NC Post Licensing - 302 - Contracts and Closing Latest Update 2024-2025 100% Complete 600 Questions and Verified Correct Answers Already Graded A+
Closing Disclosure - Delivery to Buyer - CORRECT ANSWER: Delivery of Borrower's
Closing Disclosure NO LESS THAN 3 business days prior to Settlement.
Closing Disclosure - Excise Tax - CORRECT ANSWER: Round up by
Closing Disclosure - POC - CORRECT ANSWER: Paid Outside of Closing - Are not
collected at closing. Shown as Before Closing Items of Borrower's Pd Costs
Closing Disclosure - Triggers for a New CD to be prepared - CORRECT ANSWER: 1)
APR Increases, Fixed > 1/8, Adj > 1/4, 2) Prepayment Penalty added, 3) Basic Loan Product Changes
Closing Disclosure - Typical Buyer Expensese - CORRECT ANSWER: 1) Loan
Origination Fees, 2) Discount Points, 3) Interest on Loan, 4) Mortgage Insurance, 5) Homeowner's Insurance, 6) Reserves deposited with lender, 7) Closing Attorney's Fee, 8) Appraisal, 9) Survey, 10) Inspection Fees, 11) Title Insurance premium, 12) Recording Mortgage Lien, 13) Courier Fees.
Closing Disclosure - Typical Sellers Expensese - CORRECT ANSWER: 1) Broker's
Commission, 2) Mortgage Payoff, 3) Excise Tax, 4) Deed preparation, 5) Lien Release Recording, 6) Unpaid or double DR Taxes, 7) Seller concessions per contract terms.
Closing Disclosures - Other Reminders - CORRECT ANSWER: 1) Buyers and Sellers
Closing Disclosure MUST BE KEPT Confindential and Separate, 2) Brokers are obligated to review Closing Disclosures for Accuracy and Completeness.
Closing Disclosures - Timeline for Disclosures - CORRECT ANSWER: 1) Can not be
negotiated or 2) Waived
Closing Disclosures- Lenders Business Days - CORRECT ANSWER: Days in which the
creditior's office is open. Typically, Monday to Saturday. Sundays and Frederal Holidays are not considered business days. Example: If the disclosures are delivered on Monday (do not count delivery day), the 1st day that the borrower can close is Thursday.
Contract - Formation - CORRECT ANSWER: When the last offer or counteroffer is
signed and initialed and is COMMUNICATED to the other party or their agent in ANY manner.
- / 4
Contract - Legal Capacity - CORRECT ANSWER: No Legal Capacity to Contract - 1)
Minors (Voidable), 2) Mentally Incompetent by Court (Void), 3) Mentally Incompetent in Fact (Voidable), 4) Under Influence of Alcohol, Drugs (Voidable)
Contract: Addenda / Addendum - CORRECT ANSWER: Additions to terms of the contract
Contract: Admendment - CORRECT ANSWER: A change to terms of the original Contract (after contract was signed).
Contract: Bilateral - CORRECT ANSWER: A contract where both parties are obligated to perform.
Contract: Consideration - CORRECT ANSWER: The "Value" that is being exchanged between the two parties in a contract. IT IS NOT EARNEST $ (EMD) OR DUE
DILIGENCE FEE (DDF)
Contract: Definition of Contract - CORRECT ANSWER: A deliberate agreement between two or more competent parties supported by legal consideration to perform or abstain from performing some act
Contract: Essential Elements - CORRECT ANSWER: 4 - CLAP: (C) Consideration (Value), (L) Legal Act, (A) Agreed upon Mutually, (P) All Parties are Competent
Contract: Executed - CORRECT ANSWER: A contract where task have been fully performed. Contract has been recorded
Contract: Executory - CORRECT ANSWER: A contract that has not yet been fully performed. Has tasks remaining.
Contract: Express - CORRECT ANSWER: A contract where the intentions are expressed either orally or in writing
Contract: Fraud Elements - CORRECT ANSWER: 1) Willful Misrepresentation or Omissions of a past or existing Material Fact, 2) Made with knowledge of falsity or in reckless disregard of its truth, 3) Intentially to harm other party. Voidable by deceived party. NOT AUTOMATIC
Contract: Implied - CORRECT ANSWER: A contract that is inferred either by conduct or actions
Contract: Mistake of Fact - CORRECT ANSWER: An erroneous impression on the part of one or both parties regarding some material aspect of the the contract.. May be VOIDABLE if it: 1) Involves a material term or aspect, 2) Mutual, 3) Not the result of fraud or negligence. UNILATERAL Mistakes of Fact DO NOT release parties from their obligations. 2 / 4
Contract: Mistake of Law - CORRECT ANSWER: Mistaken understanding of legal effect of contract. Does not excuse obligatin of a party
Contract: Mutual Mistake regarding Material Facts - CORRECT ANSWER: May allow a buyer to rescind the contract and be refunded ALL MONIES. DOES NOT APPY TO
MISTAKE OF LAW
Contract: Necessary Elements for Compliance - CORRECT ANSWER: 1) Individual Names of the parties in the contract, 2) Subject matter of the contract, 3) Material terms and conditions, 4) Signature of all parties
Contract: Parol Evidence Rule - CORRECT ANSWER: The parol evidence rule states that once a written agreement has been signed by all of the parties, it cannot be changed by an oral agreement, except when fraud or a serious mistake is involved.Contract is interpreted as a WHOLE and Words are interpreted in Original Meaning.
Contract: Remedies for Breach Contract - CORRECT ANSWER: Parties can be entitled to any of the following remedies: 1) Money Damages to make injured party whole, 2) Consequential damages - A $ award for damages that resulted from a foreseeable result of wrong doing (rare in RE) , 3) Liquidated Damages - amount pre-determined in the contract (EMD), 4) Specific Performance - One party sues other party to make them perform (unique nature of property), 5) Rescission - Declares contract invalid and returns parties to the position they were in prior to contract.
May be granted for: 1) Mutual Mistake of Fact, 2) Fraud or Misrepresentation, 3) Undue Influence or Duress
Contract: Unfair or Deceptive Trade Practices - CORRECT ANSWER: Includes: 1) Providing a misleading opinion or false inducement, 2) Failing to disclose a Material Fact, 3) Misleading Advertising, 4) Misrepresenting the nature or extent of a guarantee or warranty. This is applied to BROKERS AND OWNERS WHO REGULARLY SELL REAL ESTATE - NOT FSBO. Injured party is entiteled to Treble Damages.
Contract: Unfair or Deceptive Trade Practices - Duress - CORRECT ANSWER: Overcoming the will of a person by violence or threat of violence. Voidable by Injured Party through legal actions.
Contract: Unfair or Deceptive Trade Practices - Treble Damages - CORRECT
ANSWER: A statute that allows a court to award triple actual or compensatory damages to plaintiffs in certain cases.
Contract: Unfair or Deceptive Trade Practices - Undue Influence - CORRECT
ANSWER: One person takes unfair advangtage of another person due to a close,
confidential or fiduciary relationship (parent-child, broker-client, attorney-client).Voidable. 3 / 4
Contract: Unilateral - CORRECT ANSWER: A contract where only one party is obligated to perform
Contract: Unwillful Misrepresentation - CORRECT ANSWER: An untrue representation by a party believing it to be true. May be basis for contract rescission. Brokers SHOULD NOT make statements about matters they are ignorant of.
Contract: Void - CORRECT ANSWER: Void contracts are not contracts because they
lack an essential element of a contract and are thus unenforceable. Examples:
Example: - One party was declared incompetent would mean a contract was never
formed.
Contract: Voildable - CORRECT ANSWER: Voidable contracts have the necessary elements to be enforceable, so they appear to be valid, but can be rejected by one party if the contract is discovered to have any number of defects. VOIDABLE BY THE PARTY
THAT WHO LACKED COMPETENCY. Example: One party was duped, pressured, or
misled into signing the contract and uses their right to challenge its legality. Or, The contract was established under duress, fraud, deception, or coercion, making it voidable.
Contracts - CORRECT ANSWER: Real Esate Brokers / Professionals are prohibited
from Drafting Contracts. It is unauthroized practice of LAW. Role of Licensee is to Fill In or Complete Printed Forms. Licensees are PROHIBITED from drafting contracts for OTHERS. Law doesn't prohibit BUYER & SELLERS from making changes. However, if they do want to change the language in the forms, they should be ADVISED BY AN
ATTORNEY.
Contracts: Assignable? - CORRECT ANSWER: Yes, so long as the contract doesn't contain language that prohibits or limits the assignment. AssignEE is Primarily Liable, AssignOR remains Secondary Liable.
Contracts: Valid - CORRECT ANSWER: Satisfy all legal requirements. Full enforceable in court.
Forms: Created by Joint Task Force - CORRECT ANSWER: NC Association of Realtors (NAR) & NC Bar Association.
Forms: NCREC - CORRECT ANSWER: 1) Does NOT CREATER, 2) PROVIDE forms, 3) APPROVE forms. NCREC does have RULES about what the contracts MAY AND MAY NOT Contain.
Funds for Closing & The Good Funds Act - Attorney Guidelines for Funds - CORRECT
ANSWER: A Closing Attorney MUST VERIFY all funds in excess to $5,000.
- / 4