NC Post Licensing 301 Comprehensive
Review Vault: Extensive Question Bank with
Accurate and Detailed Answers, Practical
Examples, Key Topic Summaries, Assessment
Practice & Knowledge Enhancement Topic 5:
Disclosure of Material Facts and Property
Condition.
Q1. Under North Carolina law, a real estate broker must disclose to all parties any material facts
that:
A) Are known only to the seller
B) Are known to the broker and could affect a reasonable party's decision
C) Are requested by the buyer
D) Are recorded in the county register of deeds
✔ Correct Answer: B
Brokers have a duty to disclose known material facts that would affect a reasonable person's
decision to buy, sell, or the price.
Q2. A "material fact" is defined as:
A) Any fact about the property
B) A fact that would influence a reasonable person's decision to enter into a transaction or the
price they would pay
C) Only structural defects
D) Only facts the seller volunteers
✔ Correct Answer: B
Material facts are those that would affect the judgment of a reasonable person.
Q3. The duty to disclose material facts applies to:
A) Seller's agents only
,B) Buyer's agents only
C) All licensees, regardless of agency relationship
D) Only brokers with 5+ years of experience
✔ Correct Answer: C
All licensees (agents and facilitators) have a duty to disclose known material facts to all parties.
Q4. A seller's agent learns that the property has a cracked foundation. The seller refuses to
disclose it. The agent must:
A) Obey the seller and remain silent
B) Disclose the crack to any prospective buyer
C) Withdraw from the listing if the seller will not allow disclosure
D) Both B and C
✔ Correct Answer: D
The agent cannot remain silent about a known material defect. The agent must either get the
seller's permission to disclose or withdraw from the listing.
Q5. A buyer's agent learns that the property has a cracked foundation. The seller has not
disclosed it. The buyer's agent must:
A) Keep it confidential because it might harm the seller
B) Disclose it to the buyer immediately
C) Tell only the listing agent
D) Ignore it because the seller didn't disclose it
✔ Correct Answer: B
The buyer's agent owes a duty of disclosure to the buyer. Material defects must be disclosed
regardless of the seller's actions.
Q6. A broker is acting as a facilitator (no agency). The broker learns that the property has a
cracked foundation. The facilitator must:
A) Keep it confidential because there is no duty of confidentiality
B) Disclose it to both parties because facilitators must disclose material facts
C) Tell only the seller
D) Tell only the buyer
, ✔ Correct Answer: B
Facilitators owe a duty to disclose material facts to all parties, even though they do not owe
fiduciary duties.
Q7. Under the NC Residential Property Disclosure Act, a seller of residential real estate must:
A) Complete a written disclosure statement
B) Provide a disclosure statement only if the buyer requests it
C) Provide a disclosure statement only if the property was built before 1978
D) Provide no disclosure; NC has no mandatory disclosure form
✔ Correct Answer: D
Unlike many states, NC does not require a seller to complete a mandatory property disclosure
form. However, sellers must still disclose known material defects under common law.
Q8. Although NC does not require a mandatory disclosure form, a seller who voluntarily
provides a disclosure statement:
A) Has no liability for any omissions
B) Must be truthful and accurate; false statements can lead to liability
C) Waives all rights to sell the property
D) Must have the statement notarized
✔ Correct Answer: B
If a seller provides a disclosure statement, it must be accurate. False or misleading statements
can result in fraud liability.
Q9. A seller completes a disclosure statement stating "no known defects." The seller knows the
roof leaks. This is:
A) Acceptable because NC does not require disclosure
B) Fraudulent misrepresentation
C) Permitted if the buyer does not ask
D) A violation only if the buyer is using an FHA loan
✔ Correct Answer: B
Knowingly providing false information is fraud, regardless of whether a disclosure is required.
Review Vault: Extensive Question Bank with
Accurate and Detailed Answers, Practical
Examples, Key Topic Summaries, Assessment
Practice & Knowledge Enhancement Topic 5:
Disclosure of Material Facts and Property
Condition.
Q1. Under North Carolina law, a real estate broker must disclose to all parties any material facts
that:
A) Are known only to the seller
B) Are known to the broker and could affect a reasonable party's decision
C) Are requested by the buyer
D) Are recorded in the county register of deeds
✔ Correct Answer: B
Brokers have a duty to disclose known material facts that would affect a reasonable person's
decision to buy, sell, or the price.
Q2. A "material fact" is defined as:
A) Any fact about the property
B) A fact that would influence a reasonable person's decision to enter into a transaction or the
price they would pay
C) Only structural defects
D) Only facts the seller volunteers
✔ Correct Answer: B
Material facts are those that would affect the judgment of a reasonable person.
Q3. The duty to disclose material facts applies to:
A) Seller's agents only
,B) Buyer's agents only
C) All licensees, regardless of agency relationship
D) Only brokers with 5+ years of experience
✔ Correct Answer: C
All licensees (agents and facilitators) have a duty to disclose known material facts to all parties.
Q4. A seller's agent learns that the property has a cracked foundation. The seller refuses to
disclose it. The agent must:
A) Obey the seller and remain silent
B) Disclose the crack to any prospective buyer
C) Withdraw from the listing if the seller will not allow disclosure
D) Both B and C
✔ Correct Answer: D
The agent cannot remain silent about a known material defect. The agent must either get the
seller's permission to disclose or withdraw from the listing.
Q5. A buyer's agent learns that the property has a cracked foundation. The seller has not
disclosed it. The buyer's agent must:
A) Keep it confidential because it might harm the seller
B) Disclose it to the buyer immediately
C) Tell only the listing agent
D) Ignore it because the seller didn't disclose it
✔ Correct Answer: B
The buyer's agent owes a duty of disclosure to the buyer. Material defects must be disclosed
regardless of the seller's actions.
Q6. A broker is acting as a facilitator (no agency). The broker learns that the property has a
cracked foundation. The facilitator must:
A) Keep it confidential because there is no duty of confidentiality
B) Disclose it to both parties because facilitators must disclose material facts
C) Tell only the seller
D) Tell only the buyer
, ✔ Correct Answer: B
Facilitators owe a duty to disclose material facts to all parties, even though they do not owe
fiduciary duties.
Q7. Under the NC Residential Property Disclosure Act, a seller of residential real estate must:
A) Complete a written disclosure statement
B) Provide a disclosure statement only if the buyer requests it
C) Provide a disclosure statement only if the property was built before 1978
D) Provide no disclosure; NC has no mandatory disclosure form
✔ Correct Answer: D
Unlike many states, NC does not require a seller to complete a mandatory property disclosure
form. However, sellers must still disclose known material defects under common law.
Q8. Although NC does not require a mandatory disclosure form, a seller who voluntarily
provides a disclosure statement:
A) Has no liability for any omissions
B) Must be truthful and accurate; false statements can lead to liability
C) Waives all rights to sell the property
D) Must have the statement notarized
✔ Correct Answer: B
If a seller provides a disclosure statement, it must be accurate. False or misleading statements
can result in fraud liability.
Q9. A seller completes a disclosure statement stating "no known defects." The seller knows the
roof leaks. This is:
A) Acceptable because NC does not require disclosure
B) Fraudulent misrepresentation
C) Permitted if the buyer does not ask
D) A violation only if the buyer is using an FHA loan
✔ Correct Answer: B
Knowingly providing false information is fraud, regardless of whether a disclosure is required.
