NC Post Licensing - 303 Flashcards

NC Post Licensing - 303 Flashcards One BIC can only serveOne location at a time Person who obtains a firm license is a - VIP Qualifying Broker Loan terms in commercial real estate financing are shorter than residential Tenant ImprovementsCommercial lease or sale in which TENANT makes and pays for repairs or improvement

Regarding condominiums:There must be a unit owner's association formed prior to

transfer of first unit When receiving Bonuses & IncentivesDisclosure AND consent by Principal is REQUIRED A BIC may NOT pay a licensee's ENTITYunless the entity has a firm license.How many days do prospective buyers have to rescind from contract A MANDATORY 7 day right of rescission What must be obtained prior to the sale or offer to sell or lease a TIMESHARE interest - VIP Certificate of Registration Full brokers may affiliate with multiple BICs they all need to have mutual consent or permission In a Commercial Purchase a common practice is to Use Letters of Intent before a final purchase contract is created by parties Teams musthave all licensees affiliated with BIC UpfitsCommercial lease or sale in which OWNER makes and pays for repairs or improvement Licensees cannot accept or deliver1) Inspection fees2) Survey fees3) Closing disbursements to clients repairs4) survey payments Creating a team nameMust be approved by the BIC A provisional broker must deliver all monies to theirBIC IMMEDIATELY Capital gainsif real estate has not been an owner occupied for 2 out of the last 5 years is subject to Capital GAINS TAX Commercial Real Estate Lien Tim Requirements 1) Not until 30 days of closing or possesion2) For Leases - 90 days or written 60 days of non payment3) Broker has 18 months to enforce4) Lien priority is as of the date of recordation. NO SPECIAL PRIORITY5) Mechanics Liens ALWAYS have superiority over the broker's regardless of when they are filed Net lease with Base Years Stop (BYS)Means the owner pays on the pass through provisions the first year and the tenant pays in the subsequent years that is over the base year amount A Licensee MUSTHave a Current and Active License in order to EARN any Compensation, including referral fees.Only License status that must affiliate with a BIC/Firm is when a licensee is a Provisional Broker. No affiliation = INACTIVE for a PB Definition of Core area in a commercial building - VIParea used for building functions. For ExampleLobbies, stair, mechanical rooms, elevators, restrooms

Passthrough provisions in commercial real estate areTaxes, Insurance, and Maintenance Commercial Real Estate Lien Requirements 1) Written Agreement specifying services and compensation2) Must be a listing agent to file3) Must be limited to THE subject property Commercial Real Estate ClassesClass A:- No more than 20 years old- modern features- well

maintained- excellent qualityClass B:- 20-30 years old-

maintained and functioning- some limitations such as

parking and locationsClass C:- older than 30 years- lack of

maintenance, parking, security- serious limitiations How many Real Licenses are required in NC ONE. North Carolina is a SINGLE license state All licenses expire onJune 30th Requirements to get a Limited Commercial Real Estate License 1) File an application2) Affiliate with a NC Broker3) Limited to commercial real estate practice All deposits must be made to the trust account within3 banking days/3 days of acceptance of receipt or contract acceptance, whichever is later What is the job of the PROJECT BROKER in a TIMESHARE brokerage Manage and Supervise timeshare salespersons Each office location must haveOne BIC BootFunds an investor/owner retains and does not reinvest after sale of property BIC or BIC eligible licensees retain that status as long as they 1) Renew license2) complete CE3) Stay Active4) Stay current

Regarding condominiums: there may be a special class of

common areas that is reserved for use by one or more units. These areas are called Limited Common Areas Unlicensed assistants CAN1) Receive and forward phone calls2) Submit listing data3) Search public records4) Place signs and lockboxes5) Order and Supervise repairs6) Act as Courier7) Gather factual data8) Schedule appointments9) Coordinate and confirm appointments10) Complete basic forms An Active Real Estate License is required when - VIPAssisting another for compensation in the providing of brokerage services including referral of business To sell timeshare in North Carolina one MUST have a real estate license When Paying Non-Affiliated Brokers or Firms 1) Best Practice to put in writing - Not a Rule2) May pay referral fees to brokers in any state if person has a CURRENT and ACTIVE license3) DOCUMENTATION in

broker's file:- Written documentation regarding fee- Proof of

licensure- Copy of a W9 for Brokerage Insurance or a 1099 What typically covers the common areas of a condominiumthe Condo Master Policy Definition of Rentable area or square footage - VIPCore area plus Usable area Trust accounts may earn interest so long as The broker has written consent of client and a written agreement specific who gets the interest Power of Attorney exemption existsto complete the sale in a performance contract RESPA PROHIBITSReal Estate Licenses from forcing client or customer to use a particular settlement service provider

RESPA CO-OWNERSHIP with different settlement service providers

Also known as:- Affiliated Business Arrangements (ABAs)-

Controlled Business Arrangements (CBAs)These are

permitted but 3 requirements:1) Disclosure of the

relationship2) Use of the service provider cannot be forced3) must disclose fees TIMESHARE developer must designatea licensee who is NOT on provisional status to act as

PROJECT BROKER

To be a Qualifying Broker the licensee must be 1) A full broker2) Principal of the entity seeking the firm license Manufactured Homes arepersonal property Basic types of commercial real estateland, office building, retail building, industrial, speciality properties Definition of Floor PlateArea of the floor determined by measuring the exterior walls Two options of a full broker1) Affiliate with a BIC/FIRM2) Activate as a sole proprietor Licensees can accept for delivery1) Due Diligence fees2) Ernest Money deposits RESPA ProhibitsKICKBACKS toSettlement Service Providers- BANKS-

APPRAISAL COMPANIES- TITLE OFFICERS-

ATTORNEYS

1031 Tax Deferred ExchangeReferred to as "like-kind" properties, can defer capital gains tax Modular homes arereal property after sections are assembled Every entity created except Sole Prop must have A firm license Records in a TIMESHARE sale must be kept minimum of 3 years A full broker that is not affiliated with a BIC or a firm and is not BIC themselves

Cannot:1) Maintain a trust account2) Hire or supervise

other brokers3) Offer services, advertise, or market in any way A full broker may gain tax benefits and liability protection byforming and entity for the purposes of receipt of compensation only Transaction times in commercial real estate sales areoften longer than residential sales Teams must useUse the name of the firm on all disclosures and contracts Provisional Brokers may NEVER BEDUALLY Affiliated A provisional broker may only affiliate with VIP One BIC at a time Absorption Study - VIPanalyzing the amount of space leased and vacant over a particular period of time To become a BIC or BIC Eligible1) Be a Full Broker2) Have 2 years of experience out of 5 years practicing3) Complete 12 hour broker in charge course4) File Fom 2.25

Regarding Condominiums: What must be disclosed to

prospective buyers prior to sale - VIP Public Offering Statement If buyer rescinds on a TIMESHARE sale monies must be returned within 30 days from the date the contract was executed When must a POS be provided to prospective buyers when selling a TIMESHARE interest VIP prior to contract

Trust Accounts must be balancedEvery 30 days AND records retained for 3 years RESPA does not apply to (VIP)1) Vacant Land Transactions2) Cash Transactions3) Seller Financed Transactions) Commercial Transactions

RESPA STATUTEApplies to:- 1-4 units RESIDENTIAL PROPERTIES WITH

A FEDERALLY RELATED LOAN- ENFORCED BY HUD

Qualifying broker fails to have a BIC in each office locationthe firm license becomes Inactive An unlicensed person may engage in real estate activity (EXEMPTIONS) if - VIP 1) Owns the subject property2) Is an Attorney-in-Fact (POA)3) Trustees in a foreclosure4) Court ordered sales (bankruptcy, executors, guardians)5) Housing Authorities Definition of Useable area - VIPThe floor plate minus the core area A BIC must exerciseActive and Direct supervision over all activities of provisional broker The Basics of CondominiumsThe formal legal definition of a condominium is when owners1) have a separate Fee simpleAND2) share ownership of common area3) title to the common area is Tenants in Common Retail spaces are usually leasedsquare foot as an annual dollar amount Definition of TIMESHARE in NCthe sale or lease with a right to occupy the property or unit at least1) 5 or more separate time periods2) over a period of at least 5 years A Licensee can share commission with parties BUT 1) Must be in writing - as part of the agreement2) Must be subject to Lender Approval in case of loans3) Disclosed on the Closing Disclosure4) Is considered a gift5) Only with principal or client (not others) Property used in a trade or business may qualify for taxdepreciation BICs are responsible for ensuring compliance by all

affiliated brokers with: - VIP

1) Compliance with agency policies2) Maintain trust account3) Adhere to advertising guidelines4) Retention of records5) Notify NCREC of changes in location of licensees How many days does a prospective buyer have to rescind in a TIMESHARE sale

• days

Entities and those working for companies who are EXEMPT from needing a license when handling OWNED properties - VIP 1) CORPORATION - Officers, Directors, and W2

Employees2) LLC: Managers and W2 Employees3)

Partnerships: General Partners and W2 Employees

Commercial Real Estate Lien Act saysLien May be placed on Commercial properties for commercial service rendered in a sales or lease transaction Office rental rates are usually calculated - VIP per square foot for the rentable area Key factors that affect commercial real estate LocationArea demographicsTraffic patternsIncome levelsGrowthTrends Compensation ALWAYS flows through the firm 1) from the BIC2) NO payment directly by the firm3) Brokers MAY NOT pay brokers directly except a SOLE PROPrietorships Qualifying Brokers must - VIP1) Renew firm license2) Appoint a BIC in each location3) Maintain firm certificate4) Notify NCREC within 10 days of location change5) Notify NCREC within 10 days of a name