North Carolina Real Estate Broker Exam –
Verified Practice Questions & Answers with
Detailed Rationales (2026 Edition)
1. Which statement best describes the effect of North
Carolina’s due-on-sale clause enforcement in most mortgage
instruments?
A. It prohibits any assumption of an existing mortgage
B. It allows lenders to demand full repayment upon transfer
of interest without consent
C. It requires borrower consent before foreclosure
D. It transfers liability automatically to grantee
Rationale: In North Carolina, most mortgages include a due-
on-sale clause allowing lenders to accelerate the loan balance
if the property is transferred without lender approval. This
does not automatically prohibit transfers but gives the lender
enforcement power.
2. Under North Carolina license law, which action would
most likely require a broker to immediately notify the
Commission?
A. Change of mailing address
B. Change of brokerage affiliation
C. Criminal conviction unrelated to real estate involving
,moral turpitude
D. Completion of continuing education
Rationale: Brokers must report criminal convictions involving
moral turpitude or felonies promptly. Administrative changes
like address updates or CE completion do not trigger
immediate mandatory reporting.
3. A buyer enters into a contract with an option to purchase.
The option money is:
A. Always refundable
B. Considered a security deposit
C. Consideration for keeping the offer open and typically
nonrefundable
D. Applied automatically to closing costs
Rationale: Option money is consideration paid for the right to
purchase within a specified time and is generally
nonrefundable unless otherwise agreed.
4. Which of the following BEST defines a “general agency”
relationship?
A. Authority limited to a single transaction
B. Authority to act only in a fiduciary capacity
C. Authority to perform ongoing acts within a broad scope
of business for a principal
D. Authority granted only by court order
,Rationale: General agency involves ongoing representation
and broad authority, such as that of a property manager
acting for an owner.
5. In North Carolina, earnest money deposits held by a
broker-in-charge must be deposited:
A. Within 10 banking days
B. Within 5 calendar days
C. No later than the end of the third banking day following
receipt
D. Only upon contract ratification
Rationale: NC rules require prompt deposit of trust money,
typically by the end of the third banking day after receipt.
6. Which is TRUE regarding tenancy by the entirety in North
Carolina?
A. It applies to any co-owners
B. It requires equal ownership shares only
C. It is available only to legally married couples and includes
right of survivorship
D. It allows unilateral partition by either spouse
Rationale: Tenancy by the entirety is a marital estate with
survivorship rights and cannot be unilaterally severed.
7. A broker intentionally misrepresents material facts in a
listing. This is:
, A. Negligence
B. Puffing
C. Fraudulent misrepresentation
D. Innocent misrepresentation
Rationale: Intentional misrepresentation of material facts
constitutes fraud, which carries severe disciplinary
consequences.
8. The statute of frauds requires:
A. All oral agreements be notarized
B. All leases must be written
C. Certain real estate contracts to be in writing to be
enforceable
D. All brokerage agreements be recorded
Rationale: The statute of frauds requires written agreements
for enforceability of contracts involving real property
interests.
9. Which is NOT a fiduciary duty owed by a North Carolina
broker?
A. Loyalty
B. Obedience
C. Profit maximization for broker
D. Disclosure
Verified Practice Questions & Answers with
Detailed Rationales (2026 Edition)
1. Which statement best describes the effect of North
Carolina’s due-on-sale clause enforcement in most mortgage
instruments?
A. It prohibits any assumption of an existing mortgage
B. It allows lenders to demand full repayment upon transfer
of interest without consent
C. It requires borrower consent before foreclosure
D. It transfers liability automatically to grantee
Rationale: In North Carolina, most mortgages include a due-
on-sale clause allowing lenders to accelerate the loan balance
if the property is transferred without lender approval. This
does not automatically prohibit transfers but gives the lender
enforcement power.
2. Under North Carolina license law, which action would
most likely require a broker to immediately notify the
Commission?
A. Change of mailing address
B. Change of brokerage affiliation
C. Criminal conviction unrelated to real estate involving
,moral turpitude
D. Completion of continuing education
Rationale: Brokers must report criminal convictions involving
moral turpitude or felonies promptly. Administrative changes
like address updates or CE completion do not trigger
immediate mandatory reporting.
3. A buyer enters into a contract with an option to purchase.
The option money is:
A. Always refundable
B. Considered a security deposit
C. Consideration for keeping the offer open and typically
nonrefundable
D. Applied automatically to closing costs
Rationale: Option money is consideration paid for the right to
purchase within a specified time and is generally
nonrefundable unless otherwise agreed.
4. Which of the following BEST defines a “general agency”
relationship?
A. Authority limited to a single transaction
B. Authority to act only in a fiduciary capacity
C. Authority to perform ongoing acts within a broad scope
of business for a principal
D. Authority granted only by court order
,Rationale: General agency involves ongoing representation
and broad authority, such as that of a property manager
acting for an owner.
5. In North Carolina, earnest money deposits held by a
broker-in-charge must be deposited:
A. Within 10 banking days
B. Within 5 calendar days
C. No later than the end of the third banking day following
receipt
D. Only upon contract ratification
Rationale: NC rules require prompt deposit of trust money,
typically by the end of the third banking day after receipt.
6. Which is TRUE regarding tenancy by the entirety in North
Carolina?
A. It applies to any co-owners
B. It requires equal ownership shares only
C. It is available only to legally married couples and includes
right of survivorship
D. It allows unilateral partition by either spouse
Rationale: Tenancy by the entirety is a marital estate with
survivorship rights and cannot be unilaterally severed.
7. A broker intentionally misrepresents material facts in a
listing. This is:
, A. Negligence
B. Puffing
C. Fraudulent misrepresentation
D. Innocent misrepresentation
Rationale: Intentional misrepresentation of material facts
constitutes fraud, which carries severe disciplinary
consequences.
8. The statute of frauds requires:
A. All oral agreements be notarized
B. All leases must be written
C. Certain real estate contracts to be in writing to be
enforceable
D. All brokerage agreements be recorded
Rationale: The statute of frauds requires written agreements
for enforceability of contracts involving real property
interests.
9. Which is NOT a fiduciary duty owed by a North Carolina
broker?
A. Loyalty
B. Obedience
C. Profit maximization for broker
D. Disclosure
