302 NC POST LICENSING CONTRACTS AND CLOSING EXAMS, Exams of Nursing

Download 302 NC POST LICENSING CONTRACTS AND CLOSING EXAMS and more Exams Nursing in PDF only on Docsity! 1 | P a g e 302 NC POST LICENSING CONTRACTS AND CLOSING EXAMS WITH ACTUAL CORRECT QUESTIONS AND VERIFIED DETAILED RATIONALES ANSWERS (NEWEST) 2024 ALREADY GRADED A+ NC 302 Postlicensing Contracts & Closings Agent Guidelines w/ offers A) A listing broker or agent is required to respond in writing that an offer was submitted if the cooperating broker who submitted the offer so requests B) The listing broker or agent must respond in the affirmative unless the seller has provided written notification waiving the obligation to have the offer presented C) Agent has to present all offers all the way throughout the contract, up to closing D) All of the above D) All of the above NC 302 Postlicensing Contracts & Closings Mutual Mistakes A) May allow buyer to rescind the contract and be refunded all monies B) Mistake of "Material Fact" C) Does NOT apply to "Mistakes of Law" D) All of the above D) All of the above NC 302 Postlicensing Contracts & Closings Discharge of Contracts TQ Contracts can be terminated in several ways except: A) agreement of parties to terminate B) full and complete performance C) material breach D) none of the above D) none of the above NC 302 Postlicensing Contracts & Closings Discharge of Contracts TQ Contracts can be terminated in several ways except: A) impossibility of performance B) operation of law 2 | P a g e C) each party to the contract releases the other from contractual duties D) ovation D) ovation NC 302 Postlicensing Contracts & Closings Discharge of Contracts TQ Contracts can be terminated by A) Novation B) Pur Autre Vie C) Proration D) Lateral Support A) Novation (the substitution of a new contract in place of an old one) NC 302 Postlicensing Contracts & Closings Discharge of Contracts TQ Contracts can be terminated by A) RESPA B) Subsequent Modification C) Reservation D) Prima Facie B) Subsequent modification NC 302 Postlicensing Contracts & Closings Discharge of Contracts TQ Contracts can be terminated by A) Preemptive Right B) Non Recourse Note C) Accord & Satisfaction D) CERCLA C) Accord & Satisfaction NC 302 Postlicensing Contracts & Closings Discharge of Contracts TQ Contracts can be terminated by A) Affidavit B) Non Recourse Note C) Cartway Proceeding D) Cancellation D) Cancellation NC 302 Postlicensing Contracts & Closings What is the person to whom an agreement or contract is assigned? A) Assignee B) Assignor 5 | P a g e NC 302 Postlicensing Contracts & Closings Pg. 184 2. When identifying people in the contract, use their ________. The signature line should indicate whether or not people are "married" or "Husband and wife". individual legal names NC 302 Postlicensing Contracts & Closings Pg. 184 3. The one to buy, two to sell rule in NC means the following: Both spousal signatures to sell, one spouse may buy on their own. NC 302 Postlicensing Contracts & Closings Pg. 184 4,5. Spouses buying properties in their own name in NC usually are required to: A) Acknowledge deed of trust B) Sign a free trader agreement C) Spousal signature necessary on the OTPC (Offer to Purchase Contract) D) A & B only A) Acknowledge deed of trust B) Sign a free trader agreement Lender's will require signature acknowledging Deed of Trust Legal counsel may recommend a "Free Trader Agreement" by signed NC 302 Postlicensing Contracts & Closings Pg. 184 6. Electronic signatures are permitted and authorized by both a federal law dealing with interstate commerce and a state law dealing with intrastate commerce. These two laws are ____ and ____. Electronic systems as Docusign or Dotloop contain a mandated disclosure for the consumers that informs them of the extent of use and purpose of their electronic signature. E-Sign Act UETA- Uniform Electronic Transaction Act FYI: Within your state only, not just NC, but whatever state you are in. ESign for interstate. NC 302 Postlicensing Contracts & Closings Pg. 184 TQ ____________are regulated and require disclosure and compliance with statutes, records and security A) Lis Perdens B) Mailbox Rule C) Electronic signatures D) Recordations Electronic signatures POA power of attorney Consumer Transaction 6 | P a g e Used in a "Consumer Transaction" Involving a "Natural Person" Personal Household or Family Purposes As Opposed to Business Transactions Between Entities and Companies ie all rentals would be a Business Transaction Undisclosed Buyer Principals Undisclosed Buyer Principals Some "corporate buyers" wish to remain anonymous Agent may sign as "Agent for Undisclosed Principal" - (with authority) Creates Additional liability issues Not permitted in Dual Agency when could a broker actually create language for a contract? A listing Agreement NC 302 Postlicensing Contracts & Closings Pg. 185 7,8. As an attorney state, North Carolina prohibits licensees from _____ a contract for _______. Drafting Contracts Others "Fill-In" or "Complete" Pre Printed Forms Don't Engage in the Unauthorized Practice of Law NC 302 Postlicensing Contracts & Closings Pg. 185 The Modification or Amendment of Contracts It does NOT prohibit any buyer or seller from _____, but they should be advised to consult an attorney. changing or altering the language NC 302 Postlicensing Contracts & Closings Pg. 185 9-12. As an attorney state, North Carolina prohibits licensees from drafting contracts for others. This does not prohibit any of the following A person altering an agreement to which they are a party Licensees own employment agreement with the firm A listing agreement on behalf of the firm A buyer broker agreement on behalf of the firm 7 | P a g e NC 302 Postlicensing Contracts & Closings Pg. 185 TQ 13. When a contract is changed it is called an ________. Changing or editing existing terms of a contract is considered an _____. amendment NC 302 Postlicensing Contracts & Closings Pg. 185 TQ 14. Adding additional terms or conditions to a contact is properly done with an ________. There are a total of 13 NCAR/NCBA jointly approved standard addenda for use with residential contracts. Addendum NC 302 Postlicensing Contracts & Closings Pg. 185 15 16 17 Most of the forms have accompanying Guidelines. All of the following should be adhered to A) Type or print legibly B) Fill in all blanks w N/A if necessary C) Be precise- avoid abbreviations and acronyms D) All of the above D) All of the above NC 302 Postlicensing Contracts & Closings Pg. 185 18 19 20 Most of the forms have accompanying Guidelines. All of the following should be adhered to A) Parties (Seller & Buyer) should initial and date every change, addition, or deletion B) Rewrite offer if numerous changes C) Review all contract provisions with parties and recommend to get legal advice D) All of the above D) All of the above When Is It Received? Email wise? TQ All about email. What happens if buyer client says "Dont send the email to purchase. We have changed our minds and don't want to buy" after you just sent the offer to buy email to seller agent ? As long as Seller hasn't replied, you can send another email to cancel. NC 302 Postlicensing Contracts & Closings Pg. 187 Back-Up Contract Addendum 2A1-T Used when a property is under contract and a secondary buyer wants a contract in place should the original contract fall-through. NC 302 Postlicensing Contracts & Closings Pg. 187 Back -Up Contract Addendum 1 What is the purpose and use of this form? 10 | P a g e NC 302 Postlicensing Contracts & Closings Pg. 190 Working with Addenda Contingent Sale Addendum 5. How is the earnest money and due dilligence fee handled Buyer looses DD if closes. EMD rule the same NC 302 Postlicensing Contracts & Closings Pg. 193 Working with Addenda New Construction Addendum 2A3-T 1. When should a broker use this addendum as opposed to form 800T the The new construction offer to purchase and contract? When the house is already built NC 302 Postlicensing Contracts & Closings Pg. 193 Working with Addenda New Construction Addendum 2A3-T 2. When must the seller provide a Certificate of Occupancy 2. CONSTRUCTION OF HOUSE No later than settlement NC 302 Postlicensing Contracts & Closings Pg. 193 Working with Addenda New Construction Addendum 2A3-T 3. Can improvements or additions to the property be made using this addendum? Minor improvements only. 2 Additional improvements 2D on form. Seller builder will pay for it. Has to make sure vendor doesn't create a lien on the property NC 302 Postlicensing Contracts & Closings Pg. 193 Working with Addenda New Construction Addendum 4. Who pays for the construction of additional improvements? Buyer. Must make sure Contractor does not put a lien on his house. NC 302 Postlicensing Contracts & Closings Pg. 193 Working with Addenda New Construction Addendum 5. What happens if construction is delayed? Seller shall notify buyer within 5 days within the commencement of the delay. Right to extension is waived if no notice is given. 11 | P a g e 3. COMPLETION OF ADDITIONAL IMPROVEMENTS Give notice within 5 days of the delay. Additional improvements. The builder contractor has 5 days to give notice. No notice, the delay is waived. NC 302 Postlicensing Contracts & Closings Pg. 193 Working with Addenda New Construction Addendum 6. Does the buyer have the right to inspect the improvements? Yes. Paragraph 4 INSPECTIONS Reasonable times not interfering with the progress of construction NC 302 Postlicensing Contracts & Closings Pg. 193 Working with Addenda New Construction Addendum 7. Under what circumstances does the buyer have the right to cancel the Contract? Standard Form 2A3-T 5B Buyer and Builder had agreed to the additions, but built not up to par, or non build...????? NC 302 Postlicensing Contracts & Closings Pg. 193 Working with Addenda New Construction Addendum 8. What is a building deposit and how is it handled? No EMD. Paid to seller as additional $, transferred no later than the first banking day DD period. PP 5B. Building deposit. Additional Monies. The Building Deposit Paid to Seller cash, bank, wire transfer no later than first banking day following the end of the DD period NC 302 Postlicensing Contracts & Closings Pg. 201 Working with Addenda Buyer Possession Before Closing Agreement 1. What is the purpose and use of this form? Allows buyer to move in before closing instead of spending money on a hotel NC 302 Postlicensing Contracts & Closings Pg. 201 Working with Addenda Buyer Possession Before Closing Agreement 2. Who are the two professionals that a buyer and seller may want to consult with before using this form? 12 | P a g e Insurance and Attorney Professionals Seller needs to modify their ownership Insurance can say: sorry , not covered Need Renters insurance for the buyer Landlord Policy for the seller NC 302 Postlicensing Contracts & Closings Pg. 198 Working with Addenda FHA/VA Financing Addendum 4 What funds constitute "any penalty by forfeiture"? The earnest money. Buyer still gets their EMD back. NC 302 Postlicensing Contracts & Closings Pg. 201 Working with Addenda Buyer Possession Before Closing Agreement 3. What is the earliest time under which a buyer can take possession using this form? 8am the dated date. NC 302 Postlicensing Contracts & Closings Pg. 201 Working with Addenda Buyer Possession Before Closing Agreement 4. Does the buyer using this form agree to pay yes. Right to occupy the house through rent NC 302 Postlicensing Contracts & Closings Pg. 201 Working with Addenda Buyer Possession Before Closing Agreement 5. What additional obligations does a buyer assume when they utilize this form? Utilities, Maintenance NC 302 Postlicensing Contracts & Closings Pg. 201 Working with Addenda Buyer Possession Before Closing Agreement 6. What obligations does the seller retain regarding the property even though it is occupied by the buyer Risk. NC 302 Postlicensing Contracts & Closings Pg. 201 Working with Addenda Buyer Possession Before Closing Agreement 7. What happens if the buyer can't or doesn't close? Go through normal eviction process NC 302 Postlicensing Contracts & Closings Pg. 211 Additional Provisions Addendum Form 2A11-T 15 | P a g e B) An Addendum C) Inspection payments D) Non-Repair payments C) Inspection payments Not permitted: Inspection Payments Repair Payments Survey Payments Settlement distribution other than to them or their firm NC 302 Postlicensing Contracts & Closings Pg. 224 Integrating the Contractual Handling of Money with Commission Rules 12 Licensees are not permitted to courier or deliver funds relating to any of the following: A) Repair payments B) Bid payments C) Greenback payments D) None of the above A) Repair payments Not permitted: Inspection Payments Repair Payments Survey Payments Settlement distribution other than to them or their firm NC 302 Postlicensing Contracts & Closings Pg. 216 Due Diligence Request & Agreement Form 310-T NC 302 Postlicensing Contracts & Closings Pg. 224 Integrating the Contractual Handling of Money with Commission Rules 13 Licensees are not permitted to courier or deliver funds relating to any of the following: A) Survey Payments B) Bid payments C) Greenback payments D) Non- Repair payments A) Survey Payments Not permitted: Inspection Payments Repair Payments Survey Payments Settlement distribution other than to them or their firm NC 302 Postlicensing Contracts & Closings Pg. 224 Integrating the Contractual Handling of Money with Commission Rules 16 | P a g e 14 Licensees are not permitted to courier or deliver funds relating to any of the following: A) D) Settlement distribution other than to them or their firm D) Settlement distribution other than to them or their firm NC 302 Postlicensing Contracts & Closings Pg. 224 Integrating the Contractual Handling of Money with Commission Rules 1 There is no law requiring a residential brokerage to maintain a trust account. A trust account is only required when a brokerage is holding money Money belonging to another NC 302 Postlicensing Contracts & Closings Pg. 224 Integrating the Contractual Handling of Money with Commission Rules 2, 3 In Residential sales, the earnest money may be held either in a Firm's trust account or Escrow agent / attorney NC 302 Postlicensing Contracts & Closings Pg. 224 Integrating the Contractual Handling of Money with Commission Rules 4 All monies that are received by a ________ must be delivered to a BIC immediately Provisional Broker DAPP (Handling of money) Date Received or Paid Amount Property Address Purpose Payor/Payee NC 302 Postlicensing Contracts & Closings Pg. 224 Integrating the Contractual Handling of Money with Commission Rules 5, 6 All monies that are received by a provisional broker must be delivered to a BIC immediately NC 302 Postlicensing Contracts & Closings Pg. 224 Integrating the Contractual Handling of Money with Commission Rules 7 BIC must deposit all client monies to the trust account within 3 banking days of contract NC 302 Postlicensing Contracts & Closings Pg. 224 Integrating the Contractual Handling of Money with Commission Rules 8 The counting of the three days can be delayed until the date of A) Acceptance of contract B) 3 banking days 17 | P a g e C) the Due diligence for delivery D) Earnest money to an escrow agent A) Acceptance of contract Checks in sles contracts may be held and deposited within 3 banking days of the acceptance of contract NC 302 Postlicensing Contracts & Closings Pg. 224 Integrating the Contractual Handling of Money with Commission Rules 9 10 The only monies which a NC licensee is authorized to accept for delivery are: Due diligence for delivery Earnest money to an escrow agent/attorney Due diligence for delivery Earnest money to an escrow agent/attorney NC 302 Postlicensing Contracts & Closings Pg. 224 Integrating the Contractual Handling of Money with Commission Rules 15 When a licensee accepts the due diligence fees or earnest money for delivery they must ______until delivery. Direction of the buyer MUST SAFEGUARD THE FUNDS MUST DELIVER WITHIN 3 CALENDAR DAYS FOLLOW THE DIRECTIONS OF THE BUYER regarding funds NC 302 Postlicensing Contracts & Closings Pg. 226 Integrating the Contractual Handling of Money with Commission Rules 16 Firms are permitted to earn interest on trust accounts so long as there is a written agreement specifying: Written instructions with the client Trust accounts can always earn interest Who Keeps it depends on the Client's instructions and agreement NC 302 Postlicensing Contracts & Closings Pg. 226 Integrating the Contractual Handling of Money with Commission Rules 17 18 In the event of a dispute regarding the earnest money, there are two options for the brokerage prior to releasing the earnest money to either party: Written consent between the parties 93A-12 Deposit with clerk of courts -Provide written notice -Hold 90 Days -County where property located 20 | P a g e The Proper Use of Addendum 340-T Response to Buyer's Offer 10 The form does invite the buyer to take the following action Rewrite your offer on different terms NC 302 Postlicensing Contracts & Closings Pg. 231 Practical Pointers for Handling Multiple Offers & Counteroffers In Manual pgs 384-385 How to deal with Multiple Offers and Counteroffers Initial and date each change. Keep all communication prompt. Consider starting over again with a blank form. Seek out phones calls and conversations for clarification. Make it clear the inquiries and questions are not creating a counteroffer. Consider referral to an attorney for complex negotiations and changes. NC 302 Postlicensing Contracts & Closings Pg. 242 Dealing with Land Purchases and Subdivisions 1 In NC, the Vacant Land Contract should NOT be used to transfer parcels where _____ is involved. Subdividing NC 302 Postlicensing Contracts & Closings Pg. 242 Dealing with Land Purchases and Subdivisions 2 Subdivided land requires complinace with NC Subdivision laws and Statues. A subdivision in NC exists when a parcel of land is divided into _____ lots. Two or more NC 302 Postlicensing Contracts & Closings Pg. 242 Dealing with Land Purchases and Subdivisions 3,4 There are two exceptions to the Two or more lots. No lot is maller than ____acres. A division of up to a ______lot into as many as 3 lots by a single owner. 10 acres 2 acre parcel into 3 lots by a single owner NC 302 Postlicensing Contracts & Closings Pg. 242 Dealing with Land Purchases and Subdivisions 4a The _______ requirements mandate approval by the municipality or county where the subdivision is going to be located. NC Subdivision 21 | P a g e NC 302 Postlicensing Contracts & Closings Pg. 242 Dealing with Land Purchases and Subdivisions 4b The final step in the subdivision approval process is issuance of a FINAL PLAT APPROVAL NC 302 Postlicensing Contracts & Closings Pg. 242 Dealing with Land Purchases and Subdivisions TQ 5 Prior to approval of a final plat map, the developer may do the following Write contracts Take reservations Sign contracts Hold deposits Initial Planning Stage Final Planning Stage Disposition Start Up Final Plat Approval NC 302 Postlicensing Contracts & Closings Pg. 242 Dealing with Land Purchases and Subdivisions TQ 6 Prior to approval of a final plat map, the developer may not do the following CANNOT Transfer Convey or close until after final plat approval NC 302 Postlicensing Contracts & Closings Pg. 243 The Interstate Land Sales Full Disclosure Act 7 Applies when the sale of lots occurs Across state lines NC 302 Postlicensing Contracts & Closings Form 800T When buying house and land from the same developer NC 302 Postlicensing Contracts & Closings Pg. 243 The Interstate Land Sales Full Disclosure Act 8 Only applies to developments of 25 lots or more NC 302 Postlicensing Contracts & Closings Pg. 243 The Interstate Land Sales Full Disclosure Act 9 -13 Requires that the buyers be provided with a HUD Property report containing: 22 | P a g e Must provide buyers with property report FILED WITH HUD Distance to paved roads Number of homes occupied Soil conditions and septic Type of title Existence of liens BUYERS GET PRIOR TO SIGNING LEASE OR PURCHASE CONTRACT NC 302 Postlicensing Contracts & Closings Pg. 243 The Interstate Land Sales Full Disclosure Act 14 Buyer must be provided with the report PRIOR TO SIGNING LEASE OR PURCHASE CONTRACT NC 302 Postlicensing Contracts & Closings Pg. 243 The Interstate Land Sales Full Disclosure Act 15 There is a _____day rescission period on such transactions. 7 days NC 302 Postlicensing Contracts & Closings Pg. 243 The Interstate Land Sales Full Disclosure Act 16 Failure to provide allows the buyer to revoke the contract and a full refund of all monies paid for a ______ period. 2 years Things an Agent Should be Knowledgeable of Vacant land Issues of Zoning Permits Environmental Issues Water & Septic Construction Issues NC 302 Postlicensing Contracts & Closings Pg. 257 Working in New Construction 17 Working in new construction requires that you know whether you are working with a licensed agent or not. NCREC Commission Rules allow unlicensed individuals who are W2 employees to be involved in the sale of their employer's own property without licensure. Contractors are licensed by NC Licensing Board for General Contractors 25 | P a g e Vendor (Owner) -> Vendee Prospective Buyer -> Making Payments back to the Vendor (Owner) No Transfer of Deed Until the Last Payment is Made (Example - Equitable Title) TQ Honey is better than Vineager when speaking NC 302 Postlicensing Contracts & Closings Regarding Retention of Records 58A.108, a broker must provide copies of transaction documents: A) Within a day of receiving B) Within 3 days of receiving C) Within 5 days of receiving D) Within 14 days of receiving B) Within 3 days of receiving A broker must provide copies of transaction documents:- To the Firm or Sole Proprietorship (BIC) with which they are affiliated- Within 3 days NC 302 Postlicensing Contracts & Closings Regarding Retention of Records 58A.108, a broker must keep copies of transaction documents for A) Service Agreements B) Professional Conduct C) Safety Procedures D) FIRPTA A broker must provide copies of transaction documents:- To the Firm or Sole Proprietorship (BIC) with which they are affiliated- Within 3 days Keep records for 3 years after Closing Termination of Agency Disbursement of Trust Monies WHICHEVER OCCURS LAST Brokers and BIC are responsible for keeping records in a transaction These are CALENDAR days, not business days You don't count the day it was executed/received (if received Tuesday, have to upload by Friday) An offer is terminated anytime by A) Counter offer B) Rejection by the offeror C) Revocation by the offeree D) Discovery of convicted rapist in the area A) Counter offer 26 | P a g e NC 302 Postlicensing Contracts & Closings Regarding Retention of Records 58A.108, a broker must keep copies of transaction documents for ______ from the conclusion of a transaction. A) 1 year B) 3 years C) 4 years D) 5 years B) 3 years NC 302 Postlicensing Contracts & Closings Regarding Retention of Records 58A.108, a broker must keep copies of transaction documents for A) 5 years B) personal account records C) all transaction records and trust account records D) none of the above C) all transaction records and trust account records NC 302 Postlicensing Contracts & Closings Regarding Retention of Records 58A.108, a broker must keep copies of transaction documents for A) all closings for 5 years B) Start of Agency and Disbursement of Trust Monies C) Termination of Agency and Disbursement of Trust Monies D) Start of Agency and Handling of Option Fees and Earnest Money C) Termination of Agency and Disbursement of Trust Monies NC 302 Postlicensing Contracts & Closings Regarding Retention of Records 58A.108, a broker must keep copies of transaction documents for A) uncanceled checks and bookkeeping systems B) non-expenditures C) non-general account ledgers D) trust or escrow account records D) trust or escrow account records NC 302 Postlicensing Contracts & Closings Regarding Retention of Records 58A.108, a broker must keep copies of transaction documents for A) bookkeeping and expenditures B) canceled checks and non-general account ledgers C) transaction files and personal deposits D) All of the above A) bookkeeping and expenditures NC 302 Postlicensing Contracts & Closings Regarding Retention of Records 58A.108, a broker must keep copies of transaction documents for 3 years for 27 | P a g e A) bookkeeping, expenditures, and canceled checks, whichever occurs first B) transaction files, personal deposits, and general account ledgers, whichever occurs last C) closing, Termination of agency and deposits whichever occurs first D) closing, Termination of agency, disbursement of trust monies, whichever occurs last D) Keep records for 3 years after Closing Termination of Agency Disbursement of Trust Monies WHICHEVER OCCURS LAST Classifying contracts: Express & Implied Express: Bilateral, executed Intentions stated (orally or written) Implied: Unilateral, executory Inferred from conduct or actions Classifying contracts: Bilateral & Unilateral Bilateral - two promises (both parties bound to do something) Unilateral - Only one party is bound Classifying Contracts: Executed & Executory Executed - All tasks performed (After closing) Executory - tasks remaining to be done (before closing) Statute of Frauds Everything needs to be in writing DREAM OILS (Statute of Frauds) Deeds Restrictive covenants Easements Assignments Mortgages Options Installment Land Contracts Leases - longer than 3 years Sales Contracts 30 | P a g e Release Novation (the substitution of a new contract in place of an old one) Subsequent modification Accord & Satisfaction Cancellation Contract Assignments Generally assignable Unless contract prohibits Assignors & Assignees Assignee is primarily liable Assignor remains secondarily liable NC Requires Consent Prior to Assignment The NC offer to purchase and contract requires the permission and consent of the parties in order to assign rights under the agreement Remedies for Breach page 295 Compensatory Consequential Liquidated Specific Performance Rescission Drafting of Contracts No "drafting" of contracts Don't engage in the unauthorized practice of law "Fill-in" or "Complete" preprinted forms T-from (Number) -- it's a transaction form. The prohibition is against drafting contracts for others It does not prohibit a buyer or seller from changing their own contracts If a client wants to alter the contract, they should be advised to consult an attorney The Role of the Commission Don't create contracts Don't provide the forms Don't approve contracts Create rules regarding the provisions contracts must contain Give licenses and regulates licenses Parol Evidence Rule previous oral negotiations and statements are superseded by the written contract 31 | P a g e Basic Rules of interpreting contracts A contract is interpreted as a whole Words are given ordinary meaning Handwritten provisions outweigh preprinted form language Clear or ambiguous language is construed against the drafter of the document Buyer or seller can extend for 14 days Offer and Acceptance Identity of the parties: Names of Seller and Buyer (full legal names) - get the seller's name on the deed Identity of the Property -- put in an address, right city, county, zip, legal description, subdivision, etc. {TEST QUESTION} Purchase PRICE & MONEY - Time is of the essence Failure to Deliver Funds by Due Dates - You give them the money but the check bounces, you have one banking day to fix it. The earnest money deposit [TEST QUESTION] Paragraph E in the contract -- READ ITTTTT Identity of the escrow agent Effective date of the contract - the date that the last one of buyer and seller has signed or initialed the offer or the final counter, if any. Such signing or initialing is communicated to the party Due diligence definition Due diligence fee TEST QUESTION!!! READ IT (i) -- who keeps it, when is it refunded Due diligence period and settlement - time is of the essence -- TQ!!! Settlement -- the execution and delivery to the closing attorney of all docs to complete the transaction, including the deed, settlement statement, deed of trust and any other loan or conveyance docs and the closing attorney's receipt of all funds necessary to complete transactions. Closing (M) -- READ FOR TEST!!! ALL IN PURCHASE CONTRACT WHICH IS PAGE 80 OR SO OF BOOKLET compilation of legal process which transfers title / recording of the deed. Recording of the deed = closing Closing = practice of law use of non-attorneys -- TEST QUESTION!!! WARNING: THE NORTH CAROLINA STATE BAR HAS DETERMINED THAT THE PERFORMANCE OF MOST ACTS ..... They are still supervised, legalities are kept, this happens in refinances more than purchases Special Assessments - gov or HOA Fixtures & Exclusions --- TEST QUESTION!!! What is a fixture and what isn't a fixture -- all of the following are considered fixtures except 2. (a) in contract RPOADS - disclosure statement -- TEST QUESTION: read paragraph d -- residential property and owner's disclsoure Seller's representations -- TQ have they owned the property for less than year, LBP, Assessments Seller's Breach Remedies to Buyer -- Read paragraph N Prorations and adjustments -- TEST QUESTION: Paragraph 9 -- all of these items will be prorated: Taxes on real and personal property Rents , etc. -- go to find it. 32 | P a g e Condition of the propety at closing -- Test QUESTION!!! Has to be the same or better -- reasonable wear and tear accepted. Risk of Loss - TEST QUESTION Paragraph 12 , if anything happens to the property up until closing, it's the seller's issue Delay in settlement/closing -- you have 14 days and then the seller can cancel the contract -- TQ Possession - TQ -- paragraph 14. Leases go with the dirt, not with the owners. Additional Addenda -- TQ , this would be a part of parol evidence rule Assignment of contract -- TQ -- this contract may not be assigned without the written consent of all parties except in connection with a tax-deferred exchange Execution -- signing -- TQ Computation of Days & TImes -- TQ -- consecutive calendar days, includes all holidays/saturdays/sundays Signatures, dates -- TQ Listing agent receipt of DD Fee -- TQ , three receipts, remember who is signing for which ones NC is a Caveat Emptor state The principle that the buyer alone is responsible for checking the quality and suitability of goods before a purchase is made. All prior to closing: All inspections performed Property investigation **Loan in place & secured Insurance secured Appraisal completed **Repairs completed **Walk-through **Any cancellation for any reason by the buyer after the DD period will result in a forfeit of both DD fees and earnest money deposits Buyer;s DD includes: Restrictive covenants Septic/sewer Percolation Tests - for soil suitability Sewer connections require a certification of connection permit Community water system/community sewer system is a MATERIAL FACT *** Insurance Issues: Flood certifications FEMA flood plain **CLUE REPORTS!! Title insurance 35 | P a g e Other RESPA Provisions: **Escrow Account Restrictions Use of a closing disclosure Kickbacks between settlement service providers As far as RESPA is concerned, anything of value to settlement service providers (does NOT have to be money) Banking services Open house services Home warranty Appraisal company RESPA does NOT prohibit of affect: Referral fees between licensees Crediting commissions to clients for payment of costs The receipt of bonuses or additional compensation by a licensee from someone other than a settlement service provider ALL BONUSES, COMMISSIONS AND REBATES MUST APPEAR ON THE CLOSING DISCLOSURE The nature of affiliated business arrangements (AfBA's) Mandatory Disclosures for CBA's (Controlled business arrangements - think relationships between lenders) Disclosure of relationship prior to the referral Cannot require to use Must disclose the fees to be charged Can't force people to use certain settlement providers RESPA violation penalties -- Criminal fines up to $10,000 Civil Lawsuits Imprisonment Injunctions & Restitution orders CFPB: Consumer Financial Protection Bureau To educate consumers To enforce consumer protection statues Eliminate previous duplication TRID TILA RESPA Integrated Disclosures 36 | P a g e The biggest impact for brokers: The lender must provide the CD (closing disclosure to the borrower's at least 3 BUSINESS days prior to settlement TRID Timeline Overview: Step 1: Buyer/borrower applies for loan Step 2: lender must provide loan estimate (LE) within 3 business days Step 3: 3 business days before settlement: deadline for borrower's receipt of closing disclosure Step 4: Settlement conference: borrower's closing disclosure (BCD) and/or Seller's closing disclosure (SCD) What is a lender Business day Sundays and 10 federal public holidays are excluded. The borrower can close on the 3rd business day following receipt (A business day is monday - saturday) Definition of "RECEIVED" DELIVERED in person: The CD is "received" on the same day it's provided If MAILED or delivered ELECTRONICALLY: the CD is "received" 3 business days after delivery OR When lender has EVIDENCE of receipt If the closing disclosure is received by the borrower on Monday, what is the first day on which they can close? Day Three (Thursday) Broker's disclosure timeline: Brokers: the disclosure timeline is not negotiable! - the timeline cannot be waived Two separate closing disclosures -- there are two separate disclosures Buyer's closing disclosure Seller's closing disclosure Purpose is to protect confidentiality of info Only the buyer's closing disclosure subject to 3 day delivery, not the seller Delivery must be to buyer. Delivery to agent is insufficient A broker acting as a dual agent should only give the parties their respective CDs Buyer should only see the BCD Seller should only see the SCD Who is responsible for compliance? In most cases, the CD will be provided by the lender Lenders are responsible for compliance In some instances the CD may be prepared by the attorney 37 | P a g e Broker's responsibility:**** While the attorney or lender will prepare the closing disclosures, the broker has obligations: Review for accuracy and completeness Provide all relevant information Provide all relevant documents -- you still have to take your calculator to closing Only some changes require a new 3-day review of CD ***APR increases by more than: ⅛% for fixed-rate ¼% for adjustable Prepayment penalty added Basic loan product changes Costs & Fees the Seller Pays: Commission Deed preparation Mortgage payoff Lien release recording Excise tax NC charges a transfer tax on real estate $1 for each $500 of value Round up to the nearest $500 Divide by $500 Always will be an even dollar number (no change) $195,700 sales price $196,000 divided by $500 = $392 excise tax Unpaid or double debit taxes Cost & Fees that the buyer pays: Loan origination fees Discount point Interest on loan Mortgage insurance Homeowner's insurance Reserves deposited with lender Closing attorney fees Title insurance premium Recording of mortgage lien surveys/inspections Courier fees Some fees may be POC (Paid outside of closing) STILL needs to show up on the CD even though it hasn't yet been paid but NEVER collected/debited 40 | P a g e Contract All bills to be paid at closing There is a contract even if DD fee is not paid They go to court to solve the dispute You have a contract when _____ acceptance has been communicated EMD can be written to who? Buyer's firm, listing firm, attorney Void a contract that lacks an element/never existed Voidable Usually based on a lack of capacity Role of closing attorney Coordinate the process Issues validity of title opinions Prepares closing documents Conducts closing Usually selected and paid for by buyer If licensee has doubts about legal capacity --> consult an attorney Pre-licensing for NC 75 hours Delay of Settlement: NOT "Time of the essence" Relies on multiple entities 14 day delay permitted Representing another broker without consent G.S. prohibits a licensee from representing or attempting to represent a real estate broker other than broker by whom he or she is engaged or associated, without the express knowledge and consent of the broker with whom he or she is associated Authority to Advertise 41 | P a g e - A broker shall not advertise any brokerage service or the sale, purchase, exchange, rent or lease of real estate for another or others without the consent of his or her broker-in-charge and without including in the advertisement the name of the firm or sole proprietorship with which the broker is affiliated - A broker shall not advertise or display a for sale or for rent sign on any real estate without the written consent of the owner or the owner's authorized agent Blind ads - A broker shall not advertise the sale, purchase, exchange, rent or least of real estate for others in a manner indicating the offer to sell, purchase, exchange, rent, or lease is being made by the broker's principal only - A person licensed as a limited nonresident commercial broker shall comply with the provisions of Rule .1809 of this subchapter LOTS OF QUESTIONS ON OFFER TO PURCHASE AND CONTRACT Using Rule 112: Write down the 19 separate items regarding offers to purchase and sales contracts utilized by a broker in NC (Page 38) Names of the buyer and seller Legal description of the real property sufficient to identify and distinguish it from all other property An itemization of personal property to be included in the transaction The purchase price and manner of payment Any portion of the purchase price that will be paid by a promissory note, including the amount, interest rate, payment terms, whether or not the note is to be secured and any other terms contained in the promissory note deemed material by the parties Any portion of the purchase price that is to be paid by the assumption of an existing loan, including the amount of such loan, costs to be paid by the buyer or seller, the interest rate and number of discount points Earnest money, if any Any loan that must be obtained by the buyer as a condition of the contract, including the amount and type of loan, interest rate and number of discount points, loan term and who shall pay loan closing costs A general statement of the buyer's intended use of the property and a condition that such use must not be prohibited by private restriction or governmental regulation The amount and purpose of any special assessment to which the property is subject and the responsibility of the parties for any upaid charges The date for closing and transfer of possession The signature of the buyer and seller The date of offer and acceptance A provision that title to the property must be delivered at closing by general warranty deed and must be fee simple marketable title, free of all encumbrances except ad valorem taxes for the current year, utility easements and any other encumbrances specifically approved by the buyer or a provision otherwise describing the estate to be conveyed with encumbrances and the form of conveyance The items to be prorated or adjusted at closing Who shall pay closing expenses The buyer's right to inspect the property prior to closing and who shlal pay for repairs and improvements if any 42 | P a g e A provision that the property shall at closing be in substantially the same condition as on the date of the offer (reasonable wear and tear excepted) or a description of the required property condition at clsoing A provision setting forh the identiy of each real estate agent and firm involved in the transaction and disclosing the party each agent and firm represnents Any other provisions or disclosures required by statute or rule Special assessments - HOA or city/state Basic rules for interpretation of contracts: Parol evidence rule: previous oral negotiations and statements are superseded by the written contract A contract is interpreted as a whole Words are given ordinary meaning Handwritten provisions outweigh preprinted form language Clear or ambiguous language is construed against the drafter of the document Buyer or seller can extend for 14 days Trust Accounts Monies Insert from page 44 in booklet from A.0116 Appropriate Signatures -All Co-Owners must sign the contract ** (if the co-owner didn't sign the listing agreement, you don't have a listing agreement either) - Identify people by their full legal names - Must use the full legal name of all entities Names NOT to use in the Contract - "Owner of Record" - Nicknames - Combined Mr. & Mrs. Marital Life Estates Spousal signatures are required on all sales contracts, even with ownership severalty Buyer options in the event of non-signature - Contract rescission - Specific performance Single Lady buys the property and then gets married. When she sells the property 10 years later, who signs the deed, listing agreement, contract, etc.? Both the lady and her husband One to Buy - Two to sell Because NC is a marital interest state, when a married couple is conveying property, it requires: - Both spousal signatures are required to sell When one spouse is buying 45 | P a g e right to revoke consent scope of consent How to withdraw consent or update consumer info How to request these on paper TQ! Electronic signatures are regulated and require disclosures and compliance with statutes, records and security When is it sent? Properly addressed In a form that can be processed Under recipient's control, outside of sender's control When is it received? Enters a processing system from which the recipient can receive in a form processed by the recipient Drafting of Contracts NO drafting of contracts of others CAN fill in or complete preprinted forms We can't engage in the unauthorized practice of Law (93A-611) Sources of Forms Joint Forms Task Force Many Revisions and Updates The prohibition is against drafting contracts for others it does NOT prohibit any buyer or seller from changing or altering the language, but they should be advised to consult an attorney The prohibition does NOT prohibit altering or changing any of the following: A person altering an agreement to which they are a party Licensees own employment agreement with the firm A listing agreement on behalf of the firm 46 | P a g e A buyer broker agreement on behalf of the firm AGENTS SHOULD NOT ADD OR DELETE LANGUAGE TO THE AGREEMENTS BETWEEN THE BUYER AND SELLER Agents should use specific addendum and NOT draft contract changes Changing or editing existing terms is an amendment Adding additional terms is considered an addendum General Guidelines for Addenda Completion Type of Print Legibly Fill in all blanks with N/A if necessary Be precise, avoid abbreviations and acronyms Seller and buyer should initial and date every change, addition or deletion Rewrite the offer if there are numerous changes Review all contract provisions with parties and recommend legal advice Back Up Contract Addendum Purpose: To put a buyer in secondary position legally speaking (it is a contract), if something happens with the primary contract, I want to be in a position where I can from secondary to primary. How does the primary contract get terminated? - T&R -- notifying the buyer How does backup know that they're now in primary position? - Written notice AND evidence that the back up contract is now the primary contract Does backup contract get to see the primary contract? - The last name of the Buyer -- you would get it from the listing agent BUT they would only have access with written permission from seller and primary buyer. How is the backup buyer to handle due diligence fees and EM deposits? - Buyer and seller agree that any initial earnest money deposit shall be deposited within three banking days following the effective date of this back up contract even while this back up contract is in secondary position - DDF shall be due and payable within five days after delivery to buyer of notice of primary status 47 | P a g e How and when may the buyer terminate their back up contract? - Buyer may terminate this back up contract without liability by giving written notice of termination to seller at any time prior to receipt by buyer of notice or primary status and any earnest money deposit shall be refunded to buyer Contingent Addendum You will provide the seller with the original executed contract. If you do not by the end of DD, this contract is null and void. New Construction Addendum 1. Construction of house (licensed contractor and certificate of occupancy is required) 2. Additional improvements FHA/VA Financing Addendum (Form 2A4-T) Zero dispute -- EM would be returned to the buyer in the event of a low appraisal Seller, purchaser, and broker agree that all things are accurate Earliest time Buyer possession before closing Timeline is negotiable want to consult an attorney Buyer has an obligation to maintain property, If buyer can't close, there is termination of possession LBP Broker has to provide the pamphlet that says Protect your Family From Lead in your Home It's a disclosure statement 1978 Additional Provisions Addenda Used to make sure an offer is not open indefinitely, septic system installation/modification, rental/income/investment property, agreed upon repairs and/or improvements, manufactured home vacation rental has their own form so it would not be used for this form -- vacation is 90 days or less Manufactured homes -- you disclose material facts to all parties in the transaction Owner's association addendum the fees are a part of the loan qualification process 50 | P a g e NO RIGHT TO KNOW A listing agent does not have to disclose there are multiple offers A buyer's agent has NO right to know of the existence of multiple offers Disclosure of terms & conditions requires consent Must treat buyers fairly and equally Cannot disclose the terms & conditions of an offer without the offerOR's consent Not the same as an outline of acceptable seller terms The use of addendum 340-T response to buyer's offer not to used for clarification It is an express rejection of the offer Not a counter offer Rewrite your offer on different terms Licensing/Education Timeline 75 Hour Pre-Licensing. 3 post licensing classes (1 a year of your anniversary date) - 301, 302, 303 and you can take them in any order 8 hours CE (4 hours update, 4 hours elective) If you don't renew your license, it goes on expired If you don't take your CE, it goes on inactive You need to take your CE by June 10th of your second renewal and then every year after that Earned vs. Received Fees earned when you procure a contract Fees paid at closing If your license goes on inactive, you can still be compensated as long as your license was active when you earned your contract 51 | P a g e Commission only cares that your license was active at the time the commission or referral fee is earned Unfair & deceptive trade practices!!! A misleading opinion or false inducement Fails to disclose material facts Misleading advertising*** Misrepresentation of the nature of a guarantee or warranty Offer & Acceptance Seller -- OfferEE -- they can accept, reject, counter -- COUNTER OFFER VOIDS ORIGINAL OFFER Buyer -- OfferOR -- they may withdraw or revoke their offer any time prior to their acceptance All offers must be communicated Deliver all offers immediately, but never later than 3 days The best practice is always IMMEDIATELY An offer once made remains open until it is Accepted Rejected Countered **Withdrawn A buyer can withdraw an offer at any time prior to acceptance Absolute right of withdraw Even if offer stated it would be held open longer (additional provisions addenda) Communication to the other party or their agent communicating an offer or an acceptance to a principal's agent is the same as communicating directly to the principal Methods of communicating acceptance Oral communication Personal delivery Mail Telegraph Fax & Email 52 | P a g e Mailbox rule about sent not received Beware dual agency communication is IMMEDIATE When a dual agent has been informed that the seller has accepted an offer, then it is already considered communicated to the buyer Analyzing the offer to purchase and contract READ IT DD Fee Credit to buyer at closing!! Settlement date is NOT Time being of the Essence UNLESS it is a contingent sale Delay in closing 14 days Closing = practice of law Non-attorneys can close but they need to be under the supervision of an attorney Read the FIXTURES & Exclusions Alarm & security systems, fire, smoke and CO2 detecters Stoves/ranges/ovens, built in appliances, attached microwave, vent hood antennas, satellite dishes basketball goals and play equipment (permanently attached or in ground) celling and wall attached fans and light fixtures (including bulbs) Fireplace insert, gas logs or starters/screens, wood or coal stoves Floor coverings Fuel tanks Garage door openers with all controls Generators that are permanently wires Invisible fencing with power supply Landscape and outdoor trees and plans (except in moveable containers) Mailboxes Mirrors attached to walls Storage Shed; utility building swimming pool, spa, hot tub Solar electric and water heating symptoms sump pumps, radon fans 55 | P a g e You CANNOT transfer, convey or close until after final plat approval Penalties on unapproved subdivisions County can get injunctive relief (order to cease activity) Denial of building permits Applies to sale of LOTS across state lines out of state mailers newspaper and tv ads directed out of state out of state phone calls Interstate land sales full disclosure act Buyers get prior to signing lease or purchase contract or there is a 7 day rescission period (if not provided) Agent should be knowledgable Issues of zoning permits Environmental issues They have a "reasonable care" obligation to disclose zoning issues Uniform Electronic Transactions Act (UETA) (NC) UETA: Legislation validates electronic contracts / other documents / and signatures. Provides that they will not be denied validity & enforce-ability solely b/c they are in electronic form. (Federal) E-Sign: Validates electronic contracts & signatures in transactions & provides they will not be denied validity & enforce-ability solely b/c they are in electronic form. Offer to Purchase & Contract (Form 2-T) The most common type of contract used for the sale of real property in NC. Also called a sales or purchase contract. 1 - Installment Land Contract 2 - Option to Purchase Contract SALES contracts can only be drafted by LAWYERS!!! Formed jointly between the NC Bar and the NC Realtors. Who must sign the offer to purchase & contract All parties involved MUST sign the contract 56 | P a g e The legal effect of a counter offer A counter offer is a rejection of the offer and is considered to be a new offer. Counteroffer An offer made to an original offer which contains NEW or DIFFERENT TERMS/CONDITIONS not included in the original offer. The counteroffer (once COMMUNICATED) has the effect of rejecting the original offer which cannot subsequently be accepted unless renewed by the original offer. Type of contract used on single-family homes? Standard Offer to Purchase & Contract Type of contract used on 5+ dwellings? Must use a commercial contract How do you form a CONTRACT? 1 - Offeror (buyer) makes an offer to the Offeree (seller) 2 - the Offeree accepts the offer 3 - The offeree communicates to the buyer acceptance of offer IF NOT COMMUNICATED = NO DEAL COMMUNICATION OCCURS EITHER TO THE AGENT / PARTY (TREATED AS THE SAME!!!!) Communication? Use of any LEGAL method 1 - Verbal 2 - Personal Delivery 3 - Mail 4 - Fax/Electronic Communication format When anything is communicated to the AGENT it is the SAME as if it has been communicated to the CLIENT!!!! MAILBOX RULE Rule of law that states once an offeree's written acceptance is mailed (PLACED IN THE POSTAL SERVICE OUTSIDE THE CONTROL OF THE OFFEREE!!!) The offer is considered ACCEPTED as of the date/time of the mailing (even though the actual acceptance of the offer is not received for several days) The offeror CANNOT withdraw or revoke his offer AFTER an acceptance has been mailed The offeree CANNOT withdraw or revoke his acceptance after it has been mailed. Types of forms (contracts) allowed 1 - Most common (2-T) 2 - Any other legally created one (then that is the only form that is used) *** Talk to an attorney if any unusual or bizarre questions / items. 57 | P a g e *** Client may do anything that they would like to a contract as long as it is their hand that is making ANY changes to the document. 3 Required Dates on Contracts (A012) 1 - Date of Offer 2 - Date of Acceptance 3 - Date of Settlement Buyer does NOT show up at closing 14 day window After 14 days of not showing up the Seller can SUE Pro-Rate Taxes Distribution of money / monetary obligations between the seller & buyer in a real estate closing transaction Pro-Rate HOA Fees Pro-Rate Rental Payments Lead Based Paint Addendum Purpose: Shows what a SELLER "knows" about the property NOT stating that lead isn't in the house. EASEMENTS A right to the use of the lands owned by another person for a special purpose (right of way, etc.) Unknown easements do NOT void contracts They do not affect the value of the contract/property Contract is still good. Tax Deferred Exchanges The owner assigns an offer to purchase Use of an intermediary "Like Kind Exchange" Method of transferring property that DEFERS (puts off until a later time) the tax impact of the transaction The relinquished property and the replacement property are transferred according to the terms of the exchange agreement. Fixtures An item of personal property AFFIXED to a building or structure or land in a way that it becomes a part of it. Become appurtenances of the real estate to which they are affixed (not subject to rules of personal property) 60 | P a g e Mailbox rule does NOT apply Must be PHYSICALLY in their possession!!!!! What does a response to offer do? It is a rejection of the offer. It is now open for negotiations. Statute of Frauds NC State law - contracts for the sale of real estate must be IN WRITING in order to be ENFORCEABLE at law Express Contracts Contract stated in WORDS: Orally or in WRITING Implied Contracts Contract that is based upon CONDUCT/ACTIONS: Not a result of an express agreement b/t parties. Valid Contracts Having binding/legal force Legally sufficient & authorized by LAW Void Contracts Contract is UNENFORCEABLE Has NO force / effect Voidable Contracts Contract is capable of being judged void BUT is not Void UNLESS ACTION is taken to make it so. Can be voided by one of parties based upon legal terms 5 Elements of a Contract 1 - Mutual Assent (Offer & Acceptance) 2 - Consideration ($$$ specific amount) 3 - Legal Capacity 4 - Lawful Objective & Means (Purpose) 5 - In Writing (for certain types of contracts) NC 22-2 (Lease Land Selling) Any selling of lease land exceeding 3 years will be VOID unless put in writing and signed 61 | P a g e REAL PROPERTY 1 - Street Address 2 - Plat Reference 3 - PIN/PID 4 - Other Description 5 - Reference to Recorded Deed (if known) Ernest Money Deposits 1 - Held in ESCROW and credited to buyer at closing (unless contract states different) 2 - CAN BE REFUNDED!!!! 3 - If buyer in breech can be paid to the Seller (liquidated damages) 4 - Residential security deposits Due Diligence $$$ Buyer investigating a property within a specific period of time. Can be any negotiated amounts PAID directly to the seller If contract is terminated at ANY TIME Buyer must get the DD$ returned. Section 5(D) Buyer has received a Residential Property & Owners Association (HOA) statement Section 7(D) All proposed special assessments (to the best of the sellers knowledge) The four essential elements for any contract are: Consideration Legal purpose Mutual agreement Competent parties The consideration offered by a buyer in a real estate transaction is: The purchase price When an agreement is entered into y a person who lacks competence, the contract is ------- by the person who is -------- voidable, competence In a bilateral contract -------------- Both parties are expected to perform All offers must be communicated: Immediately but no later than 3 days 62 | P a g e An offer can be withdrawn anytime prior to: Acceptance An offer is terminated by any of these events or actions: Counter offer, rejection, revocation, destruction of the property, and death or insanity of the offeror In NC, we measure delivery at the time the communication was: Sent Mutual mistakes regarding a material fact may allow a buyer to rescind the contract and be refunded ---- ---- All monies The buyer is not necessarily entitled to rescind and get all monies back if the mistake is: A mistake of law The federal and state Unfair and Deceptive Trade Practices Act applies when someone: Says a misleading opinion of false information, fails to disclose a material fact, has misleading advertising, or misrepresents the nature of a guarantee or warranty The Unfair and Deceptive Trade Practices Act applies to: Real Estate Professionals Contracts may be assigned so long as: The contract does not specifically prohibit it The NC OTP&C ----- allow assignment without consent of all parties Does not When a contract is breached, the parties can be entitled to any of the following remedies: Compensatory Consequential Liquidated damages Specific Performance Recision The forms in NC come from two organizations jointly, what are they? NC Realtors NC BAR The Parol Evidence rule says that all provisions of contracts should ---------- and verbal amendments of the contracts --------- be used to alter the written contract terms 65 | P a g e To clear any title defects A closing attorney must verify all funds over how much? $5000 A brokerage holding a buyer's EMD can't transfer the deposit to the escrow or closing attorney until 10 days before settlement. RESPA applies to what transactions? Federally regulated residential loans RESPA does NOT apply to what transactions? Cash, commercial, vacant land, and seller financing The buyer must receive a loan estimate within how many days of loan application? 3 The loan estimate is provided with what two additional items? Required APR per TILA Consumer settlement cost booklets What does RESPA prohibit? Payment of anything of value to settlement service providers incidental to the referral of business. RESPA allows for the co-ownership of --------------, called settlement service providers, affiliated business arrangements. Affiliated business arrangements require --------- and -------- and cannot ---------- disclosure of fees, disclosure of relationship, require use What government agency enforces RESPA? The Consumer Financial Protection Bureau (CFPB) What does TRID stand for? TILA/RESPA Integrated Disclosure What does TRID do? Requires the lender to provide the CD to the buyer at least 3 days prior to settlement The buyer's and seller's CDs are to be kept ------ and ------- Confidential, separate Brokers have to review the CD for ------- and ------- 66 | P a g e Accuracy, completeness What changes require a new CD? APR increases Prepayment penalty added Basic loan product changes How do you calculate excise tax? Sales price / 500 What closing costs are paid by the seller? Commission Deed prep Mortgage payoff Lien release recording Excise tax Unpaid or double debit taxes What closing costs are paid by the buyer? Loan origination fees Discount points Interest on loan Mortgage insurance Homeowners insurance Reserves deposited with lender Closing attorney fees Title insurance premium Recording of mortgage lien Surveys, inspections Courier fees If it is not specified in the question, it is assumed that costs on the CD are: Unpaid What two laws authorize and permit electronic signatures? Electronic Signature in Global and National Commerce Act & Interstate and Foreign Commerce Changing or editing existing terms of a contract is considered an -------- Amendment Adding additional terms or conditions to a contact is done with an --------- Addendum What is the purpose and use of the backup contract addendum? 67 | P a g e To ensure the party in the backup contract will receive the property if the initial contract falls through How does the buyer with a backup contract know that they have been promoted to primary position (per the backup contract addendum)? By written notice from thee seller that the primary contact is terminated Does the buyer on a backup contract get to see the primary contract? No How is the backup buyer to handle DD fees and EMDs per the backup contract addendum? Buyer should pay DD fees within 5 days of notice of primary status and EMD along with the OTP&C How and when may the buyer terminate their backup contract per the backup contact addendum? Through written notice any time before notice of primary status What is the purpose and use of the contingent sale addendum? It makes the offer in this OTP&C contingent on the sale of the buyer's property What happens if the buyer's existing property does not close per the contingent sale addendum? The buyer can terminate this contract within 3 days following the settlement date by written notice What is the purpose and use of the new construction addendum? It is to be used when the seller is a licensed contractor (or has hired a licensed contractor) who has just completed construction of a house on a previously vacant lot-- only when the construction is COMPLETED If construction of a house on a previously vacant lot is not completed by the time of offer, what form should be used instead of the new construction addendum with the regular OTP&T form 2-T? OTP&C New Construction form 800-T What is the purpose and use of the FHA/VA Financing Addendum? It is to be used when the buyer is obtaining a FHA or VA financing loan What monies constitute "any penalty by forfeiture"? EMD What is the purpose and use of the buyer possession before closing addendum? Allows for the buyer to take possession of the property for some time before settlement has occurred What is the purpose and use of the seller possession after closing addendum? Allows for the seller to retain possession of the property for some time after settlement has occurred What is the purpose and use of the lead based paint and hazard addendum?