Free North Carolina Contracts Practice Test — LicenseIQ

Question 1

A financing contingency in a purchase agreement protects the:

Accepted Answer

A financing (mortgage) contingency lets the buyer cancel without penalty if unable to secure the specified loan by the deadline.

Question 2

Under an open listing, the seller owes a commission to:

Accepted Answer

Open listings are non-exclusive; only the procuring broker is paid, and the owner owes nothing for a self-sale.

Question 3

A party making an offer to buy is the ____, and the party receiving it is the ____.

Accepted Answer

The offeror makes the offer; the offeree receives it. When a counteroffer is made, the roles swap.

Question 4

A broker may NOT use a preprinted offer to purchase form that:

Accepted Answer

Rule 58A .0112 bars use of a preprinted offer or sales contract form containing a provision concerning a broker's compensation.

Question 5

A lender offers a 95% LTV loan. The buyer has $18,000 for the down payment. What is the maximum purchase price?

Accepted Answer

At 95% LTV the down payment is 5% of price. Price = $18,000 / 0.05 = $360,000; loan = $342,000.

Question 6

Which is NOT an essential element of a valid contract?

Accepted Answer

The essential elements are offer and acceptance (mutual consent), consideration, competent parties and legal purpose. Notarization is not required for a contract to be valid.

Question 7

A mandatory evacuation order forces vacation tenants to leave on day 3 of a 7-night stay. They declined evacuation insurance that the broker offered before they took possession. The tenants are entitled to:

Accepted Answer

G.S. 42A-36 grants a prorated refund after a mandatory evacuation, unless the tenant declined (or bought) evacuation insurance offered by the landlord or broker.

Question 8

A seller is already under contract, and the listing agent receives a second offer. The seller has not given written instructions about other offers. The listing agent should:

Accepted Answer

Brokers must present all offers promptly unless the seller has instructed otherwise in writing. Revealing the first buyer's terms would breach duties to the seller and require seller consent.

Question 9

In an option to purchase, the seller who grants the option is the ____ and the option holder is the ____.

Accepted Answer

The seller (optionor) gives the option; the buyer (optionee) holds it. Only the optionor is bound during the option period, making it unilateral.

Question 10

A licensee never signs a buyer agreement but repeatedly gives a buyer negotiating advice and acts on his behalf. An agency relationship may have been created by:

Accepted Answer

Implied agency arises from conduct; the agent then owes full fiduciary duties. Express agency is created by stated agreement, ideally in writing.

Question 11

A listing agreement in which the broker earns a commission regardless of who sells the property is a(n):

Accepted Answer

In an exclusive right-to-sell listing, the listing broker earns a commission no matter who procures the buyer, even the owner. (Reclassified to section 6 / CORE.)

Question 12

After the buyer and seller sign a sales contract but before closing, the contract is:

Accepted Answer

A contract is executory while obligations remain to be performed; it becomes executed when fully performed (at closing).

Question 13

The federal law that prohibits price fixing, group boycotts, market allocation and tie-in agreements is the:

Accepted Answer

The Sherman Antitrust Act of 1890 prohibits conspiracies in restraint of trade, including these practices.

Question 14

Under the statute of frauds, a real estate sales contract must be:

Accepted Answer

The statute of frauds requires real estate sales contracts to be in writing and signed to be enforceable.

Question 15

A licensee representing the seller who learns the buyer will pay more than the offer must:

Accepted Answer

Loyalty and disclosure require the seller's agent to share material information that benefits the client. The agent owes the buyer-customer no confidentiality.

Question 16

A contract that has all legal elements but where one party may cancel is:

Accepted Answer

A voidable contract is valid but one party may rescind it (e.g., a minor, or a party induced by misrepresentation or duress). A void contract lacks an essential element and has no legal effect.

Question 17

A contract clause stating that 'time is of the essence' means:

Accepted Answer

'Time is of the essence' makes performance by the stated dates essential; missing a deadline can be a breach.

Question 18

Trust money received by a North Carolina broker (other than earnest money held with a pending offer) must be deposited in a trust or escrow account:

Accepted Answer

Rule 58A .0116 sets a three-banking-day deposit deadline.

Question 19

An offer or counteroffer becomes a binding contract when:

Accepted Answer

Acceptance must be unconditional and communicated back to the offeror; any change creates a counteroffer instead.

Question 20

A buyer did not receive the disclosure statement until after the contract was signed. The buyer may cancel the contract:

Accepted Answer

G.S. 47E-5(b) lets the buyer cancel without penalty. The right ends at the earliest of the end of the third calendar day after receipt, the third calendar day after contract, or settlement or occupancy. Cancellation does not depend on what the form says.

Question 21

Under the Residential Rental Agreements Act, a North Carolina landlord must:

Accepted Answer

G.S. 42-42 lists the landlord's duties, including habitability, code compliance, safe common areas, maintenance of supplied systems and appliances, and operable smoke and CO alarms.

Question 22

A builder offers a buyer's agent a $2,000 bonus if her client buys one of the builder's homes. The agent must:

Accepted Answer

Rule 58A .0109 requires a broker to disclose to the client, in a timely way, any compensation or incentive from anyone other than the client.

Question 23

A broker must deliver a copy of a signed offer or contract to the parties who signed it:

Accepted Answer

Rule 58A .0106 requires immediate delivery, and no later than five days.

Question 24

The nondiscrimination provision required in North Carolina agency agreements lists which classes?

Accepted Answer

Commission rules require the broker to conduct brokerage activities without regard to the seven classes that mirror the federal and NC Fair Housing Acts. Age and marital status are not on the list.

Question 25

A buyer agent emails a client an offer and a buyer agency agreement. The client signs and returns only the offer. What should the agent do?

Accepted Answer

NCREC has specifically warned that presenting an offer without a signed written buyer agency agreement violates Rule 58A .0104(a). The agreement must be signed no later than the time the offer is made.

North Carolina real estate contracts practice test

1. A financing contingency in a purchase agreement protects the:

2. Under an open listing, the seller owes a commission to:

3. A party making an offer to buy is the , and the party receiving it is the .

4. A broker may NOT use a preprinted offer to purchase form that:

5. A lender offers a 95% LTV loan. The buyer has $18,000 for the down payment. What is the maximum purchase price?

6. Which is NOT an essential element of a valid contract?

7. A mandatory evacuation order forces vacation tenants to leave on day 3 of a 7-night stay. They declined evacuation insurance that the broker offered before they took possession. The tenants are entitled to:

8. A seller is already under contract, and the listing agent receives a second offer. The seller has not given written instructions about other offers. The listing agent should:

9. In an option to purchase, the seller who grants the option is the and the option holder is the .

10. A licensee never signs a buyer agreement but repeatedly gives a buyer negotiating advice and acts on his behalf. An agency relationship may have been created by:

11. A listing agreement in which the broker earns a commission regardless of who sells the property is a(n):

12. After the buyer and seller sign a sales contract but before closing, the contract is:

13. The federal law that prohibits price fixing, group boycotts, market allocation and tie-in agreements is the:

14. Under the statute of frauds, a real estate sales contract must be:

15. A licensee representing the seller who learns the buyer will pay more than the offer must:

16. A contract that has all legal elements but where one party may cancel is:

17. A contract clause stating that 'time is of the essence' means:

18. Trust money received by a North Carolina broker (other than earnest money held with a pending offer) must be deposited in a trust or escrow account:

19. An offer or counteroffer becomes a binding contract when:

20. A buyer did not receive the disclosure statement until after the contract was signed. The buyer may cancel the contract:

21. Under the Residential Rental Agreements Act, a North Carolina landlord must:

22. A builder offers a buyer's agent a $2,000 bonus if her client buys one of the builder's homes. The agent must:

23. A broker must deliver a copy of a signed offer or contract to the parties who signed it:

24. The nondiscrimination provision required in North Carolina agency agreements lists which classes?

25. A buyer agent emails a client an offer and a buyer agency agreement. The client signs and returns only the offer. What should the agent do?

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