CH. 21 - Real Estate License Law and Commission Rules

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The Constitution of the State of North Carolina was first drafted in 1776 and has been revised and amended many times since.
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Terms in this set (84)
passed by the General Assembly and signed into law by the Governor. - A bill does not become a law until it is approved by a vote of the General Assembly and has the signature of the Governor. The North Carolina General Statutes, therefore, contain the laws passed by the legislature and signed by the Governor.
Who elects the chairperson of the Real Estate Commission?the members of the Commission - The members of the Commission select their own chairperson who serves a one-year term.How many members appointed to be members CANNOT be involved directly or indirectly in the real estate or real estate appraisal business?at least 2Your broker-in-charge tells you to look up something in G.S. Chapter 93A. What kind of information is he most likely asking you to look for?statutes related to real estate licensing and brokerageHow many years of active real estate experience must a licensee have prior to being appointed to the Real Estate Commission?No experience is necessary.Where are the rules of the Real Estate Commission published?Administrative Code - Since the Real Estate Commission is an administrative entity, their regulations related to real estate licensees are found in the North Carolina Administrative Code, specifically in Title 21 Occupational Licensing Boards and Commissions, Chapter 58 Real Estate Commission.The administrative agencies of the ________________ promulgate administrative regulations.Executive Branch - The administrative agencies of the Executive branch promulgate administrative regulations. Case law is a result of judicial decisions. Legislatures enact statutory laws.North Carolina Broker Tim is being sued buyer Betty $20,000 for deliberately concealing a material fact about a serious defect in the property she purchased. Where would this case by handled?Circuit Court - In North Carolina, the court of jurisdiction that hears civil matters involving at least $10,000 and less than $25,000 is the Circuit Court.Which branch(s) of government enact statutory laws?Legislative - The administrative agencies of the Executive branch promulgate administrative regulations. Case law is a result of judicial decisions. Legislatures enact statutory laws.The primary purpose of licensing law is to protect thegeneral public.The person named in a will to handle the property of someone who has died and carry out the terms of the will.ExecutorA license issued by the Real Estate Commission to out-of-state licensees for the purpose of a commercial real estate transaction. The out-of-state licensee must be associated with an active licensed North Carolina real estate broker through a written brokerage cooperation agreement and a written declaration of affiliation.Limited Nonresidential Commercial Broker LicenseAn instrument authorizing one person (called an attorney in fact) to act as another's agent, to the extent stated in the signed, properly prepared, instrument.Power of AttorneyWithin the context of a real estate company, the principal means any person or entity owning 10 percent or more of the business entity, or who is an officer, director, manager, member, partner, or who holds any other comparable position.PrincipalThe licensed broker who is responsible for a real estate firm. The qualifying broker maintains the company license, designates brokers-in-charge, and secures and preserves transaction records and trust account records of the firm; the qualifying broker may also be the broker-in-charge.Qualifying BrokerA neutral person appointed by a judge to take charge of the property and business of one of the parties to a lawsuit.ReceiverCarl needs a real estate license if heaccepts a referral fee for bringing a buyer and seller together.Briana is the unlicensed office manager of a large apartment complex, employed by Gateway, Inc., a licensed property management broker. When prospective tenant Tony comes into the office to inquire about renting an apartment, Briana CANNOTnegotiate the amount of the security deposit Tony will pay. wrong answer: complete the information on a pre-printed lease form.Who is NOT EXEMPT from needing a real estate broker license to sell real property in North Carolina?an auctioneer selling property as part of an estateMartha is an unlicensed assistant at ABC Brokerage. What tasks may Martha perform in her role as a paid employee?contact a buyer client to set up an appointment for a showing / respond to a consumer's question about the published list price of a property wrong answer: evaluate lease applications to select the best tenantSomeone who is appointed by the court to handle the affairs of someone going through a bankruptcy is known as a(n) _____________.trustee - A trustee is appointed by a judge to handle the sale of real property and other aspects of bankruptcy. Trustees do not need a real estate license.An unlicensed assistant to a North Carolina broker may NOTaccept a fee for referring a brokerage client to a real estate firm in another state.Glen is negotiating a real estate transaction. What are the conditions that generally point to his needing a real estate license?He is being paid for his efforts. / He is working on behalf of someone else. wrong answer: It is a commercial transaction.Who needs a brokerage cooperation agreement and a declaration of affiliation?a limited nonresident commercial brokerMargaret has been transferred from Charlotte to Dallas and she must move before she's able to complete the sale of her property. She would like her sister Martha to go to the closing table and handle any last-minute contingencies from the contract. In exchange for her services, she intends to pay Martha a fee. To accomplish this task legally, Margaret must name Marthaher attorney-in-fact. - If Margaret signs a power of attorney document making Martha her attorney-in-fact, she can pay Martha a fee for conducting business on Margaret's behalf as attorney-in-fact, but Margaret cannot pay a commission to Martha for her efforts.Brian has been appointed the administrator of his grandfather's will. One of his responsibilities will be to sell his grandfather's 25 properties so that he can distribute the funds to Grandpa Joe's many heirs. Assuming he does not want to use a broker, does Brian need to have a real estate license to sell the properties?no, if he does not receive commission on the property sales - Since Brian is acting in his capacity as a court-appointed personal representative, he is not required to have a real estate license to sell his grandfather's properties, no matter how many properties he sells, as long as he is compensated only with an administrator's fee for his services and not a real estate commission.Which of the following is a license issued by the North Carolina Real Estate Commission?brokerOf the following, who would need a real estate license?Abby, who is paid a commission for negotiating the lease of a warehouse / Dan, who negotiates the sale of his mother's property, for which his mother gave him a car wrong answer: Esther, a trustee who earns $1,000 for arranging the sale of a property for a bankruptcyA consent to service signed by nonresident licensees agreeing to allow legal action to be brought against them in the State of North Carolina.Consent to Service of Process and PleadingsOngoing training opportunities that must be fulfilled to renew a real estate license. In North Carolina, licensees must complete eight hours of approved CE every year.Continuing Education (CE)The period during which a real estate licensee must renew his license. In North Carolina, real estate licenses must be renewed annually by June 30.License Renewal CycleThe 90 hours of North Carolina Real Estate Commission-approved education required within 18 months of receiving or activating an initial broker license with provisional designation; successful completion removes the provisional designation.Postlicensing EducationA provisional broker must complete ______ of postlicensing education classes within ______.90 hours / 18 monthsWhat must a licensee be prepared to show as proof of eligibility to practice real estate if asked?a pocket cardAn applicant passed the national portion but failed the state portion of the licensing exam. Which statement is TRUE? Select all correct responses.She must retake just the state portion. wrong answer: She must retake the exam within six months.Which of the following are required postlicensing courses? Select all correct responses.Broker Relationships and Responsibilities / Contracts and Closings / License Law, Commission Rules, and Legal Concepts wrong answer: Working with Buyers and SellersTo remove the provisional designation from a North Carolina real estate license, the provisional broker must work at least 18 months under the supervision of a broker-in-charge.False - The completion of the required postlicensing education will remove the provisional designation.The North Carolina General Update course accounts for _____ hours of the eight hours of the annual continuing education requirement?4Charlotte licensee Louisa is getting married and moving across town. What is the timeframe for notifying the Commission of the name and address change?10 daysWhen applying for a real estate license, the required criminal background check must be no more than _________ old.6 monthsWhat must a North Carolina real estate broker do to reinstate a license that has been expired for one year?pay a fee equal to two times the current renewal license / submit a criminal record report that was prepared within the past six months / pass one postlicensing course or pass both portions of the licensing exam wrong answer: submit an original license application and feeWhich of the following is a requirement before the Real Estate Commission will issue a broker license with a provisional designation?complete 75 hours of prelicensing education / pass both portions of the licensing examination wrong answer: affiliate with a qualifying brokerA real estate broker must complete the required CE by __________ and submit the application for renewal by __________.June 10 / June 30It is the Regulatory Affairs Division of the Real Estate Commission that is responsible for investigating complaints against licensees.TrueAn owner tells a listing agent with ABC Realty that his house has 1850 heated square feet. Without verifying the square footage, the agent records 1850 square feet on the listing form and in the listing information published in the local MLS. The house is subsequently sold by a sales agent with XYZ Realty who tells the buyer that according to the MLS data, the house has 1850 square feet. The buyer later discovers that the house actually has only 1750 square feet.negligent misrepresentationA selling agent working with a buyer as a subagent of the seller learns that the buyer is willing to pay more than the price in the buyer's offer, but fails to disclose this information to the seller (or listing agent) when presenting the offer.willful omissionWithout checking with the owner, an agent tells a prospective buyer of a listed house that heating and cooling costs are "very reasonable."willful misrepresentation - The Real Estate Commission categorizes this as willful misrepresentation: "Because the agent acted without regard for the truth of the matter, he may be guilty of willful misrepresentation if heating and cooling costs are in fact extraordinarily high."An agent knows that the approximate market value of a house is $225,000, but tells the property owner that the house is worth $250,000 in order to obtain a listing.willful misrepresentationAn agent knows that a listed house has a severe problem with water intrusion in the crawl space during heavy rains. In response to a question from a prospective buyer who is being shown the house during dry weather, the agent states that there is no water drainage problem.willful misrepresentationWhen listing a house, a listing agent is told by the seller that one area of the roof leaks badly when it rains, but the moisture so far is being contained in the attic. The listing agent forgets to note this on the MLS data sheet and forgets to disclose the leaking roof problem to prospective buyers and selling agents.negligent omissionA buyer's agent becomes aware that the seller with whom his buyer is negotiating is under pressure to sell quickly and may accept much less than the listing price. Believing such information should always be kept confidential, the buyer's agent does not provide the buyer with this information.willful omissionAn agent is completely unfamiliar with the features or condition of a listed property; however, the agent informs a prospective buyer that the plumbing is in good working order without first checking with the owner.willful misrepresentationA seller has a 30,000 square foot commercial property for sale which cannot be expanded under local zoning laws. The buyer is looking for property in the 25,000 - 30,000 square foot range, but has told his buyer's agent that he needs a property where he can expand to 50,000 square feet or more in the future. The seller does not think to advise the buyer's agent that the property cannot be expanded, and the buyer's agent makes no inquiry about it although he is aware of the buyer's special needs.negligent omissionAn agent knows that the city has just decided to extend water and sewer lines to a subdivision that has been plagued for years by serious water quality and sewage disposal problems. This will result in a substantial increase in the value of homes in the subdivision. The agent, who is working with a buyer to purchase a house in the subdivision, does not inform the seller of the city's recent decision.willful omissionA listing agent lists for sale a house located adjacent to a street that is about to be widened into a major thoroughfare. The thoroughfare project has been very controversial and highly publicized. The city recently finalized its decision to proceed with the project and the plans for the street widening are recorded in the city planner's office. A buyer, working with a selling agent, makes an offer to buy the house. The listing agent does not disclose the street widening plans to the buyer or selling agent and claims later that he/she was not aware of the plans.negligent omission - The Real Estate Commission categorizes this as negligent omission: "In this situation, both the listing and selling agents are probably guilty of negligent omission because each "should reasonably have known" of the street widening plans, clearly a material fact, and should have disclosed this fact to the buyer. This result is not affected by whether the selling agent is a buyer agent or seller's subagent."An agent knows that a listed house has a major defect (e.g., crumbling foundation, no insulation, malfunctioning septic tank, leaking roof, termite infestation, or some other problem) but fails to disclose such information to a prospective buyer.willful omissionAn agent has previously sold several lots in a subdivision under development and all those lots passed a soil suitability test for an on-site septic system. The agent then sells Lot 35 without checking as to whether this lot satisfies the soil test; however, the agent informs the buyer that Lot 35 will support an on-site septic system when in fact the contrary is true.negligent misrepresentation - The Real Estate Commission categorizes this as negligent misrepresentation: "While the agent's conduct may not rise to the level of willful disregard for the truth of the matter, the agent was at least negligent in not checking the soil test result on Lot 35 and is therefore guilty of negligent misrepresentation. This result is not affected by the agent's agency status or role in the transaction."An agent knows that the heat pump at a listed house does not function properly, but tells a prospective buyer that all mechanical systems and appliances are in good condition.willful misrepresentationAn agent knows that a zoning change is pending that would adversely affect the value of a listed property, but fails to disclose such information to a prospective buyer.willful omissionNegligent misrepresentation, sometimes called constructive fraud, occurs when false statements are made unintentionally. Here, the false statement is the result of carelessness or incompetence, rather than intent to deceive. Similarly, negligent omission is the unintentional failure to disclose.TrueWillful misrepresentation, sometimes called actual fraud, is a deliberate act with the intent to deceive or with reckless indifference to the truth. It is any form of deceit, trickery, or breach of confidence by which one party attempts to gain some unfair or dishonest advantage over another through their words or actions. Willful omission also involves intent, but it is the failure to disclose a material fact to induce someone to act or to gain an unfair advantage.TrueThe North Carolina Real Estate Authority has the authority to impose administrative discipline against a non-licensee who is practicing real estate brokerage without an active license.FalseMary has been practicing as a provisional broker for almost two years and she just completed the required postlicensing to have the provisional designation removed. The Commission is investigating a complaint from a consumer that Mary placed an ad the consumer thought was discriminatory. The Commission could restrict her license and require that her broker-in-charge continue to approve all ads that she places for the next six months.TrueCommingling is the illegal mixing of money that is held in trust on behalf of a client with the brokerage firm's funds. Commingling is specifically prohibited in North Carolina and can lead to severe penalties.TrueIn North Carolina, real estate brokers must maintain an escrow account in which to secure any funds belonging to others. You might want to think of an escrow account as a safe in which to temporarily park money that belongs to someone else, but you're not yet sure who will actually get the money until sometime down the road.TrueCommingling is specifically prohibited in North Carolina and can lead to severe penalties. For example, the Real Estate Commission permanently revoked the license of a brokerage firm for failing to safeguard funds held in the firm's trust account, finding that the broker-in-charge commingled personal funds with trust funds and converted trust money to personal use, resulting in a shortage in the firm's trust account and, therefore, the firm failed to timely remit money owed to clients (Real Estate Bulletin, February 2018).TrueIllegally mixing personal funds with money held in trust on behalf of a client.ComminglingThe ability to do something successfully or efficiently.CompetenceThe temporary withdrawal of a real estate agent's license for a specific timeframe.SuspensionThe conduct of a fiduciary that consists of taking advantage of his or her position in a transaction and acting in his or her own interests rather than in the interests of his or her clients.Self-DealingAn official public record of discipline but one that does not restrict the licensee's ability to practice real estate.ReprimandThe act of excluding or leaving out something; a failure to do something, especially something that one has a moral or legal obligation to do. An act of omission may be willful or negligent.OmissionA plea by which a defendant in a criminal prosecution accepts conviction as though a guilty plea had been entered but does not admit guilt. Also called Nolo Contendere.No ContestA court-ordered prohibition against a specific act or conduct, as opposed to a judgment for money. Also called Injunction.Injunctive Relief1. Conduct that is not in accordance with accepted rules or standards, especially of morality or honesty. 2. Failure to exercise the fiduciary duty of reasonable care in the performance of one's legal and ethical duties.Improper Conduct