NC Post Licensing 301 Comprehensive
Review Vault: Extensive Question Bank with
Accurate and Detailed Answers, Practical
Examples, Key Topic Summaries, Assessment
Practice & Knowledge Enhancement Broker
Relationships and Responsibilities – Agency
Formation and Fiduciary Duties
Q1. What is the primary source of agency law in North Carolina real estate?
A) The NC Real Estate Commission Rules only
B) Common law (court decisions) supplemented by statutes
C) The federal Fair Housing Act
D) The NAR Code of Ethics
✔ Correct Answer: B
North Carolina agency law is derived from common law (case law) as interpreted by courts, with
certain modifications by state statutes and Commission rules.
Q2. Under NC law, when must a written agency agreement be signed?
A) At closing
B) Prior to the first offer being made
C) Within 3 days of first contact
D) At first substantial contact
✔ Correct Answer: B
A written agency agreement is required prior to the first offer being made. Without it, no agency
exists.
Q3. A broker shows a property to a buyer. No written agency agreement exists. The broker gives
the buyer the WWREA brochure. The broker is legally:
A) The buyer's agent
,B) The seller's agent
C) A facilitator (no agency)
D) A dual agent
✔ Correct Answer: C
Without a written agency agreement, there is no agency. The broker is a facilitator who owes
honesty, fairness, and disclosure but no fiduciary duties.
Q4. Which of the following is a fiduciary duty owed by an agent to a principal?
A) Obedience
B) Confidentiality
C) Loyalty
D) All of the above
✔ Correct Answer: D
All are fiduciary duties. The full list includes obedience, loyalty, disclosure, confidentiality,
accounting, and reasonable care, skill, and diligence.
Q5. The duty of loyalty requires an agent to:
A) Act only as directed by the principal
B) Put the principal's interests above the agent's own interests
C) Keep the principal informed of all relevant facts
D) Handle all funds properly
✔ Correct Answer: B
Loyalty means the agent must act in the principal's best interest, not the agent's own interest,
and avoid conflicts of interest.
Q6. The duty of obedience requires an agent to:
A) Follow all lawful instructions of the principal
B) Follow only the agent's own judgment
C) Obey all third parties
D) Obey the buyer's instructions
✔ Correct Answer: A
Obedience means the agent must follow the principal's lawful instructions. The agent cannot act
against the principal's directions.
, Q7. A seller tells the listing agent, "Do not accept any offers below $300,000." The agent
receives an offer for $290,000. The agent should:
A) Present the offer immediately
B) Refuse to present the offer because it violates the seller's instruction
C) Counteroffer at $300,000 without telling the seller
D) Discard the offer
✔ Correct Answer: A
The duty of obedience does not override the duty to present all offers. The agent must present
the offer, and the seller can then reject it.
Q8. The duty of reasonable care and diligence requires an agent to:
A) Guarantee the outcome of the transaction
B) Act with the skill and competence expected of a reasonably competent agent
C) Never make any mistakes
D) Always recommend an attorney
✔ Correct Answer: B
Reasonable care means the agent must perform at the level of a reasonably competent agent in
the same community, not guarantee results.
Q9. The duty of accounting requires an agent to:
A) Keep a personal checking account
B) Deposit all client funds into a trust account and provide an accounting
C) Give the principal all commission money
D) Only use cash for client transactions
✔ Correct Answer: B
Accounting means the agent must properly handle and account for all funds received on behalf
of the principal, including earnest money and rent.
Q10. The duty of confidentiality continues:
A) Only until closing
B) Only while the agency relationship exists
Review Vault: Extensive Question Bank with
Accurate and Detailed Answers, Practical
Examples, Key Topic Summaries, Assessment
Practice & Knowledge Enhancement Broker
Relationships and Responsibilities – Agency
Formation and Fiduciary Duties
Q1. What is the primary source of agency law in North Carolina real estate?
A) The NC Real Estate Commission Rules only
B) Common law (court decisions) supplemented by statutes
C) The federal Fair Housing Act
D) The NAR Code of Ethics
✔ Correct Answer: B
North Carolina agency law is derived from common law (case law) as interpreted by courts, with
certain modifications by state statutes and Commission rules.
Q2. Under NC law, when must a written agency agreement be signed?
A) At closing
B) Prior to the first offer being made
C) Within 3 days of first contact
D) At first substantial contact
✔ Correct Answer: B
A written agency agreement is required prior to the first offer being made. Without it, no agency
exists.
Q3. A broker shows a property to a buyer. No written agency agreement exists. The broker gives
the buyer the WWREA brochure. The broker is legally:
A) The buyer's agent
,B) The seller's agent
C) A facilitator (no agency)
D) A dual agent
✔ Correct Answer: C
Without a written agency agreement, there is no agency. The broker is a facilitator who owes
honesty, fairness, and disclosure but no fiduciary duties.
Q4. Which of the following is a fiduciary duty owed by an agent to a principal?
A) Obedience
B) Confidentiality
C) Loyalty
D) All of the above
✔ Correct Answer: D
All are fiduciary duties. The full list includes obedience, loyalty, disclosure, confidentiality,
accounting, and reasonable care, skill, and diligence.
Q5. The duty of loyalty requires an agent to:
A) Act only as directed by the principal
B) Put the principal's interests above the agent's own interests
C) Keep the principal informed of all relevant facts
D) Handle all funds properly
✔ Correct Answer: B
Loyalty means the agent must act in the principal's best interest, not the agent's own interest,
and avoid conflicts of interest.
Q6. The duty of obedience requires an agent to:
A) Follow all lawful instructions of the principal
B) Follow only the agent's own judgment
C) Obey all third parties
D) Obey the buyer's instructions
✔ Correct Answer: A
Obedience means the agent must follow the principal's lawful instructions. The agent cannot act
against the principal's directions.
, Q7. A seller tells the listing agent, "Do not accept any offers below $300,000." The agent
receives an offer for $290,000. The agent should:
A) Present the offer immediately
B) Refuse to present the offer because it violates the seller's instruction
C) Counteroffer at $300,000 without telling the seller
D) Discard the offer
✔ Correct Answer: A
The duty of obedience does not override the duty to present all offers. The agent must present
the offer, and the seller can then reject it.
Q8. The duty of reasonable care and diligence requires an agent to:
A) Guarantee the outcome of the transaction
B) Act with the skill and competence expected of a reasonably competent agent
C) Never make any mistakes
D) Always recommend an attorney
✔ Correct Answer: B
Reasonable care means the agent must perform at the level of a reasonably competent agent in
the same community, not guarantee results.
Q9. The duty of accounting requires an agent to:
A) Keep a personal checking account
B) Deposit all client funds into a trust account and provide an accounting
C) Give the principal all commission money
D) Only use cash for client transactions
✔ Correct Answer: B
Accounting means the agent must properly handle and account for all funds received on behalf
of the principal, including earnest money and rent.
Q10. The duty of confidentiality continues:
A) Only until closing
B) Only while the agency relationship exists
