Your FREE NC Real Estate Flashcards 2026 – 200+ Cards

North Carolina's Real Estate License Law — the statute that creates the NC Real Estate Commission and governs the licensing and conduct of brokers.

The state agency (ncrec.gov) that licenses and disciplines real estate brokers under G.S. 93A and adopts the rules in 21 NCAC 58.

North Carolina's entry-level license — issued after passing the exam. There is NO 'salesperson' in NC. A provisional broker must be supervised by a broker-in-charge.

Provisional Broker → Broker → Broker-in-Charge (BIC). NC does not use a 'salesperson' license at all.

A North Carolina broker who has removed the provisional status by completing the 90-hour postlicensing program; may operate without BIC supervision.

The broker designated as responsible for supervising a real estate office — affiliated brokers, provisional brokers, trust accounts, and advertising. Every NC office must have one.

The NC education required before applying for an initial broker license and sitting for the licensing exam.

Three 30-hour courses a NC provisional broker must complete (within 18 months of licensure) to remove provisional status and become a broker.

A NC provisional broker must complete all three 30-hour postlicensing courses within 18 months of initial licensure to keep the license active.

If a NC provisional broker does not finish the 90-hour postlicensing program on time, the license is placed on inactive status until the courses are completed.

8 hours each license period to stay active: a 4-hour Commission Update course plus a 4-hour Commission-approved elective.

The mandatory 4-hour CE course — the General Update for brokers, or the BICUP (Broker-in-Charge Update) for brokers-in-charge.

The Broker-in-Charge Update Course — the 4-hour update a NC broker-in-charge takes instead of the General Update to satisfy CE and keep BIC status.

Continuing education must be completed by June 10 to renew on active status for the license year that begins July 1.

North Carolina licenses are renewed annually. The license year runs July 1 through June 30; renew by June 30 (renewal opens in mid-May).

A NC broker who does not complete the required CE by the deadline cannot renew on active status — the license goes inactive until the deficient hours are made up.

A NC license that is current but on which the broker may NOT perform brokerage activity; reactivated by satisfying CE or postlicensing and applying to the Commission.

Title 21, Chapter 58 of the NC Administrative Code — the Commission's rules (58A, 58B, 58C) that implement G.S. Chapter 93A.

The NC disclosure that explains the types of agency relationships available. It is informational — it does NOT itself create an agency relationship.

At first substantial contact — when a consumer begins to share confidential information or the broker seeks it (Rule 21 NCAC 58A .0104(c)).

The point at which a NC broker must provide the WWREA disclosure — when confidential information starts to be shared, before discussing the consumer's needs or motivation.

North Carolina uniquely permits buyer agency to begin orally if it is non-exclusive and unrestricted — but it must be put in writing no later than when an offer is presented.

A NC buyer agency agreement must be reduced to writing and signed no later than the time the broker prepares or presents an offer on the buyer's behalf.

In NC, a listing/seller agency agreement must be in writing from its inception — express oral seller agency is not allowed.

A NC firm may act as a dual agent only with the express written authorization of every client, obtained before the dual agency arises.

A NC firm appoints one broker to represent the buyer and a different broker to represent the seller; each acts only for their own client.

A NC broker who received a party's confidential information cannot be designated to represent the other party in that transaction.

A NC dual agent (or the firm) may not disclose one client's negotiating position — e.g., a seller's bottom-line price — to the other client.

North Carolina's Residential Property and Owners' Association Disclosure Statement — most residential sellers must deliver it, covering property condition and any HOA dues/obligations.

A NC seller may answer 'No Representation' for most property-condition items — but it does NOT relieve liability for fraud or willful concealment of a known material defect.

If the disclosure statement is not delivered before the buyer makes an offer, the NC buyer may cancel the contract within three calendar days (or by closing, whichever is first).

A separate NC disclosure mandatory for most residential sellers since January 1, 2015 — discloses whether mineral, oil, or gas rights have been or will be severed.

On the NC Mineral and Oil and Gas disclosure, whether the SELLER personally severed the rights or intends to must be answered 'Yes' or 'No' — not 'No Representation.'

Under Rule 21 NCAC 58A .0116, a broker must deposit trust money (e.g., earnest money) into a trust/escrow account no later than three banking days after receipt.

Under NC rules, earnest money a broker holds belongs to the parties to the transaction (it is the owner's/clients' money) — never the broker's. It is held in trust.

Mixing trust money with the broker's own or business funds. A NC broker must keep client trust funds in a separate trust/escrow account and keep accurate records.

A NC broker may not unilaterally release disputed trust money; the broker holds it and, if unresolved, may interplead the funds with the clerk of court for the court to decide.

Created by G.S. 93A-16, the NC fund reimburses consumers for direct monetary loss from certain wrongful acts of a licensed broker. North Carolina DOES have a recovery fund.

The NC Recovery Fund pays no more than $50,000 per transaction, regardless of how many people are aggrieved.

Under G.S. 93A-16, the NC fund pays no more than $25,000 in a calendar year and no more than $75,000 in the aggregate for any one licensee.

When the NC Recovery Fund pays a claim, the broker's license is automatically revoked and is not reinstated until the broker repays the fund plus interest.

Under G.S. 105-228.30, $1.00 on each $500 (or fraction) of the consideration conveyed. A $200,000 sale = $400 excise tax.

The transferor (seller) pays the excise tax to the register of deeds before the deed is recorded (parties may agree otherwise by contract).

G.S. Chapter 41A — prohibits housing discrimination based on race, color, religion, sex, national origin, handicap (disability), and familial status; enforced by the NC Human Relations Commission.

Race, color, religion, sex, national origin, handicap, and familial status — mirroring the federal Act. Marital status and source of income are NOT protected.

Under G.S. 93A the Commission may reprimand, suspend, or revoke a license after a hearing for violations such as misrepresentation, fraud, or commingling.

A NC provisional broker cannot operate independently and cannot be designated as a broker-in-charge — supervision by a BIC is required.

A NC broker may not advertise or list a property without the owner's authority, and the broker-in-charge is responsible for ensuring advertising is not misleading and identifies the firm.

A NC license is required to perform brokerage acts — listing, selling, leasing, or negotiating real estate for another for compensation.

Owners selling their own property, attorneys handling a client's matter, and certain court-appointed persons are generally exempt from the NC license requirement.

A NC broker owes honesty and the duty to disclose known material facts to ALL parties — to the broker's own client and to customers (the other side).

A NC broker who knows of a material defect (e.g., a failed septic system) must disclose it to the buyer even when representing the seller — it cannot be concealed.

To qualify as a NC broker-in-charge, a broker generally needs at least 2 years of full-time (or part-time equivalent) brokerage experience and must complete the BIC course.

A broker on inactive status may not engage in any brokerage activity for compensation until the license is reactivated by completing CE and applying to the Commission.

A NC broker's remedy for a trust-money dispute — depositing the disputed funds with the clerk of court so a judge decides who is entitled to them.

The NC deadline to deposit trust money: a check received Friday (with no bank holidays) must be deposited by the following Wednesday.

The North Carolina General Statutes chapter covering taxation — including the real estate excise tax (G.S. 105-228.30). It is NOT the License Law (that is Chapter 93A).

The NCREC is the state regulator under G.S. 93A. NC REALTORS® is a private trade association — it does not license or discipline brokers.

Giving a consumer the WWREA disclosure does not create agency. A separate written (or, for buyers, initially oral) agreement creates the agency relationship.

Loyalty, obedience to lawful instructions, disclosure, confidentiality, accounting, and reasonable skill and care — owed to the broker's client (principal).

A NC broker must keep records identifying each party's trust funds, reconcile the account monthly, and make records available to the Commission on request.

Using a client's trust funds for the broker's own purposes — a serious NC License Law violation distinct from commingling.

Complete the required CE (and any postlicensing), then file a reactivation request with the Commission; the broker cannot practice until the license is active.

July 1 through June 30. CE is due June 10 and renewal by June 30 to keep the license on active status for the new license year.

A material fact in NC: a known septic or onsite-wastewater problem must be disclosed; the RPOADS asks about the water and sewer/septic systems.

Land, everything permanently attached to it (improvements and fixtures), and the bundle of legal rights of ownership.

Movable property not permanently attached to land; can become real property by becoming a fixture (annexation).

The rights of ownership: possession, use (enjoyment), exclusion, disposition (transfer), and control.

Personal property attached to real property so it becomes part of it and transfers with the land. Tests: method of attachment, adaptation, agreement, relationship, and intent.

The most complete estate — of unlimited duration and freely transferable by deed or will.

An estate measured by someone's lifetime; the holder cannot will it, and it passes to a remainderman or reverts to the grantor at death.

A nonpossessory right to use another's land for a specific purpose, such as a driveway or utility line.

An easement benefiting an adjacent parcel (the dominant tenement) and burdening another (the servient tenement); it runs with the land.

An unauthorized intrusion of an improvement (a fence, eave, or driveway) onto a neighbor's land; found by a survey.

Any claim, lien, charge, or right that limits title — liens, easements, encroachments, and deed restrictions.

Government's authority to regulate land for public health, safety, and welfare — zoning and building codes — with no payment to the owner.

Government's power to take private property for public use through condemnation, paying the owner just compensation.

Property reverts to the state when an owner dies with no will and no legal heirs.

The four government powers over land: Police power, Eminent domain, Taxation, and Escheat. Only eminent domain pays the owner.

A legal description using distances (metes) and compass directions (bounds) traced from a point of beginning back to it — common in North Carolina.

One square mile of land — 640 acres — and one thirty-sixth of a 6-mile-square township in the rectangular survey system.

A unit of land area equal to 43,560 square feet.

A legal description referencing a recorded subdivision plat by lot, block, and subdivision name — common for platted NC subdivisions.

A right or improvement that belongs to and transfers with the land, such as an easement or water rights.

Littoral rights belong to land bordering a lake/ocean; riparian rights belong to land along a flowing stream or river.

Sole ownership by one person or entity — owned 'severed' from all others.

Co-ownership with an undivided, willable share and NO right of survivorship; the default form for unmarried co-owners.

Co-ownership with the right of survivorship; requires the four unities of time, title, interest, and possession.

North Carolina's form of co-ownership for married couples — survivorship, and neither spouse can convey alone; protects against one spouse's individual creditors.

A deceased co-owner's share passes automatically to the surviving co-owners (joint tenancy, tenancy by the entirety) rather than by will.

The deed giving the most protection; the grantor warrants clear title against all defects, even those arising before the grantor's ownership.

The grantor warrants title only against defects arising during the grantor's own ownership — less protection than a general warranty deed.

Conveys only whatever interest the grantor has, with no warranties; often used to clear a cloud on title.

Title passes when the grantor delivers a valid deed and the grantee accepts it — not when it is recorded.

Recording a deed at the county register of deeds gives constructive notice to the public and establishes priority of interests.

A policy protecting the insured against loss from title defects that existed before the policy date, such as liens or recording errors.

Title free of reasonable doubt or serious defects, which a willing buyer would accept; established by a title search and protected by title insurance.

The county office where North Carolina deeds, deeds of trust, and plats are recorded; the excise tax is paid here before recording.

Distribution of a deceased owner's property by state law when there is no valid will; governed in NC by the Intestate Succession Act.

Acquiring title by open, notorious, hostile, continuous possession for the statutory period (20 years in NC, or 7 years under color of title).

The most probable price a property should bring in a competitive, open market under fair-sale conditions — an opinion of value.

Value is an opinion of worth; price is the actual amount paid; cost is the dollars to build or acquire. They are not always equal.

An impartial, supported opinion of value prepared by a licensed appraiser as of a specific date, following USPAP.

A broker's estimate of value from recent comparable sales, used to help price a listing — not a formal appraisal.

The legally permissible, physically possible, financially feasible, and most profitable use of a site — the basis of value.

A buyer will pay no more for a property than the cost of an equally desirable substitute — the basis of the sales comparison approach.

Estimates value by comparing the subject to recently sold similar properties and adjusting for differences. Best for single-family homes.

Value = land value + cost to rebuild the improvements new − depreciation. Best for new or special-use property.

Value $= \dfrac{\text{NOI}}{\text{cap rate}}$. Best for income-producing property such as apartments.

Effective gross income minus operating expenses, before any mortgage payment; the income figure used in the income approach.

The rate of return on an income property: $\text{cap rate} = \dfrac{\text{NOI}}{\text{value}}$. A higher cap rate implies more risk and lower value.

Weighing the indications from the three appraisal approaches into one final opinion of value — judgment, not a simple average.

Loss in value from physical deterioration, functional obsolescence, or external (economic) obsolescence.

A quick value estimate: $\text{GRM} = \dfrac{\text{price}}{\text{gross rent}}$; value = GRM × rent.

The appraisal principle that value is created by the expectation of future benefits from owning the property.

Needs offer and acceptance (mutual assent), consideration, legal purpose, and competent parties — and, for real estate, a writing.

Requires contracts for the sale of real estate (and most leases over a year) to be in writing to be enforceable.

Void = missing an essential element, no legal effect; voidable = valid until a party with the right (e.g., a minor) chooses to rescind.

Bilateral = a promise for a promise (a purchase contract); unilateral = a promise for an act (an open listing or option).

A buyer's good-faith deposit showing serious intent; held in trust and usually applied to the price at closing.

Under the standard NC Offer to Purchase and Contract, a negotiated non-refundable fee paid directly to the seller for the buyer's right to investigate the property during the due diligence period.

The negotiated time in the NC contract during which the buyer may inspect, appraise, and obtain financing and may terminate for any reason; expires at 5:00 p.m. on the agreed date.

A condition that must be met for a contract to proceed, such as a financing, inspection, or appraisal contingency.

A court order forcing a defaulting party to complete the sale — available because each parcel of land is considered unique.

An agreed amount (often the earnest money) the seller keeps if the buyer defaults, in place of suing for actual damages.

A contract employing a broker to find a buyer for the owner's property in exchange for compensation; in NC it must be in writing.

The listing broker earns the commission no matter who finds the buyer — the most protective listing for the broker.

The broker earns a commission unless the owner personally finds the buyer without the broker's help.

Only the broker who actually produces the buyer earns the commission; the owner may use several brokers.

A fiduciary relationship in which an agent represents a principal in dealings with third parties.

Obedience, Loyalty, Disclosure, Confidentiality, Accounting, and Reasonable care — the duties an agent owes the principal.

An agent must keep the principal's confidential information private even after the agency relationship ends.

A client is the principal the broker represents (full fiduciary duties); a customer is the other party, owed honesty and disclosure of material facts.

The broker whose efforts directly result in the sale — relevant to who earns a commission under an open listing.

A response that changes the terms of an offer; it rejects the original offer and creates a new one the original offeror may accept or reject.

A contract giving the buyer the right, but not the obligation, to buy within a set time for a set price, in exchange for option consideration.

Substituting a new contract or a new party for an old one, with the consent of all parties, discharging the original obligation.

The federal law banning housing discrimination based on race, color, religion, national origin, sex, familial status, and disability.

Race, color, religion, national origin, sex, familial status, and disability — seven classes under the federal Fair Housing Act.

Illegally guiding buyers toward or away from neighborhoods based on a protected class — a fair-housing violation.

Inducing owners to sell by claiming people of a protected class are moving into the area — a fair-housing violation.

A lender refusing to make or insure loans in an area based on its racial or ethnic composition — a fair-housing violation.

A change in rules or services a housing provider must allow so a person with a disability can use housing — e.g., permitting a service animal.

Operating real estate for an owner — leasing, collecting rent, maintenance, and accounting; in NC it is brokerage requiring a license.

A contract conveying the right to use property for a term in exchange for rent. Landlord = lessor; tenant = lessee.

A lease for a definite period with a fixed start and end; it does not automatically renew.

Limits residential security deposits (e.g., up to two months' rent for month-to-month) and requires deposits be held in a trust account or bonded.

Commission rates are always negotiable; brokers fixing rates with competitors is an illegal antitrust violation.

An antitrust violation where competitors agree to refuse to deal with a particular broker or company.

A separate bank account where a NC broker holds clients' money (earnest money, rents, deposits) apart from the broker's own funds.

The broker keeps any amount above the seller's set price; discouraged or prohibited because of the conflict of interest.

Puffing is non-factual sales opinion ('best view in town'); stating a false fact about the property is misrepresentation and may be actionable.

A fact that would affect a reasonable buyer's decision or price; in NC it must be disclosed even if the buyer does not ask.

A hidden physical defect not discoverable by ordinary inspection; a known latent defect must be disclosed.

An obvious defect a buyer can discover by reasonable inspection — visible damage or an obvious code issue.

'Let the buyer beware' — the old rule, now sharply limited in NC by the duty to disclose known material facts and the RPOADS.

For housing built before 1978, the seller must disclose known lead paint, give the EPA pamphlet, and allow a 10-day inspection window for sales.

An odorless, radioactive gas from soil that can accumulate indoors; testing and mitigation may be disclosed and addressed.

A hazardous material once used in insulation and flooring; managed by removal or encapsulation to control fibers.

Grows in damp areas and can be a health and disclosure issue; remediation addresses the moisture source.

A buried tank that can leak and contaminate soil and groundwater, creating cleanup liability for the owner.

Property psychologically affected by an event (e.g., a prior death). In NC, certain facts like a prior occupant's natural death or disease are not material facts requiring disclosure.

Whether property lies in a flood hazard area or wetlands affects use and insurance and is treated as a material fact for NC buyers.

Public registries let buyers research sex offenders; brokers typically refer buyers to the registry rather than represent who lives nearby.

An exterior cladding linked to moisture intrusion in some homes; a known EIFS problem can be a material fact to disclose.

NC brokers must measure and report heated living area accurately following the Commission's residential square-footage guidelines; errors can be misrepresentation.

North Carolina's standard security instrument: title is conveyed to a neutral trustee who holds it until the loan is repaid, enabling a power-of-sale foreclosure.

The borrower's written promise to repay the loan; the deed of trust is the security for that note.

North Carolina's common foreclosure: the trustee sells the property after a hearing before the clerk of court — faster than a full judicial foreclosure.

A borrower's right to pay the debt and reclaim the property before the foreclosure sale is final.

The loan amount divided by the property's value or price; a higher LTV means a smaller down payment and more lender risk.

Insurance a borrower pays on a conventional loan when the LTV exceeds 80%, protecting the lender against default.

A loan not insured or guaranteed by the government; PMI is usually required when the LTV is above 80%.

A loan insured by the Federal Housing Administration, allowing a lower down payment, with a mortgage insurance premium.

A loan guaranteed by the Department of Veterans Affairs for eligible veterans, often with no down payment.

The Real Estate Settlement Procedures Act — requires loan-cost disclosures (Loan Estimate, Closing Disclosure) and prohibits kickbacks at closing.

The Truth in Lending Act — requires lenders to disclose the cost of credit, including the annual percentage rate (APR).

The Loan Estimate is due within 3 business days of application; the Closing Disclosure must reach the borrower at least 3 business days before closing.

North Carolina requires the practice of law (a licensed attorney) to handle real estate closings — title work and settlement are conducted under an attorney's supervision.

Prepaid interest paid at closing to lower the loan's interest rate; one point equals 1% of the loan amount.

Paid by the seller to the register of deeds before recording — $1.00 per $500 of the price under G.S. 105-228.30.

Area = length × width. Convert square feet to acres by dividing by 43,560.

Commission = sale price × commission rate. A 6% commission on a $300,000 sale is $18,000.

Price = net ÷ (1 − commission rate). To net $282,000 after a 6% commission: $\$282{,}000 \div 0.94 = \$300{,}000$.

LTV = loan ÷ value. An 80% LTV on a $300,000 home is a $0.80 \times \$300{,}000 = \$240{,}000$ loan.

Value = NOI ÷ cap rate. A $90,000 NOI at a 9% cap rate: $\$90{,}000 \div 0.09 = \$1{,}000{,}000$.

$1.00 per $500 (or fraction). A $200,000 sale: $\$200{,}000 \div \$500 = 400$, so $400 \times \$1 = \$400$.

Tax = assessed value × tax rate. NC counties often quote a rate per $100 of value: tax = (assessed value ÷ 100) × rate.

Split prepaid or accrued taxes by the days each party owns the property. Daily tax = annual tax ÷ 365; multiply by the owner's days.

Annual tax $4,380 ÷ 365 = $12/day. For 120 unpaid days the seller is debited $120 \times \$12 = \$1{,}440$.

1 acre = 43,560 square feet. To find acres, divide total square feet by 43,560.

1 mile = 5,280 feet; 1 yard = 3 feet. Memorize these — they are not provided at the test center.

1 section = 640 acres = 1 square mile; 1 township = 36 sections = 6 miles square.

Use part = total × rate. Rearrange to total = part ÷ rate or rate = part ÷ total for net, commission, and tax questions.

Percent change = (new − old) ÷ old. A home bought at $200,000 and sold at $230,000 gained $\$30{,}000 \div \$200{,}000 = 15\%$.

Annual interest = loan balance × interest rate. Monthly interest = annual ÷ 12.

Down payment = price − loan = price × (1 − LTV). A 20% down payment on $300,000 is $60,000.

Add the heated areas room by room (length × width) and total them; report heated living area per NCREC guidelines.

Cap rate = NOI ÷ price. A $1,000,000 building with $90,000 NOI has a $\$90{,}000 \div \$1{,}000{,}000 = 9\%$ cap rate.

Net to seller = sale price − commission − payoff − seller-paid costs (including the NC excise tax) ± prorations.