANSWER=> a salaried employee of a corporation
that sells homes in NC"
- ensures that the firm license remains active
- notifies the Commission of any changes in BICs or QB"
"A BIC (broker in charge) - CORRECT ANSWER=> - supervises all provisional brokers and is responsible
for all advertising, agency disclosure
- ensuring brokers are on active status, transaction files and trust accounts."
"PBs may only ever be paid by - CORRECT ANSWER=> the BIC or the Firm and cannot receive
compensation directly from a seller."
"When compensation has been paid... - CORRECT ANSWER=> there is no exception for representing
family or friends"
"A party can offer to do the work for free and this will NOT - CORRECT ANSWER=> trigger the
requirement to have a license." "What can the NC Real Estate Commission do to someone practicing real estate without a license? -
CORRECT ANSWER=> The Real Estate Commission could seek an injunction against the person
practicing real estate without a license."
"What is considered compensation? - CORRECT ANSWER=> Compensation can come in many forms
including cash, gift cards, travel, vehicles, iPads, etc." "Anita is a member of Flip Smart Properties, LLC. She has been tasked with identifying investment opportunities, negotiating contracts on behalf of the entity and seeking buyer's agent compensation on
behalf of the LLC from the property owner or listing firm. Which of the following is TRUE? - CORRECT
ANSWER=> Anita does not require an active real estate license from the LLC to earn compensation"
"A party acting as FSBO /FLBO - CORRECT ANSWER=> does not require a license"
"An owner or W-2 employee of an entity - CORRECT ANSWER=> does not require a license"
"If a brokers refuses to pay compensation to an unlicensed individual or entity stating that it is against
the law - CORRECT ANSWER=> This would be a negligent misrepresentation of a material fact."
"A broke will be set to INACTIVE status if - CORRECT ANSWER=> - Upon the 2nd renewal of his license,
they have not satisfied CEs"
"A firm must cease operation if - CORRECT ANSWER=> they have not received acknowledgement from
the Real Estate Commission within 30 days"
"A broker must cease operation if - CORRECT ANSWER=> they have not received acknowledgement
from the Real Estate Commission within 30 days that their license has been activated"
"A broker-in-charge (BIC) must complete the - CORRECT ANSWER=> Broker-in-Charge Update Course
to retain BIC status."
"Failure of the BIC to complete the BICUP will result in - CORRECT ANSWER=> the loss of BIC status on
June 30th, when all licenses expire."
"The firm license will become inactive if they fail to - CORRECT ANSWER=> appoint another BIC prior
to the June 30th deadline."
"Provisional brokers and brokers that are not BIC or BIC eligible are required to take the - CORRECT
ANSWER=> general update each year by June 10th to remain on active status, except for the first
license renewal from initial licensure."
"A BIC cannot serve - CORRECT ANSWER=> multiple physical locations."
"License pocket card indicates - CORRECT ANSWER=> -PB or full broker
-License expiration date -License number and agents name"
"License pocket card does NOT - CORRECT ANSWER=> The license does NOT indicate the how many
Postlicense classes have been taken. It also does not indicate if the license is on active or inactive status."
"A licensee must disclose material facts to all parties in the transaction because - CORRECT ANSWER=>
They are held to the same duty when selling property that they own."
"A broker must disclose - CORRECT ANSWER=> what they know or what they reasonably should
know."
"A broker is not responsible for - CORRECT ANSWER=> latent defects (hidden or concealed) unless they
are aware of an issue."
"When a license has been revoked, - CORRECT ANSWER=> it will depend if the license was
permanently revoked or for a set period of time."
"An individual whose license has been revoked will need to - CORRECT ANSWER=> complete the
Prelicense class, sit and pass the exam only after the revocation period has expired."
"A broker that desires to become BIC must - CORRECT ANSWER=> -complete the 12-hour BIC Course
within 1 year of designation, -or can designated an have 120 days to complete the course. -A broker must achieve "non-provisional" status in order request designation as broker-in-charge."
"The BIC for each office is responsible for - CORRECT ANSWER=> transaction files."
"The qualifying broker (QB) would need to notify the Commission if - CORRECT ANSWER=> they
register an assumed name or change the firm name."
"A broker, that is not on provisional status, is not required to - CORRECT ANSWER=> affiliate with a
broker in charge to be on active status." "There are significant limitations to what a broker can do when they are not broker in charge or affiliated
with a broker in charge. For example: - CORRECT ANSWER=> -The broker would not be permitted to
advertise in any manner
- or to hold trust money or offer a property for sale."
"If a broker is not affiliated with a BIC, they can still receive - CORRECT ANSWER=> referral fees or
represent buyers so long as they have not solicited the business."
"A broker that is licensed in another state in good standing can - CORRECT ANSWER=> affiliate with a
North Carolina BROKER, declare with the Commission can act as a limited non-resident commercial broker."
"The rule for limited non-resident commercial brokers specifically states that you can - CORRECT
ANSWER=> declare with a BROKER.
Don't confuse this with the fact the vast majority of firms that need to have a BIC for advertising." "A broker holds an active real estate license in Georgia and her clients have become interested in purchasing property in North Carolina. In order to be allowed to represent her clients in North Carolina
the broker must do all of the following: - CORRECT ANSWER=> -Maintain license in good standing in
another state -Affilliate with a NC broker and declare to the commission -limit activities to commercial transaction only"
"A broker in another state may seek a - CORRECT ANSWER=> Limited Non-Resident Commercial Broker
License where the broker can only offer commercial broker services."
"A broker in another state is NOT required to - CORRECT ANSWER=> pass the state exam or complete
NC postlicensing courses."
"There are NO experience requirements - length of time that the broker has maintained an - CORRECT
ANSWER=> active license in another state."
"An entity must have a qualifying broker and broker-in-charge, unless - CORRECT ANSWER=> the entity
is for compensation only and the name is not marketed."
"Four brokers of JW Realty form a team without creating an entity with John Smith and market as "The Smith Team". The broker-in-charge of JW Realty informs the Smith team that they will need a firm license, appoint a broker-in-charge and register with the NC Secretary of State. Is this accurate? -
CORRECT ANSWER=> No. Since no entity was created and no DBA filed, there is no need to obtain a
firm license, register with the Secretary of State or appoint a broker-in-charge."
"Only LLC's and Corporations are required to - CORRECT ANSWER=> register with the Secretary of
State."
"Other entities are required to register their Doing Business As (DBA) in - CORRECT ANSWER=> all
counties in which they operate." "A buyer enters into a legally binding contract on June 28th. His broker fails to pay his license renewal fee
but continues to provided broker services. Is the broker entitled to compensation? - CORRECT
ANSWER=> No. Because the license is expired. He is not entitled to compensation"
"A broker is entitled to compensation earned - CORRECT ANSWER=> when the broker had an active
license"
"A broker must have an active real estate license to provide - CORRECT ANSWER=> any brokerage
services. The BIC of the office must appoint another broker to represent the client."
"A provisional broker cannot be compensated for - CORRECT ANSWER=> the preparation of a broker
price opinion or comparative market analysis. They can receive compensation for selling the property and it is a duty to provide a comparative market analysis to a buyer and/or seller client to help determine the offer or listing price."
"The project broker supervises licensed brokers selling. - CORRECT ANSWER=> time shares"
"A broker in provisional status may perform: - CORRECT ANSWER=> -Commission from the sale of a
time share -Referal fee on commercial property -Referral fee on residential transaction outside of NC"
"In order to earn compensation on behalf of another, a party must - CORRECT ANSWER=> have an
active broker's license."
"A broker is obligated to disclose material facts, regardless of - CORRECT ANSWER=> his/her client's
instructions."
"A broker has 60 days to notify the Commission for - CORRECT ANSWER=> 1) any felony or
misdemeanor conviction
Renew License"
"How does a provisional broker remove provisional staus? - CORRECT ANSWER=> Complete the 3 - 30
hour postlicense courses. The courses can be taken in any order. To remain on active status one course must be completed no later than the licensee's anniversary date each year."
"When can a broker declare as Broker in Charge? - CORRECT ANSWER=> 1) Remove provisional status
- Have 2 years full time experience or the equivalent over the last 5 years
- Declare with the Commission
- Complete the 12-hour BIC course within 120 days of election or within the past 12 months."
"What are the duties of a Broker in Charge? - CORRECT ANSWER=> Directly Supervise ALL Provisional
Brokers Responsible for 3 A's (Agency - Advertising - Active Status) and 2 T's (Trust Accounts - Transaction Files) for all affiliated provisional and non-provisional brokers"
"When is a FIRM license required? - CORRECT ANSWER=> When an entity is earning compensation on
behalf of another. LLC's, Corporations and Partnerships must have a separate firm license - as well as the appointment of a qualifying broker and broker in charge."
