Agency + Brokerage
25%of exam
Contracts + Closing
30%of exam
Form 2-TDue DiligenceEarnest MoneyStatute of FraudsDeed Types
Ownership + Property
13%of exam
Finance + Valuation
12%of exam
Deed of TrustLoan TypesLTVAppraisal ApproachesClosing Math
NC License Law + Trust
20%of exam
Provisional BrokerBroker-in-ChargeTrust Account3-Banking-Day RuleFair Housing
Quick Facts
- Credential
- NC Provisional Broker
- Questions
- 120 (80 natl + 40 state)
- Pass national
- 71%
- Pass state
- 72.5%
- Time
- 4 hours total
- Exam fee
- $64 (Pearson VUE)
- Prelicensing
- 75 hours
- Regulator
- NCREC
Fiduciary Duties
OLD CAR = client duties
ObedienceLoyaltyDisclosureConfidentialityAccountingReasonable care
Agency Relationship Picker
- First substantial contact→Give WWREA(Before info gathered)
- Represent the seller→Listing agreement(Written required)
- Represent the buyer→Buyer agency(Oral allowed first)
- Same firm, both sides→Dual agency(Written consent)
- Want separate loyalty→Designated agency(Two agents)
- No representation→Customer(Honesty still owed)
Agency Terms
- Fiduciary duties
- OLD CAR loyalty
- Client
- Represented principal
- Customer
- Unrepresented party
- Designated agency
- One firm, separate agents
- Dual agency
- Represents both sides
- Material fact
- Must disclose all
- First substantial contact
- When WWREA given
Must I Disclose?
- Leaky roof defect→Disclose(Material fact)
- Failing septic→Disclose(Material fact)
- Death on property→Not material(NC law)
- Prior occupant HIV→Do not disclose(Protected)
- Client says hide defect→Disclose anyway(Overrides instruction)
- Property tax amount→Verify, disclose(Public record)
NC Agency Rules
- WWREA brochure
- Mandatory NC disclosure
- Oral buyer agency
- Allowed, nonexclusive only
- Written agreement
- Required before offer
- Dual agency consent
- Written, both parties
- Duties to all
- Honesty, material facts
- Stigmatized property
- Death not material
Due Diligence Money
DD fee gone, earnest comes back
Fee = nonrefundableEarnest = refundable in DDAfter DD = forfeit
Earnest Money vs DD Fee
Earnest Money
- Refundable in DD
- Held in trust
- Shows good faith
Due Diligence Fee
- Nonrefundable
- Paid to seller
- Buys walk-away right
Refundable vs nonrefundable
Buyer Money Handling
- Buyer signs contract→Pay DD fee(Nonrefundable)
- DD fee destination→To seller(Not trust account)
- Earnest money held by→Listing firm trust(Within 3 days)
- Buyer terminates in DD→Refund earnest money(Keep DD fee gone)
- Buyer terminates after DD→Forfeit earnest money(Seller keeps both)
- Earnest money disputed→Hold in trust(Until resolved)
Contract Terms
- Form 2-T
- NC Offer to Purchase
- Statute of Frauds
- Must be written
- Consideration
- Something of value
- Bilateral contract
- Mutual promises
- Specific performance
- Force completion
- Time is essence
- Deadlines binding
- Voidable
- One party cancels
General vs Special Warranty
General Warranty
- Covers all owners
- Full protection
- Best for buyer
Special Warranty
- Covers grantor only
- Limited protection
- Common commercial
All time vs grantor only
NC Due Diligence
- Due diligence fee
- Nonrefundable, to seller
- Due diligence period
- Walk for any reason
- Earnest money
- Refundable during DD
- After DD ends
- Earnest money forfeited
- RPOADS
- Property disclosure statement
- Mineral/oil rights
- Separate NC disclosure
Deeds + Title
- General warranty
- Full title guarantee
- Special warranty
- Covers grantor only
- Quitclaim deed
- No warranties
- Marketable title
- Free of defects
- Title insurance
- Protects against defects
- Recording
- Gives public notice
Joint Tenancy vs Common
Joint Tenancy
- Right of survivorship
- Equal shares
- Avoids probate
Tenancy in Common
- Heirs inherit
- Unequal shares ok
- No survivorship
Survivor vs heirs
Estate Types
- Fee simple absolute
- Fullest ownership
- Life estate
- Ownership for lifetime
- Defeasible fee
- Conditional ownership
- Leasehold
- Tenant possession right
- Remainder
- Future interest holder
- Reversion
- Returns to grantor
Co-ownership + Encumbrances
- Joint tenancy
- Survivorship right
- Tenancy in common
- Heirs inherit share
- Tenancy by entirety
- Married couple ownership
- Easement
- Right to use
- Encroachment
- Unauthorized intrusion
- Lien
- Financial claimEncumbrance
- Deed restriction
- Private use limit
Mortgage vs Deed of Trust
Mortgage
- Two parties
- Judicial foreclosure
- Rare in NC
Deed of Trust
- Three parties
- Power of sale
- Standard NC
NC uses deed of trust
Finance + Mortgage
- Deed of trust
- NC security instrument
- Trustee
- Holds legal title
- Promissory note
- Promise to repay
- LTV
- Loan vs value
- Discount points
- 1% = lower rate
- Amortization
- Principal plus interest
- PMI
- Conventional, LTV over 80%
- Power of sale
- Nonjudicial foreclosure
Loan + Valuation
- Conventional
- No government backing
- FHA
- Low down, insured
- VA
- Veterans, no down
- Sales comparison
- Compare similar sales
- Cost approach
- Land plus improvements
- Income approach
- Value from income
- CMA
- Broker pricing, not appraisal
Federal Protected Classes
Race Color Religion Sex National Familial Disability
7 classesNC mirrors federalFamilial = kids
Provisional vs Broker
Provisional Broker
- Entry license
- Must have BIC
- Owes postlicensing
Broker
- Postlicensing done
- Can work alone
- Not yet BIC
Supervised vs independent
NC Licensing Numbers
- Provisional broker
- Entry NC license
- 75 hours
- Prelicensing education
- 90 hours
- Postlicensing, 18 months
- 8 hours/year
- Continuing education
- NCREC Update
- 4 mandatory CE hours
- Broker-in-Charge
- Supervises firm office
- Recovery Fund
- Pays defrauded consumers
NC Hour Numbers
75 pre, 90 post, 8 yearly
75 prelicensing90 postlicensing8 CE/year3 banking days
Trust vs Operating Account
Trust Account
- Others' money
- No commingling
- 3-day deposit
Operating Account
- Firm money
- Pays expenses
- Broker funds
Clients vs firm
NC Trust Money
- Trust account
- Holds others' money
- 3 banking days
- Deposit deadline
- Commingling
- Mixing funds prohibited
- Conversion
- Stealing trust money
- Record retention
- 3 years NC
- Disputed funds
- Hold until resolved
NC Closing + Fair Housing
- Attorney closing
- Required in NC
- Excise tax
- $1 per $500
- Protected classes
- 7 federal classes
- Steering
- Channeling buyers illegally
- Blockbusting
- Panic selling tactic
- Redlining
- Denying loans area
Common Traps
License terminology
NC says broker ≠ Not salesperson
Buyer deposits
DD fee nonrefundable ≠ Earnest money refundable
DD fee destination
Goes to seller ≠ Not trust account
Security instrument
NC uses deed of trust ≠ Not mortgage
Closing conductor
NC needs attorney ≠ Not escrow company
Material fact limits
Defects disclosed ≠ Death not material
Last Minute
- 1.NC = broker only, no salesperson
- 2.Pass: 71% national, 72.5% state
- 3.DD fee = nonrefundable to seller
- 4.Earnest money refundable during due diligence
- 5.Deposit trust money: 3 banking days
- 6.No commingling firm and trust funds
- 7.Form 2-T = NC Offer to Purchase
- 8.NC security instrument: deed of trust
- 9.Attorney conducts NC closings
- 10.Excise tax = $1 per $500
- 11.WWREA at first substantial contact
- 12.Provisional broker needs Broker-in-Charge
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