SECTION 1: AGENCY & FIDUCIARY DUTIES
QUESTION 1
Which agency relationship is commonly used in North Carolina real estate transactions,
where the agent owes fiduciary duties to the client such as loyalty, confidentiality,
obedience, disclosure, accounting, and reasonable care and diligence?
A) Dual Agency
B) Seller's Agent
C) Buyer's Agent
D) Transaction Broker
ANSWER: D
RATIONALE: The transaction broker relationship is the default agency relationship in
North Carolina. It provides a limited, non-fiduciary form of agency where the broker
works with both parties but owes duties of honesty, fairness, and accounting
QUESTION 2
An attorney of fact is best described as:
A) A fiduciary to his principal
B) An agent
C) An attorney
D) A client
ANSWER: A
RATIONALE: An attorney of fact is a fiduciary to his principal, appointed by a power of
attorney to act on their behalf
,QUESTION 3
Which of the following is TRUE about the North Carolina Residential Property Disclosure
Act?
A) All agents in the transaction should facilitate the timely delivery of the property
disclosure report to the buyer
B) The property owner should disclose the condition of the listed property or be subject
to a 3-day rescission period
C) All residential sellers are exempt from this act unless a broker is involved
D) Buyers must receive the completed disclosure report no later than the beginning of
the due diligence period
ANSWER: A
RATIONALE: All agents in the transaction should facilitate the timely delivery of the
property disclosure report to the buyer. The seller may answer "yes," "no," or "no
representation." The licensee should not tell the seller how to respond to any question
QUESTION 4
A buyer's agent is responsible for which of the following in regard to the Closing
Disclosure?
A) The accuracy of all items on the Closing Disclosure
B) The accuracy of all items for the buyer of which they are reasonably aware
C) The correct distribution of proceeds of sale
D) To ensure that buyer has title insurance coverage
ANSWER: B
RATIONALE: The buyer's agent is responsible for the accuracy of all items for the buyer
of which they have knowledge. The agent would not be responsible for calculating seller
payoff or aggregate accounting adjustments
, QUESTION 5
A licensee has just discovered a major roofing leak in one of his current listings even
though the seller has indicated "no representation" on the Residential Property
Disclosure Statement. The listing agent does not inform the selling agent of the defect.
According to the NCREC, who is held responsible for this nondisclosure?
A) The listing agent
B) The listing broker and the selling broker
C) The seller and the listing agent
D) The seller
ANSWER: C
RATIONALE: Both the seller and the listing agent are held responsible for nondisclosure.
The listing agent has a duty to disclose known material facts .
SECTION 2: CONTRACTS & CLOSINGS
QUESTION 6
Which party's signature is required on a deed of trust?
A) The trustee
B) The beneficiary
C) The trustor(s)
D) The grantee(s)
ANSWER: C
RATIONALE: The trustor is the borrower in a lending situation using a trust deed. The
borrower is giving the lender security or collateral interests in the property. Since those
rights belong to the borrower, only the trustor (or borrower) must sign the trust deed
QUESTION 1
Which agency relationship is commonly used in North Carolina real estate transactions,
where the agent owes fiduciary duties to the client such as loyalty, confidentiality,
obedience, disclosure, accounting, and reasonable care and diligence?
A) Dual Agency
B) Seller's Agent
C) Buyer's Agent
D) Transaction Broker
ANSWER: D
RATIONALE: The transaction broker relationship is the default agency relationship in
North Carolina. It provides a limited, non-fiduciary form of agency where the broker
works with both parties but owes duties of honesty, fairness, and accounting
QUESTION 2
An attorney of fact is best described as:
A) A fiduciary to his principal
B) An agent
C) An attorney
D) A client
ANSWER: A
RATIONALE: An attorney of fact is a fiduciary to his principal, appointed by a power of
attorney to act on their behalf
,QUESTION 3
Which of the following is TRUE about the North Carolina Residential Property Disclosure
Act?
A) All agents in the transaction should facilitate the timely delivery of the property
disclosure report to the buyer
B) The property owner should disclose the condition of the listed property or be subject
to a 3-day rescission period
C) All residential sellers are exempt from this act unless a broker is involved
D) Buyers must receive the completed disclosure report no later than the beginning of
the due diligence period
ANSWER: A
RATIONALE: All agents in the transaction should facilitate the timely delivery of the
property disclosure report to the buyer. The seller may answer "yes," "no," or "no
representation." The licensee should not tell the seller how to respond to any question
QUESTION 4
A buyer's agent is responsible for which of the following in regard to the Closing
Disclosure?
A) The accuracy of all items on the Closing Disclosure
B) The accuracy of all items for the buyer of which they are reasonably aware
C) The correct distribution of proceeds of sale
D) To ensure that buyer has title insurance coverage
ANSWER: B
RATIONALE: The buyer's agent is responsible for the accuracy of all items for the buyer
of which they have knowledge. The agent would not be responsible for calculating seller
payoff or aggregate accounting adjustments
, QUESTION 5
A licensee has just discovered a major roofing leak in one of his current listings even
though the seller has indicated "no representation" on the Residential Property
Disclosure Statement. The listing agent does not inform the selling agent of the defect.
According to the NCREC, who is held responsible for this nondisclosure?
A) The listing agent
B) The listing broker and the selling broker
C) The seller and the listing agent
D) The seller
ANSWER: C
RATIONALE: Both the seller and the listing agent are held responsible for nondisclosure.
The listing agent has a duty to disclose known material facts .
SECTION 2: CONTRACTS & CLOSINGS
QUESTION 6
Which party's signature is required on a deed of trust?
A) The trustee
B) The beneficiary
C) The trustor(s)
D) The grantee(s)
ANSWER: C
RATIONALE: The trustor is the borrower in a lending situation using a trust deed. The
borrower is giving the lender security or collateral interests in the property. Since those
rights belong to the borrower, only the trustor (or borrower) must sign the trust deed
