A landlord enters a triple net lease agreement with a commercial tenant for five years with an automatic 

renewal of the lease agreement for one year after expiration unless either party provides 30 days’ notice to 

terminate. All of the following statements are true, EXCEPT:

1. The agreement must be in writing to be enforceable per the North Carolina Statue of Frauds.

2. A triple net lease is where the landlord takes on responsibilities for certain cost that are typically born 

by the tenant.

3. To be protected against 3rd party transfers, the lease should be recorded.

4. The tenant would not be protected by the North Carolina Rental Agreement Act.

2. A triple net lease is where the landlord takes on responsibilities for certain cost that are typically born 

by the tenant.

Explanation

A net lease is where the tenant takes on some of the cost of ownership typically paid for by the owner 

such as taxes, insurance or common area maintenance. The NC Statute of frauds requires leases of greater 

than 3 years to be in writing to be enforceable. The NC Connor Act requires a lease to be recorded to be 

enforceable against 3rd parties. The RESIDENTIAL Rental Agreement Act does not protect commercial 

tenants. Individuals/entities that enter commercial transactions as they are expect to be more educated 

(sophisticated) and therefore there are fewer protections on the Commercial real estate business

Which of the following statements is true regarding Ad Valorem taxation in North Carolina?

1. Real property is taxed according to its most recent sale price.

2. The Machinery Act requires reassessment tax purposes every 4 years.

3. Real property taxes and special assessments constitute an involuntary lien against property on January 

1st of the next year.

4. Tax rates are effective until the next revaluation year.

3. Real property taxes and special assessments constitute an involuntary lien against property on January 

1st of the text year

Explanation

Real property is taxed according to its assessed value, not sale price. The Machinery Act requires that 

properties be assessed at least once every 8 years (octennial appraisal). Tax rates can be changed every 

year and not set by the Machinery Act, rather by budget of the municipality.

John recently retired and moved to a coastal community located in North Carolina. He decided to seek 

opportunities to supplement his retirement income by responding to an advertisement to become a 

timeshare salesman. John is told by the developer no license is required to sell a timeshare as he will be 

paid a flat fee for each timeshare sold is the developer correct?

1. No. In order to sell time shares an individual will need to obtain a timeshare sales license.

2. No. In order to sell timeshares an individual will need to obtain a North Carolina real estate license.

3. Yes. So long as an individual is not paid a percentage-based commission there is no requirement to 

obtain a time share salesman license.

4. Yes. Timeshare sales fall under vacation property sales and therefore are exempt from the typical 

licensing requirements.

2. No. In order to sell timeshares an individual will need to obtain a North Carolina real estate license.

Explanation

The license triggering event is earning compensation on behalf of another. John will require an active real 

estate license in order to earn compensation from the sale of timeshare properties.

Which of the following statements regarding real estate sales contract is true?

1. A provisional broker acting as the seller's agent is required to safeguard an option money check until 

effective and they must deliver it directly to the seller.

2. An agent representing a buyer must submit an offer to purchase to the seller or sellers agent 

immediately or no later than 7 days.

3. When earnest money is paid with an effective contract it must be deposited within 5 banking days of 

receipt.

4. A broker is not permitted to accept an earnest money deposit if it is tender in cash.

1. Option fee and due diligence fee checks are made payable to the seller and delivered once the contract 

becomes effective. Offers and contracts must be delivered within five days. Earnest money must be 

deposited the later of three banking days from the effective date of the contract or receipt. While it is not 

recommended that a broker accept cash, it is permitted. When cash is tendered for earnest money or due 

diligence, it must be deposited immediately but no later than three banking days.

Explanation

Option fee and due diligence fee checks are made payable to the seller and delivered once the contract 

becomes effective. Offers and contracts mut be delivered within 5 days. Earnest money must be deposited 

the later of 3 banking days from the effective date of the contract or receipt. While it is not recommended 

that a broker accept cash, it is permitted. When cash is tendered for earnest money r due diligence, it must 

be deposited immediately but no later than 3 banking days.