NC Real Property Specialist cheat sheet

Real property includes land, things attached to land (fixtures), and the bundle of rights: possession, control, enjoyment, exclusion, and disposition.

Fixture test: annexation (how attached), adaptation (fit for land's use), and intention of the party who attached it; trade fixtures installed by a commercial tenant are generally removable before lease end.

Appurtenant rights run with the land: easements, riparian rights, and mineral rights; in NC, water boundaries follow the rule that the state owns the bed of navigable waters.

Air rights extend to a reasonable height; subsurface rights may be severed from the surface estate by deed or reservation.

NC is a race-notice recording state for deeds: a later purchaser prevails only if it records first and takes without notice of the prior conveyance.

Notice types defeating a later purchaser: actual, constructive (recorded documents), and inquiry (facts putting a buyer on notice to investigate).

Real property vs. personal property: growing crops (fructus industriales) are personalty, while naturally growing trees (fructus naturales) are realty until severed.

Easement by necessity arises when a parcel is landlocked by a common grantor's severance; implied from strict necessity, not convenience.

Fee simple absolute is the largest estate, of potentially infinite duration, freely devisable and inheritable.

Life estate is measured by a named person's life; the holder (life tenant) owes taxes, interest, and ordinary repairs; remainderman holds the future interest.

Fee tail and fee simple determinable: fee simple determinable ends automatically on a stated event and reverts to grantor (possibility of reverter); fee simple subject to condition subsequent requires grantor's reentry.

Tenancy in common: separate undivided interests, no right of survivorship, each co-tenant may convey or devise its share.

Joint tenancy requires the four unities (time, title, interest, possession) and carries right of survivorship; NC treats a conveyance to two or more persons as tenancy in common unless survivorship is expressly stated.

Tenancy by the entirety: only between spouses, survivorship, and neither spouse may convey alone; NC recognizes it for real property held by married couples.

Concurrent owners share possession; a co-tenant who collects rents or ousts others owes an accounting for the co-tenants' share.

Future interests: reversion, remainder (vested or contingent), executory interest, and possibility of reverter; the rule against perpetuities applies to contingent remainders and executory interests.

Valid deed elements: grantor (competent, identified), grantee (identified), words of grant, legal description, consideration (not required but recited), and grantor's signature; delivery with intent to convey is essential.

NC recording: deeds must be recorded in the register of deeds of the county where the land lies; recording gives constructive notice and protects priority.

Types of deeds: general warranty (six covenants), special warranty (grantor warrants only its own acts), quitclaim (no warranty), and judicial/trustee deeds.

NC general warranty covenants: seisin, right to convey, against encumbrances, quiet enjoyment, warranty, and further assurances.

Title search examines the chain of title; marketable title is free of encumbrances and reasonably free of doubt, but does not guarantee against hidden defects.

Adverse possession in NC: 20 years under color of title or 30 years without color of title; payment of taxes is required for color-of-title claims on land.

Probate and intestacy: without a will, NC intestate succession passes to spouse and descendants; a will must be probated and recorded to pass realty.

Eminent domain and dedication: government may take private land for public use with just compensation; dedication transfers private land to public use.

Statute of frauds requires a writing signed by the party to be charged for real property sales, leases over three years, and land-related promises.

Essential contract elements: offer, acceptance, consideration, capacity, lawful purpose, and mutual assent; a counteroffer terminates the original offer.

NC Offer to Purchase and Contract (Standard Form 2-T) is the customary residential form; it is not required by statute but is widely used by licensees.

Earnest money is held in trust; the listing or buyer's agent must deposit it in a trust account and account for it at closing or upon termination.

Contingencies: financing, inspection, appraisal, and sale of buyer's home; each has a stated deadline and remedy (termination or waiver).

Time is of the essence clauses make deadlines enforceable; otherwise, reasonable time applies.

Disclosures: NC Residential Property and Owners' Association Disclosure Statement (RPOADS) and Mineral and Oil and Gas Rights Disclosure must be provided for residential resales, with statutory exemptions.

Remedies for breach: specific performance (realty is unique), damages, and liquidated damages (earnest money forfeiture if the contract so states).

Mortgage vs. deed of trust: NC uses deeds of trust for most residential loans; the trustee holds title and may foreclose nonjudicially under power of sale.

Lien priority: first recorded instrument has priority; a purchase-money mortgage generally has priority over prior liens against the buyer.

Loan-to-value (LTV) = loan amount ÷ appraised value or purchase price, whichever is lower; down payment = price − loan.

PITI = principal + interest + taxes + insurance; the monthly housing expense used in qualifying ratios.

Qualifying ratios: front-end = housing expense ÷ gross monthly income; back-end = total debt ÷ gross monthly income; conventional guidelines commonly use 28/36.

Amortization: fixed-rate loans have level payments; adjustable-rate loans (ARM) have initial fixed periods, periodic caps, lifetime caps, and margin plus index.

NC foreclosure: power-of-sale foreclosure requires notice, a hearing before the clerk if requested, and a 10-day upset bid period after the sale.

RESPA/TRID: Loan Estimate within 3 business days of application; Closing Disclosure at least 3 business days before consummation; escrow account limits apply.

Three approaches: sales comparison (market data), cost (replacement or reproduction cost minus depreciation plus land), and income (NOI ÷ capitalization rate).

Sales comparison adjustments: adjust the comparable to the subject; if the comparable is superior, subtract; if inferior, add.

Gross rent multiplier (GRM) = sale price ÷ gross monthly rent; used for quick income-property screening.

Depreciation types: physical deterioration (curable/incurable), functional obsolescence (design), and external obsolescence (location or market).

Highest and best use: legally permissible, physically possible, financially feasible, and maximally productive.

Reconciliation weights approaches by reliability; the final opinion of value is a single point estimate, not an average.

Market value requires willing buyer and seller, no undue pressure, and reasonable exposure time; assessed value for property tax may differ from market value.

NC appraisal rules: appraisers must be licensed or certified by the NC Appraisal Board; a comparative market analysis by a broker is not an appraisal.

NC agency relationships: seller's agent, buyer's agent, dual agent, and subagent; licensees must disclose agency at first substantial contact using the Working with Real Estate Agents Disclosure.

Dual agency requires written consent of both parties and limits the broker's ability to advocate; the broker must not disclose one party's confidential information to the other.

Fiduciary duties: loyalty, obedience, disclosure, confidentiality, reasonable care, and accounting; these are owed to the principal.

Material facts must be disclosed to all parties regardless of agency; confidential information (motivation, price flexibility) stays with the principal.

A broker may act as a transaction broker without agency; NC permits non-agency brokerage if the parties consent in writing.

Designated agency: the firm represents both sides but different licensees represent each party; the firm is a dual agent but individual agents advocate for their own client.

Compensation may be paid by either party or both; NC allows buyer-agent compensation from seller or listing broker if disclosed and agreed.

NC Real Estate Commission licenses brokers; provisional broker status requires a supervising broker and postlicensing education within set deadlines.

Prelicensing: 75 hours; then pass the NC exam; postlicensing: three 30-hour courses within 18 months of licensure.

Continuing education: 8 hours per year, including the 4-hour Update course; license renewal by June 30 annually.

Trust accounts: earnest money and tenant security deposits must be deposited in a trust account and reconciled monthly; commingling is prohibited.

Advertising must include the firm name as licensed; team names must be registered; unlicensed assistants may not perform activities requiring a license.

Commission rules: no net listings; no undisclosed dual compensation; referral fees to unlicensed persons are prohibited.

Disciplinary actions: reprimand, suspension, revocation, and civil penalties; the Commission may also require education.

Licensees may not give legal advice, prepare deeds, or draft contract provisions beyond standard forms.

NC Residential Rental Agreements Act governs residential leases; it implies warranty of habitability and requires the landlord to maintain fit premises.

Security deposits: landlord must return within 30 days of termination (or 60 days if stated in lease) with an itemized statement; no deposit may exceed two weeks' rent for week-to-week or 1.5 months' rent for month-to-month tenancies.

Lease types: gross (landlord pays expenses), net (tenant pays taxes, insurance, maintenance), percentage (retail), and ground lease.

Holdover tenant: landlord may treat as trespasser or renew tenancy; in NC a month-to-month tenancy requires 7 days' notice to terminate.

Eviction (summary ejectment) requires court action; self-help eviction by changing locks or removing property is prohibited.

Property management agreement should state the manager's authority, fees, accounting, and maintenance limits.

Rent and expense analysis: effective gross income = potential gross income − vacancy − collection losses; NOI = EGI − operating expenses.

Landlord duties include smoke detector and carbon monoxide alarm requirements and disclosure of the manager's identity and address.