North Carolina Real Estate Practice & Law Review

Vocabulary flashcards reviewing core topics from North Carolina real estate lecture notes including closing procedures, NC license law, trust accounts, statutory acts, conveyances, and property valuation concepts.

Closing

The consummation of a real estate transaction where contract promises are fulfilled, mortgage loan funds and settlement costs are disbursed, seller liens are paid off, and legal title is transferred via deed in exchange for the purchase price.

Good Funds Settlement Act

The North Carolina legislation establishing that real estate closing occurs when documents are officially recorded and funds are dispersed by the settlement agent.

Consumer Financial Protection Bureau (CFPB)

An administrative agency created under the Dodd-Frank Act designed to protect consumers from abusive actions by lenders.

RESPA (Regulation X)

The Real Estate Settlement Procedures Act, a federal law applying to federally-related first lien residential loans that protects consumers from abusive lending practices, eliminates kickbacks, and limits escrow reserves.

Closing Disclosure (CD)

A mandatory settlement document that MUST be delivered to the buyer at least $3$ business days prior to settlement ($6$ business days if sent via postal mail).

Debit

An entry on a settlement statement representing an amount to be paid by the buyer or seller (spending money).

Credit

An entry on a settlement statement representing an amount payable to or received by the buyer or seller (receiving money).

Interim Interest

Interest calculated on the buyer's new mortgage loan from the day of closing through the final day of that month, paid in arrears.

Accrued Items

Unpaid settlement expenses owed by the seller that will eventually be paid by the buyer, for which the seller gives the buyer a credit at settlement.

Prepaid Items

Settlement expenses that have been paid in advance by the seller, requiring the buyer to credit the seller for the unused portion at closing.

Provisional Broker

A real estate licensee who has completed a $75$-hour pre-licensing course and passed the state exam, remaining on inactive status until affiliated with a Broker in Charge (BIC).

Non-provisional Broker

A real estate broker who is not required to be supervised by a BIC to hold an active license and can operate independently as a sole proprietor or under a firm.

Broker in Charge (BIC)

A licensed broker assigned to a single location who is responsible for supervising active brokers and unlicensed staff, maintaining trust accounts, and ensuring compliance with agency advertising and record-keeping rules.

Limited Nonresident Commercial Broker

A broker residing outside North Carolina who executes a declaration of affiliation and brokerage cooperation agreement with an NC broker to engage in commercial real estate transactions.

Active License Status

The status of a broker's license when annual renewal fees (\text{\\$50}) are paid and required annual continuing education ($8$ total hours: $4$ general/BIC update plus $4$ elective hours) is completed by midnight on June $10$\text{th}.

Material Fact

Any information that could affect a reasonable person's decision to buy, sell, or lease real estate, including facts about the property, facts affecting a principal's transaction ability, or facts of special importance.

Misrepresentation

The act of intentionally (willful) or unintentionally (negligent) communicating false information to a party in a transaction.

Omission

The failure to disclose or provide material information to a party in a real estate transaction.

Trust Account

A separate, custodial bank account maintained by a broker containing only monies belonging to others, insured by the FDIC up to \text{\\$250,000} per individual account.

Machinery Act

The statutory framework (NCGS Chapter $105$ Subchapter II) governing how local governments list, appraise, and assess property to uniformly levy property taxes across North Carolina.

Statute of Frauds

A statutory rule designed to prevent fraud by requiring major real estate contracts and legal agreements to be executed in writing to be legally enforceable.

Connor Act

The North Carolina real estate recording statute (N.C. Gen. Stat. § $47\text{-}18$) establishing a pure race system where the first entity to record a property interest with the county Register of Deeds holds absolute priority.

North Carolina Condominium Act

Chapter $47\text{C}$ of the General Statutes governing the creation, management, operation, and sales of condominiums created on or after October $1$, $1986$.

Tenant Security Deposit Act

North Carolina residential rental law limiting deposit amounts based on lease term, requiring funds to be held in an NC trust account or bond, and mandating itemized return within $30$ days of move-out.

North Carolina Vacation Rental Act

Chapter $42\text{A}$ of the General Statutes regulating short-term leisure or recreational rental agreements lasting fewer than $90$ days.

North Carolina Residential Rental Agreements Act

N.C. Gen. Stat. § $42\text{-}38$ through § $42\text{-}49$, establishing a non-waivable implied warranty of habitability requiring landlords to maintain safe and fit premises.

North Carolina Residential Property Disclosure Act

Chapter $47\text{E}$ requiring sellers of $1$ to $4$ residential units to supply buyers with property condition disclosures and separate mineral, oil, and gas rights disclosures before contract execution.

Residential Lead-Based Paint Hazard Reduction Act of 1992 (Title X)

A federal statute mandating that sellers and landlords disclose known lead-based paint hazards in properties built before $1978$ and grant buyers a $10$-day inspection window.

Fair Housing Act (Title VIII)

The federal Civil Rights Act of $1968$ prohibiting housing discrimination based on race, color, national origin, religion, sex, familial status, and disability.

Equal Credit Opportunity Act (ECOA)

A federal law prohibiting creditors from discriminating against credit applicants and requiring loan decisions to be based strictly on income and credit history.

Fee Simple

An estate in land granting absolute, permanent ownership of both the real property and any structures on it.

Fee Simple Determinable

A real property interest that terminates automatically and immediately by operation of law if a specified event or condition occurs, reverting title directly to the grantor.

Metes and Bounds

A legal description system that outlines property boundaries using specific distance measurements, directions, and physical landmarks.

Net Lease

A lease structure where the tenant pays base rent plus major property expenses, including real estate taxes, hazard insurance, and property maintenance.

Zoning Variance

An official administrative exception granted by local zoning authorities allowing a property owner to deviate from standard land-use setback or building requirements.

General Warranty Deed

A deed in which the grantor provides full title covenants and promises to defend the title back to its original source.

Special Warranty Deed

A deed in which the seller guarantees clear title against encumbrances or defects arising only during their ownership period, offering no protection against past title defects.

Loan-to-Value (LTV) Ratio

A financial risk evaluation metric calculated by dividing the mortgage loan amount by the appraised property value ($\text{LTV} = \frac{\text{Loan Amount}}{\text{Appraised Property Value}}$).

Adjustable-Rate Mortgage (ARM)

A mortgage loan featuring an initial fixed interest rate period (typically $3$ to $10$ years) after which the rate adjusts periodically according to market benchmarks.

Regulation Z

The federal rule implementing TILA that requires lenders to disclose clear loan costs, fees, and annual percentage rates (APR) prior to borrower commitment.

Title Insurance

A single-premium indemnity policy protecting real estate owners and mortgage lenders against financial loss caused by pre-existing title defects, encumbrances, or ownership disputes.

TRID Rules

TILA-RESPA Integrated Disclosure rules requiring lenders to provide the Loan Estimate within $3$ business days of loan application and the Closing Disclosure at least $3$ business days prior to closing.

Economic Obsolescence

An incurable loss in property value resulting from external factors located outside the property lines, such as neighborhood decline or heavy traffic.

Comparative Market Analysis (CMA)

An informal property valuation method where pricing adjustments are made exclusively to comparable properties (comps), never to the subject property.

Primary Mortgage Market

The market sector where residential borrowers interact directly with originating financial institutions to obtain new home loans.

Secondary Mortgage Market

The market where existing primary residential loans are bought, sold, and packaged as mortgage-backed securities to maintain liquidity for primary lenders.

Capital Gains Tax

A tax assessed on profits realized from asset sales, categorized into short-term rates ($10\%$ to $37\%$ for assets held $1$ year or less) and long-term rates ($0\%$, $15\%$, or $20\%$ for assets held over $1$ year).