State: North Carolina | Category: Real Estate | All tests in this Category:
Practice Test 1 Practice Test 21. A subordination clause most benefits which party?
The trustor benefits because a new loan can take priority over an existing loan, allowing for additional financing options.
2. Which instrument is most commonly used in North Carolina to finance real estate and provide for a non-judicial foreclosure by a trustee?
North Carolina commonly uses deeds of trust with a trustee who can foreclose non-judicially by sale upon default.
3. In NC real estate, a client is defined as:
A client is the principal who authorizes representation by the licensee, usually through a written agency agreement.
4. Which of the following is considered a physical component of real property?
Soil is a tangible part of the land, whereas rights like water or minerals are interests, not physical components.
5. A mortgage loan where only interest is paid during the term and the principal is due at the end is called:
A straight note, also called an interest-only loan, requires the borrower to pay only interest during the term. The entire principal is due as a lump sum at maturity.
6. Which adjustment is made when a comparable has fewer bathrooms than the subject?
Since the comparable is inferior (fewer bathrooms), value is added to it to equate it to the subject property's features.
7. If a construction permit in NC is not started within the allowed timeframe, what may happen?
Permits typically have a time limit to begin work; if not started, they may expire and require reactivation or reapplication.
8. Who is most commonly designated as the escrow agent for a North Carolina real estate closing?
In NC, closings are traditionally conducted by a licensed closing attorney who acts as the escrow agent and oversees fund handling and disbursement.
9. The cost approach is most appropriate for valuing:
The cost approach works best for new or unique properties where comparable sales are limited. Older homes may have significant depreciation, making other approaches more reliable.
10. In North Carolina, a fee simple determinable ends automatically when a stated event occurs. What is the grantor's future interest called?
With a fee simple determinable, the property may automatically revert to the grantor upon the occurrence of the condition; the future interest is called a possibility of reverter.
11. Which statement best describes North Carolina's property tax assessment method?
NC uses mass appraisal techniques that incorporate market data to value properties for tax purposes.
12. Which of the following is primarily a residential mortgage lender in the U.S.?
Savings and loan associations (S&Ls) historically focus on residential mortgages, whereas commercial banks have broader lending portfolios.
13. Which of the following statements about lien releases in North Carolina is accurate?
To clear title, the lien must be released by recording a release of lien; without recording, the lien remains.
14. If a zoning map is not consistent with the comprehensive plan, what action is typically taken?
When a map or ordinance is inconsistent with the comprehensive plan, jurisdictions usually pursue a map or text amendment to restore consistency with planning goals.
15. When do property taxes create a lien on NC real property?
Property tax liens in NC attach on January 1 of the tax year, securing the year’s tax liability.
16. Private mortgage insurance (PMI) protects the lender against:
PMI provides financial protection to lenders if a borrower defaults on a mortgage with a low down payment.
17. Which of the following best describes a 'customer' vs 'client' in NC agency practice?
A client has a formal written agency relationship and fiduciary duties; a customer has limited, non-fiduciary assistance.
18. Who typically pays for the owner's title insurance in a North Carolina closing?
The buyer generally pays for the owner's title insurance policy; the lender's title policy is paid as part of loan costs.
19. True or false: A North Carolina real estate licensee may negotiate terms in a transaction only if supervised by the Broker-in-Charge.
Licensed salespersons may perform license-requiring activities only under supervision of the BIC.
20. A property’s highest and best use is defined as:
Highest and best use refers to the use that is legally permissible, physically possible, financially feasible, and most productive, producing the maximum value for the property.
21. What must a licensee do if they change their legal name during licensure in NC?
A legal name change must be reported to the NC Real Estate Commission and the license record updated to reflect the new name.