NC Real Estate License Law and Commission Rules

North Carolina Real Estate License

Law and Commission Rules

(Also including the License Law and Rules Comments)

Published by the North Carolina

Real Estate Commission

July 2023

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North Carolina Real Estate License Law and Commission Rules

North Carolina Real Estate License Law

and Commission Rules

CONTENTS

North Carolina Real Estate License Law...................................... 4

Real Estate Commission Rules...................................................50

License Law and Rules Comments..............................................102

Published by the

North Carolina Real Estate Commission

1313 Navaho Drive, P. O. Box 17100

Raleigh, North Carolina 27619

919/875-3700

1,000 copies of this public document were printed at a cost of $6.73 per copy

2001, 2000, 1998, 1997, 1996, 1995, 1994, 1993, 1992, 1991, 1990, 1989, 1988, 1987, 1986, 1985, 1984, 1983

North Carolina Real Estate License Law and Commission Rules

NORTH CAROLINA REAL ESTATE LICENSE LAW

Codied as Chapter 93A of the General Statutes of North Carolina

Article 1.

Real Estate Brokers.

Section

93A-1 License required of real estate brokers.

93A-2 Denitions and exceptions.

93A-3 Commission created; compensation; organi-

za tion.

93A-4 Applications for licenses; fees; qualications;

examina tions; privilege licenses; re new al or

reinstate ment of license; power to en force

provisions.

93A-4.1 [Repealed]

93A-4.2 Broker-in-charge qualication.

93A-4.3 Elimination of salesperson license; conver-

sion of salesperson license to broker licenses.

93A-5 Register of applicants and roster of brokers.

93A-6 Disciplinary action by Commission.

93A-6.1 Commission may subpoena witnesses, re-

cords, documents, or other materials.

93A-7 Power of courts to revoke.

93A-8 Penalty for violation of Chapter.

93A-9 Licensing foreign brokers.

93A-10 Nonresident licensees; ling of consent as to

service of process and pleadings.

93A-11 Reimbursement by real estate independent

contractor of brokers’ workers’ compensation.

93A-12 Disputed monies.

93A-13 Contracts for broker services.

93A-14 to

93A-15

[Reserved.]

Article 2.

Real Estate Education and Recovery Fund.

Section

93A-16 Real Estate Education and Recovery Fund

created; payment to fund; management.

93A-17 Grounds for payment; notice and application

to Commission.

93A-18 Hearing; required showing.

93A-19 Response and defense by Commission and

judgment debtor; proof of conversion.

93A-20 Order directing payment out of fund; com-

promise of claims.

93A-21 Limitations; pro rata distribution; attorney

fees.

93A-22 Repayment to fund; automatic suspension of

license.

93A-23 Subrogation of rights.

93A-24 Waiver of rights.

93A-25 Persons ineligible to recover from fund.

93A-26 Disciplinary action against licensee.

93A-27 to

93A-31

[Reserved]

Article 3.

Private Real Estate Education Providers

and Continuing Education Requirements.

Section

93A-32 Denitions.

93A-33 Commission to administer Article.

93A-34 Certication required; application for certi-

cation; fees; requirements for certication.

93A-35 Duration and renewal of certications;

transfer of school ownership.

93A-36 Execution of bond required; applicability to

branch schools; actions upon bond.

93A-37 [Repealed]

93A-38 Suspension, revocation or denial of certi-

cation.

93A-38.5 Continuing education.

Article 4.

Timeshares.

Section

93A-39 Title.

93A-40 Registration required of timeshare programs;

real estate license required.

93A-41 Denitions.

93A-42 Timeshare estates deemed real estate; time-

share usese.

93A-42.1 Construction and validity of declarations

adopted prior to the Timeshare Act.

93A-43 Partition.

93A-44 Contract of sale; public oering statement.

93A-45 Purchaser’s right to cancel; escrow; viola tion.

93A-46 Prizes.

93A-47 Timeshare proxies.

93A-48 Exchange programs.

93A-49 Service of process on exchange company.

93A-50 Securities laws apply.

93A-51 Rule-making authority.

Please note: Certain “gender neutral” terms used in the Real Estate License Law as reprinted in

this booklet are subject to nal revision by the Revisor of Statutes.

North Carolina Real Estate License Law and Commission Rules

93A-52 Application for registration of timeshare pro-

gram; denial of registration; renewal; rein-

statement; and termina tion of developer’s in-

terest.

93A-53 Register of applicants; roster of registrants;

nancial report to Secre tary of State.

93A-54 Disciplinary action by Commission.

93A-55 Private enforcement.

93A-56 Penalty for violation of Article.

93A-57 Release of liens or subordination and notice

to creditors instrument.

93A-58 Registrar required; criminal penalties;

program broker.

93A-59 Preservation of an owner’s claims and

defenses.

93A-60 Substantial compliance.

93A-61 Management.

93A-62 Delinquent assessments; developer guaran-

tee.

93A-63 Reservation systems.

93A-64 Multisite timeshare program additions, sub-

stitutions, and deletions.

93A-65 Resale purchase contracts; prohibition

against advanced listing fee.

93A-66 Record keeping by resale service providers,

transfer service providers, and lead dealers.

93A-67 Resale service providers.

93A-68 Timeshare transfer services.

93A-69 Timeshare program extensions.

93A-69.1 Timeshare program terminations.

Article 5.

Real Estate Appraisers.

[Repealed]

Article 6.

Broker Price Opinions

and Comparative Market Analyses.

93A-82 Denitions

93A-83 Broker price opinions and comparative

market analyses for a fee.

North Carolina Real Estate License Law and Commission Rules

ARTICLE 1.

REAL ESTATE BROKERS.

§ 93A‑1. License required of real estate brokers.

From and after July 1, 1957, it shall be unlawful for any per-

son, partnership, corporation, limited liability company, as-

sociation, or other business entity in this State to act as a real

estate broker, or directly or indirectly to engage or assume

to engage in the business of real estate broker or to adver-

tise or hold himself or herself or themselves out as engaging

in or conducting such business without rst obtaining a li-

cense issued by the North Carolina Real Estate Commission

(hereinafter referred to as the Commission), under the pro-

visions of this Chapter. A license shall be obtained from the

Commission even if the person, partnership, corporation,

limited liability company, association, or business entity is

licensed in another state and is aliated or otherwise associ-

ated with a licensed real estate broker in this State.

§ 93A‑2. Denitions and exceptions.

(a)

A real estate broker within the meaning of this Chapter

is any person, partnership, corporation, limited liabil-

ity company, association, or other business entity who

for a compensation or valuable consideration or prom-

ise thereof lists or oers to list, sells or oers to sell, buys

or oers to buy, auctions or oers to auction (specical-

ly not including a mere crier of sales), or negotiates the

purchase or sale or exchange of real estate, or who leas-

es or oers to lease, or who sells or oers to sell leases of

whatever character, or rents or oers to rent any real es-

tate or the improvement thereon, for others.

(a1) e term broker-in-charge within the meaning of this

Chapter means a real estate broker who has been des-

ignated as the broker having responsibility for the su-

pervision of brokers on provisional status engaged in

real estate brokerage at a particular real estate oce and

for other administrative and supervisory duties as the

Commission shall prescribe by rule.

(a2) e term provisional broker within the meaning of this

Chapter means a real estate broker who, pending ac-

quisition and documentation to the Commission of

the education or experience prescribed by either G.S.

93A-4(a1) or G.S. 93A-4.3, must be supervised by a

broker-in-charge when performing any act for which a

real estate license is required.

(b) e term real estate salesperson within the meaning of

this Chapter shall mean and include any person who

was formerly licensed by the Commission as a real es-

tate salesperson before April 1, 2006.

(c)

e provisions of G.S. 93A-1 and G.S. 93A-2 do not

apply to and do not include:

(1) Any partnership, corporation, limited liability com-

pany, association, or other business entity that, as

owner or lessor, shall perform any of the acts afore-

said with reference to property owned or leased by

them, where the acts are performed in the regular

course of or as incident to the management of that

property and the investment therein. e exemp-

tion from licensure under this subsection shall ex-

tend to the following persons when those persons

are engaged in acts or services for which the corpora-

tion, partnership, limited liability company, or other

business entity would be exempt hereunder:

a. e ocers and employees whose income is re-

ported on IRS Form W-2 of an exempt cor-

poration.

b. e general partners and employees whose in-

come is reported on IRS Form W-2 of an ex-

empt partnership.

c. e managers, member-managers, and em-

ployees whose income is reported on IRS

Form W-2 of an exempt limited liability

company.

d. e natural person owners of an exempt closely

held business entity. For purposes of this subdi-

vision, a closely held business entity is a limited

liability company or a corporation, neither hav-

ing more than two legal owners, at least one of

whom is a natural person.

e. e ocers, managers, member-managers,

and employees whose income is reported on

IRS Form W-2 of a closely held business en-

tity when acting as an agent for an exempt

business entity if the closely held business en-

tity is owned by a natural person either (i)

owning fty percent (50%) or more owner-

ship interest in the closely held business enti-

ty and the exempt business entity or (ii) own-

ing fty percent (50%) or more of a closely

held business entity that owns a fty percent

(50%) or more ownership interest in the ex-

empt business entity. e closely held busi-

ness entity acting as an agent under this sub-

subdivision must le an annual written no-

tice with the Secretary of State, including

its legal name and physical address. e ex-

emption authorized by this sub-subdivision

is only eective if, immediately following the

completion of the transaction for which the

exemption is claimed, the closely held busi-

ness entity has a net worth that equals or ex-

ceeds the value of the transaction.

Real Estate License Law

[Codied as Chapter 93A of the General Statutes of North Carolina]

North Carolina Real Estate License Law and Commission Rules

When a person conducts a real estate transaction

pursuant to an exemption under this subdivision, the per-

son shall disclose, in writing, to all parties to the transaction

(i) that the person is not licensed as a real estate broker or

sales person under Article 1 of this Chapter, (ii) the specic

exemption under this subdivision that applies, and (iii) the

legal name and physical address of the owner of the subject

property and of the closely held business entity acting un-

der sub-subdivision e. of this subdivision, if applicable. is

disclosure may be included on the face of a lease or contract

executed in compliance with an exemption under this sub-

division.

(2)

Any person acting as an attorney-in-fact under a duly

executed power of attorney from the owner autho-

rizing the nal consummation of performance of

any contract for the sale, lease or exchange of real

estate.

(3) Acts or services performed by an attorney who is an

active member of the North Carolina State Bar if the

acts and services constitute the practice of law under

Chapter 84 of the General Statute

(4)

Any person, while acting as a receiver, trustee in

bankruptcy, guardian, administrator or executor or

any person acting under order of any court.

(5) Any person, while acting as a trustee under a written

trust agreement, deed of trust or will, or that per-

son’s regular salaried employees. e trust agree-

ment, deed of trust, or will must specically identify

the trustee, the beneciary, the corpus of trust, and

the trustee’s authority over the corpus.

(6) Any salaried person employed by a licensed real es-

tate broker, for and on behalf of the owner of any

real estate or the improvements thereon, which the

licensed broker has contracted to manage for the

owner, if the salaried employee’s employment is lim-

ited to: exhibiting units on the real estate to prospec-

tive tenants; providing the prospective tenants with

information about the lease of the units; accepting

applications for lease of the units; completing and

executing preprinted form leases; and accepting se-

curity deposits and rental payments for the units

only when the deposits and rental payments are

made payable to the owner or the broker employed

by the owner. e salaried employee shall not nego-

tiate the amount of security deposits or rental pay-

ments and shall not negotiate leases or any rental

agreements on behalf of the owner or broker. How-

ever, in a vacation rental transaction as dened by

G.S.42A-4(6), the employee may oer a prospective

tenant a rental price and term from a schedule set-

ting forth prices and terms and the conditions and

limitations under which they may be oered. e

schedule shall be written and provided by the em-

ployee’s employing broker with the written author-

ity of the landlord.

(7) Any individual owner who personally leases or sells

the owner’s own property.

(8)

Any housing authority organized in accordance with

the provisions of Chapter 157 of the General Stat-

utes and any regular salaried employees of the hous-

ing authority when performing acts authorized in

this Chapter with regard to the sale or lease of prop-

erty owned by the housing authority or the sublet-

ting of property which the housing authority holds

as tenant. is exception shall not apply to any per-

son, partnership, corporation, limited liability com-

pany, association, or other business entity that con-

tracts with a housing authority to sell or manage

property owned or

leased by the housing authority.

§ 93A‑3. Commission created; compensation;

organization.

(a)

ere is hereby created the North Carolina Real Es-

tate Commission, hereinafter called the Commission.

e Commission shall consist of nine members, sev-

en members to be appointed by the Governor, one

member to be appointed by the General Assembly

upon the recommendation of the President Pro Tem-

pore of the Senate in accordance with G.S. 120-121,

and one member to be appointed by the General As-

sembly upon the recommendation of the Speaker of

the House of Representatives in accordance with G.S.

120-121. At least three members of the Commission

shall be licensed real estate brokers. At least two mem-

bers of the Commission shall be persons who are not

involved directly or indirectly in the real estate or real

estate appraisal business. Members of the Commission

shall serve three-year terms, so staggered that the terms

of three members expire in one year, the terms of three

members expire in the next year, and the terms of three

members expire in the third year of each three-year pe-

riod. e members of the Commission shall elect one

of their members to serve as chairman of the Commis-

sion for a term of one year. e Governor may re-

move any member of the Commission for misconduct,

incompetency, or willful neglect of duty. e Gover-

nor shall have the power to ll all vacancies occurring

on the Commission, except vacancies in legislative ap-

pointments shall be lled under G.S. 120-122.

(b)

e provisions of G.S. 93B-5 notwithstanding, members

of the Commission shall receive as compensation for each

day spent on work for the Commission

a per diem in

an amount established by the Commission by rule, and

mileage reimbursement for transportation by private-

ly owned automobile at the business standard mileage

rate set by the Internal Revenue Service per mile of trav-

el along with actual cost of tolls paid.

e total expense

of the administration of this Chapter shall not exceed the

total income therefrom; and none of the expenses of said

Commission or the compensation or expenses of any of-

North Carolina Real Estate License Law and Commission Rules

ce thereof or any employee shall ever be paid or pay-

able out of the treasury of the State of North Carolina;

and neither the Commission nor any ocer or employee

thereof shall have any power or authority to make or in-

cur any expense, debt or other nancial obligation bind-

ing upon the State of North Carolina. After all expenses

of operation, the Commission may set aside an expense

reserve each year.

e Commission may deposit moneys

in accounts, certicates of deposit, or time deposits as the

Commission may approve, in any bank, savings and loan

association, or trust company. Moneys also may be in-

vested in the same classes of securities referenced in G.S.

159-30(c).

bylaws, rules and regulations that are not inconsistent

with the provisions of this Chapter and the General

Statutes; provided, however, the Commission shall not

make rules or regulations regulating commissions, sala-

ries, or fees to be charged by licensees under this Chap-

ter.

(c1) e provisions of G.S. 93A-1 and G.S. 93A-2 notwith-

standing, the Commission may adopt rules to permit a

real estate broker to pay a fee or other valuable consider-

ation to a travel agent for the introduction or procure-

ment of tenants or potential tenants in vacation rent-

als as dened in G.S. 42A-4. Rules adopted pursuant

to this subsection may include a denition of the term

“travel agent”, may regulate the conduct of permitted

transactions, and may limit the amount of the fee or the

value of the consideration that may be paid to the trav-

el agent. However, the Commission may not authorize

a person or entity not licensed as a broker to negotiate

any real estate transaction on behalf of another.

(c2) e Commission shall adopt a seal for its use, which

shall bear thereon the words “North Carolina Real Es-

tate Commission.” Copies of all records and papers

in the oce of the Commission duly certied and au-

thenticated by the seal of the Commission shall be re-

ceived in evidence in all courts and with like eect as

the originals.

(d) e Commission may employ an Executive Director

and professional and clerical sta as may be necessary

to carry out the provisions of this Chapter and to put

into eect the rules and regulations that the Commis-

sion may promulgate. e Commission shall x salaries

and shall require employees to make good and sucient

surety bond for the faithful performance of their duties.

e Commission shall reimburse its employees for trav-

el on ocial business. Mileage expenses for transporta-

tion by privately owned automobile shall be reimbursed

at the business standard mileage set by the Internal Rev-

enue Service per mile of travel along with the actual tolls

paid. Other travel expenses shall be reimbursed in ac-

cordance with G.S. 138-6. e Commission may, when

it deems it necessary or convenient, delegate to the Ex-

ecutive Director, legal counsel for the Commission, or

other Commission sta, professional or clerical, the

Commission’s authority and duties under this Chapter,

but the Commission may not delegate its authority to

make rules or its duty to act as a hearing panel in accor-

dance with the provisions of G.S. 150B-40(b).

(e) e Commission shall be entitled to the services of

the Attorney General of North Carolina, in connec-

tion with the aairs of the Commission, and may, with

the approval of the Attorney General, employ attor-

neys to represent the Commission or assist it in the en-

forcement of this Chapter. e Commission may pre-

fer a complaint for violation of this Chapter before any

court of competent jurisdiction, and it may take the

necessary legal steps through the proper legal oces of

the State to enforce the provisions of this Chapter and

collect the penalties provided therein.

(f) e Commission is authorized to acquire, hold, con-

vey, rent, encumber, alienate, and otherwise deal with

real property in the same manner as a private person

or corporation, subject only to the approval of the

Governor and Council of State. e rents, proceeds,

and other revenues and benets of the ownership of

real property shall inure to the Commission. Collat-

eral pledged by the Commission for any encumbrance

of real property shall be limited to the assets, income,

and revenues of the Commission. Leases, deeds, and

other instruments relating to the Commission’s inter-

est in real property shall be valid when executed by the

executive director of the Commission. e Commis-

sion may create and conduct education and informa-

tion programs relating to the real estate business for

the information, education, guidance and protection

of the general public, licensees, and applicants for li-

cense. e education and information programs may

include preparation, printing and distribution of pub-

lications and articles and the conduct of conferences,

seminars, and lectures. e Commission may claim

the copyright to written materials it creates and may

charge fees for publications and programs.

§ 93A‑4. Applications for licenses; fees; qualications;

examinations; privilege licenses; renewal or

reinstatement of license; power to enforce

provisions.

(a)Any person, partnership, corporation, limited liabili-

ty company, association, or other business entity here-

after desiring to enter into business of and obtain a li-

cense as a real estate broker shall make written appli-

cation for such license to the Commission in the form

and manner prescribed by the Commission. Each ap-

plicant for a license as a real estate broker shall be at

least 18 years of age. Each applicant for a license as

a real estate broker shall, within three years preced-

ing the date the application is made, have satisfactorily

North Carolina Real Estate License Law and Commission Rules

completed, through a real estate education provid-

er certied by the Commission, an education program

consisting of at least 75 hours of instruction in sub-

jects determined by the Commission, or shall possess

real estate education or experience in real estate trans-

actions which the Commission shall nd equivalent to

the education program. Each applicant for a license as

a real estate broker shall be required to pay a fee. e

application fee shall be one hundred dollars ($100.00)

unless the Commission sets the fee at a higher amount

by rule; however, the Commission shall not set a fee

that exceeds one hundred twenty dollars ($120.00).

e application fee shall not increase by more than ve

dollars ($5.00) during a 12-month period.

(a1) Each person who is issued a real estate broker license

on or after April 1, 2006, shall initially be classied as

a provisional broker and shall, within 18 months fol-

lowing initial licensure, satisfactorily complete, through

a real estate education provider certied by the Com-

mission, a postlicensing education program consisting

of 90 hours of instruction in subjects determined by the

Commission or shall possess real estate education or ex-

perience in real estate transactions which the Commis-

sion shall nd equivalent to the education program. e

Commission may, by rule, establish a schedule for com-

pletion of the prescribed postlicensing education that re-

quires provisional brokers to complete portions of the

90-hour postlicensing education program in less than

18 months, and provisional brokers must comply with

this schedule in order to be entitled to actively engage

in real estate brokerage. Upon completion of the postli-

censing education program, the provisional status of the

broker’s license shall be terminated. When a provisional

broker fails to complete all 90 hours of required postli-

censing education within 18 months following initial li-

censure, the broker’s license shall be placed on inactive

status. e broker’s license shall not be returned to active

status until he or she has satised such requirements as

the Commission may by rule require. Every license can-

celled after April 1, 2009, because the licensee failed to

complete postlicensing education shall be reinstated on

inactive status until such time as the licensee satises the

requirements for returning to active status as the Com-

mission may by rule require.

(a2) A certied real estate education provider shall pay a fee

of ten dollars ($10.00) per licensee to the Commission

for each licensee completing a postlicensing education

course conducted by the school, provided that these fees

shall not be charged to a community college, junior col-

lege, college, or university located in this State and ac-

credited by the Southern Association of Colleges and

Schools.

(b) Except as otherwise provided in this Chapter, any per-

son who submits an application to the Commission in

proper manner for a license as real estate broker shall

be required to take an examination. e examination

may be administered orally, by computer, or by any

other method the Commission deems appropriate. e

Commission

may require the applicant to pay the Com-

mission or a provider contracted by the Commission the

actual cost of

the examination and its administration.

e cost of the

examination and its administration

shall

be in addition to any other fees the applicant is required

to pay under subsection (a) of this section. e exam-

ination shall determine the applicant’s qualications

with due regard to the paramount interests of the pub-

lic as to the applicant’s competency. A person who fails

the license examination shall be entitled to know the re-

sult and score. A person who passes the exam shall be

notied only that the person passed the examination.

Whether a person passed or failed the examination shall

be a matter of public record; however, the scores for li-

cense examinations shall not be considered public re-

cords. Nothing in this subsection shall limit the rights

granted to any person under G.S. 93B-8.

An applicant for licensure under this Chapter shall sat-

isfy the Commission that he or she possesses the com-

petency, honesty, truthfulness, integrity, good mor-

al character, and general tness, including mental and

emotional tness, necessary to protect the public in-

terest and promote public condence in the real estate

brokerage business.

e Commission may investigate

the moral character and tness, including the mental

and emotional tness, of each applicant for licensure

the applicant’s character and tness may generally relate

to the real estate brokerage business, the public inter-

est, and the public’s condence in the real estate broker-

age business. e Commission may also

require an ap-

plicant to provide the Commission with a criminal re-

cord report. All applicants shall obtain criminal record

reports from one or more reporting services designated

by the Commission to provide criminal record reports.

Applicants are required to pay the designated reporting

service for the cost of these reports. Criminal record re-

ports, credit reports, and reports relating to an appli-

cant’s mental and emotional tness obtained in con-

nection with the application process shall not be con-

sidered public records under Chapter 132 of the Gen-

eral Statutes.

If the results of any required competency

examination and investigation of the applicant’s moral

character and tness shall be satisfactory to the Com-

mission, then the Commission shall issue to the appli-

cant a license, authorizing the applicant to act as a real

estate broker in the State of North Carolina, upon the

payment of any privilege taxes required by law.

Notwithstanding G.S. 150B-38(c), in a contested case

commenced upon the request of a party applying for

licensure regarding the question of the moral charac-

ter or tness of the applicant, if notice has been reason-

ably attempted, but cannot be given to the applicant

North Carolina Real Estate License Law and Commission Rules

personally or by certied mail in accordance with G.S.

150B-38(c), the notice of hearing shall be deemed giv-

en to the applicant when a copy of the notice is depos-

ited in an ocial depository of the United States Postal

Service addressed to the applicant at the latest mailing

address provided by the applicant to the Commission

or by any other means reasonably designed to achieve

actual notice to the applicant.

(b1) e Department of Public Safety may provide a crimi-

nal record check to the Commission for a person who

has applied for a license through the Commission. e

Commission shall provide to the Department of Pub-

lic Safety, along with the request, the ngerprints of the

applicant, any additional information required by the

Department of Public Safety, and a form signed by the

applicant consenting to the check of the criminal record

and to the use of the ngerprints and other identifying

information required by the State or national reposi-

tories. e applicant’s ngerprints shall be forwarded

to the State Bureau of Investigation for a search of the

State’s criminal history record le, and the State Bureau

of Investigation shall forward a set of the ngerprints to

the Federal Bureau of Investigation for a national crimi-

nal history check. e Commission shall keep all infor-

mation pursuant to this subsection privileged, in accor-

dance with applicable State law and federal guidelines,

and the information shall be condential and shall not

be a public record under Chapter 132 of the General

Statutes.

e Department of Public Safety may charge each appli-

cant a fee for conducting the checks of criminal history

records authorized by this subsection.

(b2) Records, papers, and other documentation contain-

ing personal information collected or compiled by the

Commission in connection with an application for ex-

amination, licensure, certication, or renewal or re-

instatement, or the subsequent update of informa-

tion shall not be considered public records within the

meaning of Chapter 132 of the General Statutes unless

admitted into evidence in a hearing held by the Com-

mission.

(c)All licenses issued by the Commission under the pro-

visions of this Chapter shall expire on the 30th day of

June following issuance or on any other date that the

Commission may determine and shall become invalid

after that date unless reinstated. A license may be re-

newed 45 days prior to the expiration date by ling

an application with and paying to the Executive Di-

rector of the Commission the license renewal fee. e

license renewal fee shall be forty-ve dollars ($45.00)

unless the Commission sets the fee at a higher amount

by rule; however the Commission shall not set the li-

cense renewal fee at an amount that exceeds sixty dol-

lars ($60.00). e license renewal fee may not increase

by more than ve dollars ($5.00) during a 12-month

period. e Commission may adopt rules establishing

a system of license renewal in which the licenses expire

annually with varying expiration dates. ese rules shall

provide for prorating the annual fee to cover the initial

renewal period so that no licensee shall be charged an

amount greater than the annual fee for any 12-month

period. e fee for reinstatement of an expired, re-

voked, or suspended license shall be an amount equal

to two times the license renewal fee at the time the ap-

plication for reinstatement is submitted. In the event a

licensee fails to obtain a reinstatement of such license

within six months after the expiration date thereof, the

Commission may, in its discretion, consider such per-

son as not having been previously licensed, and thereby

subject to the provisions of this Chapter relating to the

issuance of an original license, including the examina-

tion requirements set forth herein. Duplicate licenses

may be issued by the Commission upon payment of a

fee of ve dollars ($5.00) by the licensee. Commission

certication of a licensee’s license history shall be made

only after the payment of a fee of ten dollars ($10.00).

(d) e Commission is expressly vested with the power

and authority to make and enforce any and all reason-

able rules and regulations connected with license ap-

plication, examination, renewal, and reinstatement as

shall be deemed necessary to administer and enforce

the provisions of this Chapter. e Commission is fur-

ther authorized to adopt reasonable rules and regula-

tions necessary for the certication of real estate edu-

cation providers, instructors, and textbooks and rules

that prescribe specic requirements pertaining to in-

struction, administration, and content of required ed-

ucation courses and programs.

(e)

Nothing contained in this Chapter shall be construed

as giving any authority to the Commission nor any li-

censee of the Commission as authorizing any licens-

ee to engage in the practice of law or to render any le-

gal service as specically set out in G.S. 84-2.1 or any

other legal service not specically referred to in said

section.

§ 93A‑4.1. is repealed.

§ 93A‑4.2. Broker‑in‑charge qualication.

To be qualied to serve as a broker-in-charge of a real estate

oce, a real estate broker shall possess at least two years of

full-time real estate brokerage experience or equivalent part-

time real estate brokerage experience within the previous

ve years or real estate education or experience in real estate

transactions that the Commission nds equivalent to such

experience and shall complete, within a time prescribed by

the Commission, an education program prescribed by the

Commission for brokers-in-charge not to exceed 12 hours

of instruction. A provisional broker may not be designated

as a broker-in-charge.

North Carolina Real Estate License Law and Commission Rules

§ 93A‑4.3. Elimination of salesperson license;

conversion of salesperson licenses to broker

licenses.

(a) Eective April 1, 2006, the Commission shall discon-

tinue issuing real estate salesperson licenses. Also eec-

tive April 1, 2006, all salesperson licenses shall become

broker licenses, and each person holding a broker li-

cense that was changed from salesperson to broker on

that date shall be classied as a provisional broker as

dened in G.S. 93A-2(a2).

(b) A provisional broker as contemplated in subsection (a)

of this section who was issued a salesperson license prior

to October 1, 2005, shall, not later than April 1, 2008,

complete a broker transition course prescribed by the

Commission, not to exceed 24 classroom hours of in-

struction, or shall demonstrate to the Commission that

he or she possesses four years’ full-time real estate broker-

age experience or equivalent part-time real estate broker-

age experience within the previous six years. If the provi-

sional broker satises this requirement by April 1, 2008,

the provisional status of his or her broker license will be

terminated, and the broker will not be required to com-

plete the 90-classroom-hour broker postlicensing educa-

tion program prescribed by G.S. 93A-4(a1). If the provi-

sional broker fails to satisfy this requirement by April 1,

2008, his or her license will be placed on inactive status,

if not already on inactive status, and he or she must com-

plete the 90-classroom-hour broker postlicensing educa-

tion program prescribed by G.S. 93A-4(a1) in order to

terminate the provisional status of the broker license and

to be eligible to return his or her license to active status.

lars ($10.00) per licensee to the Commission for each

licensee completing a broker transition course con-

ducted by the school or sponsor, provided that these

fees shall not be charged to a community college, ju-

nior college, college, or university located in this State

and accredited by the Southern Association of Colleg-

es and Schools.

(d) A provisional broker as contemplated in subsection (a)

of this section, who was issued a salesperson license be-

tween October 1, 2005, and March 31, 2006, shall,

not later than April 1, 2009, satisfy the requirements of

G.S. 93A-4(a1). Upon satisfaction of the requirements

of G.S. 93A-4(a1), the provisional status of the bro-

ker’s license will be terminated. If the provisional bro-

ker fails to satisfy the requirements of G.S. 93A-4(a1)

by April 1, 2009, the broker’s license shall be cancelled,

and the person will be subject to the requirements for

licensure reinstatement prescribed by G.S. 93A-4(a1).

(e)

A broker who was issued a broker license prior to April

1, 2006, shall not be required to complete either the

90-classroom-hour broker postlicensing education pro-

gram prescribed by G.S. 93A-4(a1) or the broker transi-

tion course prescribed by subsection (b) of this section.

(f)

For the purpose of determining a licensee’s status, rights,

and obligations under this section, the Commission

may treat a person who is issued a license on or af-

ter the October 1, 2005, or April 1, 2006, dates cit-

ed in subsections (a), (b), (d), or (e) of this section as

though the person had been issued a license prior to

those dates if the only reason the person’s license was

not issued prior to those dates was that the person’s ap-

plication was pending a determination by the Commis-

sion as to whether the applicant possessed the requi-

site moral character for licensure. If a license applica-

tion is pending on April 1, 2006, for any reason other

than a determination by the Commission as to the ap-

plicant’s moral character for licensure, and if the appli-

cant has not satised all education and examination re-

quirements for licensing in eect on April 1, 2006, the

applicant’s application shall be cancelled and the appli-

cation fee refunded.

(g) No applications for a real estate salesperson license shall

be accepted by the Commission between September 1,

2005, and September 30, 2005.

§ 93A‑5. Register of applicants and roster of brokers.

(a) e Executive Director of the Commission shall keep a

the date of application, name, place of residence, and

whether the license was granted or refused. Said regis-

ter shall be prima facie evidence of all matters record-

ed therein.

(b)

e Executive Director of the Commission shall also

keep a current roster showing the names and places of

business of all licensed real estate brokers, which roster

shall be kept on le in the oce of the Commission and

be open to public inspection.

by G.S. 93B-2.

§ 93A‑6. Disciplinary action by Commission.

(a)

e Commission has power to take disciplinary action.

Upon its own initiative, or on the complaint of any per-

son, the Commission may investigate the actions of any

person or entity licensed under this Chapter, or any oth-

er person or entity who shall assume to act in such ca-

pacity. If the Commission nds probable cause that a li-

censee has violated any of the provisions of this Chapter,

the Commission may hold a hearing on the allegations

of misconduct.

e Commission has power to suspend or revoke at any

time a license issued under the provisions of this Chap-

ter, or to reprimand or censure any licensee, if, follow-

ing a hearing, the Commission adjudges the licensee to

be guilty of:

(1)

Making any willful or negligent misrepresentation

or any willful or negligent omission of material

fact.

North Carolina Real Estate License Law and Commission Rules

(2) Making any false promises of a character likely to

inuence, persuade, or induce.

(3) Pursuing a course of misrepresentation or mak-

ing of false promises through agents, advertising or

otherwise.

(4) Acting for more than one party in a transaction

without the knowledge of all parties for whom

or she acts.

(5)

Accepting a commission or valuable consider-

ation as a real estate broker on provisional status

for the performance of any of the acts specied

in this Article or Article 4 of this Chapter, from

any person except his or her broker-in-charge or

licensed broker by whom he or she is employed.

(6) Representing or attempting to represent a real es-

tate broker other than the broker by whom he or

she is engaged or associated, without the express

knowledge and consent of the broker with whom

he or she is associated.

(7) Failing, within a reasonable time, to account for

or to remit any monies coming into his or her

possession which belong to others.

(8)

Being unworthy or incompetent to act as a real

estate broker in a manner as to endanger the in-

terest of the public.

(9) Paying a commission or valuable consideration to

any person for acts or services performed in vio-

lation of this Chapter.

(10) Any other conduct which constitutes improper,

fraudulent or dishonest dealing.

(11) Performing or undertaking to perform any legal

service, as set forth in G.S. 84-2.1, or any other

acts constituting the practice of law.

(12)

Commingling the money or other property of

his or her principals with his or her own or fail-

ure to maintain and deposit in a trust or escrow

account in a bank as provided by subsection (g)

of this section all money received by him or her

as a real estate licensee acting in that capacity, or

an escrow agent, or the custodian or manager of

the funds of

another person or entity which re-

late to or concern that person’s or entity’s interest

or investment in real property,

provided, these ac-

counts shall not bear interest unless the principals

authorize in writing the deposit be made in an

interest bearing account and also provide for the

disbursement of the interest accrued.

(13)

Failing to deliver, within a reasonable time, a

completed copy of any purchase agreement or of-

fer to buy and sell real estate to the buyer and to

the seller.

(14)

Failing, at the time a sales transaction is con-

sum

mated, to deliver to the broker’s client a de-

tailed and accurate closing statement showing the

receipt and disbursement of all monies relating to

the transaction about which the broker knows or

reasonably should know. If a closing statement

is prepared by an attorney or lawful settlement

agent, a broker may rely on the delivery of that

statement, but the broker must review the state-

ment for accuracy and notify all parties to the

closing of any errors.

(15) Violating any rule adopted by the Commission.

(b) e Commission may suspend or revoke any license

issued under the provisions of this Chapter or repri-

mand or censure any licensee when:

(1) e licensee has obtained a license by false or fraud-

ulent representation;

(2) e licensee has been convicted or has entered a

plea of guilty or no contest upon which nal judg-

ment is entered by a court of competent jurisdic-

tion in this State, or any other state, of any mis-

demeanor or felony that involves false swearing,

misrepresentation, deceit, extortion, theft, brib-

ery, embezzlement, false pretenses, fraud, forg-

ery, larceny, misappropriation of funds or prop-

erty, perjury, or any other oense showing pro-

fessional untness or involving moral turpitude

which would reasonably aect the licensee’s per-

formance in the real estate business;

(3) e licensee has violated any of the provisions of

G.S. 93A-6(a) when selling, leasing, or buying the

licensee’s own property;

(4) e broker’s unlicensed employee, who is ex-

empt from the provisions of this Chapter under

G.S. 93A-2(c)(6), has committed, in the regu-

lar course of business, any act which, if commit-

ted by the broker, would constitute a violation of

G.S. 93A-6(a) for which the broker could be dis-

ciplined; or

(5) e licensee, who is also licensed as an appraiser,

attorney, home inspector, mortgage broker, gen-

eral contractor, or member of another licensed

profession or occupation, has been disciplined for

an oense under any law involving fraud, theft,

misrepresentation, breach of trust or duciary re-

sponsibility, or willful or negligent malpractice.

rior court in actions for injunctive relief to prevent any

person from violating the provisions of this Chapter or

rules adopted by the Commission. e superior court

shall have the power to grant these injunctions even if

criminal prosecution has been or may be instituted as

a result of the violations, or whether the person is a li-

censee of the Commission.

(d) Each broker shall maintain complete records showing

the deposit, maintenance, and withdrawal of money

or other property owned by the broker’s principals or

held in escrow or in trust for the broker’s principals.

e Commission may inspect these records periodical-

North Carolina Real Estate License Law and Commission Rules

ly, without prior notice and may also inspect these re-

cords whenever the Commission determines that they

are pertinent to an investigation of any specic com-

plaint against a licensee.

(e) When a person or entity licensed under this Chapter

is accused of any act, omission, or misconduct which

would subject the licensee to disciplinary action, the

licensee, with the consent and approval of the Com-

mission, may surrender the license and all the rights

and privileges pertaining to it for a period of time es-

tablished by the Commission. A person or entity who

surrenders a license shall not thereafter be eligible for

or submit any application for licensure as a real estate

broker during the period of license surrender.

(f) In any contested case in which the Commission takes

disciplinary action authorized by any provision of this

Chapter, the Commission may also impose reasonable

conditions, restrictions, and limitations upon the li-

cense, registration, or approval issued to the disciplined

person or entity. In any contested case concerning an

application for licensure, time share project registration,

or school, sponsor, instructor, or course approval, the

Commission may impose reasonable conditions, restric-

tions, and limitations on any license, registration, or ap-

proval it may issue as a part of its nal decision.

(g)A broker’s trust or escrow account shall be a demand de-

posit account in a federally insured depository institu-

tion lawfully doing business in this State which agrees to

make its records of the broker’s account available for in-

spection by the Commission’s representatives.

(h)e Executive Director shall transmit a certied copy of

all nal orders of the Commission suspending or revok-

ing licenses issued under this Chapter to the clerk of su-

perior court of the county in which the licensee main-

tains his or her principal place of business. e clerk

shall enter the order upon the judgment docket of the

county.

§ 93A‑6.1. Commission may subpoena witnesses,

records, documents, or other materials.

(a) e Commission, Executive Director, or other repre-

sentative designated by the Commission may issue a

subpoena for the appearance of witnesses deemed nec-

essary to testify concerning any matter to be heard be-

fore or investigated by the Commission. e Com-

mission may issue a subpoena ordering any person

in possession of records, documents, or other materi-

als, however maintained, that concern any matter to

be heard before or investigated by the Commission to

produce the records, documents, or other materials for

inspection or deliver the same into the custody of the

Commission’s authorized representatives.

Upon writ-

ten request, the Commission shall revoke a subpoena

if it nds that the evidence, the production of which

is required, does not relate to a matter in issue, or if

the subpoena does not describe with sucient par-

ticularity the evidence, the production of which is re-

quired, or if for any other reason in law the subpoena

is invalid. If any person shall fail to fully and prompt-

ly comply with a subpoena issued under this section,

the Commission may apply to any judge of the supe-

rior court resident in any county where the person to

whom the subpoena is issued maintains a residence or

place of business for an order compelling the person to

show cause why he or she should not be held in con-

tempt of the Commission and its processes. e court

shall have the power to impose punishment for acts

that would constitute direct or indirect contempt if the

acts occurred in an action pending in superior court.

(b)

e Commission shall be exempt from the require-

ments of Chapter 53B of the General Statutes with re-

gard to subpoenas issued to compel the production of

a licensee’s trust account records held by any nancial

institution. Notwithstanding the exemption, whenever

the Commission issues a subpoena under this subsec-

tion, the Commission shall send a copy to the licensee

at his or her address of record by regular mail.

§ 93A‑7. Power of courts to revoke.

Whenever any person, partnership, association or corpora-

tion claiming to have been injured or damaged by the gross

negligence, incompetency, fraud, dishonesty or misconduct

on the part of any licensee following the calling or engaging

in the business herein described and shall le suit upon such

claim against such licensee in any court of record in this State

and shall recover judgment thereon, such court may as part

of its judgment or decree in such case, if it deem it a proper

case in which so to do, order a written copy of the transcript

of record in said case to be forwarded by the clerk of court to

the chairman of the said Commission with a recommenda-

tion that the licensee’s certicate of license be revoked.

§ 93A‑8. Penalty for violation of Chapter.

Any person violating G.S. 93A-1 shall upon conviction

thereof be deemed guilty of a Class 1 misdemeanor.

§ 93A‑9. Licensing foreign brokers.

(a)

e Commission may issue a broker license to an appli-

cant licensed in a foreign jurisdiction who has satised

the requirements for licensure set out in G.S.93A-4 or

such other requirements as the Commission in its dis-

cretion may by rule require.

(b) e Commission may issue a limited broker’s license to

a person or an entity from another state or territory of

the United States without regard to whether that state

or territory oers similar licensing privileges to residents

in North Carolina if the person or entity satises all of

the following:

(1) Is of good moral character and licensed as a real es-

tate broker or salesperson in good standing in an-

North Carolina Real Estate License Law and Commission Rules

other state or territory of the United States.

(2) Only engages in business as a real estate broker in

North Carolina in transactions involving com-

mercial real estate and while the person or enti-

ty is aliated with a resident North Carolina real

estate broker.

(3) Complies with the laws of this State regulating real

estate brokers and rules adopted by the Commis-

sion.

e Commission may require an applicant for licen-

sure under this subsection to pay a fee not to exceed

three hundred dollars ($300.00). All licenses issued un-

der this subsection shall expire on June 30 of each year

following issuance or on a date that the Commission

deems appropriate unless the license is renewed pursu-

ant to the requirements of G.S. 93A-4. A person or en-

tity licensed under this subsection may be disciplined

by the Commission for violations of this Chapter as

provided in G.S. 93A-6 and G.S. 93A-54.

Any person or entity licensed under this subsection

shall be aliated with a resident North Carolina real es-

tate broker, and the resident North Carolina real estate

broker shall actively and personally supervise the licens-

ee in a manner that reasonably assures that the licens-

ee complies with the requirements of this Chapter and

rules adopted by the Commission. A person or entity li-

censed under this subsection shall not, however, be af-

liated with a resident North Carolina real estate provi-

sional broker. e Commission may exempt applicants

for licensure under this subsection from examination

and the other licensing requirements under G.S. 93A-

4. e Commission may adopt rules as it deems neces-

sary to give eect to this subsection, including rules es-

tablishing: (i) qualications for licensure; (ii) licensure

and renewal procedures; (iii) requirements for continu-

ing education; (iv) conduct of persons and entities li-

censed under this subsection and their aliated resi-

dent real estate brokers; (v) a denition of commercial

real estate; and (vi) any requirements or limitations on

aliation between resident real estate brokers and per-

sons or entities seeking licensure under this subsection.

§ 93A‑10. Nonresident licensees; ling of consent as to

service of process and pleadings.

Every nonresident applicant shall le an irrevocable consent

that suits and actions may be commenced against such ap-

plicant in any of the courts of record of this State, by the

service of any process or pleading authorized by the laws of

this State in any county in which the plainti may reside, by

serving the same on the Executive Director of the Commis-

sion, said consent stipulating and agreeing that such service

of such process or pleadings on said Executive Director shall

be taken and held in all courts to be valid and binding as if

due service had been made personally upon the applicant in

this State. is consent shall be duly acknowledged, and, if

made by a corporation, shall be executed by an ocer of the

corporation. e signature of the ocer on the consent to

service instrument shall be sucient to bind the corporation

and no further authentication is necessary. An application

from a corporation or other business entity shall be signed

by an ocer of the corporation or entity or by an individ-

ual designated by the Commission. In all cases where pro-

cess or pleadings shall be served, under the provisions of this

Chapter, upon the Executive Director of the Commission,

such process or pleadings shall be served in duplicate, one

of which shall be led in the oce of the Commission and

the other shall be forwarded immediately by the Executive

Director of the Commission, by registered mail, to the last

known business address of the nonresident licensee against

which such process or pleadings are directed.

§ 93A‑11. Reimbursement by real estate independent

contractor of brokers’ workers’ compensation.

(a) Notwithstanding the provisions of G.S. 97-21 or any

other provision of law, a real estate broker may include

in the governing contract with a real estate broker on

provisional status whose nonemployee status is recog-

nized pursuant to section 3508 of the United States In-

ternal Revenue Code, 26 U.S.C. § 3508, an agreement

for the broker on provisional status to reimburse the

broker for the cost of covering that broker on provision-

al status under the broker’s workers’ compensation cov-

erage of the broker’s business.

(b) Nothing in this section shall aect a requirement under

any other law to provide workers’ compensation cover-

age or in any manner exclude from coverage any person,

rm, or corporation otherwise subject to the provisions

of Article 1 of Chapter 97 of the General Statutes.

§ 93A‑12. Disputed monies.

(a) An escrow agent may deposit with the clerk of court in

accordance with this section monies, other than a resi-

dential security deposit, the ownership of which are in

dispute and that were received while the escrow agent

was acting in a duciary capacity.

(b) e disputed monies shall be deposited with the clerk

of court in the county in which the property for which

the disputed monies are being held is located. At the

time of depositing the disputed monies, the escrow

agent shall certify to the clerk of court that the persons

claiming ownership of the disputed monies have been

notied in accordance with subsection (c) of this sec-

tion that the disputed monies are to be deposited with

the clerk of court and that the persons may initiate a

special proceeding with the clerk of court to recover

the disputed monies.

ed monies required under subsection (b) of this section

shall be provided by delivering a copy of the notice to

the person or by mailing it to the person by rst-class

North Carolina Real Estate License Law and Commission Rules

mail, postpaid, properly addressed to the person at the

person’s last known address.

(d) An escrow agent shall not deposit disputed monies

with the clerk of court until 90 days following noti-

cation of the persons claiming ownership of the dis-

puted monies.

(e) Upon the ling of a special proceeding to recover the

disputed monies, the clerk shall determine the right-

ful ownership of the monies and distribute the disput-

ed monies accordingly. If no special proceeding is led

with the clerk of court within one year of the disputed

monies being deposited with the clerk of court, the dis-

puted monies shall be deemed unclaimed and shall be

delivered by the clerk of court to the State Treasurer in

accordance with the provisions of Article 4 of Chapter

116B of the General Statutes.

(f) As used in this section, “escrow agent” means any of

the following:

(1) A real estate broker licensed under this Chapter.

(2) An attorney licensed to practice law in this State.

(3) A title insurance company or title insurance agent

licensed to conduct business in this State.

§ 93A‑13. Contracts for broker services.

No action between a broker and the broker’s client for re-

covery under an agreement for broker services is valid unless

the contract is reduced to writing and signed by the party to

be charged or by some other person lawfully authorized by

the party to sign.

Sections 93A‑14 through 93A‑15: Reserved for future

codication purposes.

ARTICLE 2.

REAL ESTATE EDUCATION AND RECOVERY FUND.

§ 93A‑16. Real Estate Education and Recovery Fund

created; payment to fund; management.

(a) ere is hereby created a special fund to be known as

the “Real Estate Education and Recovery Fund” which

shall be set aside and maintained by the North Caro-

lina Real Estate Commission. e fund shall be used

in the manner provided under this Article for the pay-

ment of unsatised judgments where the aggrieved

person has suered a direct monetary loss by reason of

certain acts committed by any real estate broker. e

Commission may also expend money from the fund

to create books and other publications, courses, forms,

seminars, and other programs and materials to educate

licensees and the public in real estate subjects. Howev-

er, the Commission shall make no expenditures from

the fund for educational purposes if the expenditure

will reduce the balance of the fund to an amount less

than two hundred thousand dollars ($200,000).

(b) On September 1, 1979, the Commission shall transfer the

sum of one hundred thousand dollars ($100,000) from

its expense reserve fund to the Real Estate Education and

Recovery Fund. ereafter, the Commission may trans-

fer to the Real Estate Education and Recovery Fund ad-

ditional sums of money from whatever funds the Com-

mission may have, provided that, if on December 31 of

any year the amount remaining in the fund is less than

fty thousand dollars ($50,000), the Commission may

determine that each person or entity licensed under this

Chapter, when renewing a license, shall pay in addition

to the license renewal fee, a fee not to exceed ten dollars

($10.00) per broker as shall be determined by the Com-

mission for the purpose of replenishing the fund.

ies in the Real Estate Education and Recovery Fund

in the same manner as provided by law for the invest-

ment of funds by the clerk of superior court. e pro-

ceeds from such investments shall be deposited to the

credit of the fund.

(d) e Commission shall have the authority to adopt rules

and procedures not inconsistent with the provisions of

this Article, to provide for the orderly, fair and e-

cient administration and payment of monies held in

the Real Estate Education and Recovery Fund.

§ 93A‑17. Grounds for payment; notice and application

to Commission.

(a) An aggrieved person who has suered a direct mone-

tary loss by reason of the conversion of trust funds by

any licensed real estate broker shall be eligible to recov-

er, subject to the limitations of this Article, the amount

of trust funds converted and which is otherwise unre-

coverable provided that:

(1) e act or acts of conversion which form the ba-

sis of the claim for recovery occurred on or after

September 1, 1979;

(2) e aggrieved person has sued the real estate bro-

ker in a court of competent jurisdiction and has

led with the Commission written notice of such

lawsuit within 60 days after its commencement

unless the claim against the Real Estate Educa-

tion and Recovery Fund is for an amount less

than three thousand dollars ($3,000), excluding

attorneys’ fees, in which case the notice may be

led within 60 days after the termination of all ju-

dicial proceedings including appeals;

(3) e aggrieved person has obtained nal judgment

in a court of competent jurisdiction against the

real estate broker on grounds of conversion of

trust funds arising out of a trans

action which oc-

curred when such broker

was licensed and acting

in a capacity for which a license is required; and

(4)

Execution of the judgment has been attempted and

has been returned unsatised in whole or in part.

Upon the termination of all judicial proceedings includ-

North Carolina Real Estate License Law and Commission Rules

ing appeals, and for a period of one year thereafter, a

person eligible for recovery may le a veried applica-

tion with the Commission for payment out of the Real

Estate Education and Recovery Fund of the amount re-

maining unpaid upon the judgment which represents

the actual and direct loss sustained by reason of con-

version of trust funds. A copy of the judgment and re-

turn of execution shall be attached to the application

and led with the Commission.

(b) For the purposes of this Article, the term “trust funds”

shall include all earnest money deposits, down payments,

sales proceeds, tenant security deposits, undisbursed

rents and other such monies which belong to another

or others and are held by a real estate broker acting in

that capacity. Trust funds shall also include all time share

purchase monies which are required to be held in trust

by G.S. 93A-45(c) during the time they are, in fact, so

held. Trust funds shall not include, however, any funds

held by an independent escrow agent under G.S. 93A-42

or any funds which the court may nd to be subject to an

implied, constructive or resulting trust.

“broker” shall include only individual persons licensed

under this Chapter as brokers.

e terms “licensee” and

“broker”

shall not include a time share developer, time

share project, independent escrow agent, corporation

or other entity licensed under this Chapter.

§ 93A‑18. Hearing; required showing.

Upon application by an aggrieved person, the Commission

shall conduct a hearing and the aggrieved person shall be re-

quired to show that the aggrieved person:

(1) Is not a spouse of the judgment debtor or a person

representing such spouse;

(2) Is making application not more than one year after

termination of all judicial proceedings, including ap-

peals, in connection with the judgment;

(3) Has complied with all requirements of this Arti-

cle;

(4) Has obtained a judgment as described in G.S.

93A-17, stating the amount owing thereon at the

date of application;

(5) Has made all reasonable searches and inquiries to

ascertain whether the judgment debtor is possessed

of real or personal property or other assets liable to

be sold or applied in satisfaction of the judgment;

(6) After searching as described in subdivision (5)

of this section, has discovered no real or person-

al property or other assets liable to be sold or ap-

plied, or has discovered certain of them, describ-

ing them, but the amount so realized was insu-

cient to satisfy the judgment, stating the amount

realized and the balance remaining due on the

judgment after application of the amount real-

ized;

(7) Has diligently pursued the aggrieved person’s rem-

edies, which include attempting execution on the

judgment against all the judgment debtors, which

execution has been returned unsatised; and

(8) Knows of no assets of the judgment debtor and has

attempted collection from all other persons who

may be liable for the transaction for which the ag-

grieved person seeks payment from the Real Es-

tate Education and Recovery Fund if there be any

such other persons.

§ 93A‑19. Response and defense by Commis sion and

judgment debtor; proof of conversion.

(a) Whenever the Commission proceeds upon an applica-

tion as set forth in this Article, counsel for the Com-

mission may defend such action on behalf of the fund

and shall have recourse to all appropriate means of de-

fense, including the examination of witnesses. e

judgment debtor may defend such action on his or

her own behalf and shall have recourse to all appro-

priate means of defense, including the examination of

witnesses. Counsel for the Commission and the judg-

ment debtor may le responses to the application, set-

ting forth answers and defenses. Responses shall be

led with the Commission and copies shall be served

upon every party by the ling party. If at any time it

appears there are no triable issues of fact and the ap-

plication for payment from the fund is without mer-

it, the Commission shall dismiss the application. A

motion to dismiss may be supported by adavit of

any person or persons having knowledge of the facts

and may be made on the basis that the application or

the judgment referred to therein do not form a basis

for meritorious recovery within the purview of G.S.

93A-17, that the applicant has not complied with the

provisions of this Article, or that the liability of the

fund with regard to the particular licensee or transac-

tion has been exhausted; provided, however, notice of

the motion shall be given at least 10 days prior to the

time xed for hearing. If the applicant or judgment

debtor fails to appear at the hearing after receiving no-

tice of the hearing, the applicant or judgment debtor

waives the person’s rights unless the absence is excused

by the Commission.

(b) Whenever the judgment obtained by an applicant is by

default, stipulation, or consent, or whenever the action

against the licensee was defended by a trustee in bank-

ruptcy, the applicant, for purposes of this Article, shall

have the burden of proving the cause of action for con-

version of trust funds. Otherwise, the judgment shall

create a rebuttable presumption of the conversion of

trust funds. is presumption is a presumption aect-

ing the burden of producing evidence.

North Carolina Real Estate License Law and Commission Rules

§ 93A‑20. Order directing payment out of fund;

compromise of claims.

Applications for payment from the Real Estate Education

and Recovery Fund shall be heard and decided by a major-

ity of the members of the Commission. If, after a hearing,

the Commission nds the claim should be paid from the

fund, the Commission shall enter an order requiring pay-

ment from the fund of whatever sum the Commission shall

nd to be payable upon the claim in accordance with the

limitations contained in this Article.

Subject to Commission approval, a claim based upon the

application of an aggrieved person may be compromised;

however, the Commission shall not be bound in any way by

any compromise or stipulation of the judgment debtor. If a

claim appears to be otherwise meritorious, the Commission

may waive procedural defects in the application for payment.

§ 93A‑21. Limitations; pro rata distribution; attorney

fees.

(a) Payments from the Real Estate Education and Recov-

ery Fund shall be subject to the following limitations:

(1) e right to recovery under this Article shall be for-

ever barred unless application is made within one

year after termination of all proceedings including

appeals, in connection with the judgment.

(2) e fund shall not be liable for more than fty

thousand dollars ($50,000) per transaction re-

gardless of the number of persons aggrieved or

parcels of real estate involved in such transaction.

(3) Payment from the fund shall not exceed in the ag-

gregate twenty-ve thousand dollars ($25,000) for

any one licensee within a single calendar year, and

in no event shall it exceed in the aggregate seven-

ty-ve thousand dollars ($75,000) for any one li-

censee.

(4) e fund shall not be liable for payment of any

judgment awards of consequential damages, mul-

tiple or punitive damages, civil penalties, inciden-

tal damages, special damages, interest, costs of

court or action or other similar awards.

(b)

If the maximum liability of the fund is insucient to

pay in full the valid claims of all aggrieved persons whose

claims relate to the same transaction or to the same li-

censee, the amount for which the fund is liable shall be

distributed among the claimants in a ratio that their re-

spective claims bear to the total of such valid claims or in

such manner as the Commission, in its discretion, deems

equitable. Upon petition of counsel for the Commission,

the Commission may require all claimants and prospec-

tive claimants to be joined in one proceeding to the end

that the respective rights of all such claimants to the Real

Estate Education and Recovery Fund may be equitably

resolved. A person who les an application for payment

after the maximum liability of the fund for the licensee

or transaction has been exhausted shall not be entitled to

payment and may not seek judicial review of the Com-

mission’s award of payment to any party except upon a

showing that the Commission abused its discretion.

from the fund in an amount which is equal to or less

than the maximum amount of money which may be

awarded in small claims court under G.S.7A-210, the

Commission may allow such person to recover from the

fund reasonable attorney’s fees incurred in eecting such

recovery. Reimbursement for attorney’s fees shall be lim-

ited to those fees incurred in eecting recovery from the

fund and shall not include any fee incurred in obtain

ing

judgment against the licensee.

§ 93A‑22. Repayment to fund; automatic sus pension of

license.

Should the Commission pay from the Real Estate Education

and Recovery Fund any amount in settlement of a claim or to-

ward satisfaction of a judgment against a licensed real estate

broker, any license issued to the broker shall be automatical-

ly suspended upon the eective date of the order authorizing

payment from the fund. No such broker shall be granted a re-

instatement until the fund has been repaid in full, including

interest at the legal rate as provided for in G.S. 24-1.

§ 93A‑23. Subrogation of rights.

When the Commission has paid from the Real Estate Edu-

cation and Recovery Fund any sum to the judgment credi-

tor, the Commission shall be subrogated to all of the rights

of the judgment creditor to the extent of the amount so paid

and the judgment creditor shall assign all right, title, and in-

terest in the judgment to the extent of the amount so paid

to the Commission and any amount and interest so recov-

ered by the Commission on the judgment shall be deposited

in the Real Estate Education and Recovery Fund.

§ 93A‑24. Waiver of rights.

e failure of an aggrieved person to comply with this Arti-

cle shall constitute a waiver of any rights hereunder.

§ 93A‑25. Persons ineligible to recover from fund.

No real estate broker who suers the loss of any commission

from any transaction in which he or she was acting in the ca-

pacity of a real estate broker shall be entitled to make appli-

cation for payment from the Real Estate Education and Re-

covery Fund for the loss.

§ 93A‑26. Disciplinary action against licensee.

Nothing contained in this Article shall limit the authority of

the Commission to take disciplinary action against any li-

censee under this Chapter, nor shall the repayment in full of

all obligations to the fund by any licensee nullify or modify

the eect of any other disciplinary proceeding brought un-

der this Chapter.

North Carolina Real Estate License Law and Commission Rules

Sections 93A‑27 through 93A‑31: Reserved for future

codication purposes.

ARTICLE 3.

PRIVATE REAL ESTATE EDUCATION

PROVIDERS AND CONTINUING EDUCATION

REQUIREMENTS.

§ 93A‑32. Denitions.

As used in this Article:

(1) “Commission” means the North Carolina Real Es-

tate Commission.

(2) “Private real estate education provider” or “edu-

cation provider” means any individual or real es-

tate educational entity which is privately owned

and conducting, for a prot or tuition charge,

real estate broker prelicensing, postlicensing, or

continuing education courses prescribed by G.S.

93A-4(a) or (a1) or G.S. 93A-38.5, provided that

a proprietary business or trade school licensed

by the State Board of Community Colleges un-

der G.S. 115D-90 to conduct courses other than

those real estate courses described herein shall not

be considered to be a private real estate education

provider.

§ 93A‑33. Commission to administer Article.

e Commission shall have authority to administer and en-

force this Article and to certify private real estate education

providers as dened herein which have complied with the

requirements of this Article and regulations promulgated by

the Commission. rough certication applications, peri-

odic reports required of education providers, periodic in-

vestigations, and appropriate regulations, the Commission

shall exercise general supervisory authority over private real

estate education providers, the object of such supervision

being to protect the public interest and to assure the con-

duct of quality real estate education programs. To this end

the Commission is authorized and directed to promulgate

such regulations as it deems necessary which are not incon-

sistent with the provisions of this Article and which relate to

the subject areas set out in G.S. 93A-34(c).

§ 93A‑34. Certication required; application for

certication; fees; requirements for certication.

(a) No person, partnership, corporation, association, indi-

vidual, or other entity shall operate or oer to operate

in this State, whether live or in any online format, as a

private real estate education provider as dened here-

in unless a certication is rst obtained from the Com-

mission in accordance with the provisions of this Ar-

ticle and the rules and regulations promulgated by the

Commission under this Article. For certication pur-

poses, each branch location where an education pro-

vider conducts courses shall be considered a separate

location requiring a separate certication.

(b) Application for certication shall be led in the man-

ner and upon the forms prescribed by the Commis-

sion for that purpose. e Commission may by rule set

nonrefundable application fees not to exceed two hun-

dred fty dollars ($250.00) for each education provid-

er and fty dollars ($50.00) for each real estate bro-

ker prelicensing or postlicensing course. e applica-

tion for certication shall be accompanied by the ap-

propriate fees.

(b1) Applications for education providers utilizing methods

other than only distance education shall contain all of

the following:

(1) Name and address of the applicant;

(2) Names, biographical data, and qualications of di-

rector, administrators and instructors;

(3) Description of education provider school facilities

and equipment, if any.

(4) Description of course or courses to be oered and

instructional materials to be utilized.

(5) Information on policies and procedures regarding

administration, record keeping, entrance require-

ments, registration, tuition and fees, grades, stu-

dent progress, attendance, and student conduct.

(6) Copies of bulletins, catalogues, and other ocial

publications.

(8) Any additional information as the Commission

may deem necessary to enable it to determine the

adequacy of the instructional program and the

ability of the applicant to operate in such a man-

ner as would best serve the public interest.

mission, certication shall be issued to the applicant

when it is shown to the satisfaction of the Commission

that the applicant and school are in compliance with

the following standards, as well as the requirements of

any supplemental regulations of the Commission re-

garding these standards:

(1) e program of instruction is adequate in terms of

quality, content and duration.

(2) e director, administrators and instructors are ad-

equately qualied by reason of education and ex-

perience.

(3) ere are adequate facilities, equipment, instruc-

tional materials and instructor personnel to pro-

vide instruction of good quality.

(4) e education provider has adopted adequate pol-

icies and procedures regarding administration, in-

struction, record keeping, entrance requirements,

registration, tuition and fees, grades, student

progress, attendance, and student conduct.

(5) e education provider publishes and provides to

all students upon enrollment a bulletin, catalogue

or similar ocial publication which is certied as

being true and correct in content and policy by an

North Carolina Real Estate License Law and Commission Rules

authorized school ocial, and which contains all

of the following information:

a. Identifying data and publication date.

b. Name or names of education provider or

providers and its full-time ocials and fac-

ulty.

c. Education provider’s policies and procedures

relating to entrance requirements, registra-

tion, grades, student progress, attendance,

student conduct and refund of tuition and

fees.

d. Detailed schedule of tuition and fees.

e. Detailed course outline of all courses oered.

(6) Adequate records as prescribed by the Commis-

sion are maintained in regard to grades, atten-

dance, registration and nancial operations.

(7) Institutional standards relating to grades, atten-

dance and progress are enforced in a satisfacto-

ry manner.

(8) e applicant is nancially sound and capable of

fullling educational commitments made to stu-

dents.

(9) e education provider’s owner(s), director, ad-

ministrators and instructors are of good reputa-

tion and character.

(10) e education provider’s facilities and equipment

comply with all applicable local, State and federal

laws and regulations regarding health, safety, and

welfare, including the Americans with Disabilities

Act and other laws relating to accessibility stan-

dards for places of public accommodation.

(11) e education provider does not utilize advertis-

ing of any type which is false or misleading, either

by actual statement, omission or intimation.

(12) Such additional standards as may be deemed nec-

essary by the Commission to assure the conduct

of adequate instructional programs and the oper-

ation of education providers in a manner which

will best serve the public interest.

§ 93A‑35. Duration and renewal of certications;

transfer of school ownership

(a) All certications issued shall expire on June 30 follow-

ing the date of issuance.

(b) Certications shall be renewable annually on July 1, pro-

vided that a renewal application accompanied by the ap-

propriate renewal fees has been led not later than June

1 in the form and manner prescribed by the Commis-

sion, and provided further that the applicant and edu-

cation provider are found to be in compliance with the

standards established for issuance of an original certi-

cation. e Commission may by rule set nonrefundable

renewal fees not to exceed one hundred twenty-ve dol-

lars ($125.00) for each education provider location and

twenty-ve dollars ($25.00) for each real estate broker

prelicensing and postlicensing course.

ownership is otherwise transferred, the certication is-

sued to the original owner is not transferable to the

new owner. e new owner must apply for an original

certication as prescribed by this Article and Commis-

sion regulations.

§ 93A‑36. Execution of bond required; applicability to

branch schools; actions upon bond

(a) Before the Commission shall issue a certication the ap-

plicant shall execute a bond in the sum of ve thousand

dollars ($5,000), payable to the State of North Caroli-

na, signed by a solvent guaranty company authorized

to do business in the State of North Carolina, and con-

ditioned that the principal in said bond will carry out

and comply with each and every contract or agreement,

written or verbal, made and entered into by the appli-

cant’s education provider acting by and through its o-

cers and agents with any student who desires to take any

courses oered by the education provider and that said

principal will refund to such students all amounts col-

lected in tuition and fees in case of failure on the part

of the party obtaining a certication from the Commis-

sion to operate as a private real estate education provider

or to provide the instruction agreed to or contracted for.

Such bond shall be required for each education provider

for which a certication is required and shall be rst ap-

proved by the Commission and then led with the clerk

of superior court of the county in which the school is lo-

cated, to be recorded by such clerk in a book provided

for that purpose. A separate bond shall not be required

for each location of an education provider.

(b) In any and all cases where the party licensed by the

Commission fails to fulll its obligations under any

contract or agreement, written or verbal, made and en-

tered into with any student, then the State of North

Carolina, upon the relation of the student(s) enter-

ing into said contract or agreement, shall have a cause

of action against the principal and surety on the bond

herein required for the full amount of payments made

to such party, plus court costs and six percent (6%) in-

terest from the date of payment of said amount. Such

suits shall be brought in Wake County Superior Court

within one year of the alleged default.

§ 93A‑37. Repealed.

§ 93A‑38. Suspension, revocation or denial of

certication.

e Commission shall have the power to suspend, revoke,

deny issuance, or deny renewal of certication of a private

real estate education provider. In all proceedings to suspend,

revoke or deny a certication, the provisions of Chapter

150B of the General Statutes shall be applicable. e Com-

North Carolina Real Estate License Law and Commission Rules

mission may suspend, revoke, or deny such certication or

renewal thereof when it nds that the applicant or princi-

pal thereof or holder of such certication has done any of

the following:

(1) Refused or failed to comply with any of the pro-

visions of this Article or the rules or regulations

promulgated thereunder.

(2) Knowingly presented to the Commission false or

misleading information relating to matters within

the purview of the Commission under this Arti-

cle.

(3) Presented to its students or prospective students

false or misleading information relating to its in-

structional program, to the instructional pro-

grams of other institutions or to employment op-

portunities.

(4) Failed to comply with the provisions of any con-

tract or agreement entered into with a student.

(5) At any time refused to permit authorized rep-

resentatives of the Commission to inspect the

school, or failed to make available to them upon

request full information relating to matters with-

in the purview of the Commission under the pro-

visions of this Article or the rules or regulations

promulgated thereunder.

(6) Pleaded guilty, entered a plea of nolo contendere

or been found guilty of a crime involving moral

turpitude in any state or federal court.

§ 93A‑38.5. Continuing education.

(a) e Commission shall establish a program of con-

tinuing education for real estate brokers. An indi-

vidual licensed as a real estate broker is required to

complete eight hours of instruction a year during

any license renewal period in subjects the Com-

mission deems appropriate. Any licensee who fails

to complete continuing education requirements

pursuant to this section shall not actively engage

in the business of real estate broker.

(b) e Commission may, as part of the broker con-

tinuing education requirements, require real estate

brokers-in-charge to complete during each annu-

al license period a special continuing education

course consisting of not more than four hours of

instruction in subjects prescribed by the Commis-

sion.

ing for a deferral of continuing education for bro-

kers while they are not actively engaged in real es-

tate brokerage.

(d) e Commission may adopt rules not inconsis-

tent with this Chapter to implement the continu-

ing education requirement, including rules that

govern:

(1) e content and subject matter of continuing

education courses.

(2) e curriculum of courses required.

(3) e criteria, standards, and procedures for the ap-

proval of courses, real estate education providers,

and course instructors.

(4) e methods of instruction.

(5) e computation of course credit.

(6) e ability to carry forward course credit from one

year to another.

(7) e deferral of continuing education for brokers

not engaged in brokerage.

(8) e waiver of or variance from the continuing ed-

ucation requirement for hardship or other reasons.

(9) e procedures for compliance and sanctions for

noncompliance.

(e) e Commission may establish a nonrefundable

course application fee to be charged to private real es-

tate education providers for the review and approval of

a proposed continuing education course. e fee shall

not exceed one hundred twenty-ve dollars ($125.00)

per course. e Commission may charge the private

real estate education providers of an approved course

a nonrefundable fee not to exceed seventy-ve dollars

($75.00) for the annual renewal of course approval.

A private real estate education provider shall pay a fee

of ten dollars ($10.00) per licensee to the Commis-

sion for each licensee completing an approved continu-

ing education course conducted by the sponsor. e

Commission shall not charge a course application fee,

a course renewal fee, or any other fee for a continu-

ing education course sponsored by a community col-

lege, junior college, college, or university located in

this State and accredited by the Southern Association

of Colleges and Schools.

(f) e Commission may award continuing education

credit for an unapproved course or related education-

al activity. e Commission may prescribe procedures

for a licensee to submit information on an unapproved

course or related educational activity for continuing

education credit. e Commission may charge a fee to

the licensee for each course or activity submitted. e

fee shall not exceed fty dollars ($50.00).

ARTICLE 4.

TIMESHARES.

§ 93A‑39. Title.

is Article shall be known and may be cited as the “North

Carolina Timeshare Act.”

§ 93A‑40. Regis tration required of timeshare programs;

real es tate license required.

(a) Unless exempt under this Article, it shall be unlawful

for any person in this State to engage or assume to en-

gage in the business of a timeshare salesperson with-

North Carolina Real Estate License Law and Commission Rules

out rst obtaining a real estate broker license issued by

the North Carolina Real Estate Commission under the

provisions of Article 1 of this Chapter unless the time-

share salesperson (i) meets the requirement for exemp-

tion set forth in G.S. 93A-2(c)(1) or (ii) is an employ-

ee of the registered timeshare developer whose income

is reported on IRS Form W-2 of the registered time-

share’s developer. It shall be unlawful for a timeshare

developer to sell or oer to sell a timeshare required to

be registered in this State pursuant to this Article with-

out rst obtaining a certicate of registration issued by

the North Carolina Real Estate Commission under the

provisions of this Article.

(b)

A person responsible as general partner, corporate of-



cer, joint venturer, or sole proprietor who intention-

ally acts as a timeshare developer, allowing the oering

of sale or the sale of timeshares to a purchaser, without

rst obtaining registration of the timeshare project un-

der this Article shall be guilty of a Class I felony.

lowing:

(1) Any arrangement, plan, scheme, or method, in-

cluding a timeshare program, wherein the con-

tractually specied maximum total nancial obli-

gation on the owner’s part is three thousand dol-

lars ($3,000) or less during the entire term of the

plan.

(2) Any arrangement, plan, scheme, or method, in-

cluding a timeshare program, if the initial term

and any renewal term are each for a period of ve

years or less, regardless of the owner’s contractu-

ally specied maximum total nancial obligation,

if any; provided, however, that (i) the period of

any optional renewal term which the owner, in

the owner’s sole discretion, may armatively elect

to exercise, whether or not for additional consid-

eration, shall not be included, and (ii) the period

of any automatic renewals shall be included un-

less an owner has the right to terminate the mem-

bership at any time and receive a pro rata refund

or the owner receives a notice no less than 30 days

and no more than 60 days prior to any renew-

al term informing the owner of the right to ter-

minate at any time prior to the date of automat-

ic renewal.

(3) e oering or sale, in another jurisdiction, of a

timeshare program containing timeshare units lo-

cated in this State; provided, however, that the time-

share program has been registered with the Com-

mission.

(4) e oering or sale, in this State, of a timeshare pro-

gram containing only timeshare units located in an-

other jurisdiction or jurisdictions.

(5) e oering or sale of no more than seven time-

shares within a ve-year period by a consumer time-

share reseller who has acquired the timeshares for

their own use and occupancy and who later oers

it for resale, provided that the owner complies with

the provisions of G.S. 93A-67.

(6) e oering or sale by a managing entity, not oth-

erwise a developer, or a third party engaged by the

managing entity, of 50 or fewer timeshares in the

timeshare program which it manages in a given cal-

endar year to purchasers who are not existing own-

ers of that timeshare program, provided that the

managing entity complies with the provisions of

G.S. 93A-67.

(7) e conveyance, assignment, or transfer of more

than seven timeshares to a purchaser who subse-

quently conveys, assigns, or transfers all acquired

timeshares to a single purchaser in a single transac-

tion, which transaction may occur in stages.

(8) A purchaser’s acquisition, or the right to acquire,

more than seven timeshare interests from an owner

in connection with a loan, securitization, conduit,

or similar nancing arrangement transaction and

who subsequently arranges for all or a portion of the

timeshares to be oered by a developer in the ordi-

nary course of business on its own behalf or on be-

half of the purchaser.

(9) e oering of an accommodation, product, ser-

vice, discount, or other benet which is incidental

to the timeshare program and which is not necessary

for any accommodation of the timeshare program

to be available for use by an owner in a manner con-

sistent in all material respects with the manner por-

trayed by any promotional material, advertising, or

public oering statement.

§ 93A‑41. Denitions.

When used in this Article, unless the context otherwise re-

quires, the term:

(1) Assessment. – e share of funds required for the

payment of common expenses which is assessed

from time to time against each owner by the man-

aging entity.

(2)

Board. – e board of directors of a timeshare own-

ers’ association.

(3) Closing or close. – One of the following:(4)

“Exchange company” means any person operat-

ing an exchange program;

a. For the sale and purchase of a timeshare es-

tate, conveyance of the legal or benecial ti-

tle to the timeshare estate as evidenced by

the delivery of a timeshare instrument for

conveyance of legal title or benecial title

to the purchaser or to the clerk of superior

court in the county where the timeshare es-

tate is located for recording.

b. For the sale and purchase of a timeshare use,

North Carolina Real Estate License Law and Commission Rules

the nal execution and delivery by all parties

of the last document necessary for vesting in

the purchaser the full rights available under

the timeshare program.

(4) Commission. – e North Carolina Real Estate

Commission.

(5) “Common expense. – All of the following:

a. ose expenses, fees, or taxes properly in-

curred for the maintenance, operation, and

repair of the timeshare units or facilities, or

both, constituting the timeshare program.

b. Any other expenses, fees, or taxes designated

as common expenses in a timeshare declara-

tion.

(6) Conspicuous type. – A print type that is sepa-

rated on all sides from other type and print and

that is either (i) print type in upper- and lower-

case letters two point sizes larger than the largest

non-conspicuous type, exclusive of headings, on

the page on which it appears, but not less than

10-point type, or (ii) where the use of 10-point

type would be impractical or impossible, a dier-

ent style of type or print that is conspicuous un-

der the circumstances.

(7) Consumer resale timeshares. – One of the follow-

ing:

a. A timeshare owned by an owner.

b. One or more reserved occupancy rights re-

lating to a timeshare owned by an owner.

c. One or more reserved occupancy rights re-

lating to, or arranged through, an exchange

program in which an owner is a member.

(8) Consumer timeshare reseller. – An owner who

acquires a timeshare for their own use and oc-

cupancy and later oers the timeshare or the oc-

cupancy rights associated with the timeshare for

resale or rental, or who contracts with a transfer

service provider.

(9) Developer. – Any person or entity which (i) cre-

ates a timeshare, timeshare project, or timeshare

program, (ii) purchases a timeshare for purpose

of resale, or (iii) is engaged in the business of sell-

ing timeshares it owns or controls and shall in-

clude any person or entity who controls, is con-

trolled by, or is in common control with the de-

veloper which is engaged in creating or selling

timeshares for the developer.

(10) Electronic. – Relating to technology having elec-

trical, digital, magnetic, wireless, optical, electro-

magnetic, or similar capabilities.

(11)

Enrolled. – Membership in an exchange program.

(12) Exchange company. – Any person operating an ex-

change program.

(13) Exchange program. – Any method, arrangement, or

procedure for the voluntary exchange of the right

to use and occupy timeshare units among owners,

even if enrollment is not voluntary.

(14)

Foreclosing party. – A trustee, mortgagee, managing

entity, or their authorized agent who has the designat-

ed authority to pursue a nonjudicial foreclosure pro-

ceeding pursuant to G.S. 93A-62.

(15) Independent escrow agent. – A licensed attorney lo-

cated in this State, or a federally insured depository

institution or licensed title insurance underwriter or

agency, lawfully doing business in this State, which

agrees to make its records of the account available

for inspection by the Commission’s representative;

provided, however, that (i) the independent escrow

agent is not a relative or an employee of the devel-

oper or managing entity, or of any ocer, director,

aliate, or subsidiary thereof, (ii) there is no nan-

cial relationship, other than the payment of ducia-

ry fees, between the independent escrow agent and

the developer or managing entity, or any ocer, di-

rector, aliate, or subsidiary thereof, and (iii) com-

pensation paid by the developer to an independent

escrow agent is not paid from funds in the escrow

account unless and until the developer is otherwise

entitled to receive the disbursement of such funds

from the escrow account in accordance with this Ar-

ticle. A person shall not be disqualied to serve as an

independent escrow agent solely because of any of

the following:

a. A nonemployee, attorney-client relation-

ship exists between the developer or manag-

ing entity and the independent escrow agent

or any ocer, director, aliate, or subsidiary

thereof.

b. e independent escrow agent provides the

developer or managing entity with routine

banking services which do not include con-

struction or receivables nancing or any oth-

er lending activities.

c. e independent escrow agent performs

closings for the developer or issues owner’s

or lender’s title insurance commitments or

policies in connection with such closings.

d. e independent escrow agent is a licensed

attorney or a licensed title insurance under-

writer or agency and performs timeshare

transfer services.

(16) Interest holder. – A developer, a mortgagee, judg-

ment creditor, or other lienor, or any other person

having an interest in or lien or encumbrance against

the real property or personal property compris-

ing or underlying the timeshare property, includ-

ing the timeshares and the timeshare units, but ex-

cluding the timeshare declaration and any encum-

brance placed against an owner’s timeshare securing

the owner’s payment of purchase money nancing

North Carolina Real Estate License Law and Commission Rules

for the purchase. With respect to a multisite time-

share program which contains timeshare units that

are also part of an underlying timeshare program or

condominium or other property regime, the term

does not include a developer, a mortgagee, judg-

ment creditor, or other lienor, or any other person

having an interest in or lien or encumbrance against

a timeshare in an underlying timeshare program or

against a timeshare unit or other accommodation

in an underlying condominium or property regime,

except as to any timeshare, timeshare unit, or oth-

er accommodation that is specically subject to, or

otherwise dedicated to, the multisite timeshare pro-

gram.

(17) Lead dealer. – A person who sells or otherwise pro-

vides a resale service provider or any other person

with personal contact information for ve or more

purchasers or owners. If a lead dealer is not a natural

person, the term shall also include the natural per-

son providing personal contact information to a re-

sale service provider or other person on behalf of the

lead dealer entity. e term does not include devel-

opers, managing entities, or exchange companies to

the extent they provide others with personal contact

information about purchasers or owners of time-

shares in their own timeshare programs or members

of their own exchange programs. e term does not

include persons providing personal contact infor-

mation that is not designed specically or primari-

ly to identify owners of timeshares even though the

information provided may include ve or more pur-

chasers or owners.

(18) Managing entity. – Any developer, timeshare own-

ers’ association, or third-party management rm

that has the duties, responsibilities, and obligations

of managing a timeshare project or timeshare pro-

gram.

(19) Multisite timeshare program. – A timeshare pro-

gram under which an owner obtains, by any means,

a recurring right to reserve, use, or occupy time-

share units of more than one timeshare project

through the mandatory use of a reservation system

in competition with other owners in the same time-

share program.

(20) One-to-one use night to use right ratio. – e ratio

of the number of owners eligible to use the time-

share units on a given night to the number of time-

share units available for use within the timeshare

program on that night, such that the total number

of owners eligible to use the timeshare units during

a given calendar year never exceeds the total num-

ber of timeshare units available for use in the time-

share program during that year. For purposes of the

calculation under this denition, each owner must

be counted at least once, and no individual time-

share units may be counted more than 365 times

per calendar year or more than 366 times per leap

year. An owner who is delinquent in the payment of

timeshare program assessments shall continue to be

considered eligible to use the timeshare units of the

timeshare program for purposes of calculating the

one-to-one use night to use right ratio.

(21) Owner. – Any person, other than a developer, who

has acquired a timeshare.

(22) Person. – One or more natural persons, corpora-

tions, partnerships, associations, trusts, other enti-

ties, or any combination thereof.

(23) Personal contact information. – Any information

that can be used to contact a purchaser or an own-

er, including, but not limited to, the purchaser’s

or owner’s name, address, telephone number, and

email address.

(24) Program broker. – A natural person licensed as a

real estate broker and designated by the developer

to supervise brokers at the timeshare program.

(25) Purchaser. – Any person, other than a developer,

who is advertised or solicited to acquire a timeshare,

oered a timeshare, or enters into a timeshare in-

strument to acquire a timeshare.

(26) Regulated party. – Any developer, exchange compa-

ny, managing entity, timeshare owners’ association,

timeshare owners’ association director or ocer,

third-party management rm, independent escrow

agent, lead dealer, resale broker, resale service pro-

vider, resale advertiser, timeshare transfer provider,

timeshare registrar, any other person having duties

or obligations pursuant to this Article, and any of

their respective assignees or agents.

(27) Resale advertiser. – Any person who oers, person-

ally or through an agent, resale advertising services

to consumer timeshare resellers for compensation or

other valuable consideration, regardless of whether

the oer is made in person, by mail, by telephone,

through the internet, or by any other medium of

communication. e term does not include any of

the following:

a. A resale broker to the extent that resale ad-

vertising services are oered in connection

with timeshare resale brokerage services and

no fee for the resale advertising service is col-

lected in advance.

b. A developer or managing entity to the extent

that either of them oers resale advertising

services to owners of timeshares in their own

timeshare programs.

c. A newspaper, periodical, or website owner,

operator, or publisher, unless the newspa-

per, periodical, or website owner, operator,

or publisher derives more than ten percent

(10%) of its gross revenue from providing re-

North Carolina Real Estate License Law and Commission Rules

sale advertising services.

(28) Resale advertising service. – e provision of any

good or service relating to advertising or promoting

the resale or rental of a consumer resale timeshare

located or oered within this State, including any

oer to advertise or promote the sale or purchase of

any such interest.

(29) Resale broker. – Any person who is issued a broker’s

license by the North Carolina Real Estate Commis-

sion under the provisions of Article 1 of this Chap-

ter and who oers or provides resale brokerage ser-

vices to consumer timeshare resellers for compensa-

tion or other valuable consideration, regardless of

whether the oer is made in person, by mail, by

telephone, through the internet, or by any other

medium of communication. e term includes any

agent or employee of a resale broker.

(30) Resale brokerage services. – With respect to a con-

sumer resale timeshare located or oered within this

State, any activity that directly or indirectly consists

of any of the activities regulated under G.S. 93A-1.

(31) Resale service provider. – Any resale advertiser, or

other person or entity, including any agent or em-

ployee of that person or entity, who oers resale

brokerage or resale advertising services to consum-

er timeshare resellers. e term does not include (i)

developers or managing entities to the extent they

oer resale brokerage or resale advertising services

to owners of timeshares in their own timeshare pro-

grams or (ii) resale brokers to the extent that resale

advertising services are oered in connection with

resale brokerage services and no fee for the advertis-

ing service is collected in advance.

(32) Reservation system. – e method, arrangement,

procedure, rules, and regulations by which an own-

er reserves the use and occupancy of a timeshare

unit for one or more timeshare periods.

(33) Reservation system operator. – e person who has

the responsibility for operating any reservation sys-

tem for the timeshare program. Unless the time-

share declaration provides otherwise, the operator

of the reservation system is the managing entity of a

timeshare program. e reservation system operator

may be a third-party entity that has contracted with

the developer or managing entity to provide the res-

ervation system for the timeshare program, provid-

ed that the third party shall be deemed a managing

entity as to the operation of the reservation system

for purposes of this Article.

(34) Timeshare. – A timeshare estate or timeshare use.

(35) Timeshare declaration. – One or more documents,

by whatever name denominated, establishing, creat-

ing, or governing the operation of a timeshare pro-

gram.

(36) Timeshare estate. – e right to occupy a timeshare

unit coupled with ownership of any of the following

real property interests:

a. A freehold estate or an estate for years with a

future interest in property.

b. An ownership interest in a condominium

unit.

c. A direct or indirect benecial interest in a

trust, provided that both of the following

conditions are met:

1. e timeshare instrument contains a pro-

vision declaring that such interests are real

property interests.

2. e trust does not contain any timeshares

created in personal property.

(37) Timeshare instrument. – An instrument transfer-

ring a timeshare or any interest, legal or benecial,

in a timeshare to a purchaser, including a contract,

installment contract, lease, deed, or other instru-

ment.

(38) Timeshare owners’ association. – An association

made up of all owners of timeshares in a timeshare

program, including developers.

(39) Timeshare period. – e period or periods of time

when an owner is aorded the opportunity to use

a timeshare unit under the terms of the timeshare

program.

(40) Timeshare program. – Any arrangement, plan, pro-

gram, scheme, or similar device, other than an ex-

change program, whether by membership, agree-

ment, tenancy in common, sale, lease, deed, rent-

al agreement, license, or right-to-use agreement, or

by any other means whereby an owner receives the

right to use timeshare units for a period of time less

than a full year during any given year, but not nec-

essarily for consecutive years.

(41) Timeshare project. – A specic geographic site

where all or a portion of the timeshare units of a

timeshare program are located. If phased develop-

ment is permitted under applicable law, separate

phases operated as a single development located at

a specic geographic site under common manage-

ment may be deemed a single timeshare project by

the developer.

(42) Timeshare property. – e property included in or

subject to a timeshare program, including time-

shares in an underlying timeshare program, one

or more timeshare units, any amenities, any other

property, and appurtenant property or rights.

(43) Timeshare registrar. – A natural person who is des-

ignated by the developer to record or cause time-

share instruments and lien releases to be recorded

and to fulll the other duties imposed by this Arti-

cle.

(44) Timeshare salesperson. – A person who sells or of-

fers to sell on behalf of a developer a timeshare to a

North Carolina Real Estate License Law and Commission Rules

purchaser.

(45) Timeshare transfer services. – Any service oered or

provided in this State, or oered or provided any-

where in connection with a timeshare program con-

taining timeshare units or a timeshare property lo-

cated in this State, that provides assistance in the re-

sale, transfer, relinquishment, or other disposition

of a consumer timeshare reseller’s timeshare, includ-

ing a reconveyance or other transfer to a developer

or managing entity, whether referred to as timeshare

exit, timeshare cancellation, timeshare relief, or any

similar phrase. e term does not include resale ad-

vertising services.

(46) Timeshare transfer services agreement. – A contract

or other agreement between a transfer service pro-

vider and a consumer timeshare reseller in which

the transfer service provider agrees to provide such

services.

(46) Timeshare unit. – e real property or real property

improvement in a project which is divided into time

shares timeshares and designated for separate occu-

pancy and use.

(48) Timeshare use. – e right to occupy a timeshare

unit that is not coupled with ownership of a real

property interest.

(49) Transfer service provider. – Any person, includ-

ing any agent, representative, subsidiary, successor,

or employee of that person or entity, unless other-

wise exempt, who oers or uses telemarketing, di-

rect mail, email, or any other means of communi-

cation in connection with the oering of timeshare

transfer services.

§ 93A‑42. Timeshare states deemed real estate; timeshare

uses.

(a) A timeshare is deemed to be an interest in real estate and

shall be governed by the law of this State relating to real

estate.

(b)

An owner of a timeshare located in the State may, in ac-

cordance with G.S. 47-18, register the timeshare instru-

ment by which the owner acquired interest and upon

such registration shall be entitled to the protection pro-

vided by Chapter 47 of the General Statutes for the re-

cordation of other real property instruments. A time-

share instrument transferring or encumbering a time-

share estate shall not be rejected for recordation because

of the nature or duration of that estate, provided all

other requirements necessary to make an instrument re-

cordable are complied with. An instrument concerning

a timeshare use shall not be recorded in the oce of the

developer shall close on the sale of a timeshare estate and

record or cause to be recorded a timeshare instrument for

timeshare estates located in this State no later than 180

days following the execution of the contract of sale by the

purchaser, provided that all payments made by the pur-

chaser have been placed by the developer with an inde-

pendent escrow agent in accordance with G.S. 93A-45.

(e) In no event shall the developer be required to close and

record a timeshare instrument if the purchaser is in de-

fault of the purchaser’s obligations under the contract

of sale

(f) Recordation under the provisions of this section of the

timeshare instrument shall constitute delivery of that

instrument from the developer to the purchaser.

(g) A timeshare use is not an interest in real property and

shall be governed by the laws of this State relating to

personal property. For each transfer of the legal title to a

timeshare use by a developer, the developer shall deliver

an instrument evidencing such transfer to the purchas-

er at closing. Unless the timeshare instrument provides

otherwise, the developer shall close on the sale of a time-

share use no later than 180 days following the execution

of the contract of sale by the purchaser, provided that all

payments made by the purchaser shall be placed by the

developer with an independent escrow agent in accor-

dance with G.S. 93A-45. In no event shall the develop-

er be required to close on the sale of a timeshare use if

the purchaser is in default of the purchaser’s obligations

under the contract of sale.

(h) A developer may not sell or close on the sale of any time-

share that would cause the total number of timeshares

available for use in the timeshare program to exceed the

one-to-one use night to use right ratio.

§ 93A‑42.1 Construction and validity of declarations

adopted prior to the Timeshare Act.

(a) All provisions contained in timeshare declarations ad-

opted and recorded at the appropriate register of deeds

oce prior to July 1, 1984, are severable.

(b) e rule against perpetuities may not be applied to de-

feat any provision of timeshare declarations or bylaws

adopted and recorded at the appropriate register of

deeds oce prior to July 1, 1984.

ration, the board of directors of a timeshare project

may, by an armative vote of two-thirds of the board,

amend a provision within the timeshare declaration,

provided that the provision to be changed meets all of

the following criteria:

(1) e provision was adopted as part of the origi-

nal timeshare declaration recorded prior to July 1,

1984.

(2) e provision either converts or provides a mech-

anism to convert ownership of timeshare units to

tenancy in common.

(d) Title or interest in a timeshare project or unit is not

rendered unmarketable or otherwise aected by reason

of an insubstantial failure of the timeshare declaration

North Carolina Real Estate License Law and Commission Rules

to comply with this section. Whether a substantial fail-

ure to comply with this section impairs marketability

shall be determined by the laws of this State relating to

marketability.

(e) is section shall not otherwise impair the ability of

the individual timeshare owner’s right under the time-

share declaration, bylaws, or the laws of this State to

vote to terminate the timeshare project or to amend

the declaration to provide for the termination of the

timeshare project and interests. (2014-99, s. 1.)

§ 93A‑43. Partition.

When a timeshare is owned by two or more persons as ten-

ants in common or as joint tenants either may seek a par-

tition by sale of that interest but no owner of a timeshare

may maintain an action for partition by sale or in kind of the

timeshare unit, timeshare project, or timeshare program in

which such timeshare is held.

§ 93A‑44. Contract of sale; public oering statement.

(a) e contract of sale between a developer and a pur-

chaser for the sale and purchase of a timeshare must in-

clude the following:

(1) e name and address of the developer.

(2) e name and address of the timeshare program

being oered.

(3) An identication or legal description of the time-

share being sold, including whether any interest

in real property or personal property is being con-

veyed and the number of years constituting the

term of the timeshare program or the timeshare if

less than the term of the timeshare program.

(4) If the purchaser acquires a timeshare in a specif-

ic timeshare project, the name and location of the

timeshare project to which the specic timeshare

relates.

(5) A statement that the purchaser should refer to the

timeshare public oering statement for more in-

formation required to be provided to the purchas-

er.

(6) e initial purchase price and all additional charg-

es to which the purchaser may be subject in con-

nection with the purchase of the timeshare, such

as nancing, or which will be collected from the

purchaser on or before closing, such as the cur-

rent year’s annual assessment or any initial or spe-

cial fee together with a description of the purpose

of such initial or special fee.

(7) A statement disclosing the amount of the periodic

assessments currently assessed against or collected

from owners who own similar types of timeshares

in that timeshare program.

(8) e name and address of the independent escrow

agent required by G.S. 93A-45(d).

(9) e purchaser’s address for the purposes of deliv-

ery of any notices.

(10) e date the purchaser signs the contract of sale.

(11) e following statement in conspicuous type:

“Any resale of this timeshare must be accompa-

nied by certain disclosures in accordance with the

North Carolina Timeshare Act.”

(12) A statement in conspicuous type immediately pri-

or to the purchaser’s signature block in substan-

tially the following form: “You may cancel this

contract of sale without any penalty or obligation

before midnight ve days after the date you sign

this contract of sale or received the required pub-

lic oering statement and all documents required

to be delivered to you, whichever is later. If you

decide to cancel this contract of sale, you must

notify the developer in writing of your intent to

cancel. Your notice of cancellation shall be eec-

tive upon the date sent and shall be sent to the de-

veloper at [insert address]. Any attempt to obtain

a waiver of your cancellation right is void and of

no eect. While you may execute all closing doc-

uments in advance, the closing on your purchase

before expiration of your ve-day cancellation pe-

riod is prohibited.”

(b) Prior to the execution of a contract of sale by a pur-

chaser, each developer shall provide the purchaser with

a public oering statement and shall obtain from the

purchaser a written acknowledgement of receipt of

the public oering statement and any documents re-

quired to be delivered to the purchaser. In addition to

any other information that the developer discloses, the

public oering statement must contain the following:

(1) A cover page stating only the name of the time-

share program and in conspicuous type, substan-

tially the following statement: “is public oer-

ing statement contains important matters to be

considered in acquiring a timeshare. e state-

ments contained in this public oering statement

are only summary in nature. Purchaser should re-

fer to all references, accompanying exhibits, con-

tract documents, nance documents, and sales

materials. Purchaser should not rely upon oral

representations as being correct. e developer is

prohibited from making any representations oth-

er than those contained in the contract of sale and

this public oering statement.”

(2) e name and principal address of the developer.

(3) A general description of the timeshare program,

including the nature and types of timeshares in

the timeshare program and if it is a multisite

timeshare program.

(4) A description of the duration of the timeshare

program and whether it includes timeshares hav-

ing a shorter duration than the duration of the

timeshare program.

North Carolina Real Estate License Law and Commission Rules

(5) A description of the method by which an owner

can reserve, use, and occupy the timeshare units,

including the following:

a. e name and principal address of the enti-

ty that owns the reservation system and the

entity responsible for operating the reserva-

tion system, their relationship to the devel-

oper, and the duration of any agreement for

operating the reservation system.

b. A summary of the material rules governing

access to and use of the reservation system,

including (i) a description of the limitations,

restrictions, or priorities applied in the oper-

ation of the timeshare program, (ii) if such

limitations, restrictions, or priorities are not

uniformly applied, a description of the man-

ner in which they are applied, (iii) an expla-

nation of any priority reservation features

that aect an owner’s ability to make reserva-

tions for the use of a given timeshare unit on

a rst-come, rst-served basis, (iv) whether

the owner must be in good standing with re-

spect to payment of all sums due the manag-

ing entity in order to reserve, use, or occupy

a timeshare unit, and (v) the terms and con-

ditions for making, deferring, or cancelling

reservations, including any transaction fees

or other charges and, if applicable, a state-

ment that such fees or charges are subject to

change without owner approval.

c. Any periodic adjustment or amendment to

the reservation system that may be conduct-

ed in order to respond to owner use patterns

and changes in owner use demand for the

timeshare units, timeshare projects, or time-

share periods. If ownership or use of the

timeshare program is based on a point sys-

tem, a statement indicating the circumstanc-

es by which the point values may change, the

extent of such changes, and the person or en-

tity responsible for the changes.

d. Whether and under what circumstances an

owner may lose the right to reserve, use, or

occupy a timeshare unit without being pro-

vided with a substitute reservation, use, or

occupancy.

e. e disposition of timeshares or time peri-

ods that are not reserved by owners prior to

the start of the timeshare period or prior to

the start of any established point in time and

who has the right to reserve and benet from

such unreserved timeshares or timeshare pe-

riods.

f. If the operator of the reservation system is

going to exercise the right granted to it by

G.S. 93A-63(d) to reserve, deposit, or rent

the timeshare periods or timeshare units

for the purpose of facilitating the use or fu-

ture use of the timeshare periods or time-

share units or other benets made available

through the timeshare program by owners,

a statement in conspicuous type, in substan-

tially the following form, shall be included:

“e managing entity shall have the right to

forecast anticipated reservation and use of

the timeshare period or timeshare units and

is authorized to reasonably reserve, depos-

it, or rent the timeshare period or timeshare

units for the purpose of facilitating the use

or future use of the accommodations or oth-

er benets made available through the time-

share program by the owners.”

g. Any use or transaction fees or charges to be

paid by owners for the reservation, use, or

occupancy of any timeshare units or ameni-

ties and, if applicable, a statement that the

fees or charges are subject to change without

owner approval.

h. e rules governing the making, cancelling,

or transferring of reservations.

(6) For each timeshare project, the following infor-

mation:

a. A description of the existing timeshare units

and future timeshare units committed to be

constructed or obtained, including the lo-

cation of the timeshare project or timeshare

projects in the timeshare program, and the

number of bedrooms, number of bathrooms,

sleeping capacity, and whether the timeshare

unit contains a full kitchen for each time-

share project.

b. A description of any existing amenities and

future amenities committed to be construct-

ed or obtained, and whether such amenities

are included as part of the ownership of a

timeshare or made separately available and

on what basis.

c. e estimated date that future timeshare

units or amenities will be available as com-

mitted, and a description of nancial ar-

rangements for the completion or acquisi-

tion of future timeshare units or amenities as

committed.

d. A description of the method and timing for

performing maintenance of the timeshare

units.

(7) A statement indicating that, on an annual basis,

the one-to-one use night to use right ratio will

be maintained through the duration of the time-

share program, except temporarily pursuant to

North Carolina Real Estate License Law and Commission Rules

G.S. 93A-61(g), or temporarily as a result of a ca-

sualty or eminent domain action.

(8) For multisite timeshare programs, a description

of (i) any reserved rights to make additions, sub-

stitutions, or deletions of timeshare units, ame-

nities, or timeshare projects, (ii) who has the au-

thority to make such additions, substitutions, or

deletions and whether owners have the right to

consent, and (iii) the basis upon which such time-

share units, amenities, or timeshare projects may

be added to, substituted for, or deleted from the

timeshare program.

(9) With respect to the managing entity for the time-

share program, the following information, if ap-

plicable:

a. e name and principal address of the man-

aging entity of the timeshare program.

b. Whether the managing entity for any time-

share project is dierent than the managing

entity of the multisite timeshare program.

c. If there is a timeshare owners’ association at

a timeshare project or for a multisite time-

share program, whether owners are members

of the timeshare owners’ association, togeth-

er with a general description of their rights

and responsibilities with respect to the time-

share owners’ association.

d. If there is a management rm, the term of

the management agreement.

(10) A description of the method for calculating and

apportioning assessments among owners, includ-

ing the developer, together with a description of

the consequences to the owner if assessments are

not timely paid. e description shall also include

whether reserves for the timeshare units and ame-

nities have been established, and if not, or if any

reserves are not fully funded, a statement to that

eect in conspicuous type.

(11) If the developer intends to guarantee the level of

assessments for the timeshare program, a state-

ment disclosing that the developer may be ex-

cused from the payment of the developer’s share

of the assessments which would have been as-

sessed against developer-owned timeshares during

the guarantee period.

(12) A statement that the timeshare to be acquired by

the purchaser and the timeshare property, on or

before closing, (i) will be free and clear of any in-

terest in or lien or encumbrance against the time-

share and the timeshare property by the develop-

er or any interest holders or (ii) are the subject of

a recorded subordination and notice to creditors

instrument pursuant to G.S. 93A-57.

(13) A description of any civil or criminal suit or ad-

judication or disciplinary actions material to the

timeshare program of which the developer has

knowledge, including any bankruptcy of the de-

veloper that is pending or that has occurred with-

in the past ve years.

(14) A description of the insurance insuring the time-

share property for damage and destruction and

insuring owners and, if applicable, the timeshare

owners’ association.

(15) A description of the requirements for, or restraint

on, the transfer or rental of a timeshare, including

any right of rst refusal or the imposition of any

fees or charges.

(16) A statement disclosing that any funds paid to the

developer in connection with the purchase of a

timeshare shall be held by an independent escrow

agent in accordance with G.S. 93A-45(d) or that

the developer has provided nancial assurances in

an amount equal to or in excess of the funds that

would otherwise be held by the independent es-

crow agent, and that if the purchaser elects to ex-

ercise the right of cancellation or the developer

defaults under the contract of sale, any funds paid

to the developer shall be returned to the purchas-

er, as set forth in G.S. 93A-45(c).

(17) If the developer or managing entity provides pur-

chasers with the opportunity to become a mem-

ber of an exchange program in connection with

the purchase of the timeshare, the name and ad-

dress of the exchange company and the material

terms of the opportunity.

(18) Any person who has or may have the right to al-

ter, amend, or add to fees and charges to which

the owner may be subject and the terms and con-

ditions under which those fees and charges may

be imposed.

(19) In conspicuous type, a statement in substantially

the following form: “e purchase of a timeshare

should be based upon its value as a vacation expe-

rience or for spending leisure time, and not con-

sidered for purposes of acquiring an appreciating

investment or with an expectation that the time-

share may be rented or resold.”

(20) A statement that under North Carolina law a

timeshare instrument conveying a timeshare es-

tate located in this State must be recorded in the

(21) Any other information which the Commission

may by rule require. e Commission is also au-

thorized to prescribe by rule the form of the pub-

lic oering statement that must be furnished by

the developer to each purchaser.

er, the following documents, including any amend-

ments, shall also be provided to the purchaser either

attached as an exhibit to the public oering statement

North Carolina Real Estate License Law and Commission Rules

or provided as a separate supplement with the public

oering statement:

(1) e timeshare declaration.

(2) e timeshare owners’ association articles of in-

corporation and bylaws, if applicable.

(3) Any timeshare unit or timeshare project rules and

regulations.

(4) Timeshare program reservation system rules and

regulations.

(5) An estimate of the current year’s operating budget

for the timeshare program.

(6) For multisite timeshare programs where a time-

share is provided in a particular timeshare unit or

timeshare project, the applicable documents gov-

erning the timeshare unit or timeshare project set

forth in subdivisions (1) through (5) of this sub-

section must also be separately provided as part of

the public oering statement.

(d) Contemporaneously with the execution of a contract

of sale by a purchaser, a copy of the contract of sale

signed by the purchaser, receipt for the public oering

statement signed by the purchaser, any nancing doc-

uments signed by the purchaser, and any other docu-

ment signed by the purchaser at the time of execution

of the contract of sale shall be provided to the purchas-

er.

(e) If the purchaser receives documents electronically at

the time of execution of a contract of sale, the develop-

er shall provide the purchaser a separate paper or email

copy of the purchaser’s cancellation rights in conspicu-

ous type as described in G.S. 93A-44(a)(12).

(f) e developer is prohibited from making any represen-

tations other than those contained in the contract of

sale and the public oering statement.

§ 93A‑45. Purchaser’s right to cancel; escrow; violation.

(a) A purchaser has the right to cancel the contract of sale

until midnight of the fth day after the later of the fol-

lowing events:

(1) e purchaser’s execution of the contract of sale.

(2) e purchaser’s receipt of the public oering

statement pursuant to G.S. 93A-44 and all oth-

er documents required to be provided to the pur-

chaser pursuant to G.S. 93A-44.

e purchaser may not waive this right of cancellation.

Any oral or written declaration or instrument that pur-

ports to waive this right of cancellation is void. No

closing may occur until the cancellation period of the

purchaser has expired.

(b) Any notice of cancellation shall be considered given on

the date postmarked if mailed, or when transmitted if

delivered by electronic means, so long as the notice is

actually received by the developer or independent es-

crow agent. If given by means of a writing transmitted

other than by mail, the notice of cancellation shall be

considered given at the time of delivery at the place for

receipt of notice provided by the developer.

the refund of all monies received by the developer or

timeshare salesperson shall be made within 20 days

of demand therefor by the purchaser or within ve

days after receipt of cleared funds from the purchaser,

whichever is later.

(d)

Prior to a purchaser’s execution of a contract of sale,

the developer shall establish an escrow account with

an independent escrow agent for the purpose of pro-

tecting the funds of purchasers required to be es-

crowed by this subsection. Any funds received prior

to closing by a developer or timeshare salesperson in

connection with the sale of the timeshare shall be im-

mediately deposited by the developer or salesperson

in a trust or escrow account in a federally insured de-

pository institution or a trust institution authorized

to do business in this State and shall only be disbursed

in accordance with subsection (f) of this section. Pay-

ments held in such trust or escrow accounts shall be

deemed to belong to the purchaser and not the devel-

oper. In lieu of escrow requirements, the Commission

shall have the authority to accept, in its discretion, al-

ternative nancial assurances adequate to protect the

purchaser’s interest during the contract of sale cancel-

lation period, including, but not limited to, a surety

bond, corporate bond, cash deposit or irrevocable let-

ter of credit in an amount equal to the escrow require-

ments or a nancial assurance posted in another juris-

diction.

(e) A developer shall not be entitled to the release of any es-

crowed funds until the developer has provided the inde-

pendent escrow agent with (i) an adavit stating that

the purchaser has defaulted under the contract of sale

and the developer is entitled to the escrowed funds pur-

suant to the terms of the contract of sale or (ii) an a-

davit that the developer has performed all of its obliga-

tions under the purchase contract, including completion

of construction of all promised timeshare units and ame-

nities or the posting of an alternate nancial assurance

acceptable to the Commission securing the completion

of construction, and the developer and purchaser have

closed on the contract of sale, together with evidence

satisfactory to the independent escrow agent that the

timeshare and the timeshare property is either free and

clear of interests in or liens or encumbrances against the

timeshare and timeshare property of any interest holder

or the developer has met the requirements of G.S. 93A-

57(a).

(f) An independent escrow agent shall maintain the ac-

counts called for in this section only in such a manner as

to be under the direct supervision and control of the in-

dependent escrow agent. e independent escrow agent

shall have a duciary duty to each purchaser to maintain

North Carolina Real Estate License Law and Commission Rules

the escrow accounts in accordance with good account-

ing practices and to release the purchaser’s funds or oth-

er property from escrow only in accordance with this

section. e independent escrow agent shall retain all af-

davits received pursuant to this section for a period of

ve years. Should the independent escrow agent receive

conicting demands for funds or other property held in

escrow that remain unresolved for more than 30 days,

the independent escrow agent shall notify the Commis-

sion of the dispute and either promptly submit the mat-

ter to arbitration or, by interpleader or otherwise, seek

an adjudication of the matter by court.

(g) If the contract of sale does not include the cancellation

notice as required by G.S. 93A-44(a)(12), the owner, in

addition to any rights to damages or other relief, is enti-

tled to void the transfer and receive from the developer

all funds paid for the timeshare together with an amount

equal to ten percent (10%) of the sales price of the time-

share not to exceed three thousand dollars ($3,000).

(h) A timeshare declaration or other instrument establish-

ing or governing a timeshare program or an underlying

timeshare property regime is not an encumbrance for

purposes of this Chapter and does not create a require-

ment for a subordination and notice to creditors instru-

ment for purposes of this section from any person.

(i) Any developer or independent escrow agent who inten-

tionally fails to comply with the provisions of this Arti-

cle concerning the establishment of an escrow account,

deposits of funds into escrow, and withdrawal therefrom

is guilty of a Class E felony. e failure to establish an

escrow account or to place funds therein as required in

this section is prima facie evidence of an intentional and

purposeful violation of this subsection.

§ 93A‑46. Prizes.

An advertisement of a timeshare which includes the oer of a

prize or other inducement shall fully comply with the provi-

sions of Chapter 75 of the General Statutes.

§ 93A‑47. Timeshares proxies.

No proxy, power of attorney or similar device given by the

owner of a timeshare regarding voting in a timeshare owners’

association shall exceed one year in duration, but the same may

be renewed from year to year.

§ 93A‑48. Exchange programs.

(a)

If a purchaser is oered the opportunity to subscribe to any

exchange program, the developer shall, except as provided

in subsection (b) of this section, deliver to the purchaser,

prior to the execution of (i) any contract between the pur-

chaser and the exchange company, and (ii) the contract for

sale, at least the following information regarding such ex-

change program:

(1) e name and address of the exchange company.

(2) e names of all ocers, directors, and shareholders

owning ve percent (5%) or more of the outstand-

ing stock of the exchange company.

(3) Whether the exchange company or any of its o-

cers or directors has any legal or benecial interest in

any developer or managing entity for any timeshare

project participating in the exchange program and,

if so, the name and location of the timeshare project

and the nature of the interest.

(4) Unless the exchange company is also the developer a

statement that the purchaser’s contract with the ex-

change company is a contract separate and distinct

from the contract for sale.

(5) Whether the purchaser’s participation in the ex-

change program is dependent upon the contin-

ued aliation of the timeshare project with the ex-

change program.

(6) Whether the purchaser’s membership or participa-

tion, or both, in the exchange program is volun

tary

or mandatory.

(7) A complete and accurate description of the terms

and conditions of the purchaser’s contractual rela-

tionship with the exchange company and the pro-

cedure by which changes thereto may be made.

(8) A complete and accurate description of the proce-

dure to qualify for and eectuate exchanges.

(9) A complete and accurate description of all limita-

tions, restrictions, or priorities employed in the op-

eration of the exchange program, including, but

not limited to, limitations on exchanges based on

seasonality, unit size, or levels of occupancy, ex-

pressed in conspicuous type, and, in the event that

such limitations, restrictions, or priorities are not

uniformly applied by the exchange program, a clear

description of the manner in which they are ap-

plied.

(10) Whether exchanges are arranged on a space avail-

able basis and whether any guarantees of fulll-

ment of specic requests for exchanges are made

by the exchange program.

(11) Whether and under what circumstances an own-

er, in dealing with the exchange company, may

lose the use and occupancy of the owner’s time-

share in any properly applied for exchange with-

out being provided with substitute accommoda-

tions by the exchange company.

(12) e expenses, fees or range of fees for participa-

tion by owners in the exchange program, a state-

ment whether any such fees may be altered by the

exchange company, and the circumstances under

which alterations may be made.

(13) e name and address of the site of each time-

share project or other property which is partici-

pating in the exchange program.

(14) e number of units in each timeshare project

or other property participating in the exchange

North Carolina Real Estate License Law and Commission Rules

program which are available for occupancy and

which qualify for participation in the exchange

program, expressed within the following numer-

ical groupings, 1-5, 6-10, 11-20, 21-50 and 51,

and over.

(15) e number of owners with respect to each time-

share project or other property which are eligible

to participate in the exchange program expressed

within the following numerical groupings, 1-100,

101-249, 250-499, 500-999, and 1,000 and over,

and a statement of the criteria used to determine

those owners who are currently eligible to partici-

pate in the exchange program.

(16) e disposition made by the exchange company

of timeshares deposited with the exchange pro-

gram by owners eligible to participate in the ex-

change program and not used by the exchange

company in eecting exchanges.

(17) e following information which, except as pro-

vided in subsection (b) of this section, shall be in-

dependently audited by a certied public accoun-

tant in accordance with the standards of the Ac-

counting Standards Board of the American Insti-

tute of Certied Public Accountants and reported

for each year no later than July 1, of the succeed-

ing year:

a. e number of owners enrolled in the ex-

change program and such numbers shall dis-

close the relationship between the exchange

company and owners as being either fee pay-

ing or gratuitous in nature.

b. e number of timeshare projects or other

properties eligible to participate in the ex-

change program categorized by those having

a contractual relationship between the de-

veloper or the association and the exchange

company and those having solely a contrac-

tual relationship between the exchange com-

pany and owners directly.

c. e percentage of conrmed exchanges, which

shall be the number of exchanges conrmed

by the exchange company divided by the

number of exchanges properly applied for,

together with a complete and accurate state-

ment of the criteria used to determine wheth-

er an exchange requested was properly ap-

plied for.

d. e number of timeshares or other intervals

for which the exchange company has an out-

standing obligation to provide an exchange

to an owner who relinquished a timeshare

or interval during the year in exchange for a

timeshare or interval in any future year.

e. e number of exchanges conrmed by the

exchange company during the year.

(18) A statement in conspicuous type to the eect that

the percentage described in sub-subdivision c. of

subdivision (17) of this subsection is a summa-

ry of the exchange requests entered with the ex-

change company in the period reported and that

the percentage does not indicate a purchaser’s/

owner’s probabilities of being conrmed to any

specic choice or range of choices, since availabil-

ity at individual locations may vary.

e purchaser shall certify in writing to the receipt of the

information required by this subsection and any other

information which the Commission may by rule require.

(b) e information required by subdivisions (2), (3), (13),

(14), (15), and (17) of subsection (a) of this section

shall be accurate as of December 31 of the year preced-

ing the year in which the information is delivered, ex-

cept for information delivered within the rst 180 days

of any calendar year which shall be accurate as of De-

cember 31 of the year two years preceding the year in

which the information is delivered to the purchaser.

e remaining information required by subsection (a)

of this section shall be accurate as of a date which is no

more than 30 days prior to the date on which the in-

formation is delivered to the purchaser.

program directly to the purchaser or owner, the ex-

change company shall deliver to each purchaser or own-

er, concurrently with the oering and prior to the exe-

cution of any contract between the purchaser or owner

and the exchange company the information set forth in

subsection (a) of this section. e requirements of this

subsection shall not apply to any renewal of a contract

between an owner and an exchange company.

(d) All promotional brochures, pamphlets, advertisements,

or other materials disseminated by the exchange com-

pany to purchasers in this State which contain the per-

centage of conrmed exchanges described in su-sub-

division c. of subdivision (17) of subsection (a) of this

section must include the statement set forth in subdi-

vision (18) of subsection (a) of this section.

§ 93A‑49. Service of process on exchange company.

Any exchange company oering an exchange program to

a purchaser shall be deemed to have made an irrevocable

appointment of the Commission to receive service of law-

ful process in any proceeding against the exchange company

arising under this Article.

§ 93A‑50. Securities laws apply.

e North Carolina Securities Act, Chapter 78A, shall also

apply, in addition to the laws relating to real estate, to time-

shares deemed to be investment contracts or to other securi-

ties oered with or incident to a timeshare; provided, how-

ever, in the event of the applicability of the North Carolina

Securities Act, any oer or sale of timeshares registered un-

North Carolina Real Estate License Law and Commission Rules

der this Article shall not be subject to the provisions of G.S.

78A-24 and any real estate broker registered under Article 1

of this Chapter shall not be subject to the provisions of G.S.

78A-36.

§ 93A‑51. Rule‑making authority.

e Commission shall have the authority to adopt rules

and regulations that are not inconsistent with the provisions

of this Article and the General Statutes of North Carolina.

e Commission may prescribe forms and procedures for

submitting information to the Commission.

§ 93A‑52. Application for registration of timeshare

program; denial of registration; renewal;

reinstate ment; and termination of developer’s

interest.

(a) Prior to the oering in this State of any timeshare locat

in this State, the developer of the timeshare

program shall

make written application to the Commission for the reg-

istration of the program.

(a1) e application shall be accompanied by a fee in an

amount xed by the Commission but not to exceed one

thousand ve hundred dollars ($1,500), and shall in-

clude (i) a description of the program, (ii) copies of pro-

posed timeshare declaration, timeshare program govern-

ing documents, public oering statement, form time-

share instrument, form contract for sale, if dierent than

the timeshare instrument, and other documents referred

to in the public oering statement, (iii) information per-

taining to any marketing or managing entity to be em-

ployed by the developer for the sale of timeshares in a

timeshare program, (iv) information regarding any ex-

change program available to the owner, (v) an irrevocable

appointment of the Commission to receive service of any

lawful process in any proceeding against the developer or

the developer’s timeshare salespersons arising under this

Article, and (vi) such other information as the Commis-

sion may by rule require.

(a2) Upon receipt of a properly completed application and fee

and upon a determination by the Commission that the

sale of the timeshares in the timeshare program will be

directed and conducted by persons of good moral char-

acter, the Commission shall issue to the developer a cer-

ticate of registration authorizing the developer to of-

fer timeshares in the program for sale. e Commis-

sion shall, within 30 days after receipt of an incomplete

application, notify the developer by mail that the Com-

mission has found specied deciencies, and shall, with-

in 60 days after the receipt of a properly completed ap-

plication, either issue the certicate of registration or no-

tify the developer by mail or by electronic means of any

specic objections to the registration of the program.

Once issued, the certicate shall be available for inspec-

tion upon request of the Commission, and a copy of the

certicate shall be available for inspection by written re-

quest from any purchaser or owner.

(a3) e developer shall promptly report to the Commission

any and all material changes in the information required

to be submitted for the purpose of the registration. e

developer shall also immediately furnish the Commis-

sion complete information regarding any change in its

interest in a registered timeshare program, other than

the transfer of timeshares to purchasers in the ordinary

course of its business. If a developer disposes of, or oth-

erwise terminates its interest in a timeshare program,

the developer shall cease all marketing and sales of time-

shares, certify to the Commission in writing that its in-

terest in the timeshare program is terminated, and shall

return to the Commission for cancellation the certicate

of registration.

(b)

If the Commission nds that there is substan

tial reason to

deny the application for registration as a timeshare pro-

gram, the Commission shall notify the developer that

such application has been denied and shall aord the de-

veloper an opportunity for a hearing before the Commis-

sion to show cause why the application should not be de-

nied. In all proceedings to deny a certicate of registra-

tion, the provisions of Chapter 150B of the General Stat-

utes shall be applicable.

registration shall not constitute the approval of its con-

tents or waive the authority of the Commission to take

disciplinary action as provided by this Article.

(d) All certicates of registration granted and issued by the

Commission under the provisions of this Article shall ex-

pire on the 30th day of June following issuance thereof,

and shall become invalid after that date unless reinstated.

A certicate may be renewed 45 days prior to the expira-

tion date by ling an application with and paying to the

Commission the timeshare registration renewal fee xed

by the Commission but not to exceed one thousand ve

hundred dollars ($1,500) for each timeshare program.

Each certicate reinstated after the expiration date there-

of shall be subject to a fee of fty dollars ($50.00) in ad-

dition to the required renewal fee. If a developer fails to

reinstate the registration within 12 months after the ex-

piration date thereof, the Commission may, in its discre-

tion, consider the timeshare program as not having been

previously registered, and thereby subject to the provi-

sions of this Article relating to the issuance of an orig-

inal certicate. Duplicate certicates may be issued by

the Commission upon payment of a fee of one dollar

($1.00) by the registrant developer. Except as prescribed

by Commission rules, all fees paid pursuant to this Arti-

cle shall be nonrefundable.

§ 93A‑53. Register of applicants; roster of registrants;

nancial report to Secretary of State.

(a)

e Executive Director of the Commission shall keep

a register of all applicants for certicates of registration,

North Carolina Real Estate License Law and Commission Rules

showing for each the date of application, name, business

address, and whether the certicate was granted or refused.

(b) e Executive Director of the Commission shall also

keep a current roster showing the name and address of

all timeshare programs registered with the Commis-

sion. e roster shall be kept on le in the oce of the

Commission and be open to public inspection.

timeshare programs current on the preceding June 30

and a statement of the income received by the Com-

mission in connection with the registration of time \

share programs during the scal year ending on June 30

with the report required by G.S.93B-2.

§ 93A‑54. Disciplinary action by Com mission.

(a) e Commission shall have power to take disciplinary ac-

tion for violation of the provisions of this Article in the of-

fering or sale of a timeshare program to a purchaser. Upon

its own motion, or on the complaint of any person, the

Commission may investigate the actions of any regulated

party or any other person or entity who shall assume to act

in such capacity of a regulated party. If the Commission

nds probable cause that a timeshare regulated party has

violated any of the provisions of this Article, the Commis-

sion may hold a hearing on the allegations of misconduct.

(b) e Commission has the power to suspend or revoke at

any time a real estate license issued to a timeshare sales-

person or program broker, or a certicate of registration

of a timeshare program issued to a developer; or to rep-

rimand or censure a regulated party; or to ne a regulat-

ed party in the amount of ve hundred dollars ($500.00)

for each violation of this Article; or to impose any other

specied penalty permitted under this Article; if, after a

hearing, the Commission adjudges regulated party to be

guilty of any of the following:

(1) Making any willful or negligent misrepresentation

or any willful or negligent omission of material

fact about any timeshare or timeshare program;

(2) Making any false promises of a character likely to

inuence, persuade, or induce.

(3) Pursuing a course of misrepresentation or making

of false promises through agents, salespersons, ad-

vertising or otherwise.

(4) Failing, within a reasonable time, to account for

all money received from others in a timeshare

transaction, and failing to remit such monies as

may be required in G.S. 93A- 45 of this Article.

(5) Acting in a manner as to endanger the interest of

the public.

(6)

Paying a commission, salary, or other valuable

consideration to any person for acts or services

performed in violation of this Article.

(7) Any other conduct which constitutes improper,

fraudulent, or dishonest dealing.

(8) Performing or undertaking to perform any legal

service as set forth in G.S. 84-2.1, or any other

acts not specically set forth in that section.

(9) Failing to deposit and maintain in an escrow ac-

count all money received from others in a time-

share transaction as may be required in G.S.

93A-42 or G.S. 93A-45.

(10) Failing to deliver to a purchaser a public oering

statement containing the information required

by G.S. 93A-44 and any other disclosures that

the Commission may by regulation require.

(11) Failing to comply with the provisions of Chapter

75 of the General Statutes in the advertising or

promotion of timeshares for sale, or failing to as-

sure such compliance by persons engaged on be-

half of a developer.

(12) Failing to comply with the provisions of G.S.

93A-48 in furnishing complete and accurate in-

formation to purchasers concerning any exchange

program which may be oered to such purchaser

or owner.

(13) Making any false or fraudulent representation on

an application for registration.

(14) Violating any rule or regulation promulgated by

the Commission.

(15) Failing to record or cause to be recorded a time

share instrument as required by G.S. 93A-42(c1),

or failing to provide an owner the protection

against liens required by G.S. 93A-57(a).

(16) Failing as a timeshare program broker to exercise

reasonable and adequate supervision of the con-

duct of sales at a project or location by the bro-

kers and salespersons under the timeshare pro-

gram broker’s control.

tion (b) of this section shall be remitted to the Civil

Penalty and Forfeiture Fund in accordance with G.S.

115C-457.2.

(d) Following a hearing, the Commission shall also have

power to suspend or revoke any certicate of regis-

tration issued under the provisions of this Article or

to reprimand or censure any regulated party when

the regulated party has been convicted or has entered

a plea of guilty or no contest upon which nal judg-

ment is entered by a court of competent jurisdiction

in this State, or any other state, of the criminal oens-

es of embezzlement, obtaining money under false pre-

tense, fraud, forgery, conspiracy to defraud, or any oth-

er oense involving moral turpitude which would rea-

sonably aect the regulated party’s performance in the

timeshare business.

(e) e Commission may appear in its own name in supe-

rior court in actions for injunctive relief to prevent any

person or entity from violating the provisions of this

Article or rules promulgated by the Commission. e

superior court shall have the power to grant these in-

North Carolina Real Estate License Law and Commission Rules

junctions even if criminal prosecution has been or may

be instituted as a result of the violations, or regardless

of whether the regulated party or person has been reg-

istered by the Commission.

(f) Each developer shall maintain or cause to be main-

tained complete records of every timeshare transaction

and each independent escrow agent shall maintain or

cause to be maintained complete records pertaining to

the deposit, maintenance, and withdrawal of money

required to be held in an escrow account, or as other-

wise required by the Commission, under G.S. 93A-45

of this Article. e Commission may inspect these re-

cords periodically without prior notice and may also

inspect these records whenever the Commission deter-

mines that they are pertinent to an investigation of any

specic complaint against a developer or independent

escrow agent.

(g)

When a licensee is accused of any act, omission, or

misconduct under this Article which would subject the

licensee to disciplinary action, the licensee may, with

the consent and approval of the Commission, surren-

der the licensee’s license and all the rights and privi-

leges pertaining to it for a period of time to be estab-

lished by the Commission. A licensee who surrenders a

license shall not be eligible for, or submit any applica-

tion for, licensure as a real estate broker or registration

of a timeshare program during the period of license

surrender. For the purposes of this section, the term li-

censee shall include a timeshare developer.

§ 93A‑55. Private enforcement.

e provisions of the Article shall not be construed to lim-

it in any manner the right of a purchaser, owner, or other

person injured by a violation of this Article to bring a pri-

vate action.

§ 93A‑56. Penalty for violation of Article.

Except as specically provided elsewhere in this Article, any

person violating the provisions of this Article shall be guilty

of a Class 1 misdemeanor.

§ 93A‑57. Release of liens or subordination and notice

to creditors instrument.

(a) Prior to any closing, the developer shall record a release of

all liens or encumbances aecting the timeshare being ac-

quired by the purchaser or timeshare property or comply

with one of the following:

(1) If there are any interest holders in the timeshare

or timeshare property, the developer and any in-

terest holders must execute and record a subordi-

nation and notice to creditors instrument in the

jurisdiction in which the timeshare or timeshare

program is situated. e subordination and no-

tice to creditors instrument shall contain the fol-

lowing:

a. Language sucient to provide subsequent

creditors of the developer and interest holder

with notice of the existence of the timeshare

program and of the rights of owners in order

to protect the interests of the owners from

any claims of subsequent creditors.

b. A statement that the instrument shall be ef-

fective as between the owner and the devel-

oper and interest holder despite any bank-

ruptcy proceedings involving the developer.

c. A statement that so long as an owner remains

in good standing with respect to the own-

er’s obligations under the timeshare declara-

tion, then the interest holder will honor all

rights of the owner as reected in the time-

share declaration.

(2) If there are any interest holders in the timeshare or

the timeshare property, the developer must make

alternative arrangements that are adequate to pro-

tect the rights of the owners of the timeshares and

timeshare property, provided that any alternative

arrangement is approved by the Commission.

(b) Unless a timeshare owner or a timeshare owner who

the owner’s predecessor in title agree otherwise with the

lienor, if a lien other than a mortgage or deed of trust

becomes eective against more than one timeshare in a

timeshare program, any timeshare owner is entitled to a

release of the owner’s timeshare from a lien upon pay-

ment of the amount of the lien attributable to the owner’s

timeshare. e amount of the payment must be propor-

tionate to the ratio that the owner’s liability bears to the li-

abilities of all owners whose interests are subject to the lien.

Upon receipt of payment, the lien holder shall promptly

deliver to the owner a release of the lien covering that time-

share. After payment, the managing entity may not assess

or have a lien against that timeshare for any portion of the

expenses incurred in connection with that lien.

§ 93A‑58. Registrar required; criminal penal ties; program

broker.

(a) Every developer shall, by adavit led with the Commis-

sion, designate a natural person to serve as timeshare reg-

istrar for its registered timeshare program. e timeshare

registrar shall be responsible for the recordation of time-

share instruments and the release of liens required by G.S.

93A-42(c) and G.S. 93A-57(a). A developer may, from

time to time, change the designated timeshare registrar by

proper ling with the Commission and by otherwise com-

plying with this subsection. No sales or oers to sell shall be

made until the registrar is designated for a timeshare pro-

gram.

(b) e timeshare registrar has the duty to ensure that the

provisions of this Article are complied with in a time-

share program for which the person is the timeshare reg-

istrar. No timeshare registrar shall record a timeshare in-

North Carolina Real Estate License Law and Commission Rules

strument except as provided by this Article.

timeshare registrar knowingly or recklessly fails to record

or cause to be recorded a timeshare instrument as required

by this Article. A person responsible as general partner, cor-

porate ocer, joint venturer, or sole proprietor of the devel-

oper of a timeshare project is guilty of a Class I felony if the

person intentionally allows the oering for sale or the sale

of timeshare to purchasers without rst designating a time-

share registrar.

(d) e developer shall designate for each timeshare program

and other locations where timeshares are sold or oered for

sale a program broker. e program broker shall act as su-

pervising broker for all timeshare salespersons at the time-

share program or other location and shall directly, person-

ally, and actively supervise all such persons at the timeshare

program or other locations in a manner to reasonably en-

sure that the sale of timeshares will be conducted in accor-

dance with the provisions of this Chapter.

§ 93A‑59. Preservation of an owner’s claims and

defenses.

(a) For one year following the execution of an instrument

of indebtedness for the purchase of a timeshare uses,

the owner may assert against the developer, assignee

of the developer, or other holder of the instrument of

indebtedness, any claims or defenses available against

the developer, and the owner may not waive the right

to assert these claims or defenses in connection with a

timeshare purchase. Any recovery by the owner on a

claim asserted against an assignee of the developer or

other holder of the instrument of indebtedness shall

not exceed the amount paid by the developer under the

instrument. A holder shall be the person or entity with

the rights of a holder as set forth in G.S. 25-3-301.

(b)

Every instrument of indebtedness for the purchase of

a timeshare shall set forth in conspicuous type the fol-

lowing provision in substantially the following form:

“NOTICE: FOR A PERIOD OF ONE YEAR FOL-

LOWING THE EXECUTION OF THIS INSTRUMENT

OF INDEBTEDNESS, ANY HOLDER OF THIS IN-

STRUMENT OF INDEBTEDNESS IS SUBJECT TO

ALL CLAIMS AND DEFENSES WHICH THE OWN-

ER COULD ASSERT AGAINST THE DEVELOPER

OF THE TIMESHARE. RECOVERY BY THE OWN-

ER SHALL NOT EXCEED AMOUNTS PAID BY THE

OWNER UNDER THIS INSTRUMENT.”

§ 93A‑60. Substantial compliance.

If a developer or managing entity has otherwise substantially

complied with this Article, any nonmaterial errors or omis-

sions shall not be the basis for any claims or defenses assert-

ed by the purchaser; provided, however, that for purposes of

this section, the developer or managing entity shall have the

burden of proof.

§ 93A‑61. Management.

(a) For each timeshare program, the developer shall pro-

vide for a managing entity, which shall be either the de-

veloper, a third-party management rm, or timeshare

owners’ association.

(b) e managing entity may not furnish the name, ad-

dress, electronic mail address, or contact information

of any owner to any person, including any other own-

er or authorized agent of an owner, unless the owner

whose name, address, electronic mail address, or con-

tact information is requested rst approves the dis-

closure in writing. e managing entity shall main-

tain among its records and provide to the Commission

upon request a complete list of the names and address-

es of all owners in the timeshare program. e manag-

ing entity shall update this list at least quarterly. e

managing entity may not publish this owners’ list or

provide a copy of it to any owner or to any third party

other than the Commission. However, the managing

entity shall mail to those owners listed on the owners’

list materials provided by any owner, upon the writ-

ten request of that owner, if the purpose of the mail-

ing is to advance legitimate business of the timeshare

program, including, but not limited to, a proxy solic-

itation for any purpose, including the recall of one or

more directors elected by the owners or the discharge

of the management rm. e managing entity shall be

responsible for determining the appropriateness of any

requested mailing. e owner who requests the mail-

ing must reimburse the managing entity in advance for

the actual, reasonable costs in performing the mailing.

A mailing requested for the purpose of advancing le-

gitimate business of the timeshare program shall occur

within 30 days after receipt of a request from an owner.

vider for the predecessor in interest, shall deliver to the

managing entity a copy of the timeshare instrument,

which shall be a copy of the recorded timeshare instru-

ment if the timeshare is a timeshare estate, together

with the name and mailing address of the successor in

interest within 15 days after the date of transfer, and af-

ter such delivery, the successor in interest shall be listed

by the managing entity as the owner of the timeshare

on the books and records. e managing entity shall

not be liable to any person for any inaccuracy in the

books and records arising from the failure of the pre-

decessor in interest to timely and correctly notify the

managing entity of the name and mailing address of

the successor in interest.

(d) e managing entity shall make the books and records

reasonably available for inspection by any owner or

North Carolina Real Estate License Law and Commission Rules

the authorized agent of an owner. e managing en-

tity may charge the owner a reasonable fee for copy-

ing or providing the requested information, however,

any owner or agent of an owner shall be permitted to

personally inspect and examine the books and records

wherever located at any reasonable time, under reason-

able conditions, and under the supervision of the cus-

todian of those records. All books and nancial records

of the timeshare program must be maintained in ac-

cordance with generally accepted accounting practic-

es. e managing entity may require any owner or au-

thorized agent of an owner to execute and provide a

reasonable condentiality or nondisclosure agreement

prohibiting the disclosure of books and records to non-

owners.

(e) All notices or other information sent by a managing

entity may be delivered to an owner by electronic mail,

provided that the owner rst consents electronically to

the use of electronic mail for notice purposes. e con-

sent to receive notice by electronic mail is eective un-

til revoked by the owner.

(f) An ocer, director, or agent of a timeshare owners’

association shall discharge their duties in good faith,

with the care an ordinarily prudent person in a like po-

sition would exercise under similar circumstances, and

in a manner they reasonably believe to be in the inter-

ests of the timeshare owners’ association. An ocer, di-

rector, or agent of a timeshare owners’ association shall

be exempt from liability for monetary damages unless

the ocer, director, or agent breached or failed to per-

form their duties and the breach of, or failure to per-

form, those duties constitutes a violation of criminal

law, constitutes a transaction from which the ocer,

director, or agent derived an improper personal bene-

t, either directly or indirectly, or constitutes reckless-

ness or an act or omission that was in bad faith, with

malicious purpose, or in a manner exhibiting wanton

and willful disregard of human rights, safety, or prop-

erty.

(g) If a state of emergency is declared pursuant to the

North Carolina Emergency Management Act or by

any governmental agency with authority in the locale

in which timeshare property is located, then the fol-

lowing apply:

(1) e managing entity may, but is not required to,

exercise the following powers:

a. Conduct board meetings and owner meet-

ings with notice given in any practicable

manner, including publication, radio, con-

spicuous posting on the timeshare proper-

ty, electronic means, or any other means the

board deems reasonable under the circum-

stances. Notice of board decisions may be

communicated in the same manner as notice

of the meetings is given.

b. Cancel and reschedule any timeshare own-

ers’ association meeting.

c. Name as assistant ocers persons who are

not directors of the board. Named assistant

ocers shall have the same authority as the

executive ocers to whom they are assistants

during the state of emergency to accommo-

date the incapacity or unavailability of any

ocer of the timeshare owners’ association.

d. Relocate the managing entity’s principal of-

ce or designate alternative principal oces

or conduct business remotely.

e. Enter into agreements with government

agencies to assist in responding to the emer-

gency.

f. Implement an emergency plan for which a

state of emergency is declared. e emergen-

cy plan may include, but is not limited to,

shutting down all or any portion of time-

share units, amenities, or timeshare projects,

including shutting o systems or utilities.

g. Determine that all or any portion of the

timeshare property is unavailable for entry

or occupancy by owners or any other per-

son to protect the health, safety, or welfare

of owners or persons or to properly respond

to the emergency. Should any person enter

or occupy the timeshare property when the

board has declared the timeshare property is

unavailable for entry or occupancy for those

persons, and without board approval, the

board and the association shall be immune

from liability or injury to persons or proper-

ty arising from that failure or refusal.

h. Require occupancy of timeshare units to be

aggregated in certain parts of the timeshare

property even if other parts of the timeshare

property are habitable.

i. Require the evacuation of all or any portion

of the timeshare property in the event of a

mandatory evacuation order or in order to

respond to the emergency. Should any per-

son fail or refuse to evacuate the timeshare

property where the board has required evac-

uation, the board and the association shall be

immune from liability or injury to persons

or property arising from that failure or refus-

al.

j. Make a determination whether all or any

portion of the timeshare property can be

safely inhabited or occupied; provided, how-

ever, any determination is not conclusive as

to any determination of habitability pursu-

ant to applicable law or the timeshare decla-

ration.

North Carolina Real Estate License Law and Commission Rules

k. Temporarily suspend or modify rules and

regulations concerning the physical use of all

or any portion of the timeshare property.

l. Mitigate further damage, including taking

action to contract for the removal of debris

and to prevent or mitigate the spread of fun-

gus or disease notwithstanding timeshare

declaration provisions regarding owner ap-

proval of changes to the timeshare units or

amenities.

m. Regardless of any provision to the contrary

and even if such authority does not specif-

ically appear in the timeshare declaration,

levy special assessments without a vote of the

owners.

n. Without owners’ approval, borrow money

and pledge association assets as collateral to

fund emergency repairs, to respond to the

emergency, or to carry out the duties of the

association when operating funds are insu-

cient.

o. Temporarily suspend or modify timeshare

program reservation system rules and regula-

tions to manage owner reservations and use

rights in the best interests of the owners as a

whole, including cancelling existing reserva-

tions, extending expiring use rights, or sus-

pending or modifying priority periods and

priority reservation rights. A temporary sus-

pension or modication shall be permitted

even if owners must compete for reservation

and use of timeshare periods and timeshare

units on a more than one-to-one use night to

use right ratio.

p. Toll the expiration of any claim of lien aris-

ing under G.S. 93A-62(d)(4) for the dura-

tion of the state of emergency, provided that

the beginning and ending dates for each pe-

riod of tolling are recorded in the public re-

cords and the owner is notied of the end of

the tolling period.

q. Modify or suspend assessment and collec-

tion requirements and activity, including de-

ferring due dates or waiving late charges and

interest, provided that all owners are treat-

ed equally as of the date of modication and

suspension, and owners who have previous-

ly made timely payments have their future

assessments adjusted in a manner that fair-

ly compensates them for making timely pay-

ments in advance of the modication or sus-

pension.

(2) e emergency powers authorized and exercised

shall be limited to that time reasonably necessary

to protect the health, safety, and welfare of the

managing entity and the owners and reasonably

necessary to mitigate further damage and make

emergency repairs, notwithstanding the termina-

tion of the state of emergency. Further, the man-

aging entity may take any actions that are neces-

sary to implement the exercised powers even if the

implementation takes place after the termination

of the state of emergency, provided that the im-

plementation is necessary and does not go beyond

the scope of the exercised power.

(3) In the exercise of emergency powers, the man-

aging entity may take into account the econom-

ic consequences of the emergency to the owners;

however, the managing entity shall give great-

er weight to the health, safety, and welfare of the

managing entity and the owners and mitigation

of further damage and adhere to the business

judgment rule in balancing economic consider-

ations with owner opportunity to enjoy the use of

the timeshare property.

(4) In the exercise of the emergency powers, the man-

aging entity will be deemed to have met any duty

of care if the managing entity has relied upon ad-

vice of emergency management ocials or upon

the advice of licensed professionals with applica-

ble expertise.

§ 93A‑62. Delinquent assessments; developer guarantee.

(a) Delinquent assessments may bear interest at the high-

est rate permitted by law or at some lesser rate estab-

lished by the managing entity. In addition to interest,

the managing entity may charge a reasonable admin-

istrative late fee for each delinquent assessment. Any

costs of collection, including reasonable collection

agency fees and reasonable attorney’s fees, incurred in

the collection of a delinquent assessment shall be paid

by the owner and shall be secured by a lien in favor of

the managing entity upon the timeshare with respect

to which the delinquent assessment has been incurred.

(b) e managing entity may deny the use of the timeshare

units or facilities, including the denial of the right to

make a reservation or the cancellation of a conrmed

reservation for timeshare periods, to any owner who is

delinquent in the payment of any assessments made by

the managing entity against the owner for common ex-

penses, in accordance with the following:

(1) e managing entity must, no less than 30 days

after the date the assessment is due, notify the

owner in writing of the total amount of any delin-

quency which then exists, including any accrued

interest and late charges permitted to be imposed

under the terms of the timeshare program or by

law and including a per diem amount. e notice

shall be sent to the owner at the owner’s known

address as recorded in the books and records of

North Carolina Real Estate License Law and Commission Rules

the timeshare program.

(2) e notice shall clearly state that the owner will

not be permitted to use the owner’s timeshare,

that the owner will not be permitted to make a

reservation in the timeshare program’s reservation

system, or that any conrmed reservation may

be canceled until the total amount of such delin-

quency is satised in full or until the owner pro-

duces satisfactory evidence that the delinquency

does not exist.

(3) e notice shall be eective to bar the use of

the owner and those claiming use rights under

the owner, including the owner’s guests, lessees,

and persons receiving use rights in the timeshare

through an exchange program; provided, however,

that (i) a managing entity desiring to deny the use

of the timeshare to persons receiving use rights in

the delinquent owner’s timeshare through an ex-

change program that has an aliation agreement

with the managing entity shall notify the aliated

exchange company in writing of the denial of use

at the time that the notice was sent to the owner

and (ii) any person claiming through the aliated

exchange program who has received a conrmed

assignment of the delinquent owner’s use rights

from the aliated exchange company prior to the

expiration of 48 hours after the receipt by the af-

liated exchange company of the written notice

from the managing entity shall be permitted by

the managing entity to use the owner’s use rights.

(4) Any costs reasonably incurred by the managing

entity in connection with its compliance with the

requirements of this section may be assessed by

the managing entity against the delinquent owner

and collected in the same manner as if those costs

were common expenses of the timeshare program

allocable solely to the delinquent purchaser.

(5) A managing entity may not enforce the denial

of use against any one owner or group of owners

without similarly enforcing it against all owners,

including all developers.

(b) of this section, the managing entity may give fur-

ther notice to the delinquent owner that the managing

entity may rent the delinquent owner’s timeshare, or

any use rights appurtenant thereto, in accordance with

the following:

(1) A further notice of intent to rent must be given

no less than 30 days after the date the assessment

is due and must be delivered to the purchaser in

the manner required for notices under subsection

(b) of this section.

(2) e notice shall state that unless the owner satis-

es the delinquency in full, or unless the owner

produces satisfactory evidence that the delinquen-

cy does not exist, the purchaser will be bound by

the terms of any rental contract entered into by

the managing entity with respect to the owner’s

timeshare or appurtenant use rights.

(3) e notice shall state that the owner will remain

liable for any dierence between the amount of

the delinquency and the net amount produced by

the rental contract and applied against the delin-

quency, and the managing entity shall not be re-

quired to provide any further notice to the owner

regarding any residual delinquency.

(4) e managing entity’s eorts to secure a rental

shall not commence on a date earlier than 10 days

after the date of the notice of intent to rent.

(5) e managing entity must apply the proceeds of

any rental, net of any rental commissions, clean-

ing charges, travel agent commissions, or any oth-

er commercially reasonable charges reasonably

and usually incurred by the managing entity in se-

curing rentals to the delinquent owner’s account.

(6) A managing entity may make a reasonable deter-

mination regarding the priority of rentals of time-

shares and, if the delinquent owner whose time-

share is rented cannot be specically determined

due to the structure of the timeshare program, the

managing entity may allocate any net rental pro-

ceeds in any reasonable manner.

(7) In securing a rental, the managing entity shall not

be required to obtain the highest nightly rental

rate available, nor any particular rental rate, and

the managing entity shall not be required to rent

the entire timeshare or appurtenant rights; how-

ever, the managing entity must use reasonable ef-

forts to secure a rental that is commensurate with

other rentals of similar timeshares or use rights

generally secured at that time.

(d) For timeshare estates located in this State, the manag-

ing entity shall have a lien on a timeshare for any as-

sessment levied against that timeshare from the date

such assessment becomes due. e managing entity

shall also have a lien on a timeshare estate of any own-

er for the cost of any maintenance, repairs, or replace-

ment resulting from an act of the owner or the owner’s

guest or lessee that results in damage to the timeshare

property. All of the following apply to a lien imposed

under this section:

(1) e managing entity, or the holder of the lien,

may bring a judicial action in its name to fore-

close the lien in the nature of an action to fore-

close a mortgage or deed of trust and may also

bring an action to recover a money judgment

for the unpaid assessments without waiving any

claim of lien. As an alternative to initiating a ju-

dicial action, the managing entity may initiate a

nonjudicial foreclosure proceeding to foreclose

North Carolina Real Estate License Law and Commission Rules

the assessment lien.

(2) e lien is eective from the date of and shall re-

late back to the recording of the original time-

share declaration, or, in the case of lien on a time-

share located in a phase timeshare program, the

last to occur of the recording of the original time-

share declaration or amendment creating the

timeshare. However, as to rst mortgages of re-

cord, the lien is eective from and after ling of

the claim of lien in the oce of the clerk of supe-

rior court in the county where the timeshare es-

tate is located.

(3) e claim of lien shall state the name of the time-

share program and identify the timeshare for

which the lien is eective, state the name of the

owner, state the assessment amount due, and state

the due dates. e claim of lien shall be signed

and acknowledged by an ocer or agent of the

managing entity or the holder.

(4) e lien shall expire upon the earlier of:

a. e date it is satised.

b. Five years from the date the claim of lien is

led unless an action to enforce the lien is

commenced within that time.

(5) A claim of lien for assessments may include assess-

ments which are due when the claim is recorded

and all assessments that subsequently become due

and are delinquent. Upon full payment, the per-

son making the payment is entitled to receive a

satisfaction of the lien.

(6) A judgment in any action or suit brought to fore-

close the claim of lien may include costs and rea-

sonable attorney’s fees for the substantially pre-

vailing party.

(e) A successor in interest, regardless of how the timeshare

has been acquired, including a purchaser at a judicial

sale or foreclosure trustee sale, is jointly and severally

liable with their predecessor in interest for all unpaid

assessments against the predecessor up to the time of

transfer of the timeshare to a successor, without preju-

dice to any right a successor in interest may have to re-

cover from their predecessor in interest any amounts

assessed against the predecessor and paid by the suc-

cessor; provided, however, a rst mortgagee or its suc-

cessor or assignee who acquires title to a timeshare as

a result of the foreclosure of the mortgage or by deed

in lieu of foreclosure of the mortgage shall be exempt

from liability for all unpaid assessments attributable

to the timeshare or chargeable to the previous owner

which came due prior to acquisition of title by the rst

mortgagee.

(f) If the developer agrees to guarantee the level of as-

sessments for the timeshare program for any period

of time, the developer may be excused from the pay-

ment of the developer’s share of the assessments that

otherwise would have been assessed against develop-

er-owned timeshares during the guarantee period, pro-

vided that the developer guarantees that (i) during the

guarantee period the assessments against owner time-

shares will not increase over the dollar amount stat-

ed in the adopted, good-faith budget of the timeshare

program and (ii) the developer will pay any amount by

which all common expenses incurred during the guar-

antee period exceed the total revenues of the timeshare

program during the guarantee period.

§ 93A‑63. Reservation systems.

(a) e developer shall describe in the timeshare declara-

tion any creation of a reservation system and shall es-

tablish rules and regulations for its operation. In estab-

lishing these rules and regulations, the developer shall

take into account the location and anticipated relative

use demand of each timeshare unit and timeshare proj-

ect component site that is included in the timeshare

program and, the developer shall use its best eorts, in

good faith and based upon all reasonably available evi-

dence under the circumstances, to further the best in-

terests of the owners as a whole with respect to their

opportunity to use and enjoy the timeshare units.

(b) e rules and regulations shall also provide for period-

ic adjustment or amendment of the reservation system

by the reservation system operator from time to time

in order to respond to actual owner use patterns and

changes in owner use demand for the timeshare units

existing at that time within the timeshare program. In

addition to any other rights granted by the rules and

regulations of the timeshare program, the reservation

system operator is authorized to manage the reserva-

tion and use of the timeshare program using those pro-

cesses, analyses, procedures, and methods that are in

the best interests of the owners as a whole to eciently

manage the timeshare program.

forecast anticipated reservation and use of the time-

share units, including the right to take into account

current and previous reservation and use of the time-

share units, information about events that are sched-

uled to occur, seasonal use patterns, and other perti-

nent factors that aect the reservation or use of the

timeshare program.

(d) e reservation system operator is authorized to re-

serve timeshare periods and timeshare units, in the best

interests of the owners as a whole, for the purposes of

depositing any reserved use with an aliated exchange

program or renting any reserved timeshare periods or

timeshare units in order to facilitate the use or future

use of the timeshare period or timeshare units or other

benets made available through the timeshare program

to owners.

(e) If the reservation system operator is not the timeshare

North Carolina Real Estate License Law and Commission Rules

owners’ association, the following provisions shall ap-

ply with respect to termination of the reservation sys-

tem operator’s management agreement or reservation

agreement:

(1) No later than 90 days after the date of termina-

tion, or another date as set forth in the applica-

ble management agreement or reservation agree-

ment, the terminated reservation system opera-

tor shall transfer to the timeshare owners’ associa-

tion, or any designated successor reservation sys-

tem operator, all relevant data held by the prior

reservation system operator and related to any res-

ervation system and any other records and infor-

mation as is necessary to permit the uninterrupt-

ed operation and administration of the reserva-

tion system. However, the information required

to be transferred does not include private infor-

mation of the terminated reservation system op-

erator that is not directly related to operation and

management of the timeshare program.

(2) All reasonable costs incurred by the terminated

reservation system operator in eecting the trans-

fer of information shall be reimbursed to the ter-

minated reservation system operator as a com-

mon expense of the timeshare program within 10

days after the completed transfer of the informa-

tion.

(3) Nothing contained in this section shall preclude

a reservation system operator from providing in

its agreement with the timeshare owners’ associa-

tion or in the timeshare declaration that the reser-

vation system operator owns the reservation sys-

tem and that the reservation system operator shall

continue to own the reservation system in the

event that it is terminated.

§ 93A‑64. Multisite timeshare program additions,

substitutions, and deletions.

(a) With respect to addition of timeshare units, amenities,

or timeshare projects to the multisite timeshare pro-

gram, the timeshare declaration must provide for the

following:

(1) e basis upon which new timeshare units, ame-

nities, or timeshare projects may be added, by

whom additions may be made, and the scal im-

pact, if any, of any additions on the owners.

(2) e extent, if any, to which owners will have the

right to consent to any proposed additions.

(3) e person authorized to make additions during

the term of the multisite timeshare program must

comply with the one-to-one use night to use right

ratio and the requirements of G.S. 93A-63 in as-

certaining the desirability of the proposed addi-

tion and any impact of the proposed addition

upon the demand for and availability of existing

timeshare units, amenities, or timeshare projects.

(b) With respect to substitution of timeshare units, ameni-

ties, or timeshare projects for existing timeshare units,

amenities, or timeshare projects in a multisite time-

share program, the timeshare declaration must provide

for the following:

(1) e basis upon which timeshare units, amenities,

or timeshare projects may be substituted for exist-

ing timeshare units, amenities, or timeshare proj-

ects, by whom substitutions may be made, and

the scal impact, if any, of any substitutions on

the owners.

(2) e replacement timeshare units, amenities, or

timeshare projects must provide owners with an

opportunity to enjoy a substantially similar or im-

proved vacation experience as compared to the ex-

perience available at the replaced timeshare units,

amenities, or timeshare projects. In determining

whether the replacement timeshare units, ameni-

ties, or timeshare projects will provide a substan-

tially similar or improved vacation experience, all

relevant factors may be considered, including, but

not limited to, some or all of the following: size;

capacity; furnishings; maintenance; location, in-

cluding geographic, topographic, and scenic con-

siderations; demand and availability for owner

use; and recreational capabilities.

(3) If a timeshare owned by the owner in a multi-

site timeshare program is a timeshare estate in a

specic timeshare unit, no substitution may be

made of that timeshare unit without the approv-

al of that owner and all other owners of timeshare

estates in that timeshare unit.

(4) If the timeshare declaration provides that the de-

veloper, acting unilaterally, or a managing entity

under common ownership or control with the de-

veloper is the person who is authorized to make

substitutions, the developer or managing enti-

ty may not substitute available timeshare units in

the multisite timeshare program in a given calen-

dar year pursuant to this subsection if the amount

of the substituted timeshare units provides more

than ten percent (10%) of the total annual use

availability in the multisite timeshare program

calculated in seven-day increments.

(5) If the timeshare declaration provides that the

managing entity is the person authorized to make

substitutions, and the managing entity is not un-

der common ownership or control with the de-

veloper, the managing entity may not substitute

available timeshare units in the multisite time-

share program in a given calendar year pursuant

to this subsection if the amount of the substituted

timeshare units provides more than twenty-ve

percent (25%) of the total annual use availability

North Carolina Real Estate License Law and Commission Rules

in the multisite timeshare program calculated in

seven-day increments.

(6) If the owners have the right to consent to any

proposed substitutions, and the person autho-

rized to make substitutions receives, within 21

days after the date of the notice of substitution re-

quired by this subsection, a written objection to

the proposed substitution from at least ten per-

cent (10%) of all owners in the multisite time-

share program, a meeting of the owners must be

conducted by the managing entity within 30 days

after the end of the 21-day period. e proposed

substitution is ratied unless it is rejected by a

majority of owners voting in person or by proxy

at the meeting, provided that at least twenty-ve

percent (25%) of all owners cast votes.

(7) e person authorized to make substitutions may

make unlimited substitutions in a given year if a

proposed substitution is approved in advance by

a majority of owners of the multisite timeshare

program voting in person or by proxy at a meet-

ing called for that purpose, provided that at least

twenty-ve percent (25%) of the total number of

owners cast votes.

(8) e person authorized to make substitutions shall

notify all owners of the multisite timeshare pro-

gram in writing of the decision to make a substi-

tution. is notice must meet all of the following

requirements:

a. e notice must be given at least six months

in advance of the date that the proposed sub-

stitution will occur.

b. e notice must state the last day after the

end of the six-month period on which reser-

vations will be accepted from owners for use

of the existing timeshare units that will be re-

placed.

c. e notice must state that owners shall have

21 days after the date of the notice of sub-

stitution to le a written objection with the

person authorized to make substitutions.

(9) e person authorized to make substitutions may

remove existing timeshare units for substitution

only after those timeshare units have no pending

purchaser use reservations.

(10) e person authorized to make substitutions must

comply with the one-to-one use night to use right

ratio and the requirements of G.S. 93A-63 in as-

certaining the desirability of the proposed substi-

tution and its impact upon the demand for and

availability of existing timeshare units, amenities,

or timeshare projects.

or timeshare projects, the timeshare declaration must

provide for the following:

(1) If the deletion is as a result of a casualty, the fol-

lowing apply:

a. e timeshare declaration must provide for

casualty insurance for the timeshare units or

amenities in an amount equal to the replace-

ment cost of those timeshare units or ame-

nities. e timeshare declaration must also

provide that in the event of a casualty that re-

sults in timeshare units, amenities, or time-

share projects being unavailable for use by

owners, the managing entity shall notify all

aected owners of the unavailability of use

within 30 days after the event of casualty.

b. e timeshare declaration must also provide

for the application of any insurance pro-

ceeds arising from a casualty to either the re-

placement or acquisition of additional simi-

lar timeshare units or to the removal of own-

ers from the multisite timeshare program so

that owners will not be competing for avail-

able timeshare units or amenities on a greater

than one-to-one use night to use right ratio.

c. If the timeshare instrument does not provide

for business income insurance, or if it is un-

available, or if the declaration permits the

developer, the managing entity, or the own-

ers to elect not to reconstruct after casualty

under certain circumstances or to secure re-

placement timeshare units in lieu of recon-

struction, owners may temporarily compete

for available accommodations on a greater

than one-to-one use night to use right ratio.

e decision whether or not to reconstruct

shall be made as promptly as possible under

the circumstances.

d. Any replacement of timeshare units, ame-

nities, or timeshare projects must comply

with the one-to-one use night to use right

ratio and the requirements of G.S. 93A-63

in ascertaining the desirability of the pro-

posed addition and its impact upon the de-

mand for and availability of existing time-

share units, amenities, or timeshare projects.

(2) If the deletion is as a result of an eminent domain

proceeding, the following apply:

a. e timeshare declaration must provide for

the application of any proceeds arising from

a taking under eminent domain proceedings

to either the replacement or acquisition of

additional similar timeshare units or to the

removal of owners so that owners will not be

competing for available timeshare units on

a greater than one-to-one use night to use

right requirement ratio.

b. Any replacement of timeshare units, ame-

North Carolina Real Estate License Law and Commission Rules

nities, or timeshare projects must comply

with the one-to-one use night to use right

ratio and the requirements of G.S. 93A-63

in ascertaining the desirability of the pro-

posed addition and its impact upon the de-

mand for and availability of existing time-

share units, amenities, or timeshare projects.

(3) e timeshare declaration may provide that time-

share units, amenities, or timeshare projects will

be deleted upon the expiration of the term of

their availability or as otherwise provided in the

timeshare declaration. However, the timeshare

declaration must also provide that if a timeshare

unit is deleted in this manner, a sucient number

of owners will also be deleted, or a sucient num-

ber of substitute timeshare units will be substitut-

ed for the deleted timeshare units, so as to main-

tain no greater than a one-to-one use night to use

right ratio.

§ 93A‑65. Resale purchase contracts; prohibition

against advance listing fee.

(a) A consumer timeshare reseller, or any agent of a resell-

er, must use a resale purchase contract which must con-

tain all of the following:

(1) An identication of the timeshare.

(2) e name and address of the timeshare program

and of the managing entity of the timeshare pro-

gram.

(3) Immediately prior to the disclosure required by

subdivision (5) of this subsection, a statement in

conspicuous type in substantially the following

form:

“e current year’s assessment allocable to the

timeshare you are purchasing is [insert amount].

is assessment, which may be increased from

time to time by the managing entity of the time-

share program, is payable in full each year on or

before [insert date]. is assessment [includes/

does not include] yearly real estate taxes, which

[are/are not] billed and collected separately. Each

owner is personally liable for the payment of as-

sessments, and failure to timely pay these assess-

ments may result in restriction or loss of your

use or ownership rights. ere are many impor-

tant documents relating to the timeshare program

which you should review prior to purchasing a

timeshare, including the timeshare declaration,

the timeshare owners’ association articles and by-

laws, the current year’s operating and reserve bud-

gets, and any rules and regulations aecting the

use of timeshare units and amenities.”

(4) If there are any delinquent assessments or real es-

tate taxes outstanding with respect to the time-

share, the following statement must be included

in the statement described in subdivision (3) of

this subsection:

“A delinquency in the amount of [insert amount]

for unpaid assessments or real estate taxes current-

ly exists with respect to the timeshare you are pur-

chasing, together with a per diem charge of [insert

amount] for interest and late charges.”

(5) A statement in conspicuous type located imme-

diately prior to the space in the contract reserved

for the signature of the purchaser in the following

form:

“You may cancel this contract without any penal-

ty or obligation within ve days after the date you

sign this contract. If you decide to cancel this con-

tract, you must notify the seller in writing of your

intent to cancel. Your notice of cancellation shall

be eective upon the date sent and shall be sent to

the seller at [insert address]. Any attempt to ob-

tain a waiver of your cancellation right is void and

of no eect. While you may execute all closing

documents in advance, the closing before expira-

tion of your ve-day cancellation period is pro-

hibited.”

(6) e year in which the purchaser will rst be enti-

tled to reserve, use, or occupy a timeshare unit.

(b) If a resale purchase contract is not used or does not

comply with the provisions of this section, the transac-

tion shall be voidable at the option of the purchaser for

a period of one year after the date of transfer.

vance fee for the listing of any timeshare.

§ 93A‑66. Record keeping by resale service providers,

transfer service providers, and lead dealers.

Resale service providers, lead dealers, and transfer service

providers shall maintain the following records for a period

of three years from the date each piece of personal contact

information is obtained:

(1) A copy of all pieces of personal contact informa-

tion obtained.

(2) Resale service providers, transfer service provid-

ers, and lead dealers who receive personal contact

information from other lead dealers shall main-

tain records disclosing:

a. e full name, address, and telephone num-

ber of the lead dealer from which the person-

al contact information was obtained.

b. e date, time, and place of the transaction

at which the personal contact information

was obtained, along with the amount of con-

sideration paid and a signed receipt from the

lead dealer or copy of a canceled check.

(3) Resale service providers, transfer service provid-

ers, and lead dealers who obtained personal con-

tact information by directly researching and as-

North Carolina Real Estate License Law and Commission Rules

sembling such information and did not obtain

such information from a lead dealer shall main-

tain records disclosing:

a. A complete written description of the source

from which each piece of personal contact

information was obtained.

b. e methodologies used for researching and

assembling the personal contact informa-

tion.

c. e date, time, and place at which the piece

of personal contact information was ob-

tained.

d. e full name, address, and telephone num-

ber of each person who performed the work

to obtain the piece of personal contact infor-

mation.

§ 93A‑67. Resale service providers.

(a) Before engaging in resale advertising services, a resale

service provider must provide to the consumer time-

share reseller in writing (i) a description of any fees or

costs related to the services that the consumer time-

share reseller, or any other person, is required pay to

the resale service provider or to any third party and (ii)

a description of when the fees or costs are due.

(b) A resale service provider may not engage in real estate

broker activities described in Article 1 of this Chapter

without being the holder of an active license in accor-

dance with Article 1 of this Chapter.

resale advertiser may not do any of the following:

(1) State or imply that the resale advertiser will pro-

vide or assist in providing any type of direct sales

or resale brokerage services other than the adver-

tising of the consumer resale timeshare for sale or

rent by the consumer timeshare reseller.

(2) State or imply to a consumer timeshare reseller,

directly or indirectly, that the resale advertiser has

identied a person interested in buying or rent-

ing the timeshare resale interest without provid-

ing the name, address, and telephone number of

the represented interested resale purchaser.

(3) State or imply to a consumer timeshare resell-

er, directly or indirectly, that sales or rentals have

been achieved or generated as a result of its ad-

vertising services unless the resale advertiser, at

the time of making that representation, possess-

es and is able to provide documentation to sub-

stantiate the statement or implication made to the

consumer timeshare reseller. In addition, to the

extent that a resale advertiser states or implies to

a consumer timeshare reseller that the resale ad-

vertiser has sold or rented any specic number of

timeshares, the resale advertiser must also provide

the consumer timeshare reseller the ratio or per-

centage of all the timeshares that have resulted in

a sale versus the number of timeshares advertised

for sale by the resale advertiser for each of the pre-

vious two calendar years if the statement or im-

plication is about a sale or sales, or the ratio or

percentage of all the timeshares that have actual-

ly resulted in a rental versus the number of time-

shares advertised for rental by the resale advertiser

for each of the previous two calendar years if the

statement or implication is about a rental or rent-

als.

(4) State or imply to a consumer timeshare reseller

that the timeshare has a specic resale value.

(5) Make or submit any charge to a consumer time-

share reseller’s credit card account, make or cause

to be made any electronic transfer of consumer

timeshare reseller funds, or collect any payment

from a consumer timeshare reseller that exceeds

an aggregate total amount of seventy-ve dollars

($75.00) or more in any 12-month period unless

the following have occurred:

a. e consumer timeshare reseller has been

provided a copy of the terms and conditions

of the contract for resale advertising servic-

es and the consumer timeshare reseller has

agreed to those terms and conditions by mail

or electronic transmission.

b. e resale advertiser has received a written

contract complying in all respects with this

section and that has been signed by the con-

sumer timeshare reseller.

(6) Engage in any resale advertising services for com-

pensation or other valuable consideration with-

out rst obtaining a written brokerage agreement

to provide resale advertising services signed by

the consumer timeshare reseller. Notwithstanding

any other law to the contrary, the contract must

be printed in at least 12-point type and must con-

tain the following information:

a. e name, address, telephone number, and

internet address, if any, of the resale advertis-

er and a mailing address and email address to

which a contract cancellation notice may be

delivered at the consumer timeshare reseller’s

election.

b. A complete description of all resale advertis-

ing services to be provided, including, but

not limited to, details regarding the publi-

cations, internet sites, and other media in

or on which the consumer resale timeshare

will be advertised; the dates or time intervals

for such advertising or the minimum num-

ber of times such advertising will be run in

each specic medium; the itemized cost to

the consumer timeshare reseller of each re-

North Carolina Real Estate License Law and Commission Rules

sale advertising service to be provided; and a

statement of the total cost to the consumer

timeshare reseller of all resale advertising ser-

vices to be provided.

c. A statement printed in conspicuous type im-

mediately preceding the space in the con-

tract provided for the consumer timeshare

reseller’s signature in substantially the fol-

lowing form:

“Timeshare Owner’s Right of Cancellation

[Insert name of resale advertiser] will provide

resale advertising services pursuant to this

contract. If the resale advertiser represents

that they have identied a person who is in-

terested in purchasing or renting your time-

share, then the resale advertiser must provide

you with the name, address, and telephone

number of such represented interested resale

purchaser.

You have an unwaivable right to cancel this

contract for any reason within ve days af-

ter the date you sign this contract. If you de-

cide to cancel this contract, you must notify

[insert name of resale advertiser] in writing

of your intent to cancel. Your notice of can-

cellation shall be eective upon the date sent

and shall be sent to [insert resale advertiser’s

physical address] or to [insert resale advertis-

er’s email address]. Your refund will be made

within 20 days after receipt of notice of can-

cellation or within ve days after receipt of

funds from your cleared check, whichever is

later.

You are not obligated to pay [insert name of

resale advertiser] any money unless you sign

this contract and return it to the retail adver-

tiser.

Important: Before signing this contract, you

should carefully review your original pur-

chase document and other timeshare pro-

gram documents to determine whether the

developer has reserved a right of rst refusal

or other option to purchase your timeshare

or to determine whether there are any re-

strictions or special conditions applicable to

the resale or rental of your timeshare.”

d. A statement that any resale contract entered

into by or on behalf of the consumer time-

share reseller must comply in all respects

with G.S. 93A-65, including the provision

of a ve-day cancellation period for the pro-

spective consumer resale purchaser.

(7) Fail to honor any cancellation notice sent by the

consumer timeshare reseller within ve days after

the date the consumer timeshare reseller signs the

contract for resale advertising services.

(8) Fail to provide a full refund of all money paid by

a consumer timeshare reseller within 20 days af-

ter receipt of notice of cancellation or within ve

days after receipt of funds from a cleared check,

whichever is later.

(d) If a resale service provider uses a contract for resale ad-

vertising services that fails to comply with the require-

ments of this section, the contract shall be voidable at

the option of the consumer timeshare reseller for a pe-

riod of one year after the date it is executed by the con-

sumer timeshare reseller.

(e) Notwithstanding obligations placed upon any other

persons by this section, it is the duty of a resale ser-

vice provider to supervise, manage, and control all as-

pects of the oering of resale advertising services by

any agent or employee of the resale service provider.

Any violation of this section that occurs during that of-

fering shall be deemed a violation by the resale service

provider as well as by the person actually committing

the violation.

(f) Providing resale advertising services with respect to

a consumer resale timeshare in a timeshare property

located or oered within this State, or in a multisite

timeshare program registered or required to be regis-

tered to be oered in this State, including acting as an

agent or third-party service provider for a resale service

provider, constitutes operating, conducting, engaging

in, or carrying on a business or business venture in this

State.

(g) If a resale service provider also oers timeshare transfer

services, the resale service provider must comply with

G.S. 93A-68.

(h) Any violation of this section is an unfair or deceptive

act or practice prohibited by G.S. 75-1.1.

§ 93A‑68. Timeshare transfer services.

(a) In the course of advertising, marketing, promoting, of-

fering, sale, or performance of any timeshare transfer

services, no person shall do any of the following:

(1) Engage in any timeshare transfer services for com-

pensation, or the expectation of receiving com-

pensation, without rst obtaining a written time-

share transfer services agreement signed by the

consumer timeshare reseller that complies with

this section.

(2) Fail to provide both the consumer timeshare re-

seller and the independent escrow agent required

by this section with an executed copy of the time-

share transfer services agreement.

(3) Advise, suggest, or assist with advising or suggest-

ing that a consumer timeshare reseller cease mak-

ing any payment of assessments, ad valorem real

estate taxes, or any other sums imposed against

the consumer resale timeshare, or any payment of

North Carolina Real Estate License Law and Commission Rules

any amounts due to a mortgagee or other lienor

under a mortgage or other lien or encumbrance

secured by the consumer resale timeshare.

(4) Represent, expressly or by implication, that (i)

a consumer timeshare reseller cannot or should

not contact or communicate with the developer,

managing entity, exchange company, mortgagee,

or lienor or (ii) the developer, managing entity,

exchange company, mortgagee, or lienor is pro-

hibited from contacting or communicating with

the consumer timeshare reseller.

(5) Oer, obtain, negotiate, arrange, or assist with of-

fering, obtaining, negotiating, arranging a time-

share transfer service that disposes of the consum-

er resale timeshare through foreclosure of the con-

sumer resale timeshare for (i) the nonpayment of

assessments, ad valorem real estate taxes, or any

other sums imposed against the consumer resale

timeshare or (ii) nonpayment of amounts due to

a mortgagee or other lienor under a mortgage or

other lien encumbrance secured by the consumer

resale timeshare.

(6) Charge or accept a fee for obtaining, negotiating,

arranging, or assisting with obtaining, negotiat-

ing, or arranging the voluntary relinquishment of

a consumer resale timeshare to a managing entity

in lieu of payment of assessments or ad valorem

real estate taxes.

(b) A consumer timeshare reseller has the right to cancel

the timeshare transfer services agreement until mid-

night of the fth day after the execution of the time-

share transfer services agreement. e consumer time-

share reseller may not waive this right of cancellation.

Any oral or written declaration or instrument that pur-

ports to waive this right of cancellation is void. Cancel-

lation under this section is without penalty, and the re-

fund of all monies received by the transfer service pro-

vider shall be made within 20 days of demand therefor

by the consumer timeshare reseller or within ve days

after receipt of cleared funds from the consumer time-

share reseller, whichever is later.

tain the following:

(1) A statement that no fee, cost, or other compen-

sation may be received by or paid to the trans-

fer service provider before the delivery to the con-

sumer timeshare reseller of written evidence that

all promised timeshare transfer services have been

performed, including:

a. Delivery to both the consumer timeshare re-

seller and the timeshare program managing

entity of a copy of the recorded timeshare in-

strument or other legal document evidenc-

ing the transfer of ownership of or legal ti-

tle to the consumer resale timeshare to the

transferee, accompanied by the full name,

address, and other known contact informa-

tion for the transferee.

b. Delivery to the consumer timeshare resell-

er of a copy of the legal document executed

by the vendor or obligee evidencing the mu-

tually agreed upon termination of the time-

share instrument or timeshare loan obliga-

tion relating to the consumer resale time-

share.

(2) e name, address, current phone number, and

current email address of the independent escrow

agent required by this section.

(3) A specic, detailed description of each timeshare

transfer service promised to be provided, includ-

ing a statement of the last date by which each

promised service will be fully performed, and in-

cluding a statement that the transfer service pro-

vider will deliver to the consumer timeshare re-

seller written notice of the full performance of

each timeshare transfer service, together with a

copy of the legal document evidencing the com-

pleted performance of the service.

(4) e total cost to the consumer timeshare reseller

of each timeshare transfer service promised to be

provided pursuant to subdivision (3) of this sub-

section together with an itemized list of all of the

fees and costs that comprise the total cost of that

service.

(5) e terms or conditions of any refund, cancella-

tion, exchange, or repurchase policy for a time-

share transfer service, including the circumstances

under which a guaranteed or nonguaranteed, full

or partial refund will be granted.

(6) A statement in conspicuous type that nonpay-

ment of a timeshare loan obligation or assessment

obligation may lead to a foreclosure action or oth-

er proceeding that could result in the loss of own-

ership of the timeshare and negative consequenc-

es for the consumer timeshare reseller’s credit and

tax liability.

(7) A statement in substantially the following form

in conspicuous type immediately preceding the

space in the timeshare transfer services agreement

provided for the consumer timeshare reseller’s sig-

nature:

“[Insert transfer service provider name] has agreed

to provide you with timeshare transfer services

under this timeshare transfer services agreement.

After those services have been fully performed,

the transfer service provider is obligated to pro-

vide you with written notice of full performance

and a copy of the recorded instrument or other

legal document evidencing the transfer or assign-

ment of your timeshare, the termination of your

North Carolina Real Estate License Law and Commission Rules

timeshare contract, or the release from a time-

share loan or assessment obligation. Any fee or

other compensation paid by you under this agree-

ment before full performance by [Insert transfer

service provider name] must be held in escrow by

the escrow agent specied in this agreement, and

the transfer service provider is prohibited from re-

ceiving any such fee or other compensation until

all promised timeshare transfer services have been

performed.

Timeshare Owner’s Right of Cancellation

You have an unwaivable right to cancel this agree-

ment for any reason within ve days after the date

you sign this agreement. If you decide to cancel

this contract, you must notify [insert name of

transfer service provider] in writing of your intent

to cancel. Your notice of cancellation shall be ef-

fective upon the date sent and shall be sent to [in-

sert name and mailing address of transfer service

provider] or to [insert transfer service provider’s

email address]. Your refund will be made within

20 days after receipt of notice of cancellation or

within ve days after receipt of funds from your

cleared check, whichever is later.

IMPORTANT: It is recommended that you con-

tact your developer, managing entity, mortgagee,

or lienor before signing this agreement. Your de-

veloper, management entity, mortgagee, or lien-

or may be willing to negotiate a payment plan,

restructure your debt obligation, or accept the

transfer of your timeshare free of charge.”

(d) If the timeshare transfer services to be provided include

relief to be obtained from the consumer timeshare re-

seller’s managing entity, mortgagee, or lienor, the time-

share transfer service provider may not do the follow-

ing:

(1) Request or receive payment of any fee or other

consideration until the consumer timeshare re-

seller has executed a written agreement between

the consumer timeshare reseller and the consum-

er timeshare reseller’s managing entity, mortgag-

ee, or lienor incorporating the oer of relief the

timeshare transfer service provider obtained from

the managing entity, mortgagee, or lienor.

(2) Fail to disclose, on a separate page, in conspicuous

type, substantially the following statement at the

time the timeshare transfer service provider fur-

nishes the consumer timeshare reseller with the

written agreement specied in subsection (c) of

this section, the following:

“Important Notice

is is an oer of relief we obtained from your

[insert name of managing entity, mortgagee, or

lienor]. You may accept or reject the oer. If you

reject the oer, you do not have to pay us for this

service. If you accept the oer, you will have to

pay us [insert total amount] for this service.”

(e) Before entering into any timeshare transfer services

agreement, a person providing timeshare transfer ser-

vices shall establish an escrow account with an inde-

pendent escrow agent for the purpose of protecting the

funds or other property of consumer timeshare resell-

ers required to be escrowed by this subsection. e in-

dependent escrow agent shall maintain the escrow ac-

count only in such a manner as to be under the di-

rect supervision and control of the independent es-

crow agent. e independent escrow agent shall have

a duciary duty to each consumer timeshare reseller to

maintain the escrow account in accordance with good

accounting practices and to release the consumer time-

share reseller’s funds or other property from escrow

only in accordance with this section.

(f) All funds that are received from or on behalf of a con-

sumer timeshare reseller under a timeshare transfer ser-

vices agreement shall be deposited into the escrow ac-

count. A fee, cost, or other compensation that is due or

that will be paid to the transfer service provider must

be held in the escrow account until the transfer ser-

vice provider has fully complied with all of the obliga-

tions under the timeshare transfer services agreement

and this section.

(g) e funds required to be escrowed may only be re-

leased from escrow as follows:

(1) On the order of the transfer service provider upon

presentation of an adavit by the transfer service

provider that all promised timeshare transfer ser-

vices have been performed as set forth in the time-

share transfer services agreement, including deliv-

ery to both the consumer timeshare reseller and

the timeshare program managing entity of ei-

ther, as applicable: (i) a copy of the recorded in-

strument or other legal document evidencing the

transfer of ownership of or legal title to the con-

sumer resale timeshare to the transferee or (ii) a

copy of the legal document executed by the ven-

dor or obligee evidencing the termination of the

timeshare instrument or timeshare loan obliga-

tion relating to the consumer resale timeshare.

(2) To a managing entity to pay any assessments,

transfer fees, or other moneys owed with respect

to the consumer resale timeshare or to pay a gov-

ernmental agency for the purpose of completing

and perfecting the transfer.

(h) e independent escrow agent shall retain all timeshare

transfer services agreements, escrow account records,

and adavits received pursuant to this subsection for a

period of ve years.

(i) A transfer service provider, an agent or third-party ser-

vice provider for the transfer services provider, or an

independent escrow agent who intentionally fails to

North Carolina Real Estate License Law and Commission Rules

comply with the provisions of this subsection concern-

ing the establishment of an escrow account, deposits of

funds into escrow, withdrawal therefrom, and mainte-

nance of records is guilty of a Class E felony.

(j) e provisions of this section that apply to transfer ser-

vice providers do not apply to any of the following:

(1) A resale broker who oers timeshare transfer ser-

vices to a consumer timeshare reseller, so long as

the resale broker complies in all respects with the

provisions of Article 1 of this Chapter.

(2) An attorney who is licensed in this State and a

member in good standing or a title insurer or

agent licensed in this State in good standing who

oers timeshare transfer services to a consumer

timeshare reseller.

(3) A mortgagee or servicer or lienor, or agent or con-

tractor of a mortgagee or servicer or lienor, to the

extent that any of them oers timeshare transfer

services to an obligor related to a mortgage, lien,

or other encumbrance of a mortgagee, servicer, or

lienor against the obligor’s timeshare.

(k) is section shall not apply to the transfer of owner-

ship of a consumer resale timeshare from a consum-

er timeshare reseller to the developer or managing en-

tity of that timeshare program unless and only to the

extent the transfer includes the assistance of a transfer

service provider.

(l) Only an attorney licensed in this State or any person

authorized to perform nonjudicial foreclosures pur-

suant to this Article may oer services to a consum-

er timeshare reseller in connection with an involuntary

transfer, or proposed involuntary transfer, of a con-

sumer resale timeshare.

(m) Notwithstanding obligations placed upon any other

persons by this section, it is the duty of a transfer ser-

vice provider to supervise, manage, and control all as-

pects of the oering of timeshare transfer services by

any agent or employee of the transfer service provider.

Any violation of this section that occurs during such

oering shall be deemed a violation by the transfer ser-

vice provider as well as by the person actually commit-

ting the violation.

(n) Providing timeshare transfer services with respect to

a consumer resale timeshare in a timeshare property

located or oered within this State, or in a multisite

timeshare program registered or required to be regis-

tered to be oered in this State, including acting as an

agent or third-party service provider for a transfer ser-

vice provider, constitutes operating, conducting, en-

gaging in, or carrying on a business or business venture

in this State.

(o) An owner, managing entity, or developer may bring

an action for injunctive relief and recover their reason-

able attorneys’ fees and costs against a timeshare service

provider for a violation of this section.

(p) Upon a consumer timeshare reseller’s request, the de-

veloper or managing entity shall provide information

regarding relinquishment or other disposition options

of the consumer timeshare reseller’s timeshare available

to the timeshare reseller through the developer or man-

aging entity, if available.

(q) Any violation of this section is an unfair or deceptive

act or practice prohibited by G.S. 75-1.1.

§ 93A‑69. Timeshare program extensions.

(a) Unless the timeshare declaration specically provides a

lower percentage, the vote or written consent, or both,

of at least sixty-six percent (66%) of all eligible vot-

ing interests present in person or by proxy at a duly

noticed, called, and constituted meeting of the own-

ers may, at any time, extend the term of the timeshare

program. If the term of a timeshare program is extend-

ed pursuant to this section, all rights, privileges, du-

ties, and obligations created under applicable law or

the timeshare declaration continue in full force to the

same extent as if the extended termination date of the

timeshare program were the original termination date

of the timeshare program.

(b) Unless the timeshare declaration specically provides

for a lower quorum, the quorum for the timeshare

owners’ association meeting to extend the timeshare

program is fty percent (50%) of all eligible voting in-

terests in the timeshare program.

section (a) of this section may be held at any time be-

fore the termination of the timeshare program.

(d) e managing entity may determine that any voting

interest that is delinquent in the payment of more than

two years of assessments is ineligible to vote on any ex-

tension of the timeshare program unless such delin-

quency is paid in full before the vote.

(e) A proxy for a vote to extend a timeshare program pur-

suant to this section is valid for up to three years and is

revocable unless the proxy states it is irrevocable.

(f) If an extension vote or consent pursuant to this sec-

tion is proposed for a timeshare project of a multisite

timeshare program located in this State, the proposed

extension is eective only if the person authorized to

make additions or substitutions of accommodations

and facilities pursuant to the timeshare declaration also

approves the extension.

§ 93A‑69.1. Timeshare program terminations.

(a) Unless the timeshare declaration provides otherwise,

the vote or written consent, or both, of sixty percent

(60%) of all voting interests in a timeshare program

may terminate the term of the timeshare program at

any time. If a timeshare program is terminated pursu-

ant to this section, the termination has immediate ef-

fect pursuant to applicable law and the timeshare dec-

North Carolina Real Estate License Law and Commission Rules

laration as if the eective date of the termination were

the original date of termination.

(b) If the timeshare property is managed by a timeshare

owners’ association that is separate from any underly-

ing owners’ association, the termination of a timeshare

program does not change the corporate status of the

timeshare owners’ association. e timeshare owners’

association continues to exist only for the purposes of

concluding its aairs, prosecuting and defending ac-

tions by or against it, collecting and discharging obli-

gations, disposing of and conveying its property, col-

lecting and dividing its assets, and otherwise comply-

ing with this subsection.

ing entity or the board, if there is a timeshare owners’

association, shall serve as the termination trustee, and

in a duciary capacity may bring an action in partition

on behalf of the tenants in common in each former

timeshare property or sell the former timeshare prop-

erty in any manner and to any person who is approved

by a majority of all tenants in common. e termina-

tion trustee shall have all other powers reasonably nec-

essary to eect the partition or sale of the former time-

share property, including the power to maintain the

property during the pendency of any partition action

or sale.

(d) All reasonable expenses incurred by the termination

trustee relating to the performance of its duties pursu-

ant to this section, including reasonable attorneys’ fees

and other professionals, must be paid by the tenants in

common of the former timeshare property subject to

partition or sale proportionate to their respective own-

ership interests.

(e) e termination trustee shall adopt reasonable proce-

dures to implement the partition or sale of the former

timeshare property and comply with the requirements

of this section.

(f) If a timeshare program is terminated in an underlying

property regime and the underlying property regime is

not simultaneously terminated, a majority of the ten-

ants in common in each former timeshare unit present

and voting in person or by proxy at a meeting of ten-

ants in common conducted by the termination trustee,

or conducted by the board of the owners’ association

of the underlying property regime, if the owners’ asso-

ciation managed the former timeshare property, shall

designate a voting representative for the timeshare unit

and le a voting certicate with the owners’ associa-

tion for the underlying regime. e voting representa-

tive may vote on all matters at meetings of the owners’

association for the underlying regime, including termi-

nation of the underlying regime.

(g) Unless the timeshare declaration provides otherwise,

this section applies only to a timeshare program that

has been in existence for at least 25 years as of the ef-

fective date of the termination vote or consent.

(h) If a termination vote or consent is proposed for a time-

share project of a multisite timeshare program located

in this State, the proposed termination is eective only

if the person authorized to make additions or substitu-

tions of accommodations and facilities pursuant to the

timeshare instrument also approves the termination.”

“PURSUANT TO S.L. 2021-192, THIS TIME-

SHARE ACT DOES NOT APPLY TO TIMESHARE

TRANSFER SERVICES OR TO TRANSFER SER-

VICE PROVIDERS PRIOR TO JULY 1, 2022.”

Article 5.

Real Estate Appraisers.

[Repealed]

Article 6.

Broker Price Opinions and

Comparative Market Analyses

§ 93A‑82. Denitions.

As used in this Article, the terms “broker price opinion” and

“comparative market analysis” mean an estimate prepared

by a licensed real estate broker that details the probable sell-

ing price or leasing price of a particular parcel of or interest

in property and provides a varying level of detail about the

property’s condition, market, and neighborhood, and infor-

mation on comparable properties, but does not include an

automated valuation model. (2012-163, s. 2.)

§ 93A‑83. Broker price opinions and comparative

market analyses for a fee.

(a) Authorized. – A person licensed under this Chapter,

other than a provisional broker, may prepare a bro-

ker price opinion or comparative market analysis and

charge and collect a fee for the opinion if:

(1) e license of that licensee is active and in good

standing; and

(2) e broker price opinion or comparative market

analysis meets the requirements of subsection (c)

of this section.

(3) e requirements of this Article shall not apply to

any broker price opinion or comparative market

analysis performed by a licensee for no fee or con-

sideration.

(b) For Whom Opinion May Be Prepared. – Notwithstand-

ing any provision to the contrary, a person licensed un-

der this Chapter may prepare a broker price opinion or

comparative market analysis for any of the following:

(1) An existing or potential seller of a parcel of real

property.

(2) An existing or potential buyer of a parcel of real

property.

(3) An existing or potential lessor of a parcel of or in-

North Carolina Real Estate License Law and Commission Rules

terest in real property.

(4) An existing or potential lessee of a parcel of or in-

terest in real property.

(5) A third party making decisions or performing due

diligence related to the potential listing, oering,

sale, option, lease, or acquisition price of a parcel

of or interest in real property.

(6) An existing or potential lienholder or other third

party for any purpose other than as the basis to

determine the value of a parcel of or interest in

property, for a mortgage loan origination, includ-

ing rst and second mortgages, renances, or eq-

uity lines of credit.

(7) e provisions of this subsection do not preclude

the preparation of a broker price opinion or com-

parative market analysis to be used in conjunction

with or in addition to an appraisal.

parative Market Analysis. – A broker price opinion or

comparative market analysis shall be in writing and

conform to the standards provided in this Article that

shall include, but are not limited to, the following:

(1) A statement of the intended purpose of the broker

price opinion or comparative market analysis.

(2) A brief description of the subject property and

property interest to be priced.

(3) e basis of reasoning used to reach the conclu-

sion of the price, including the applicable market

data or capitalization computation.

(4) Any assumptions or limiting conditions.

(5) A disclosure of any existing or contemplated in-

terest of the broker issuing the broker price opin-

ion, including the possibility of representing the

landlord/tenant or seller/buyer.

(6) e eective date of the broker price opinion.

(7) e name and signature of the broker issuing the

broker price opinion and broker license number.

(8) e name of the real estate brokerage rm for

which the broker is acting.

(9) e signature date.

(10) A disclaimer stating that “is opinion is not an

appraisal of the market value of the property, and

may not be used in lieu of an appraisal. If an apprais-

al is desired, the services of a licensed or certied ap-

praiser shall be obtained. is opinion may not be

used by any party as the primary basis to determine

the value of a parcel of or interest in real property for

a mortgage loan origination, including rst and sec-

ond mortgages, renances, or equity lines of credit.”

(11) A copy of the assignment request for the broker

price opinion or comparative market analysis.

(d) Rules. – e North Carolina Real Estate Commission

shall have the power to adopt rules that are not incon-

sistent with the provisions in this Article.

(e) Additional Requirements for Electronic or Form Sub-

mission. – In addition to the requirement of subsec-

tion (c) of this section, if a broker price opinion is sub-

mitted electronically or on a form supplied by the re-

questing party, the following provisions apply:

(1) A signature required by subdivision (7) of subsec-

tion (c) of this section may be an electronic signa-

ture, as dened in G.S. 47-16.2.

(2) A signature required by subdivision (7) of subsec-

tion (c) of this section and the disclaimer required

by subdivision (10) of subsection (c) of this sec-

tion may be transmitted in a separate attachment

if the electronic format or form supplied by the

requesting party does not allow additional com-

ments to be written by the licensee. e electron-

ic format or form supplied by the requesting party

shall do the following:

a. Reference the existence of a separate attachment.

b. Include a statement that the broker price opinion

or comparative market analysis is not complete

without the attachment.

(f) Restrictions. – Notwithstanding any provisions to the

contrary, a person licensed pursuant to this Chapter

may not knowingly prepare a broker price opinion or

comparative market analysis for any purpose in lieu of

an appraisal when an appraisal is required by federal or

State law. A broker price opinion or comparative mar-

ket analysis that estimates the value of or worth a par-

cel of or interest in real estate rather than sales or leas-

ing price shall be deemed to be an appraisal and may

not be prepared by a licensed broker under the authori-

ty of this Article, but may only be prepared by a duly li-

censed or certied appraiser, and shall meet the regula-

tions adopted by the North Carolina Appraisal Board.

A broker price opinion or comparative market analy-

sis shall not under any circumstances be referred to as a

valuation or appraisal.

(g) No Report of Predetermined Result. – A broker

price opinion or comparative market analysis shall

not include the reporting of a predetermined result.

(2012-163, s. 2; 2012-194, s. 61.)

North Carolina Real Estate License Law and Commission Rules

NORTH CAROLINA REAL ES TATE COM MISSION RULES

CHAPTER 93A

Statutory Authority: Se ctions 93A‑3(c), 93A ‑4(d), 93A‑33, and 93A ‑51 of the North Carolina Real Estate

License Law; and the North Carolina Ad ministrative Procedures Act.

NORTH CAROLINA ADMINIS TRATIVE CODE

TITLE 21

OCCUPATIONAL LICENSING BOARDS

CHAPTER 58

REAL ESTATE COMMISSION

Subchapter 58A

Real Estate Brokers

Section .0100 General Brokerage

A .0101 Proof of Licensure

A .0103 Broker Name and Address

A .0104 Agency Agreements and Disclosure

A .0105 Advertising

A .0106 Delivery of Instruments

A .0108

Retention of Records

A .0109 Brokerage Fees and Compensation

A .0110 Broker-in-Charge

A .0111 Drafting Legal Instruments

A .0112 Oers and Sales Contracts

A .0113 Reporting Criminal Convictions and

Disciplinary Actions

A .0114 Residential Property and Owners’ Association

Disclosure Statement

A .0115 Disclosure of Oers Prohibited

A .0116 Handling of Trust Money

A .0117 Accounting for Trust Money

A .0118 Trust Money Belonging to Property Owners’

Associations

A .0119 Mineral and Oil and Gas Rights Mandatory

Disclosure Statement

A .0120 Prohibited Acts

Section .0300 Application for License

A .0301 License Application

A .0302 License Application and Fee

A .0304 Waiver of 75-Hour Prelicensing Education

Requirement

A .0305

Petition For Predetermination

Section .0400 Examinations

A .0401 Scheduling Examinations

A .0402 Examination Subject Matter, Format, and

Passing Scores

A .0403 Re-applying for Examination

A .0404 Examination Related Conduct

A .0405 Condentiality of Examinations

Section .0500 Licensing

A .0502 Firm Licensing

A .0503 License Renewal

A .0504 Active and Inactive License Status

A .0505 Reinstatement of a License

A .0506 Provisional Broker to be Supervised by

Broker-in-Charge

A .0507 Payment of Fees

A .0511 Licensing of Persons Licensed in Another

Jurisdiction

A. 0512 Death or Incapacity of Sole Proprietor

Section .0600 Real Estate Commission Hearings

A .0601 Complaints/Inquiries/Motions/Other

Pleadings

A .0607 Petition to Reopen Proceeding

A .0610 Subpoenas

A .0612 Presiding Ocer

A .0614 Summary Suspension

A .0615 Settlements

A .0616 Procedures for Requesting Hearings when

Applicant’s Character is in Question

Section .0700 Petitions for Rules

A .0701 Petition for Rule-Making Hearings

Section .0900 Declaratory Rulings

A .0902 Requests for Rulings: Disposition of Requests

Section .1400 Real Estate Education and

Recovery Fund

A .1401 Application for Payment

A .1402 Multiple Claims

A .1403 Notice of Hearing Order/Payt From/Real

Estate Recovery Fund

A .1404 Exhausted Liability Limits

Section .1600 Discriminatory Practices

Prohibit ed

A .1601 Fair Housing

North Carolina Real Estate License Law and Commission Rules

Section .1700 Mandatory Continuing

Education

A .1701 Purpose and Applicability

A .1702 Continuing Education Requirement

A .1703 Continuing Education for License Activation

A .1704 No Credit for Prelicensing or Postlicensing

Courses

A .1705 Attendance and Participation Requirements

A .1706 Repetition of Courses

A .1707 Elective Course Carry-Over Credit

A .1708 Equivalent Credit

A .1709 Extensions of Time to Complete Continuing

Education

A .1710 Denial or Withdrawal of Continuing Education

Credit

A .1711

A .1712

[Repealed]

Broker-In-Charge Course

Section .1800 Limited Nonresident

Commercial Licensing

A .1801 General Provisions

A .1802 Denitions

A .1803

Requirements for Licensure; Application and Fee

A .1804 Active Status

A .1805 Renewal

A .1806

Limitations

A .1807 Aliation with Resident Broker

A .1808 Trust Monies

A .1809 Advertising

A .1810 Payment of Fees

Section .1900 Postlicensing Education

A .1901 Purpose and Applicability

A .1902 Postlicensing Education Requirement

A .1904 Denial or Withdrawal of Postlicensing

Education Credit

A .1905 Waiver of 90-hour Postlicensing Education

Requirement

Section .2000 Annual Reports

A .2002 Escrow Account

Section .2100 Brokers in Military Service

A .2101

Applicability

A .2102

Postponement of fees

A .2103

Postponement of Continuing Education

A .2104

Postponement of Postlicensing Education

A .2105

Proof of Eligibility

Section .2200 Broker Price Opinions and

Comparative Market Analyses

A .2201 Applicability

A .2202 Standards

Subchapter 58B

Timeshares

Section .0100 Timeshare Program

Registration

B .0101 Application for Registration

B .0102 Registration Fee

B .0103 Renewal of Timeshare Program Registration

B .0104 Amendments to Timeshare Program Registra-

tion

B .0105 Notice of Termination

Section .0200 Public Oering Statement

B .0201 General Provisions

B .0202 Public Oering Statement Summary

B .0203 Receipt for Public Oering Statement

Section .0300 Cancellation

B .0301 Proof of Cancellation

Section .0400 Timeshare Sales Operations

B .0401 Retention of Timeshare Records

B .0402 Timeshare Agency Agreements and Disclosure

Section .0500 Handling and Accounting of

Funds

B .0501 Timeshare Trust Funds

Section .0600 Program Broker

B .0601 Designation of Program Broker

B .0602 Duties of the Program Broker

Subchapter 58G

North Carolina Real Estate Commission

Section .0100 General

G .0101 Per Diem

G .0102 Location

G .0103 Denitions

G .0104 [Expired Rule]

G .0105 [Expired Rule]

Subchapter 58H

Real Estate Education

Section .0100 General

H .0101 Denitions

Section .0200 Real Estate Education Providers

H .0201 Applicability

H .0202 Application For Education Provider

Certication

H .0203 Education Director

H .0204 Policies and Procedures Disclosure

H .0205 Course Materials

North Carolina Real Estate License Law and Commission Rules

H .0206 Advertising and Recruitment Activities

H .0207 Course Completion Certicates and Reports

H .0208 Education Provider Records

H .0209 Expiration and Renewal of Education

Provider Certication

H .0210 Limitation, Denial, Withdrawal, or

Termination of Education Provider

H .0216 Limited Education Provider Petition for

Reconsideration

Section .0300 Approved Instructors

H .0301 Prelicensing, Postlicensing, and Update

Course Instructor Approval

H .0302 Application and Criteria for Instructor

Approval

H .0303 Limitation, Denial or Withdrawal of

Instructor Approval

H .0304 Instructor Conduct and Performance

H .0305 Digital Video Recordings

H .0306 Renewal and Expiration of Instructor Approval

H .0307 Limited Instructor Petition for

Reconsideration

Section .0400 Real Estate Courses

H .0401 Approval of Real Estate Education Course

H .0402 Continuing Education Elective Course

Requirements

H .0403 Commission Created Update Courses

H .0404 Course Scheduling

H .0415 Distance Education Courses

North Carolina Real Estate License Law and Commission Rules

CHAPTER 58

REAL ESTATE COMMISSION

Subchapter 58A

Real Estate Brokers

SECTION .0100

GENERAL BROKERAGE

A .0101 Proof of Licensure

(a) e pocket card issued by the Commission annual-

ly to each broker shall be retained by the broker as evidence

of licensure. Each broker shall produce a legible form of the

card as proof of licensure whenever requested while engag-

ing in real estate brokerage.

(b) Every licensed real estate business entity or rm shall

prominently display its license certicate or a copy of its li-

cense certicate in each oce maintained by the entity or

rm. A broker-in-charge shall also display his or her license

certicate in the oce where he or she is broker-in-charge.

be obtained by:

(1) submitting a written request to the Commission

that includes the broker or rm’s:

(A) legal name;

(B) license number;

(D) phone number;

(E) email address;

(F) proof of legal name change pursuant to Rule

.0103 of this Section, if applicable; and

(G) signature; and

(2) paying a ve dollar ($5.00) duplicate license fee.

A .0103 Broker Name and Address

(a) Upon initial licensure, every broker shall notify the

Commission of the broker’s current personal name, rm

name, trade name, residence address, rm address, tele-

phone number, and email address. All addresses provided

to the Commission shall be suciently descriptive to enable

the Commission to correspond with and locate the broker.

(b) Every broker shall notify the Commission in writing

of each change of personal name, rm name, trade name,

residence address, rm address, telephone number, and

email address within 10 days of said change. A broker no-

tifying the Commission of a change of legal name or rm

name shall also provide evidence of a legal name change for

either the individual or rm, such as a court order or name

change amendment from the Secretary of State’s Oce.

erate in any manner using a name dierent from the name

under which the broker is licensed, the broker shall rst le

an assumed name certicate in compliance with G.S. 66–

71.4 and shall notify the Commission in writing of the use

of such a rm name or assumed name. An individual bro-

ker shall not advertise or operate in any manner that would

mislead a consumer as to the broker’s actual identity or as

to the identity of the rm with which he or she is aliated.

(d) A broker shall not include the name of a provisional

broker or an unlicensed person in the legal or assumed name

of a sole proprietorship, partnership, or business entity other

than a corporation or limited liability company. No broker

shall use a business name that includes the name of any cur-

rent or former broker without the permission of that broker

or that broker’s authorized representative.

A .0104 Agency Agreements and Disclosure

(a) Every agreement for brokerage services in a real es-

tate transaction and every agreement for services connect-

ed with the management of a property owners association

shall be in writing and signed by the parties thereto. Ev-

ery agreement for brokerage services between a broker and

an owner of the property to be the subject of a transaction

shall be in writing and signed by the parties at the time of

its formation. Every agreement for brokerage services be-

tween a broker and a buyer or tenant shall be express and

shall be in writing and signed by the parties thereto not later

than the time one of the parties makes an oer to purchase,

sell, rent, lease, or exchange real estate to another. Howev-

er, every agreement between a broker and a buyer or tenant

that seeks to bind the buyer or tenant for a period of time

or to restrict the buyer’s or tenant’s right to work with oth-

er agents or without an agent shall be in writing and signed

by the parties thereto from its formation. A broker shall not

continue to represent a buyer or tenant without a written,

signed agreement when such agreement is required by this

Rule. Every written agreement for brokerage services of any

kind in a real estate transaction shall be for a denite period

of time, shall include the broker’s license number, and shall

provide for its termination without prior notice at the expi-

ration of that period, except that an agency agreement be-

tween a landlord and broker to procure tenants or receive

rents for the landlord’s property may allow for automatic re-

newal so long as the landlord may terminate with notice at

the end of any contract period and any subsequent renew-

als. Every written agreement for brokerage services that in-

cludes a penalty for early termination shall set forth such a

provision in a clear and conspicuous manner that shall dis-

tinguish it from other provisions of the agreement. For the

purposes of this Rule, an agreement between brokers to co-

operate or share compensation shall not be considered an

agreement for brokerage services and, except as required by

North Carolina Real Estate License Law and Commission Rules

Rule .1807 of this Subchapter, need not be memorialized in

writing.

(b) Every listing agreement, written buyer agency agree-

ment, or other written agreement for brokerage services in a

real estate transaction shall contain the following provision:

“e broker shall conduct all brokerage activities in regard

to this agreement without respect to the race, color, religion,

sex, national origin, handicap, or familial status of any par-

ty or prospective party.” e provision shall be set forth in a

clear and conspicuous manner that shall distinguish it from

other provisions of the agreement. For the purposes of this

Rule, the term, “familial status” shall be dened as it is in

G.S. 41A-3(1b).

at rst substantial contact with a prospective buyer or sell-

er, provide the prospective buyer or seller with a copy of the

publication “Working with Real Estate Agents,” set forth

the broker’s name and license number thereon, review the

publication with the buyer or seller, and determine wheth-

er the agent will act as the agent of the buyer or seller in the

transaction. If the rst substantial contact with a prospec-

tive buyer or seller occurs by telephone or other electronic

means of communication where it is not practical to pro-

vide the “Working with Real Estate Agents” publication, the

broker shall at the earliest opportunity thereafter, but in no

event later than three days from the date of rst substantial

contact, mail or otherwise transmit a copy of the publica-

tion to the prospective buyer or seller and review it with him

or her at the earliest practicable opportunity thereafter. For

the purposes of this Rule, “rst substantial contact” shall in-

clude contacts between a broker and a consumer where the

consumer or broker begins to act as though an agency rela-

tionship exists and the consumer begins to disclose to the

broker personal or condential information. e “Work-

ing with Real Estate Agents” publication may be obtained

on the Commission’s website at www.ncrec.gov or upon re-

quest to the Commission.

(d) A real estate broker representing one party in a trans-

action shall not undertake to represent another party in the

transaction without the written authority of each party. e

written authority shall be obtained upon the formation of

the relationship except when a buyer or tenant is represent-

ed by a broker without a written agreement in conformity

with the requirements of Paragraph (a) of this Rule. Un-

der such circumstances, the written authority for dual agen-

cy shall be reduced to writing not later than the time that

one of the parties represented by the broker makes an oer

to purchase, sell, rent, lease, or exchange real estate to an-

other party.

(e) In every real estate sales transaction, a broker work-

ing directly with a prospective buyer as a seller’s agent or

subagent shall disclose in writing to the prospective buyer at

the rst substantial contact with the prospective buyer that

the broker represents the interests of the seller. e written

disclosure shall include the broker’s license number. If the

rst substantial contact occurs by telephone or by means of

other electronic communication where it is not practical to

provide written disclosure, the broker shall immediately dis-

close by similar means whom he or she represents and shall

immediately mail or otherwise transmit a copy of the writ-

ten disclosure to the buyer. In no event shall the broker mail

or transmit a copy of the written disclosure to the buyer lat-

er than three days from the date of rst substantial contact

with the buyer.

(f) In every real estate sales transaction, a broker repre-

senting a buyer shall, at the initial contact with the seller or

seller’s agent, disclose to the seller or seller’s agent that the

broker represents the buyer’s interests. In addition, in ev-

ery real estate sales transaction other than auctions, the bro-

ker shall, no later than the time of delivery of an oer to the

seller or seller’s agent, provide the seller or seller’s agent with

a written conrmation disclosing that he or she represents

the interests of the buyer. e written conrmation may be

made in the buyer’s oer to purchase and shall include the

broker’s license number.

(g) e provisions of Paragraphs (c), (d) and (e) of this

Rule do not apply to real estate brokers representing sellers

in auction sales transactions.

(h) A broker representing a buyer in an auction sale

transaction shall, no later than the time of execution of a

written agreement memorializing the buyer’s contract to

purchase, provide the seller or seller’s agent with a written

conrmation disclosing that he or she represents the inter-

ests of the buyer. e written conrmation may be made in

the written agreement.

(i) A rm that represents more than one party in the

same real estate transaction is a dual agent and, through the

brokers associated with the rm, shall disclose its dual agen-

cy to the parties.

(j) When a rm represents both the buyer and seller in

the same real estate transaction, the rm may, with the prior

express approval of its buyer and seller clients, designate one

or more individual brokers associated with the rm to rep-

resent only the interests of the seller and one or more other

individual brokers associated with the rm to represent only

the interests of the buyer in the transaction. e authority

for designated agency shall be reduced to writing not later

than the time that the parties are required to reduce their

dual agency agreement to writing in accordance with Para-

graph (d) of this Rule. An individual broker shall not be so

designated and shall not undertake to represent only the in-

terests of one party if the broker has actually received con-

dential information concerning the other party in connec-

tion with the transaction. A broker-in-charge shall not act

as a designated broker for a party in a real estate sales trans-

action when a provisional broker under his or her supervi-

sion will act as a designated broker for another party with a

competing interest.

(k) When a rm acting as a dual agent designates an in-

dividual broker to represent the seller, the broker so desig-

North Carolina Real Estate License Law and Commission Rules

nated shall represent only the interest of the seller and shall

not, without the seller’s permission, disclose to the buyer or

a broker designated to represent the buyer:

(1) that the seller may agree to a price, terms, or any

conditions of sale other than those established by the

seller;

(2) the seller’s motivation for engaging in the trans-

action unless disclosure is otherwise required by stat-

ute or rule; and

(3) any information about the seller that the seller

has identied as condential unless disclosure of the

information is otherwise required by statute or rule.

(l) When a rm acting as a dual agent designates an in-

dividual broker to represent the buyer, the broker so desig-

nated shall represent only the interest of the buyer and shall

not, without the buyer’s permission, disclose to the seller or

a broker designated to represent the seller:

(1) that the buyer may agree to a price, terms, or

any conditions of sale other than those established

by the seller;

(2) the buyer’s motivation for engaging in the trans-

action unless disclosure is otherwise required by stat-

ute or rule; and

(3) any information about the buyer that the buyer

has identied as condential unless disclosure of the

information is otherwise required by statute or rule.

(m) A broker designated to represent a buyer or seller in

accordance with Paragraph (j) of this Rule shall disclose the

identity of all of the brokers so designated to both the buyer

and the seller. e disclosure shall take place no later than

the presentation of the rst oer to purchase or sell.

(n) When an individual broker represents both the buy-

er and seller in the same real estate sales transaction pursu-

ant to a written agreement authorizing dual agency, the par-

ties may provide in the written agreement that the broker

shall not disclose the following information about one party

to the other without permission from the party about whom

the information pertains:

(1) that a party may agree to a price, terms, or any

conditions of sale other than those oered;

(2) the motivation of a party for engaging in the

transaction, unless disclosure is otherwise required

by statute or rule; and

(3) any information about a party that the party has

identied as condential, unless disclosure is other-

wise required by statute or rule.

(o) A broker who is selling property in which the broker

has an ownership interest shall not undertake to represent

a buyer of that property except that a broker who is selling

commercial real estate as dened in Rule .1802 of this Sub-

chapter in which the broker has less than 25% ownership

interest may represent a buyer of that property if the buy-

er consents to the representation after full written disclosure

of the broker’s ownership interest. A rm listing a property

owned by a broker aliated with the rm may represent a

buyer of that property so long as any individual broker rep-

resenting the buyer on behalf of the rm does not have an

ownership interest in the property and the buyer consents to

the representation after full written disclosure of the broker’s

ownership interest.

(p) A broker or rm with an existing listing agreement

for a property shall not enter into a contract to purchase

that property unless, prior to entering into the contract, the

listing broker or rm rst discloses in writing to their sell-

er-client that the listing broker or rm may have a conict

of interest in the transaction and that the seller-client may

want to seek independent counsel of an attorney or anoth-

er licensed broker. Prior to the listing broker entering into

a contract to purchase the listed property, the listing bro-

ker and rm shall either terminate the listing agreement or

transfer the listing to another broker aliated with the rm.

Prior to the listing rm entering into a contract to purchase

the listed property, the listing broker and rm shall disclose

to the seller-client in writing that the seller-client has the

right to terminate the listing and the listing broker and rm

shall terminate the listing upon the request of the seller-cli-

ent.

A .0105 Advertising

(a) Authority to Advertise.

(1) A broker shall not advertise any brokerage ser-

vice or the sale, purchase, exchange, rent, or lease of

real estate for another or others without the consent

of his or her broker-in-charge and without includ-

ing in the advertisement the name of the rm or sole

proprietorship with which the broker is aliated.

(2) A broker shall not display a “for sale” or “for

rent” sign on any real estate or otherwise advertise

any real estate without the written consent of the

owner or the owner’s authorized agent.

(b) Blind Ads. A broker shall not advertise the sale, pur-

chase, exchange, rent, or lease of real estate for others in a

manner indicating the oer to sell, purchase, exchange, rent,

or lease is being made by the broker’s principal only. Every

such advertisement shall indicate that it is the advertisement

of a broker or rm and shall not be conned to publication

of only contact information, such as a post oce box num-

ber, telephone number, street address, internet web address,

or e-mail address.

cial broker shall comply with the provisions of Rule .1809

of this Subchapter in connection with all advertising con-

cerning or relating to his or her status as a North Carolina

broker.

A .0106 Delivery of Instruments

(a) Except as provided in Paragraph (b) of this Rule, ev-

ery broker shall deliver a copy of any written agency agree-

ment, contract, oer, lease, rental agreement, option, or oth-

er related transaction document to their customer or client

North Carolina Real Estate License Law and Commission Rules

within three days of the broker’s receipt of the executed doc-

ument.

(b) A broker may be relieved of the duty to deliver cop-

ies of leases or rental agreements to a property owner pursu-

ant to Paragraph (a) of this Rule if the broker:

(1) obtains the prior written authority of the prop-

erty owner to enter into and retain copies of leases or

rental agreements on behalf of the property owner;

(2) executes the lease or rental agreement on a pre-

printed form, the material terms of which may not

be changed by the broker without prior approval by

the property owner, except as may be required by

law; and

(3) delivers to the property owner an accounting

within 45 days following the date of execution of the

lease or rental agreement that identies:

(A) the leased property;

(B) the name, phone number, and home address

of each tenant; and

request of a property owner, a broker shall deliver a copy of

any lease or rental agreement within ve days.

A .0108 Retention of Records

(a) Brokers shall retain records of all sales, rental, and

other transactions conducted in such capacity, whether the

transaction is pending, completed, or terminated. e bro-

ker shall retain records for three years after all funds held by

the broker in connection with the transaction have been dis-

bursed to the proper party or parties or the conclusion of the

transaction, whichever occurs later. If the broker’s agency

agreement is terminated prior to the conclusion of the trans-

action, the broker shall retain such records for three years af-

ter the termination of the agency agreement or the disburse-

ment of all funds held by or paid to the broker in connec-

tion with the transaction, whichever occurs later.

(b) Records shall include copies of the following:

(1) contracts of sale;

(2) written leases;

(3) agency contracts;

(4) options;

(5) oers to purchase;

(6) trust or escrow records;

(7) earnest money receipts;

(8) disclosure documents;

(9) closing statements;

(10) brokerage cooperation agreements;

(11) declarations of aliation;

(12) broker price opinions and comparative market

analyses prepared pursuant to G.S. 93A, Article 6,

including any notes and supporting documentation;

(13) sketches, calculations, photos, and other docu-

mentation used or relied upon to determine square

footage;

(14) advertising used to market a property; and

(15) any other records pertaining to real estate

transactions.

reproduction by the Commission or its authorized represen-

tatives without prior notice.

(d) Brokers shall provide a copy of the written agen-

cy disclosure and acknowledgement thereof when applica-

ble, written agency agreement, contract, oer, lease, rental

agreement, option, or other related transaction document to

the rm or sole proprietorship with which they are aliated

within three days of receipt.

A .0109 Brokerage Fees and Compensation

(a) A licensee shall not receive, either directly or indirect-

ly, any commission, rebate or other valuable consideration of

more than nominal value from a vendor or a supplier of goods

and services for an expenditure made on behalf of the licens-

ee’s principal in a real estate transaction without the written

consent of the licensee’s principal.

(b) A licensee shall not receive, either directly or indirect-

ly, any commission, rebate, or other valuable consideration of

more than nominal value for services which the licensee rec-

ommends, procures, or arranges relating to a real estate trans-

action for a party, without full and timely disclosure to such

party.

receive any compensation, incentive, bonus, rebate, or other

consideration of more than nominal value:

(1) from his principal unless the compensation, in-

centive, bonus, rebate, or other consideration is pro-

vided for in a written agency contract prepared in

conformity with the requirements of 21 NCAC 58A

.0104.

(2) from any other party or person unless the broker

provides full and timely disclosure of the incentive,

bonus, rebate, or other consideration, or the prom-

ise or expectation thereof to the broker’s principal.

e disclosure may be made orally, but must be con-

rmed in writing before the principal makes or ac-

cepts an oer to buy or sell.

(d) Full disclosure shall include a description of the com-

pensation, incentive, bonus, rebate, or other consideration in-

cluding its value and the identity of the person or party by

whom it will or may be paid. A disclosure is timely when it

is made in sucient time to aid a reasonable person’s deci-

sion-making.

(e) Nothing in this rule shall be construed to require a

broker to disclose to a person not his principal the compensa-

tion the broker expects to receive from his principal or to dis-

close to his principal the compensation the broker expects to

receive from the broker’s employing broker. For the purpose

of this Rule, nominal value means of insignicant, token, or

merely symbolic worth.

(f) e Commission shall not act as a board of arbitra-

North Carolina Real Estate License Law and Commission Rules

tion and shall not compel parties to settle disputes concerning

such matters as the rate of commissions, the division of com-

missions, pay of brokers, and similar matters.

(g) Except as provided in (h) of this rule, a licensee shall

not undertake in any manner, any arrangement, contract,

plan or other course of conduct, to compensate or share com-

pensation with unlicensed persons or entities for any acts per-

formed in North Carolina for which licensure by the Com-

mission is required.

(h) A broker may pay or promise to pay consideration to

a travel agent in return for procuring a tenant for a vacation

rental as dened by the Vacation Rental Act if:

(1) the travel agent only introduces the tenant to the

broker, but does not otherwise engage in any activity

which would require a real estate license;

(2) the introduction by the travel agent is made in

the regular course of the travel agent’s business; and

(3) the travel agent has not solicited, handled or re-

ceived any monies in connection with the vacation

rental.

For the purpose of this Rule, a travel agent is any person

or entity who is primarily engaged in the business of acting

as an intermediary between persons who purchase air, land,

and ocean travel services and the providers of such services. A

travel agent is also any other person or entity who is permit-

ted to handle and sell tickets for air travel by the Airlines Re-

porting Corporation (ARC). Payments authorized hereunder

shall be made only after the conclusion of the vacation rent-

al tenancy. Prior to the creation of a binding vacation rent-

al agreement, the broker shall provide a tenant introduced

by a travel agent a written statement advising him or her to

rely only upon the agreement and the broker’s representations

about the transaction. e broker shall keep for a period of

three years records of a payment made to a travel agent in-

cluding records identifying the tenant, the travel agent and

their addresses, the property and dates of the tenancy, and the

amount paid.

(i) Nothing in this Rule shall be construed to permit a li-

censee to accept any fee, kickback or other valuable consid-

eration that is prohibited by the Real Estate Settlement Pro-

cedures Act (12 USC 2601 et. seq.) or any rules and regula-

tions promulgated by the United States Department of Hous-

ing and Urban Development pursuant to said Act or to fail to

make any disclosure required by said Act or rules.

A .0110 Broker‑in‑Charge

(a) Every real estate rm shall designate one BIC for its

principal oce and one BIC for each of its branch oces.

No oce of a rm shall have more than one designated BIC.

A BIC shall not serve as BIC for more than one oce unless

each of those oces share the same physical oce space and

delivery address.

(b) Every sole proprietorship shall designate a BIC if the

sole proprietorship:

(1) engages in any transaction where a broker is re-

quired to deposit and maintain monies belonging to

others in a trust account;

(2) engages in advertising or promoting services as a

broker in any manner; or

(3) has one or more other brokers aliated with the

sole proprietorship in the real estate business.

a BIC if it:

(1) is organized for the sole purpose of receiving

compensation for brokerage services furnished by its

qualifying broker through another rm or broker;

(2) is treated for tax purposes as a pass-through busi-

ness by the United States Internal Revenue Service;

(3) has no principal or branch oce; and

(4) has no licensed person associated with it other

than its qualifying broker.

(d) A broker who maintains a trust or escrow account for

the sole purpose of holding residential tenant security depos-

its received by the broker on properties owned by the broker

in compliance with G.S. 42-50 shall not be required to be a

BIC.

(e) In order for a broker to designate as a BIC for a sole

proprietor, real estate rm, or branch oce, a broker shall ap-

ply for BIC Eligible status by submitting an application on a

form available on the Commission’s website. e BIC Eligible

status form shall include the broker’s:

(1) name;

(2) license number;

(3) telephone number;

(4) email address;

(5) criminal history and history of occupational li-

cense disciplinary actions;

(6) certication of compliance with G.S. 93A-4.2,

including that:

(A) his or her broker license is on active status;

(B) the broker has obtained at least two years of

real estate brokerage experience equivalent to 40

hours per week within the previous ve years or

shall be a North Carolina licensed attorney with

a practice that consisted primarily of handling

real estate closings and related matters in North

Carolina for three years immediately preceding

application; and

in-Charge Course no earlier than one year prior

to application and no later than 120 days after

application; and

(7) signature.

(f) A broker who holds BIC Eligible status shall submit a

form to become the designated BIC for a sole proprietor, real

estate rm, or branch oce. e BIC designation form shall

include:

(1) the broker’s:

(A) name;

(B) license number;

North Carolina Real Estate License Law and Commission Rules

(D) email address; and

(E) criminal history and history of occupational

license disciplinary actions; and

(2) the rm’s:

(A) name; and

(B) license number, if applicable;

(g) A designated BIC shall:

(1) assure that each broker aliated at the oce has

complied with Rules .0503, .0504, and .0506 of this

Subchapter;

(2) notify the Commission of any change of rm’s

business address or trade name and the registration

of any assumed business name adopted by the rm

for its use;

(3) be responsible for the conduct of advertising by

or in the name of the rm at such oce;

(4) maintain the trust or escrow account of the rm

and the records pertaining thereto;

(5) retain and maintain records relating to transac-

tions conducted by or on behalf of the rm, includ-

ing those required to be retained pursuant to Rule

.0108 of this Section;

(6) supervise provisional brokers associated with or

engaged on behalf of the rm at such oce in accor-

dance with the requirements of Rule .0506 of this

Subchapter;

(7) supervise all brokers aliated at the oce with

respect to adherence to agency agreement and dis-

closure requirements;

(8) notify the Commission in writing that he or

she is no longer serving as BIC of a particular oce

within 10 days following any such change;

(9) complete the Commission’s Basic Trust Account

Procedures Course within 120 days of assuming re-

sponsibility for a trust account in accordance with

G.S. 93A-6(g), however the BIC shall not be re-

quired to complete the course more than once in

three years; and

(10) supervise all unlicensed individuals employed

at the oce and ensure that unlicensed individuals

comply with G.S. 93A-2(c)(6).

(h) A broker holding BIC Eligible status shall take the

Broker-in-Charge Update Course during the license year of

designation, unless the broker has satised the requirements

of Rule .1702 of this Subchapter prior to designation.

(i) A broker’s BIC Eligible status shall terminate if the

broker:

(1) made any false statements or presented any false,

incomplete, or incorrect information in connection

with an application;

(2) fails to complete the 12-hour Broker-in-Charge

Course pursuant to Paragraph (e) of this Rule;

(3) fails to renew his or her broker license pursuant

to Rule .0503 of this Subchapter, or the broker’s li-

cense has been suspended, revoked, or surrendered;

(4) fails to complete the Broker-in-Charge Update

Course and a four credit hour elective course pursu-

ant to Rules .1702 and .1711 of this Subchapter, if

applicable.

(j) In order to regain BIC Eligible status after a broker’s

BIC Eligible status terminates, the broker shall complete the

12-hour Broker-in-Charge Course prior to application and

then submit a BIC Eligible status form pursuant to Paragraph

(e) of this Rule.

(k) A nonresident commercial real estate broker licensed

under the provisions of Section .1800 of this Subchapter shall

not act as or serve in the capacity of a broker-in-charge of a

rm or oce in North Carolina.

(l) A broker shall not be granted BIC Eligible status or

designated as BIC of a rm if there is a pending Commission

investigation against the broker.

A .0111 Drafting Legal Instruments

(a) A broker acting as an agent in a real estate transaction

shall not draft oers, sales contracts, options, leases, promis-

sory notes, deeds, deeds of trust or other legal instruments by

which the rights of others are secured; however, a broker may

complete preprinted oer, option contract, sales contract and

lease form in a real estate transaction when authorized or di-

rected to do so by the parties.

(b) A broker may use electronic, computer, or word pro-

cessing equipment to store preprinted oer and sales contract

forms which comply with Rule .0112, as well as preprinted op-

tion and lease forms, and may use such equipment to complete

and print oer, contract and lease documents. Provided, how-

ever, a broker may not alter the form before it is presented to

the parties. If the parties propose to delete or change any word

or provision in the form, the form must be marked to indicate

the change or deletion made. e language of the form shall

not be modied, rewritten, or changed by the broker or their

clerical employees unless directed to do so by the parties.

prohibit a broker from making written notes, memoranda or

correspondence recording the negotiations of the parties to a

real estate transaction when such notes, memoranda or corre-

spondence do not themselves constitute binding agreements

or other legal instruments.

A .0112 Oers and Sales Contracts

(a) A broker acting as an agent in a real estate transac-

tion shall not use a preprinted oer or sales contract form

unless the form describes or specically requires the entry of

the following information:

(1) the names of the buyer and seller;

(2) a legal description of the real property sucient

to identify and distinguish it from all other property;

(3) an itemization of any personal property to be in-

cluded in the transaction;

North Carolina Real Estate License Law and Commission Rules

(4) the purchase price and manner of payment;

(5) any portion of the purchase price that will be

paid by a promissory note, including the amount,

interest rate, payment terms, whether or not the

note is to be secured, and any other terms contained

in the promissory note deemed material by the par-

ties;

(6) any portion of the purchase price that is to be paid

by the assumption of an existing loan, including the

amount of such loan, costs to be paid by the buyer or

seller, the interest rate and number of discount points

and a condition that the buyer must be able to quali-

fy for the assumption of the loan and must make ev-

ery reasonable eort to quality for the assumption of

the loan;

(7) the amount of earnest money, if any, the method

of payment, the name of the broker or rm that will

serve as escrow agent, an acknowledgment of earnest

money receipt by the escrow agent, and the crite-

ria for determining disposition of the earnest money,

including disputed earnest money, consistent with

Commission Rule .0116 of this Subchapter;

(8) any loan that must be obtained by the buyer as a

condition of the contract, including the amount and

type of loan, interest rate and number of discount

points, loan term, and who shall pay loan closing

costs, and a condition that the buyer shall make ev-

ery reasonable eort to obtain the loan;

(9) a general statement of the buyer’s intended use of

the property and a condition that such use must not

be prohibited by private restriction or governmen-

tal regulation;

(10) the amount and purpose of any special assess-

ment to which the property is subject and the re-

sponsibility of the parties for any unpaid charges;

(11) the date for closing and transfer of possession;

(12) the signatures of the buyer and seller;

(13) the date of oer and acceptance;

(14) a provision that title to the property must be

delivered at closing by general warranty deed and

must be fee simple marketable title, free of all en-

cumbrances except ad valorem taxes for the current

year, utility easements, and any other encumbranc-

es specically approved by the buyer or a provision

otherwise describing the estate to be conveyed with

encumbrances, and the form of conveyance;

(15) the items to be prorated or adjusted at closing;

(16) who shall pay closing expenses;

(17) the buyer’s right to inspect the property prior to

closing and who shall pay for repairs and improve-

ments, if any;

(18) a provision that the property shall at closing be

in substantially the same condition as on the date of

the oer (reasonable wear and tear excepted), or a de-

scription of the required property condition at clos-

ing;

(19) a provision setting forth the identity of each

real estate agent and rm involved in the transaction

and disclosing the party each agent and rm repre-

sents; and

(20) any other provisions or disclosures required by

statute or rule.

(b) A broker acting as an agent in a real estate transac-

tion shall not use a preprinted oer or sales contract form

containing:

(1)any provision concerning the payment of a com-

mission or compensation, including the forfeiture of

earnest money, to any broker or rm; or

(2) any provision that attempts to disclaim the liabil-

ity of a broker for his or her representations in con-

nection with the transaction.

A broker or anyone acting for or at the direction of the

broker shall not insert or cause such provisions or terms to

be inserted into any such preprinted form, even at the direc-

tion of the parties or their attorneys.

printed oer and sales contract forms which a broker acting

as an agent in a real estate transaction proposes for use by

the buyer and seller. Nothing contained in this Rule shall

be construed to prohibit the buyer and seller in a real estate

transaction from altering, amending or deleting any provi-

sion in a form oer to purchase or contract nor shall this

Rule be construed to limit the rights of the buyer and sell-

er to draft their own oers or contracts or to have the same

drafted by an attorney at law.

A .0113 Reporting Criminal Convictions and

Disciplinary Actions

(a) A broker shall le with the Commission a Criminal

Conviction Disciplinary Action Reporting Form within 60

days of:

(1) a nal judgement, order, or disposition of any

felony or misdemeanor conviction;

(2) a disciplinary action or entering into a concilia-

tion agreement or consent order with a governmental agen-

cy or occupational licensing agency;

(3) a nal judgement, order, or disposition of a mil-

itary court-martial conviction; or

(4) a notarial commission sanction pursuant to

G.S. 10B-60.

(b) e Criminal Conviction Disciplinary Action Re-

porting Form is available on the Commission’s website at-

www.ncrec.gov or upon request to the Commission and shall

set forth the broker’s:

(1) full legal name;

(2) physical and mailing address;

(3) real estate license number,

(4) telephone number;

(5) email address;

(6) social security number;

North Carolina Real Estate License Law and Commission Rules

(7) date of birth; and

(8) description of the criminal conviction, military

court-martial conviction, notarial commission sanction, or

professional license disciplinary action, including the juris-

diction and le number.

A .0114 Residential Property and Owners’

Association Disclosure Statement

(a) Every owner of real property subject to a transfer

of the type governed by Chapter 47E of the General Stat-

ues shall complete a Residential Property and Owners’ Asso-

ciation Disclosure Statement (hereinafter “Disclosure State-

ment”) and furnish a copy of the complete statement to a

purchaser in accordance with the requirements of G.S. 47E-

4. e Disclosure Statement is a form prescribed by the Com-

mission and available on the Commission’s website at https://

www.ncrec.gov/Forms/Consumer/rec422.pdf. e Disclo-

sure Statement shall include the items set forth in G.S. 47E-

4(b1)(1) and the following information pertaining to the

property:

(1) property address;

(2) owner’s name(s), signature(s), and date of Disclosure

Statement completion;

(3) year the dwelling was constructed;

(4) any historic designation or registration status which

places a restriction on the property;

(5) noise, odor, smoke, or other nuisance from commer-

cial, industrial, or military sources impacting the property;

(6) existence of any private road(s) abutting or adjoining

the property and the maintenance agreements, if applicable;

(7) type of heating, cooling, water heater fuel sources

along with the year each system was manufactured;

(8) type of fuel source, and, if the fuel source is stored in

a tank, whether the tank is above or below ground and leased

or owned by the seller;

(9) type of water supply source and sewage disposal sys-

tem, and if serviced by a septic system, identify the number of

bedrooms allowed pursuant to permit;

(10) any violations impacting the property, such as lo-

cal ordinances, restrictive covenants, building codes, or other

land-use restrictions;

(11) whether any portion of the property is designated

as within a Special Flood Hazard Area pursuant to Title 44,

Chapter 1, Subchapter B, Part 65 of the Code of Federal Reg-

ulations, has a ood elevation certicate, is insured for ood

damage, has experienced damage from natural events causing

water seepage, or has had a claim led for ood damage or re-

ceived federal nancial assistance for ood damage; and

(12) if there is any problem, malfunction, or defect with

the property’s;

(A) roof, replaces, or chimneys;

(B) foundation, basement, crawl space, or slab;

(D) garage or other structural component of the

property;

(E) electrical, heating, cooling, or elevator systems;

(F) plumbing, water supply, sewer or septic systems;

(G) xtures or appliances to be conveyed with the

purchase;

(H) drainage, grading or soil stability; and

(I) condition caused by wood destroying insects or

organisms.

(b) A broker shall furnish a current Disclosure State-

ment published on the Commission’s website to the property

owner(s) for completion.

any real property subject to Chapter 47E of the North Caro-

lina General Statutes shall disclose to the purchaser any mate-

rial facts the broker knows or reasonably should know about

the property. A broker’s duty to disclose is separate from that

of the owner’s, and the owner’s Disclosure Statement does not

obviate the broker’s duty to disclose. A material fact is a fact

that a reasonable person would recognize as relevant to a pur-

chaser in deciding to purchase the property the suppression of

which could reasonably result in a dierent decision.

A .0115 Disclosure of Oers Prohibited

A broker shall not disclose the price or other materi-

al terms contained in a party’s oer to purchase, sell, lease,

rent, or to option real property to a competing party with-

out the express authority of the oering party.

A .0116 Handling of Trust Money

(a) Except as provided in Paragraph (b) of this Rule, all

monies received by a broker acting in his or her duciary

capacity (hereinafter “trust money”) shall be deposited in a

trust or escrow account as dened in Rule .0117(b) of this

Section no later than three banking days following the bro-

ker’s receipt of such monies.

(b) Exceptions to the requirements of Paragraph (a):

(1) All monies received by a provisional broker shall

be delivered upon receipt to the broker with whom

he or she is aliated.

(2) All monies received by a non-resident commer-

cial broker shall be delivered as required by Rule

.1808 of this Subchapter.

(3) Earnest money or tenant security deposits paid

by means other than currency and received by a bro-

ker in connection with a pending oer to purchase

or lease shall be deposited in a trust or escrow ac-

count no later than three days following acceptance

of the oer to purchase or lease; the date of accep-

tance of the oer or lease shall be set forth in the

purchase or lease agreement.

(4) A broker may accept custody of a check or oth-

er negotiable instrument made payable to the sell-

er of real property as payment for an option or due

diligence fee, or to the designated escrow agent in a

sales transaction, but only for the purpose of deliv-

ering the instrument to the seller or designated es-

North Carolina Real Estate License Law and Commission Rules

crow agent. While the instrument is in the custody

of the broker, the broker shall, according to the in-

structions of the buyer, either deliver it to the named

payee or return it to the buyer. e broker shall safe-

guard the instrument and be responsible to the par-

ties on the instrument for its safe delivery as required

by this Rule. A broker shall not retain an instrument

for more than three business days after the accep-

tance of the option or other sales contract.

account that bears interest, the broker having custody over

the money shall rst secure written authorization from all

parties having an interest in the money. Such authorization

shall specify and set forth in a conspicuous manner how and

to whom the interest shall be disbursed.

(d) In the event of a dispute between buyer and seller or

landlord and tenant over the return or forfeiture of any de-

posit other than a residential tenant security deposit held by

the broker, the broker shall retain the deposit in a trust or es-

crow account until the broker has obtained a written release

from the parties consenting to its disposition or until dis-

bursement is ordered by a court of competent jurisdiction.

Alternatively, the broker may deposit the disputed monies

with the appropriate Clerk of Superior Court in accordance

with the provisions of G.S. 93A-12. If it appears that one

of the parties has abandoned his or her claim to the funds,

the broker may disburse the money to the other claimant

according to the written agreement. Before doing so, how-

ever, the broker must rst make a reasonable eort to noti-

fy the absent party and provide that party with an opportu-

nity to renew his or her claim to the funds. Tenant security

deposits shall be disposed of in accordance with G.S. 42-50

through 56 and G.S. 42A-18.

(e) A broker may transfer an earnest money deposit

from his or her trust or escrow account to the closing attor-

ney or other settlement agent no more than 10 days prior to

the anticipated settlement date. A broker shall not disburse

prior to settlement any earnest money in his or her posses-

sion for any other purpose without the written consent of

the parties.

(f) A broker shall not disburse trust money to or on be-

half of a client in an amount exceeding the balance of trust

money belonging to the client and held in the trust account.

(g) Every broker shall safeguard any money or prop-

erty of others that comes into the broker’s possession in a

manner consistent with the Real Estate License Law and

Commission rules. A broker shall not convert the money or

property of others to his or her own use, apply such mon-

ey or property to a purpose other than that it was intended

for, or permit or assist any other person in the conversion or

misapplication of such money or property.

A .0117 Accounting for Trust Money

(a) A broker shall create, maintain and retain records

sucient to identify the ownership of all funds belonging to

others. Such records shall be sucient to show proper de-

posit and disbursement of such funds into and from a trust

or escrow account and to verify the accuracy and proper use

of the trust or escrow account.

(b) A trust or escrow account shall satisfy the require-

ments of G.S. 93A-6(g) and shall be designated as a “Trust

Account” or “Escrow Account.” All bank statements, de-

posit tickets and checks drawn on said account shall bear

the words “Trust Account” or “Escrow Account.” A trust

account shall provide for the full withdrawal of funds on de-

mand without prior notice and without penalty or deduc-

tion to the funds.

by Rule .0108 of this Section, the following records:

(1) bank statements;

(2) canceled checks and other evidence or memo-

randa of payments from the trust or escrow account,

whether by transfer between accounts, wire pay-

ments, or payments by electronic means, that shall

be referenced to the corresponding journal entry or

check stub entries and to the corresponding sales

transaction ledgers or for rental transactions, the

corresponding property or owner ledgers. Checks

and other evidence or memoranda of payments from

the account shall identify the payee by name and

shall bear a notation identifying the purpose of the

disbursement. When a payment is used to disburse

funds for more than one sales transaction, owner,

or property, the check or other evidence or memo-

randa of payment shall bear a notation identifying

each sales transaction, owner, or property for which

disbursement is made, including the amount dis-

bursed for each, and the corresponding sales trans-

action, property, or owner ledger entries. When nec-

essary, the check notation may refer to the required

information recorded on a supplemental disburse-

ment worksheet that shall be cross-referenced to the

corresponding check or payment. In lieu of retain-

ing canceled checks, a broker may retain digitally

imaged copies of the canceled checks or substitute

checks provided that such images are legible repro-

ductions of the front and back of such instruments

with no smaller images than 1.1875 x 3.0 inches and

provided that the broker’s bank retains for a period

of at least ve years the original checks, “substitute

checks” as described in 12 C.F.R. 229.51 or the ca-

pacity to provide substitute checks as described in 12

C.F.R. 229.51 and makes the original or substitute

checks available to the broker and the Commission

upon request. e description of “substitute checks”

contained in 12 C.F.R. 229.51 is incorporated by

referencing, including subsequent amendments and

additions. e regulation may be accessed at www.

gpo.gov at no charge.

(3) deposit tickets or other evidence or memoran-

North Carolina Real Estate License Law and Commission Rules

da of deposits or payments into the account, wheth-

er by transfer between accounts, wire payments, or

payments by electronic means:

(A) for a sales transaction, the deposit tick-

et or other evidence or memoranda of deposits

or payments into the account shall identify the

purpose and remitter of the funds deposited, the

property, the parties involved, and a reference to

the corresponding sales transaction ledger;

(B) for a rental transaction, the deposit tick-

et or other evidence or memoranda of deposits

or payments into the account shall identify the

purpose and remitter of the funds deposited, the

tenant, and the corresponding property or own-

er ledger;

lected on behalf of a property owner association,

the deposit ticket or other evidence or memo-

randa of deposits or payments into the account

shall identify the property or property interest

for which the payment is made, the property or

interest owner, the remitter, and the purpose of

the payment;

(D) when a single deposit ticket or payment

is used to deposit funds collected for more than

one sales transaction, property owner, or prop-

erty, the required information may either be re-

corded on the ticket or other evidence or mem-

oranda of deposits or payments into the account

for each sales transaction, owner, or property, or

it may refer to the same information recorded

on a supplemental deposit worksheet that shall

be cross-referenced to the corresponding depos-

it ticket;

(4) a separate ledger for each sales transaction, for

each property or owner of property managed by the

broker and for company funds held in the trust ac-

count:

(A) the ledger for a sales transaction shall iden-

tify the property, the parties to the transaction,

the amount, date, and purpose of the depos-

its and from whom received, the amount, date,

check number, and purpose of disbursements

and to whom paid, and the running balance of

funds on deposit for each deposit and disburse-

ment entry;

(B) the ledger for a rental transaction shall iden-

tify the particular property or owner of property,

the tenant, the amount, date, and purpose of the

deposits and from whom received, the amount,

date, check number, and purpose of disburse-

ments and to whom paid, and the running bal-

ance of funds on deposit for each deposit and

disbursement entry. Monies held as tenant se-

curity deposits in connection with rental trans-

actions may be accounted for on a separate ten-

ant security deposit ledger for each property or

owner of property managed by the broker. For

each security deposit, the tenant security depos-

it ledger shall identify the remitter, the date the

deposit was paid, the amount, the tenant, land-

lord, and subject property as well as the check

number, amount, date, payee, purpose and a

running balance for each disbursement. When

tenant security deposit monies are accounted for

on a separate ledger as provided in this Rule, de-

posit tickets, canceled checks and supplemen-

tal worksheets shall reference the corresponding

tenant security deposit ledger entries;

hundred dollars ($100.00) in company funds in

a trust account for the purpose of paying service

charges incurred by the account. In the event

that the services charges exceed one hundred dol-

lars ($100.00) monthly, the broker may depos-

it an amount each month sucient to cover the

service charges. A broker shall maintain a sepa-

rate ledger for company funds held in the trust

account identifying the date, amount and run-

ning balance for each deposit and disbursement;

(5) a general journal, check register or check stubs

identifying in chronological order each bank depos-

it and disbursement of monies to and from the trust

or escrow account, including the amount and date

of each deposit and a reference to the corresponding

deposit ticket and any supplemental deposit work-

sheet, and the amount, date, check number, and

purpose of disbursements and to whom paid. e

journal or check stubs shall also show a running bal-

ance for each entry into the account;

(6) a payment record for each property or interest

for which funds are collected and deposited into a

property owner association trust account as required

by Rule .0118 of this Section. Payment record(s)

shall identify the amount, date, remitter, and pur-

pose of payments received, the amount and nature

of the obligation for which payments are made, and

the amount of any balance due or delinquency;

(7) copies of earnest money checks, due diligence fee

checks, receipts for cash payments, contracts, and

closing statements in sales transactions;

(8) copies of leases, security deposit checks, proper-

ty management agreements, property management

statements, and receipts for cash payments in leas-

ing transactions;

(9) copies of covenants, bylaws, minutes, manage-

ment agreements and periodic statements relating to

the management of property owner associations;

(10) copies of invoices, bills, and contracts paid from

the trust account; and

North Carolina Real Estate License Law and Commission Rules

(11) copies of any documents not otherwise de-

scribed in this Rule that are necessary to verify and

explain record entries.

(d) Records of all receipts and disbursements of trust or

escrow monies shall be maintained in such a manner as to

create an audit trail from deposit tickets and canceled checks

to check stubs or journals and to the ledger sheets.

(e) Brokers shall reconcile their trust or escrow accounts

monthly. e trust account reconciliation shall be per-

formed in the following manner as of a specic cuto date

selected by the broker:

(1) a trial balance shall be prepared showing a list of

the property or owner ledgers, their balances, and

the total of all of the property or owner ledger bal-

ances as of the cuto date;

(2) a bank statement shall be reconciled by deduct-

ing from the statement’s ending balance the amount

of any outstanding checks and then adding to the

balance the amount of any deposits-in-transit as of

the cuto date; and

(3) the trial balance, reconciled bank statement bal-

ance, and the journal balance shall be compared as

of the cuto date. If the amounts on the trial bal-

ance, journal balance and reconciled bank balance

do not agree, the broker shall investigate the reason

for any variation between the balances and make

the necessary corrections to bring the balances into

agreement.

A broker shall maintain and retain a worksheet for each

monthly trust account reconciliation showing the balance

of the journal or check stubs, the trial balance and the rec-

onciled bank statement balance to be in agreement as of the

cuto date.

(f) In addition to the records required by Paragraph (c)

of this Rule, a broker acting as agent for the landlord of a

residential property used for vacation rentals shall create and

maintain either a subsidiary ledger sheet for each property

or owner of such properties on which all funds collected and

disbursed are identied in categories by purpose or an ac-

counts payable ledger for each owner or property and each

vendor to whom trust monies are due. If a broker maintains

a subsidiary ledger, the broker shall reconcile the subsid-

iary ledgers to the corresponding property or property own-

er ledger on a monthly basis. If a broker maintains an ac-

counts payable ledger, the broker shall record on the ledger

monies collected on behalf of the owner or property iden-

tifying the date of receipt of the trust monies, from whom

the monies were received, rental dates, and the correspond-

ing property or owner ledger entry including the amount to

be disbursed for each and the purpose of the disbursement.

e broker may also maintain an accounts payable ledger in

the format described above for vacation rental tenant secu-

rity deposit monies and vacation rental advance payments.

(g) Upon the written request of a client, a broker shall,

no later than ten days after receipt of the request, furnish

the client with copies of any records retained as required by

Rule .0108 of this Section that pertain to the transaction to

which the client was a party.

(h) All trust or escrow account records shall be made

available for inspection by the Commission or its authorized

representatives in accordance with Rule .0108 of this Sec-

tion.

A .0118 Trust Money Belonging To Property Owners’

Associations

(a) e funds of a property owners’ association, when col-

lected, maintained, disbursed or otherwise controlled by a

broker, are trust money and shall be treated as such in the

manner required by Rules .0116 and .0117 of this Section.

Such trust money shall be deposited into and maintained in

a trust or escrow account dedicated exclusively for trust mon-

ey belonging to a single property owners’ association and shall

not be commingled with funds belonging to other proper-

ty owners’ associations or other persons or parties. A bro-

ker who undertakes to act as manager of a property owners’

association or as the custodian of trust money belonging to

a property owners’ association shall provide the association

with periodic statements that report the balance of association

trust money in the broker’s possession or control and account

for the trust money the broker has received and disbursed on

behalf of the association. Such statements must be made in

accordance with the broker’s agreement with the association,

but not less frequently than every 90 days.

(b) A broker who receives trust money belonging to a prop-

erty owners’ association in his or her capacity as an ocer of

the association in a residential development in which the bro-

ker is a property owner and for which the broker receives no

compensation is exempt from the requirements of Rules .0116

and .0117 of this Section. However, the broker shall not con-

vert trust money belonging to the association to his or her own

use, apply such money or property to a purpose other than that

for which it was intended or permit or assist any other person

in the conversion or misapplication of such money or property.

A .0119 Mineral and Oil And Gas Rights Mandatory

Disclosure Statement

(a) Every owner of real property subject to a transfer of

the type governed by G.S. 47E-1 and 47E-2(b) shall com-

plete a disclosure statement form prescribed by the Com-

mission and designated “Mineral and Oil and Gas Rights

Mandatory Disclosure Statement,” and shall furnish a copy

of the completed form to a purchaser as required by G.S.

47E-4.1. e form shall bear the seal of the North Caroli-

na Real Estate Commission and shall include the following:

(1) instructions to property owners regarding trans-

actions when the disclosure statement is required;

(2) the text and format of the disclosure statement

form as required by G.S. 47E-4.1(a);

(3) a note to purchasers regarding their rights under

G.S. 47E-5 in the event they are not provided with

North Carolina Real Estate License Law and Commission Rules

a disclosure statement as required by G.S. 47E-4.1;

(4) the identication of the subject property and the

parties to the transaction;

(5) an acknowledgment by the owner(s) that the dis-

closure statement is true and correct as of the date

signed; and

(6) an acknowledgment by the buyer(s) of the re-

ceipt of a copy of the disclosure statement.

(b) e disclosure statement form described in Paragraph

(a) of this Rule shall be available on the Commission’s web-

site at www.ncrec.gov or upon request to the Commission.

(a) of this Rule may be reproduced, but the text of the form

shall not be altered or amended in any way.

(d) Every broker representing a party in a real estate

transaction governed by G.S. 47E-1 and 47E-2(b) shall in-

form each client of the client’s rights and obligations under

G.S. Chapter 47E.

(e) e disclosure statement form described in Paragraph

(a) of this Rule applies to all contracts executed on or after

January 1, 2015.

A .0120 Prohibited Acts

(a) A broker shall not require or demand of any escrow

agent or attorney that a broker’s commission be split with or

paid to another person or entity.

(b) An aliated broker shall not be paid a commission

or referral fee directly by anyone other than their current

BIC or the person who served as their BIC at the time of

the transaction.

induce, bribe, or intimidate a service provider in a real es-

tate transaction in order to inuence or attempt to inuence

their ndings, report, or decision. Service providers include,

but are not limited to, appraisers, attorneys, inspectors, -

nancial lenders, and contractors.

(d) A broker shall not conduct brokerage activities or

otherwise promote their status as a real estate broker in any

manner that discriminates on the basis of race, color, reli-

gion, national origin, sex, familial status, or disability.

SECTION .0300

APPLICATION FOR LICENSE

A .0301 License Application

(a) An individual seeking licensure as a real estate bro-

ker shall submit a license application that is available on the

Commission’s website and shall include the applicant’s:

(1) legal name;

(2) mailing, physical, and email address;

(3) telephone number;

(4) social security number and date of birth;

(5) qualication for license application;

(6) real estate license history;

(7) places of residence for the past seven years;

(8) employment history for the past three years;

(9) criminal oenses, military courts-martial convic-

tions, professional license disciplinary actions, including the

jurisdiction, le number, and explanation of each oense;

(10) liens or unpaid judgments;

(11) certication the applicant has read the Real Es-

tate Licensing in North Carolina brochure that is available on

the Commission’s website; and

(12) declaration and signature.

(b) In addition to the application required by Paragraph

(a) of this Rule, the applicant shall submit:

(1) the license application fee pursuant to Rule

.0302 of this Section; and

(2) a criminal records report from a Commission-

designated criminal reporting service obtained within six

months prior to application submission.

A .0302 License Application and Fee

(a) e fee for an original application of a broker or rm

license shall be one hundred dollars ($100.00)

(b) An applicant shall update information provided in

connection with a license application in writing to the Com-

mission or submit a new application form that includes the

updated information without request by the Commission

to ensure that the information provided in the application

is current and accurate. Failure to submit updated informa-

tion prior to the issuance of a license may result in disciplin-

ary action against a broker or rm in accordance with G.S.

93!-6(b)(1). Upon the request of the Commission, an appli-

cant shall submit updated information or provide addition-

al information necessary to complete the application with-

in 45 days of the request or the license application shall be

canceled.

celed is the applicant fails to:

(1) pass a scheduled license examination within 18-

days of ling a complete application pursuant to Rule .0301

of this Section; or

(2) appear for and take any scheduled examination

without having the applicant’s examination postponed or

absence excused pursuant to Rule .0401 of this Subchapter.

A .0304 Waiver of 75‑Hour Prelicensing Education

Requirement

e Commission shall grant a waiver of the 75-hour ed-

ucation program pursuant to G.S. 93A-4(a) if an applicant

submits:

(1) an application pursuant to Rule .0301 of this

Section;

(2) a written request for a waiver of the 75-hour ed-

ucation program; and either

(3) a transcript and copy of a baccalaureate or high-

er degree in the eld of real estate, real estate broker-

age, real estate nance, real estate development, or a

North Carolina Real Estate License Law and Commission Rules

law degree conferred on the applicant from any col-

lege or university accredited by a college accrediting

body recognized by the U. S. Department of Edu-

cation; or

(4) a course completion certicate or transcript evi-

dencing the completion of a prelicensing education

program in another state that:

(a) consisted of at least 75-hours of instruction;

(b) was completed within one year prior to li-

cense application while the applicant was a resi-

dent of said state; and

in the Commission’s Prelicensing course syllabus.

A .0305 Petition for Predetermination

(a) An individual who wishes to le a petition for a pre-

determination of whether the individual’s criminal histo-

ry will likely disqualify the individual from obtaining a real

estate license shall submit a petition on the Commission’s

website.

(b) e petition shall include the petitioner’s:

(1) legal name;

(2) mailing, physical, and email addresses;

(3) social security number;

(4) date of birth;

(5) telephone number;

(6) places of residence for the past seven years;

(7) employment history during the last three years

or since the date of the petitioner’s last criminal con-

viction, whichever is greater;

(8) criminal record report prepared by the Com-

mission’s approved independent vendor pursuant to

G.S. 93B-8.1 no more than 60 days prior to the date

of petition;

(9) written statement describing the circumstances

surrounding the commission of the crime(s);

(10) written statement of any rehabilitation eorts,

if applicable;

(11) rehabilitative drug or alcohol treatments, if ap-

plicable;

(12) Certicate of Relief granted pursuant to G.S.

15A-173.2, if applicable;

(13) adavits or other written documents, includ-

ing character references;

(14) certication that the information is true and ac-

curate; and

(15) signature.

forty-ve dollars ($45.00).

SECTION .0400

EXAMINATIONS

A .0401 Scheduling Examinations

(a) An applicant who is required and qualied to take

the licensing examination shall be provided a notice of ex-

amination eligibility that shall be valid for a period of 180

days and for a single administration of the licensing exami-

nation. Upon receipt of the notice of examination eligibil-

ity, the applicant shall contact the Commission’s authorized

testing service to pay for and schedule the examinations in

accordance with procedures established by the testing ser-

vice. e testing service will schedule applicants for exami-

nation by computer at their choice of one of the testing lo-

cations and will notify applicants of the time and place of

their examinations.

(b)

An applicant may postpone a scheduled examination

provided the applicant makes the request for postponement

directly to the Commission’s authorized testing service in

accordance with procedures established by the testing ser-

vice. An applicant’s examination shall not be postponed be-

yond the 180 day period allowed for taking the examination

without rst reling another complete application with the

Commission.

A request to postpone a scheduled licensing examina-

tion without complying with the procedures for re-applying

for examination described in Rule .0403 of this Subchap-

ter shall be granted only once unless the applicant satises

the requirements for obtaining an excused absence stated in

Paragraph (c) of this Rule.

from a scheduled examination if the applicant provides evi-

dence that the absence was the direct result of an emergen-

cy situation or condition which was beyond the applicant’s

control and which could not have been reasonably foreseen

by the applicant. A request for an excused absence must be

promptly made in writing and must be supported by docu-

mentation verifying the reason for the absence. e request

must be submitted directly to the testing service in accor-

dance with procedures established by the testing service. A

request for an excused absence from an examination shall be

denied if the applicant cannot be rescheduled and examined

prior to expiration of the 180 day period allowed for taking

the examination without rst reling another complete ap-

plication with the Commission.

A .0402 Examination Subject Matter, Format, and

Passing Scores

(a) e real estate licensing examination shall test appli-

cants on the following general subject areas:

(1) real estate law;

(2) real estate brokerage law and practices;

(3) the Real Estate License Law, rules of the Com-

mission, and the Commission’s trust account guide-

lines;

(4) real estate nance;

(5) real estate valuation (appraisal);

(6) real estate mathematics; and

(7) related subject areas.

(b) e real estate licensing examination shall consist of

North Carolina Real Estate License Law and Commission Rules

two sections, a “national” section on general real estate law,

principles, and practices and a “state” section on North Car-

olina real estate law, principles, and practices. Unless the

“national” section is waived by the Commission for an ap-

plicant based on its authority under G.S. 93A-9, an appli-

cant shall pass both sections of the examination in order to

pass the examination.

an applicant shall attain a score for each required section of

the examination that is at least equal to the passing score es-

tablished by the Commission for each section of the exam-

ination in compliance with psychometric standards for es-

tablishing passing scores for occupational licensing exami-

nations as set forth in the “Standards for Educational and

Psychological Testing” jointly promulgated by the Ameri-

can Educational Research Association, the American Psy-

chological Association, and the National Council on Mea-

surement in Education. e “Standards for Educational and

Psychological Testing” are incorporated by referencing, in-

cluding subsequent amendments and editions. A copy of

the “Standards for Educational and Psychological Testing”

is available for inspection at the North Carolina Real Estate

Commission’s oce, whose address is posted on its website

at www.ncrec.gov. Copies of the “Standards for Educational

and Psychological Testing” may be ordered from the Amer-

ican Education Research Association through its website at

www.aera.net at a charge of $69.95 per copy plus shipping.

(d) An applicant who passes one or both sections of

the examination will receive only a score of “pass” for the

section(s) passed; however, an applicant who fails one or

both sections of the examination shall be informed of their

actual score for the section(s) failed. An applicant who is

required to pass both sections of the examination shall do

so within his or her 180-day examination eligibility period,

and if the applicant passes only one section during his or her

180-day examination eligibility period, then that passing

score shall not be recognized if the applicant subsequently

re-applies to the Commission for a license.

(e) A passing examination score obtained by a license

applicant for both sections of the examination, or for the

“state” section if that is the only section an applicant is re-

quired to pass, shall be recognized as valid for a period of

one year from the date the examination was passed. During

this time, the applicant shall satisfy any remaining require-

ments for licensure that were pending at the time of exam-

ination. e running of the one-year period shall be tolled

upon mailing the applicant the letter set forth in 21 NCAC

58A .0616(c) informing the applicant that his or her mor-

al character is in question, and shall resume running when

the applicant’s application is either approved for license is-

suance, denied, or withdrawn. e application of an appli-

cant with a passing examination score who fails to satisfy all

remaining requirements for licensure within one year shall

be canceled and the applicant shall be required to reapply

and satisfy all requirements for licensure, including retak-

ing and passing the license examination, in order to be eli-

gible for licensure.

A .0403 Re‑applying for Examination

(a) An individual whose license application has been

canceled pursuant to Rule .0302(c) of this Subchapter

and

whose 180 day examination eligibility period has expired

who wishes to be rescheduled for the

real estate license exam-

ination must

re-apply to the Commission by ling a com-

plete license application as described in Rule .0301 of this

Subchapter and paying the prescribed application fee.

Sub-

sequent examinations shall be scheduled in accordance with

Rule .0401 of this Section.

(b) An individual whose license application has been

canceled

pursuant to Rule .0302(c) of this Subchapter

who

wishes to be rescheduled for the license examination before

the expiration of his or her 180 day examination eligibility

period may utilize an abbreviated electronic license appli-

cation and examination rescheduling procedure by direct-

ly contacting the Commission’s authorized testing service,

paying both the license application fee and the examination

fee to the testing service, and following the testing service’s

established procedures.

one or both sections of

the li-

cense examination shall not be allowed to retake the

failed

section(s) of the

examination for at least 10 calendar days.

A .0404 Examination Related Misconduct

(a) When taking a license examination, an applicant

shall not:

(1) cheat or attempt to cheat on the examination by

any means, including giving or receiving assistance

or using notes of any type;

(2) communicate with any person other than an ex-

amination supervisor for any purpose in any manner;

(3) have in his or her possession or utilize in any

manner study materials or notes or any device that

may be used to:

(A) communicate with others;

(B) access information; or

audio or other information about the examina-

tion;

(4) have in his or her possession or utilize a calcula-

tor that:

(A) permits the storage, entry or retrieval of al-

phabetic characters; or

(B) is not silent, hand-held and either battery-

powered or solar-powered;

(5) have in his or her possession a wallet, pocket-

book, bag or similar item that can be used to store

materials prohibited by this Rule;

(6) refuse to demonstrate to the examination super-

visor that pockets on any item of clothing do not

contain materials prohibited by this Rule;

North Carolina Real Estate License Law and Commission Rules

(7) leave or attempt to leave the testing area with any

materials provided for the purpose of taking the ex-

amination or with any information, notes or oth-

er information about the content of the examina-

tion; or

(8) refuse to comply with the instructions of the

Commission and the Commission’s test provider for

taking the examination; or

(9) disrupt in any manner the administration of the

examination.

(b) Violation of this Rule shall result in dismissal from an

examination, invalidation of examination scores, forfeiture of

examination and application fees and denial of a real estate li-

cense, as well as for disciplinary action if the applicant has been

issued a license.

A .0405 Condentiality of Examinations

Licensing examinations are condential. No applicant or li-

censee shall obtain, attempt to obtain, receive or communicate

to other persons examination ques tions or answers. Violation

of this Rule is grounds for deni al of a real estate license if the

violator is an appli cant and disciplinary action if the violator is

a licens ee or becomes a licensee prior to the discovery of the vi-

olation by the Commission.

SECTION .0500

LICENSING

A .0502 Firm Licensing

(a) Every business entity other than a sole proprietor-

ship shall apply for and obtain from the Commission a rm

license prior to engaging in business as a real estate broker.

(b) An entity that changes its business form other than

by conversion shall submit a new rm license application

upon making the change and obtain a new rm license. An

entity that converts to a dierent business entity in confor-

mity with and pursuant to applicable North Carolina Gen-

eral Statutes shall not be required to apply for a new license.

However, such converted entity shall provide the informa-

tion required by this Rule in writing to the Commission

within 10 days of the conversion and shall include the du-

plicate license fee pursuant to Rule .0101(c) of this Sub-

chapter.

the Commission’s website or upon request to the Commis-

sion and shall require the applicant to set forth:

(1) the legal name of the entity;

(2) the name under which the entity will do busi-

ness;

(3) the type of business entity;

(4) the address of its principal oce;

(5) the entity’s NC Secretary of State Identication

Number if it is required to be registered with the Of-

ce of the NC Secretary of State;

(6) each federally insured depository institution law-

fully doing business in this State where the entity’s

trust account(s) will be held, if applicable;

(7) the name, real estate license number, and signa-

ture of the proposed qualifying broker for the rm;

(8) the address of and name of the proposed broker-

in-charge for each oce as dened in Rule .0110(a)

of this Subchapter, along with a completed bro-

ker-in-charge designation form described in Rule

.0110(f) of this Subchapter for each proposed bro-

ker-in-charge;

(9) any past criminal conviction of and any pending

criminal charge against any principal in the compa-

ny or any proposed broker-in-charge;

(10) any past revocation, suspension, or denial of a

business or professional license of any principal in

the company or any proposed broker-in-charge;

(11) if a general partnership, a description of the ap-

plicant entity, including a copy of its written part-

nership agreement or if no written agreement exists,

a written description of the rights and duties of the

partners, and the name of each partner. If a partner

is an entity rather than a natural person, the name

of each ocer, partner, or manager of that entity, or

any entity therein;

(12) if a limited liability company, a description of

the applicant entity, including a copy of its written

operating agreement or if no written agreement ex-

ists, a written description of the rights and duties of

the managers, and the name of each manager. If a

manager is an entity rather than a natural person,

the name of each ocer, partner, or manager of that

entity, or any entity therein;

(13) if a business entity other than a corporation,

limited liability company, or partnership, a descrip-

tion of the organization of the applicant entity, in-

cluding a copy of its organizational documents ev-

idencing its authority to engage in real estate bro-

kerage;

(14) if a foreign business entity, a Certicate of Au-

thority to transact business in North Carolina issued

by the NC Secretary of State and an executed con-

sent to service of process and pleadings; and

(15) any other information required by this Rule.

(d) When the authority of a business entity to engage in

the real estate business is unclear in the application or in law,

the Commission shall require the applicant to declare in the

rm license application that the applicant’s organizational

documents authorize the rm to engage in the real estate

business and to submit organizational documents, address-

es of aliated persons, and similar information. For purpos-

es of this Rule, the term “principal,” when it refers to a per-

son or entity, means any person or entity owning 10 percent

or more of the business entity, or who is an ocer, director,

manager, member, partner, or who holds any other compa-

North Carolina Real Estate License Law and Commission Rules

rable position.

(e) After ling a rm license application with the Com-

mission, the entity shall be licensed provided that it:

(1) has one principal holding a broker license on

active status in good standing who will serve as the

qualifying broker; and

(2) employs and is directed by personnel licensed as

a broker in accordance with this Chapter.

e qualifying broker of a partnership of any kind shall

be a general partner of the partnership; the qualifying bro-

ker of a limited liability company shall be a manager of the

company; and the qualifying broker of a corporation shall

be an ocer of the corporation. A licensed business entity

may serve as the qualifying broker of another licensed busi-

ness entity if the qualifying broker-entity has as its qualify-

ing broker a natural person who is licensed as a broker. e

natural person who is qualifying broker shall assure to the

Commission the performance of the qualifying broker’s du-

ties with regard to both entities. A provisional broker may

not serve as a qualifying broker.

(f) e licensing of a business entity shall not be con-

strued to extend to the licensing of its partners, managers,

members, directors, ocers, employees or other persons act-

ing for the entity in their individual capacities regardless of

whether they are engaged in furthering the business of the

licensed entity.

(g) e qualifying broker of a business entity shall as-

sume responsibility for:

(1) designating and assuring that there is at all times

a broker-in-charge for each oce and branch oce

of the entity as “oce” and “branch oce” are de-

ned in Rule .0110(a) of this Subchapter;

(2) renewing the real estate broker license of the entity;

(3) retaining the rm’s current pocket card at the

rm and producing it as proof of rm licensure upon

request and maintaining a photocopy of the rm li-

cense certicate and pocket card at each branch of-

ce thereof;

(4) notifying the Commission of any change of busi-

ness address or legal or trade name of the entity and

the registration of any assumed business name ad-

opted by the entity for its use;

(5) notifying the Commission in writing of any

change of his or her status as qualifying broker with-

in 10 days following the change;

(6) securing and preserving the transaction and

trust account records of the rm whenever there is a

change of broker-in-charge at the rm or any oce

thereof and notifying the Commission if the trust ac-

count records are out of balance or have not been rec-

onciled as required by Rule .0117 of this Subchapter;

(7) retaining and preserving the transaction and

trust account records of the rm upon termina-

tion of his or her status as qualifying broker until a

new qualifying broker has been designated with the

Commission or, if no new qualifying broker is desig-

nated, for the period of time records are required to

be retained by Rule .0108 of this Subchapter;

(8) notifying the Commission if, upon the termi-

nation of his or her status as qualifying broker, the

rm’s transaction and trust account records cannot

be retained or preserved or if the trust account re-

cords are out of balance or have not been reconciled

as required by Rule .0117 of this Subchapter; and

(9) notifying the Commission regarding any reve-

nue suspension, revocation of Certicate of Author-

ity, or administrative dissolution of the entity by the

NC Secretary of State within 10 days of the suspen-

sion, revocation, or dissolution.

(h) Every licensed business entity and every entity ap-

plying for licensure shall conform to all the requirements

imposed upon it by the North Carolina General Statutes

for its continued existence and authority to do business in

North Carolina. Failure to conform to such requirements

shall be grounds for disciplinary action or denial of the en-

tity’s application for licensure.

(i) Upon receipt of notice from an entity or agency of

this State that a licensed entity has ceased to exist or that its

authority to engage in business in this State has been termi-

nated by operation of law, the Commission shall cancel the

license of the entity.

A .0503 License Renewal

(a) All real estate licenses issued by the Commission un-

der G.S. 93A, Article 1 shall expire on June 30 following is-

suance. Any broker desiring renewal of his or her license

shall renew on the Commission’s website within 45 days pri-

or to license expiration and shall submit a renewal fee of for-

ty-ve dollars ($45.00).

(b) During the renewal process, every individual bro-

ker shall provide an email address to be used by the Com-

mission. e email address may be designated by the broker

as private in order to be exempt from public records disclo-

sures pursuant to G.S. 93A-4(b2).

in-charge shall disclose:

(1) each federally insured depository institution law-

fully doing business in this State where the trust

account(s) for the broker-in-charge or the entity for

which the broker-in-charge is designated is held, if

applicable; and

(2) any criminal conviction or occupational license

disciplinary action that occurred within the previ-

ous year.

A .0504 Active and Inactive License Status

(a) Except for licenses that have expired or that have

been revoked, suspended or surrendered, all licenses issued

by the Commission shall be designated as being either on

active status or inactive status. Subject to compliance with

North Carolina Real Estate License Law and Commission Rules

Rule .0110 of this Subchapter, the holder of a license on ac-

tive status may engage in any activity requiring a real estate

license and may be compensated for the provision of any

lawful real estate brokerage service. e holder of a license

on inactive status shall not engage in any activity requir-

ing a real estate license, including the referral for compensa-

tion of a prospective seller, buyer, landlord or tenant to an-

other real estate broker or any other party. A broker hold-

ing a license on inactive status must renew the license and

pay the prescribed license renewal fee in order to continue to

hold the license. e Commission may take disciplinary ac-

tion against a broker holding a license on inactive status for

any violation of G.S. 93A or any rule adopted by the Com-

mission, including the oense of engaging in an activity for

which a license is required.

(b) A license issued to a provisional broker shall, upon

initial licensure, be assigned to inactive status. A license is-

sued to a rm or a broker other than a provisional broker

shall be assigned to active status. Except for persons licensed

under the provisions of Section .1800 of this Subchapter,

a broker may change the status of his or her license from

active to inactive status by submitting a written request to

the Commission. A provisional broker’s license shall be as-

signed by the Commission to inactive status when the pro-

visional broker is not under the active, direct supervision of

a broker-in-charge. A rm’s license shall be assigned by the

Commission to inactive status when the rm does not have

a qualifying broker with an active license. Except for per-

sons licensed under the provisions of Section .1800 of this

Subchapter, a broker shall also be assigned to inactive status

if, upon the second renewal of his or her license following

initial licensure, or upon any subsequent renewal, he or she

has not satised the continuing education requirement de-

scribed in Rule .1702 of this Subchapter.

sires to have the license placed on active status must comply

with the procedures prescribed in Rule .0506 of this Section.

(d) A broker, other than a provisional broker, with an in-

active license who desires to have the license placed on active

status shall le with the Commission a request for license

activation on a form provided by the Commission contain-

ing identifying information about the broker, a statement

that the broker has satised the continuing education re-

quirements prescribed by Rule .1703 of this Subchapter, the

name and address of any broker-in-charge, the date of the

request, and the signature of the broker. Upon the mail-

ing or delivery of this form, the broker’s status will be con-

sidered to be active. If the broker is eligible for license acti-

vation, the Commission shall send a written acknowledge-

ment of the license activation to the broker and his or her

aliated broker-in-charge, if any. If neither the broker nor

his or her aliated broker-in-charge receive from the Com-

mission a written acknowledgment of the license activation

within 30 days of the date shown on the form, the broker

shall immediately terminate his or her real estate brokerage

activities pending receipt of the written acknowledgment

from the Commission. If either the broker or his or her af-

liated broker-in-charge, if any, is notied that he or she is

not eligible for license activation due to a continuing educa-

tion deciency, the broker shall terminate all real estate bro-

kerage activities until such time as the continuing education

deciency is satised and a new request for license activation

is submitted to the Commission.

(e) Upon an active, non-provisional broker’s aliation

with a rm and broker-in-charge, the broker-in-charge of

the oce where the broker will be engaged in the real estate

business shall notify the Commission of the aliation on a

form provided by the Commission containing identifying

information about the aliating broker and the broker-in-

charge, and the signature of the broker-in-charge. If neither

the broker nor the broker-in-charge receive from the Com-

mission a written acknowledgment of the license aliation

within 30 days of the date shown on the form, the broker

and his or her broker-in-charge shall cease representing the

broker as being aliated with such broker-in-charge pend-

ing receipt of the written acknowledgment from the Com-

mission.

(f) A rm with an inactive license which desires to have

its license placed on active status shall le with the Commis-

sion a request for license activation containing identifying

information about the rm and its qualifying broker and

satisfy the requirements of Rule .0110 of this Subchapter. If

the qualifying broker has an inactive license, he or she must

satisfy the requirements of Paragraph (d) of this Rule. Upon

the mailing or delivery of the completed form by the qual-

ifying broker, the rm may engage in real estate brokerage

activities requiring a license; however, if the rm’s qualify-

ing broker does not receive from the Commission a written

acknowledgment of the license activation within 30 days of

the date shown on the form, the rm shall immediately ter-

minate its real estate brokerage activities pending receipt of

the written acknowledgment from the Commission. If the

qualifying broker is notied that the rm is not eligible for

license activation due to a continuing education deciency

on the part of the qualifying broker, the rm must terminate

all real estate brokerage activities until such time as the con-

tinuing education deciency is satised and a new request

for license activation is submitted to the Commission.

(g) A person licensed as a broker under Section .1800 of

this Subchapter shall maintain his or her license on active sta-

tus at all times as required by Rule .1804 of this Subchapter.

A .0505 Reinstatement of a License

(a) e fee for reinstatement of a license that has been

expired, revoked, or surrendered for less than two years shall

be an amount equal to two times the current renewal license

fee pursuant to Rule .0503 of this Section.

(b) e reinstatement application form is available on

the Commission’s website and shall include the applicant’s:

(1) legal name;

North Carolina Real Estate License Law and Commission Rules

(2) mailing, physical, and email address;

(3) telephone number;

(4) previous license number;

(5) Secretary of State identication number, if ap-

plicable;

(6) social security number and date of birth, if ap-

plicable;

(7) qualifying broker and broker-in-charge’s legal

name and license number, if applicable;

(8) criminal record report from a designated crimi-

nal reporting service obtained within six months pri-

or to application;

(9) certication; and

(10) signature.

has been expired for less than six months shall:

(1) submit the reinstatement fee pursuant to Para-

graph (a) of this Rule;

(2) disclose any criminal conviction, court-martial

conviction, notarial commission sanction, or disci-

plinary action pursuant to Rule .0113 of this Sec-

tion, including any conviction or disciplinary action

incurred while the individual’s license was expired;

and

(3) satisfy the license activation requirements of Rule

.1703 of this Subchapter, if applicable.

(d) An individual seeking reinstatement of a license that

has been expired for six months but no more than two years

or revoked or surrendered for no more than two years shall:

(1) submit a complete reinstatement application

pursuant to Paragraph (b) of this Rule;

(2) submit the reinstatement fee pursuant to Para-

graph (a) of this Rule; and

(3) pass:

(A) one Postlicensing course within six months

prior to submitting a reinstatement application;

(B) the “National” and “State” sections of the

current license examination within 180 days af-

ter submitting a reinstatement application; or

amination within 180 days after submitting a re-

instatement application if the individual possesses

an active broker license in another state.

(e) An individual seeking reinstatement of a license that

has been expired, revoked, or surrendered for more than two

years shall submit a license application and application fee

pursuant to G.S. 93A-4 and Rules .0301, .0302, and .0511

of this Subchapter.

(f) A reinstated license shall be eective as of the date of

reinstatement, not the date of initial licensure. If a license is

reinstated after three years from the expiration, revocation,

or surrender, the license shall be on provisional broker status

pursuant to G.S. 93A-4(a1).

(g) A business entity seeking reinstatement of a license

shall submit:

(1) the reinstatement fee pursuant to Paragraph (a)

of this Rule if the license has been expired for less

than six months;

(2) the reinstatement fee and a complete reinstate-

ment application pursuant to Paragraphs (a) and (b)

of this Rule if the license has been expired for six

months but no more than two years or revoked or

surrendered for no more than two years; or

(3) a rm license application pursuant to G.S. 93A-

4 and Rules .0301, .0302, and .0502 of this Sub-

chapter if the license has been expired, revoked, or

surrendered for more than two years.

(h) A broker seeking reinstatement of a license shall sat-

isfy to the Commission that the broker possesses the charac-

ter requisites pursuant to G.S. 93A-4(b).

A .0506 Provisional Broker to be Supervised by

Broker‑in‑Charge

(a) A provisional broker may engage in or hold himself or

herself out as engaging in activities requiring a real estate li-

cense only while his or her license is on active status pursu-

ant to Rule .0504 of this Section and he or she is supervised

by the broker-in-charge of the real estate rm or oce with

which the provisional broker is aliated. A provisional broker

shall be supervised by only one broker-in-charge at a time ex-

cept that a provisional broker may be supervised by no more

than two brokers-in-charge of two licensed aliated rms lo-

cated in the same physical location and acting as co-listing or

co-selling agents in real estate transactions. When a provision-

al broker is supervised by more than one broker-in-charge,

both brokers-in-charge shall bear all supervision responsibil-

ity at all times.

(b) Upon a provisional broker’s aliation with a real es-

tate broker or brokerage rm, the broker-in-charge of the of-

ce where the provisional broker will be engaged in the real

estate business shall le with the Commission a License Acti-

vation and Broker Aliation form that sets forth the:

(1) provisional broker’s:

(A) name;

(B) license number, type of license, and current

license status;

(D) public and private phone numbers;

(E) completed Postlicensing courses, if necessary;

(F) completed continuing education courses, if

necessary; and

(G) signature.

(2) broker-in-charge’s:

(A) name;

(B) license number;

(D) physical, mailing, and emailing addresses;

(E) public and private phone numbers; and

(F) signature.

North Carolina Real Estate License Law and Commission Rules

Broker Aliation form, the provisional broker may engage

in real estate brokerage activities requiring a license under the

supervision of the broker-in-charge; however, if the provision-

al broker and broker-in-charge do not receive from the Com-

mission a written acknowledgment of the provisional broker

supervision notication and, if appropriate, the request for

license activation, within 30 days of the date shown on the

form, the provisional broker shall cease all real estate broker-

age activities pending receipt of the written acknowledgment

from the Commission.

(d) A broker-in-charge shall supervise the provisional bro-

ker in a manner that assures that the provisional broker per-

forms all acts for which a real estate license is required in ac-

cordance with the Real Estate License Law and Commission

rules. A supervising broker who fails to supervise a provision-

al broker as prescribed in this Rule may be subject to disci-

plinary action pursuant to Rule .0110 of this Subchapter.

(e) Upon the termination of the supervisory relationship

between a provisional broker and his or her broker-in-charge,

the provisional broker and the broker-in-charge shall provide

written notication of the date of termination to the Com-

mission not later than 10 days following the termination.

A .0507 Payment of License Fees

Checks, credit cards, and other forms of payment giv-

en the Commission for fees due which are returned un-

paid shall be consid ered cause for license denial, suspen-

sion, or revoca tion.

A .0511 Licensing of Persons Licensed in Another

Jurisdiction

(a) For purposes of this Rule, “Jurisdiction” shall mean a

state, territory, or possession of the United States or Canada.

(b) An individual seeking a real estate license who, at the

time of application, holds a current real estate salesperson or

broker license in another jurisdiction that has been on ac-

tive status in good standing within the three years prior to

application may satisfy the 75-hour prelicensing education

program and examination requirements prescribed in G.S.

93A-4 by electing to either:

(1) pass the “State” section of that examination. A

person qualifying for licensure under this provision

shall be issued a North Carolina broker license on a

status comparable to the category of license held by

the person in the jurisdiction where the qualifying

license is held; or

(2) be issued a North Carolina broker license on pro-

visional status only and then comply with the provi-

sions of G.S. 93A-4(a1).

iprocity shall be entitled to retain such license indenitely,

unless suspended, revoked, or surrendered pursuant to G.S.

93A-6, so long as the license is renewed or is reinstated pur-

suant to Rule .0505 of this Section.

(d) A military-trained or military spouse applicant seek-

ing a temporary practice permit shall submit an application

on a form available on the Commission’s website. e mil-

itary-trained or military spouse temporary permit applica-

tion shall include applicant’s:

(1) legal name;

(2) mailing, physical, and email address;

(3) telephone number;

(4) social security number;

(5) date of birth;

(6) criminal background report prepared within six

months of application;

(7) occupational licensing history, including any dis-

ciplinary actions;

(8) pending liens or judgements;

(9) certication of equivalent training or experience,

by submission of either a:

(A) military occupational specialty certificate

that is substantially equivalent to or exceeds the

requirements for licensure;

(B) certication that the applicant has engaged

in the active practice of brokerage for at least

two of the ve years preceding the date of the

application; or

plication, of a current real estate salesperson or

broker license in another jurisdiction that has

been on active status within 3 years of application;

(10) certication; and

(11) signature.

(e) An applicant who is issued a temporary practice per-

mit pursuant to Paragraph (d) of this Rule shall remain a

provisional broker for the duration of the permit.

A .0512 Death or Incapacity of Sole Proprietor

(a) If a licensed real estate broker engaged in business as

a sole proprietor pursuant to G.S. 93A-2(a) dies or becomes

incapacitated, the Commission shall issue a temporary li-

cense to the executor or administrator of the estate of the

deceased sole proprietor broker or to the court-appointed -

duciary of the incapacitated sole proprietor broker upon re-

ceipt of the following:

(1) a written notication to the Commission of the

date of the broker’s death or disability; and

(2) a certied copy of the court order appointing

the executor, administer, or duciary.

(b) A temporary license shall be valid only for the pur-

pose of distributing trust money held or paying commis-

sions owed by the sole proprietor broker at the time of death

or incapacity, but shall not otherwise entitle the holder to

undertake any action for which a real estate license is re-

quired.

from issuance.

North Carolina Real Estate License Law and Commission Rules

SECTION .0600

REAL ESTATE COMMISSION HEARINGS

A .0601 Complaints/Inquiries/Motions/Other

Pleadings

(a) Any individual may le a complaint against a broker at

any time. A complaint shall:

(1) be in writing;

(2) identify the respondent broker or rm; and

(3) apprise the Commission of the facts which form

the basis of the complaint.

(b) A complaint may be amended by submitting the re-

vised complaint in writing to the Commission.

mission’s investigation shall not be limited only to matters al-

leged in the complaint.

(d) All answers, motions, or other pleadings relating to

contested cases before the Commission shall be:

(1) in writing or made during the hearing as a mat-

ter of record; and

(2) apprise the Commission of the matters it alleges

or answers.

(e) During the course of an investigation, any broker that

receives a Letter of Inquiry from the Commission shall submit

a written response within 14 days of receipt. e Commis-

sion, through its legal counsel or other sta, may send a bro-

ker a Letter of Inquiry requesting a response. e Letter of In-

quiry, or attachments thereto, shall set forth the subject matter

being investigated. e response shall include:

(1) a disclosure of all requested information; and

(2) copies of all requested documents.

(f) Persons who make complaints are not parties to con-

tested cases, but may be witnesses.

A .0607 Petition to Reopen Proceeding

(a) After a nal decision has been reached by the Com-

mission in a contested case, a party may petition the Com-

mission to reconsider a case. Petitions will not be granted

except when the petitioner can show that the reasons for re-

considering the case are to introduce newly discovered evi-

dence which was not presented at the initial hearing because

of some justiable, excusable or unavoidable circumstance.

Upon the running of the 30 day period for seeking judicial

review, such petitions will have no eect.

(b) Decisions on petitions to reopen cases are within the

discretion of the Commission.

A .0610 Subpoenas

(a) Subpoenas issued in preparation for, or in the con-

duct of, a contested case pending before the Commission

shall be issued in the name of the Commission and shall be

signed by the Commission’s legal counsel, chairman, vice

chairman, the ocer presiding at the hearing if a member of

the Commission other than the chairman or vice chairman

has been designated to preside.

(b) After a notice of hearing in a contested case has been

issued and served upon a respondent or, in a case concern-

ing an application for licensure, the applicant, the respon-

dent, or the attorney for the respondent or applicant may

request subpoenas for the attendance of witnesses and the

production of evidence. e subpoenas may be signed by

the respondent or applicant, or the respondent’s or appli-

cant’s attorney.

case pending before the Commission shall be on a form ap-

proved by the Commission. Subpoena forms shall be pro-

vided by the Commission without charge upon request.

(d) Motions to quash a subpoena issued in preparation

for, or in connection with, a contested case pending before

the Commission shall be submitted to the Commission in

writing and shall clearly state the grounds therefor. e dis-

position of any motion to quash a subpoena shall be made by

the chairman of the Commission in his or her discretion. If

the chairman is unavailable, then the vice chairman or other

Commission member designated to preside over the hearing

may dispose of such a motion in the chairman’s place.

A .0612 Presiding Ocer

e Commission may designate any of its members to

preside over the hearing in a contested case. When no desig-

nation is made, the Chairman of the Commission shall pre-

side, or, in his or her absence, the Vice Chairman shall pre-

side. e presiding ocer shall rule on motions or other re-

quests made in a contested case prior to the conduct of the

hearing in that case except when the ruling on the motion

would be dispositive of the case. When the ruling on a mo-

tion or request would be dispositive of the case, the presid-

ing ocer shall make no ruling and the motion or request

shall be determined by a majority of the Commission.

A .0614 Summary Suspension

(a) If the Commission nds that the public health, safe-

ty, or welfare requires emergency action, it may, pursuant

to G.S. 150B-3(c), summarily suspend a license without

a hearing or opportunity for the licensee to be heard. A

motion for summary suspension shall be presented to the

Chairman of the Commission by counsel for the State and

may be presented ex parte. e motion shall be supported

by an adavit of a person with rst-hand knowledge of the

facts alleged which require emergency action.

(b) e Commission shall, when it summarily suspends

a license, immediately schedule a hearing, to occur at the

earliest practicable date, on the merits of the charges set out

in a notice of hearing issued contemporaneously with the

order of summary suspension. e motion, supporting af-

davit, order for summary suspension and notice of hear-

ing shall be served on the licensee as soon as possible and

the summary suspension shall be eective no earlier than

the date of service of the summary suspension order on the

licensee. e order of summary suspension shall remain in

North Carolina Real Estate License Law and Commission Rules

eect until the Commission vacates it.

Commission to vacate the summary suspension order. If

the Chairman of the Commission nds that the summary

suspension order was issued in error or on insucient fac-

tual grounds to justify emergency action, the Chairman of

the Commission may vacate the summary suspension order.

(d) Neither an order of summary suspension nor a deni-

al of a motion to vacate an order of summary suspension is

a nal agency decision.

A .0615 Settlements

e Commission may consider disposing of any contest-

ed matter before it by consent order or upon stipulation of

the respondent and the Commission’s legal counsel. e

Commission may approve or reject any proposal to dispose

of a contested matter by consent or stipulation, however,

any matter to which a respondent and the Commission’s le-

gal counsel have stipulated which is rejected by the Com-

mission shall not thereafter bind the parties or the Commis-

sion. Except as may be otherwise allowed by the presiding

ocer, all proposals to dispose of a contested matter must

be in written form and signed by the respondent not lat-

er than two days prior to the date set for the hearing of the

matter, excluding any days during which the Commission’s

oces are closed.

A .0616 Procedures For Requesting Hearings When

Applicant’s Character Is In Question

(a) When the moral character of an applicant for licen-

sure or approval is in question, the applicant shall not be

licensed or approved until the applicant has armatively

demonstrated that the applicant possesses the requisite hon-

esty, truthfulness, integrity, good moral character, and gen-

eral tness, including mental and emotional tness, neces-

sary to protect the public interest and promote public con-

dence in the real estate brokerage business. For the purposes

of this Rule, applicant means any person or entity making

application for licensure as a real estate broker or for licen-

sure or approval as an instructor.

(b) When the applicant is an entity, it shall be directed

and controlled by persons who possess the requisite hones-

ty, truthfulness, integrity, good moral character, and general

tness, including mental and emotional tness, necessary to

protect the public interest and promote public condence in

the real estate brokerage business.

the Commission shall defer action upon the application un-

til the applicant is notied by letter. e letter informing

the applicant that his or her moral character is in question

shall be sent by certied mail, return receipt requested, to

the address shown upon the application. e applicant shall

have 60 days from the date of receipt of this letter to request

a hearing before the Commission. If the applicant fails to

request a hearing within this time or if a properly addressed

letter is returned to the Commission undelivered, appli-

cant’s right to a hearing shall be considered waived and the

application shall be deemed denied. If the applicant makes

a timely request for a hearing in accordance with the provi-

sions of this Rule, the Commission shall provide the appli-

cant with a Notice of Hearing and hearing as required by

G.S. 150B, Article 3A .

(d) Nothing in this Rule shall be interpreted to prevent

an unsuccessful applicant from reapplying for licensure or

approval if such application is otherwise permitted by law.

SECTION .0700

PETITIONS FOR RULES

A .0701 Petition For Rule‑Making Hearings

(a) Any person wishing to le a petition requesting the

adoption, amendment or repeal of a rule by the Commis-

sion shall le a written petition with the executive director.

(b) e petition shall include the following information:

(1) name, address and occupation of petitioner;

(2) a summary of the proposed action (adoption,

amendment, or repeal of a rule or rules);

(3) a draft of the proposed rule or other action;

(4) a complete statement of the reason for the pro-

posed action; and

(5) an identication of the persons or class of persons

most likely to be aected by the proposed action.

deny a rule-making petition.

SECTION .0900

DECLARATORY RULINGS

A .0902 Requests for Rulings: Disposition of

Requests

(a) All requests for declaratory rulings shall be written

and led with the Commission. e request must contain

the following information:

(1) the name, address and signature of petitioner;

(2) a concise statement of the manner in which peti-

tioner is aggrieved by the rule or statute in question,

or its potential application to him or her;

(3) a statement of the interpretation given the stat-

ute or rule in question by petitioner;

(4) a statement of the reasons, including any legal

authorities, in support of the interpretation given

the statute or rule by petitioner.

(b) e Commission shall either deny the request, stat-

ing the reasons therefore, or issue a declaratory ruling. e

Commission may deny a request for a declaratory ruling

when the Commission determines that:

(1) the petition does not comply with the require-

ments of Paragraph (a) of this Rule;

(2) the subject matter is one concerning which the

Commission is without authority to make a decision

North Carolina Real Estate License Law and Commission Rules

binding the agency or the petitioner;

(3) the petitioner is not aggrieved by the rule or stat-

ute in question or otherwise has insucient interest

in the subject matter of the request;

(4) there is reason to believe that the petitioner or

some other person or entity materially connected to

the subject matter of the request is acting in viola-

tion of the real estate license law or the rules adopt-

ed by the Commission; or

(5) the subject matter of the request is the subject of

litigation, legislation, or rulemaking.

ing when the petitioner or his or her request is the subject

of, or materially related to, an investigation by the Real Es-

tate Commission or contested case before the Commission.

SECTION .140 0

REAL ESTATE EDUCATION AND RECOVERY

FUND

A .1401 Application for Payment

(a) Any person or entity desiring to obtain payment

from the Real Estate Education and Recovery Fund shall le

an application with the Commission on a form provided by

the Commission. e form shall require the following infor-

mation concerning the applicant and the claim: the appli-

cant’s name and address, the amount of the claim, a descrip-

tion of the acts of the broker which constitute the grounds

for the claim and a statement that all court proceedings are

concluded. With the form, the applicant shall submit copies

of the civil complaint, judgment, and the return of execu-

tion marked as unsatised. If the application is incomplete

or not led in correct form, or if the Commission is with-

out jurisdiction over the claim or the parties, counsel for the

Commission may le a motion to dismiss the application.

e Commission shall conduct a hearing on the motion at

which the only issues to be determined shall be whether the

application is complete or in correct form or whether the

Commission has jurisdiction over the claim or the parties.

(b) Forms for application for payment from the Real Es-

tate Education and Recovery Fund shall be available from

the Commission on request.

A .1402 Multiple Claims

(a) If at any time the Commission has notice of more

than one application or potential claim for payment from the

Real Estate Education and Recovery Fund arising out of the

conduct of a single broker, the Commission may, in its discre-

tion, direct that all applications led before a date determined

by the Commission be consolidated for hearing and payment.

(b) Upon directing that claims be consolidated as pro-

vided in Paragraph (a) of this Rule, the Commission shall is-

sue to the broker and the applicants and potential claimants

an Order of Consolidation setting forth the deadline for l-

ing all applications to be consolidated. Upon the passing of

the deadline, the Commission may, in its discretion, either

extend the deadline or issue to the broker and all applicants

a notice of the time, date and place set for the hearing on the

consolidated applications.

(a) and (b) of this Rule, the Commission shall consider the

following factors:

(1) the number of claim applications or potential

claims of which it has notice;

(2) the amount of each claim;

(3) the status of the underlying civil action in each

claim;

(4) the length of time each claim has been pend-

ing since the Commission rst received notice of the

claim; and

(5) whether consolidation of such claims or the ex-

tension of the deadline for ling applications to be

consolidated will promote the fair and ecient ad-

ministration and payment of monies from the Real

Estate Education and Recovery Fund.

A .1403 Notice of Hearing: Order/Payt From/Real

Estate Education and Recovery Fund

(a) e Commission shall give notice of the time, place

and date of a hearing on a claim for payment from the Real

Estate Education and Recovery Fund to any applicant and

the broker.

(b) After conducting a hearing, the Commission shall

issue an order either authorizing payment or denying the

claim, in whole or in part. is order shall be served upon

the broker and any applicant.

claims or subsequent applications shall not be considered

by the Commission in the issuance of an Order for Payment

in those cases where the award is allowable but must be re-

duced pursuant to the provisions of G.S. 93A-21.

A .1404 Exhausted Liability Limits

Applications for payment from the Real Estate Educa-

tion and Recovery Fund received or considered by the Com-

mission after the liability of the Real Estate Education and

Recovery Fund as described in G.S. 93A-21 has been ex-

hausted shall be dismissed.

SECTION .1600

DISCRIMINATORY PRACTICES PROHIBITED

A .1601 Fair Housing

Conduct by a licensee which violates the provisions of

the State Fair Housing Act consti tutes improper con duct in

violation of G.S. 93A-6(a)( 10).

SECTION .1700

MANDATORY CONTINUING EDUCATION

North Carolina Real Estate License Law and Commission Rules

A .1701 Purpose and Applicability

is Section describes the continuing education require-

ment for real estate brokers authorized by G.S. 93A-4A, es-

tablishes the continuing education requirement to change a

license from inactive status to active status, establishes atten-

dance requirements for continuing education courses, estab-

lishes the criteria and procedures relating to obtaining an ex-

tension of time to complete the continuing education require-

ment, establishes the criteria for obtaining continuing educa-

tion credit for an unapproved course or related educational ac-

tivity, and addresses other similar matters.

A .1702 Continuing Education Require ment

(a) Except as provided in Rules .1708 and .1711 of this

Section, a broker shall complete eight credit hours of real es-

tate continuing education courses approved pursuant to 21

NCAC 58H within one year prior to the expiration of the

license as follows:

(1) four credit hours of elective courses; and

(2) four hours of either:

(A) the “General Update Course;” or

(B) for a broker with BIC Eligible status, the

“Broker-In-Charge Update Course” in lieu of

the “General Update Course.”

(b) A BIC or broker who takes the General Update

Course rather than the Broker-In-Charge Update Course

shall receive continuing education credit for taking such

course only for the purpose of retaining his or her license on

active status and shall not be considered to have satised the

requirement to take the Broker-In-Charge Update Course

in order to retain his or her BIC Eligible status.

upon the second renewal following the initial licensure and

upon each subsequent annual renewal.

(d) e broker shall provide the course completion cer-

ticate upon request of the Commission.

(e) No continuing education shall be required to renew

a broker license on inactive status. In order to change a li-

cense from inactive status to active status, the broker shall

satisfy the continuing education requirement described in

Rule .1703 of this Section.

(f) No continuing education shall be required for a bro-

ker who is a member of the U.S. Congress or the North Car-

olina General Assembly in order to renew his or her license

on active status.

(g) For purposes of this Rule, the terms “active status”

and “inactive status” shall have the same denition as those

in Rule .0504 of this Subchapter.

(h) For continuing education purposes, the term “ini-

tial licensure” shall include the rst time that a license of a

particular type is issued to a person, the reinstatement of a

canceled, revoked or surrendered license, and any license ex-

pired for more than six months.

A .1703 Continuing Education for Li cense Activation

(a) A broker requesting to change an inactive license to ac-

tive status on or after the broker’s second license renewal fol-

lowing his or her initial licensure shall have completed the

continuing education as described in Paragraph (b) or (c) of

this Rule, whichever is appropriate.

(b) If the inactive broker’s license has not been on active

status since the preceding July 1 and the broker has a decien-

cy in his or her continuing education record for the previous

license period, the broker shall make up the deciency and sat-

isfy the continuing education requirement pursuant to Rule

.1702 of this Section for the current license period in order to

activate the license. Any deciency may be made up by com-

pleting, during the current license period or previous license

period, approved continuing education elective courses; how-

ever, such courses shall not be credited toward the continuing

education requirement for the current license period. When

crediting elective courses for purposes of making up a con-

tinuing education deciency, the maximum number of credit

hours that will be awarded for any course is four hours.

than two years and the broker has a deciency in his or her

continuing education record, the broker shall:

(1) cure the continuing education deciency for the

current license year; and

(2) complete two Postlicensing courses no more

than six months prior to activation.

A .1704 No Credit for Prelicensing or Postlicensing

Cou rses

No credit toward the continuing edu cation require ment

shall be awarded for completing a real estate prelicen sing or

postlicensing course.

A .1705 Attendance And Participation Requirements

(a) In order to receive credit for completing an approved

continuing education course, a broker shall:

(1) attend at least 90 percent of the scheduled in-

structional hours for the course;

(2) provide the broker’s legal name and license num-

ber to the education provider;

(3) present the broker’s pocket card or photo identi-

cation card, if necessary; and

(4) personally perform all work required to complete

the course.

(b) With the instructor or the education provider’s per-

mission, a 10 percent absence allowance may be permitted at

any time during the course, except that it may not be used to

skip the last 10 percent of the course unless the absence is:

(1) approved by the instructor; and

(2) for circumstances beyond the broker’s control

that could not have been reasonably foreseen by the

broker, such as:

(A) an illness;

(B) a family emergency; or

North Carolina Real Estate License Law and Commission Rules

A .1707 Elective Course Carry‑Over Credit

A maximum of four hours of continuing education cred-

it for an approved elective course taken during the current

license period may be carried over to satisfy the continu-

ing education elective requirement for the next following

license period if the licensee receives no continuing educa-

tion elective credit for the course toward the elective require-

ment for the current license period or the previous license

period. However, if a contin uing education elective course

is used to wholly or partially satisfy the elective requirement

for the current or previous license period, then any excess

hours completed in such course which are not needed to sat-

isfy the four-hour elective requirement for that license peri-

od may not be carried forward and applied toward the elec-

tive requirement for the next following license period.

A .1708 Equivalent Credit

(a) e Commission shall award an approved instruc-

tor continuing education credit for teaching a Commission

Update Course. An approved instructor seeking continuing

education credit for teaching a Commission Update Course

shall submit a form, available on the Commission’s website,

that requires the approved instructor to set forth the:

(1) approved instructor’s name, license number, in-

structor number, address, telephone number, and

email address;

(2) Update Course number;

(3) education provider’s name and number;

(4) education provider’s address; and

(5) date the course was taught.

(b) e Commission shall award a broker continuing

education elective credit the rst time an approved continu-

ing education elective course is taught by the broker. A bro-

ker seeking continuing education credit under this Para-

graph shall submit a form, available on the Commission’s

website, that requires the broker to set forth the:

(1) broker’s name, license number, address, tele-

phone number, and email address;

(2) course title;

(3) course number;

(4) education provider’s name and number;

(5) education provider’s address; and

(6) date the course was taught.

elective credit for developing a continuing education elec-

tive course the rst time it is approved by the Commission

pursuant to 21 NCAC 58H .0401. However, a broker shall

only receive credit for the year in which the continuing ed-

ucation elective course is approved. A broker seeking con-

tinuing education credit under this Paragraph shall submit a

form, available on the Commission’s website, that requires-

the broker to set forth the broker’s name, license number,

address, telephone number, and email address. Along with

the form, the broker shall submit the course title, the course

number, the date of the course approval, and a fty dollar

($50.00) fee for each course for which the broker seeks

credit.

(d) In order for any application for equivalent credit to

be considered and credits applied to the current licensing

period, a complete application, the appropriate fee, and all

supporting documents shall be received by the Commission

no later than 5:00 p.m. Eastern Time on June 17.

A .1709 Extensions of Time to Complete Continuing

Education

(a) A broker on active status may request an extension of

time to satisfy the continuing education requirement for the

current license period if the broker was unable to obtain the

necessary education due to an incapacitating illness, military

deployment, or other circumstance that existed for a portion

of the license period and that constituted a severe hardship.

(b) Requests for an extension of time shall be submitted

on a form available on the Commission’s website that requires

the broker to set out the broker’s name, mailing address, li-

cense number, telephone number, email address, and a de-

scription of the incapacitating illness or other circumstance.

e requesting broker shall submit, along with the form, sup-

porting documentation, such as a written physician’s state-

ment, deployment orders, or other corroborative evidence,

demonstrating that compliance with the continuing educa-

tion requirement would have been impossible or burdensome.

by the Commission by 5:00 p.m. on June 10 of the licens-

ing period for which the extension is sought.

(d) If an extension of time is granted, the broker shall be

permitted to renew his or her license on active status. e

broker’s license shall automatically change to inactive sta-

tus if the broker fails to satisfy the continuing education re-

quirement prior to the end of the extension period.

(e) In no event shall an extension of time be granted that

extends the continuing education requirement deadline be-

yond June 10 of the license year following the license year in

which the request is made.

A .1710 Denial or Withdrawal of Continuing

Education Credit

(a) e Commission shall deny continuing education

credit claimed by a broker or reported by an education pro-

vider for a broker, and shall withdraw continuing education

credit previously awarded by the Commission to a broker

upon nding that the broker:

(1) or education provider provided incorrect or in-

complete information to the Commission concern-

ing continuing education completed by the broker;

(2) failed to comply with the attendance require-

ment established by Rule .1705 of this Section; or

(3) was mistakenly awarded continuing education

credit due to an administrative error.

(b) If an administrative error or an incorrect report by

an education provider results in the denial or withdrawal of

North Carolina Real Estate License Law and Commission Rules

continuing education credit for a broker, the Commission

shall, upon the written request of the broker, grant the bro-

ker an extension of time to satisfy the continuing education

requirement.

ing education credit through misrepresentation of fact, dis-

honesty, or other improper conduct shall be subject to disci-

plinary action pursuant to G.S. 93A-6.

A .1711 Continuing Education Required of Nonresi‑

dent Brokers is repealed.

A .1712 Broker‑In‑Charge Course

(a) e Broker-in-Charge Course is a 12-hour edu-

cational course that is required for all brokers designating

as broker-in-charge under Rule .0110 of this Subchapter.

e 12-hour course is divided into an 8-hour module and

a 4-hour module. A broker shall complete the 8-hour mod-

ule before beginning the 4-hour module.

(b) In order to receive credit for completing the Broker-

in-Charge Course, a broker shall:

(1) attend at least 90 percent of the scheduled in-

structional hours for the course;

(2) provide his or her legal name and license number

to the course provider;

(3) present his or her pocket card or photo identi-

cation card, if necessary;

(4) personally perform all work required to complete

the course; and

(5) complete the 12-hour Broker-in Charge Course

no later than 120 days after the broker registers for

the course.

Course, a broker shall receive four credit hours of elective

continuing education. e four credit hours will be award-

ed in the license year in which the broker completes the 12-

hour Broker-in-Charge Course.

SECTION .1800

LIMITED NONRESIDENT COMMERCIAL

LICENSING

A .1801 General Provisions

(a) Any person resident in a state or territory of the Unit-

ed States other than North Carolina may perform the acts or

services of a real estate broker in North Carolina in transac-

tions involving commercial real estate if said person rst ap-

plies for and obtains a limited nonresident commercial real

estate broker license as provided in this Section.

(b) Corporations, business associations and entities shall

be ineligible for licensure under this Section.

it the rights of any person duly licensed as a real estate bro-

ker in North Carolina under the provisions of N.C.G.S.§§

93A-4 or 93A-9(a).

A .1802 Denitions

For the purposes of this Section:

(1) “Commercial Real Estate” means any real property

or interest therein, whether freehold or non-freehold, which

at the time the property or interest is made the subject of an

agreement for brokerage services:

(a) is lawfully used primarily for sales, oce, research,

institutional, warehouse, manufacturing, industri-

al or mining purposes or for multifamily residential

purposes involving ve or more dwelling units;

(b) may lawfully be used for any of the purposes list-

ed in (1) above by a zoning ordinance adopted pursu-

ant to the provisions of Article 18 of Chapter 153A or

Article 19 of Chapter 160A of the General Statutes or

which is the subject of an ocial application or peti-

tion to amend the applicable zoning ordinance to per-

mit any of the uses listed in (1) above which is under

consideration by the government agency with author-

ity to approve the amendment; or

for any of the purposes listed in (1) above by the par-

ties to any contract, lease, option, or oer to make

any contract, lease, or option.

(2) “Qualifying state” means the state or territory of the

United States where an applicant for, and the holder of, a

limited nonresident commercial license issued under this

Section is licensed in good standing as a real estate broker or

salesperson. e qualifying state must be the state or terri-

tory where the applicant or limited nonresident commercial

licensee maintains his or her primary place of business as a

real estate broker or salesperson. Under no circumstances

may North Carolina be a qualifying state.

A .1803 Requirements For Licensure; Application

And Fee

(a) A person desiring to obtain a broker license under this

Section shall demonstrate to the Real Estate Commission that:

(1) he or she is a resident of a state or territory of the

United States other than North Carolina;

(2) he or she is licensed as a real estate broker in a

qualifying state and that said license is on active sta-

tus and not in abeyance for any reason. If licensed

as a salesperson, he or she shall also demonstrate that

he or she is acting under the supervision of a broker

in accordance with the applicable governing statutes

or regulations in the qualifying state; and

(3) he or she possesses the requisite honesty, truth-

fulness, integrity, and moral character for licensure

as a broker in North Carolina.

A person applying for licensure under this Section shall

not be required to show that the state or territory where he

or she is currently licensed oers reciprocal licensing privi-

leges to North Carolina brokers.

North Carolina Real Estate License Law and Commission Rules

(b) A person desiring to be licensed under this Section shall

submit an application on a form prescribed by the Commis-

sion and shall show the Commission that he or she has satis-

ed the requirements set forth in (a) of this rule. In connec-

tion with his or her application a person applying for licensure

under this rule shall provide the Commission with a certica-

tion of license history from the qualifying state where he or she

is licensed. He or she shall also provide the Commission with

a report of his or her criminal history from the service desig-

nated by the Commission. An applicant for licensure under

this Section shall be required to update his or her application

as required by Rule .0302(c) of this Subchapter.

tion shall be $100 and shall be paid in the form of a certied

check, bank check, cashier’s check, money order, or by credit

card. Once paid, the application fee shall be non-refundable.

(d) If the Commission has received a complete application

and the required application fee and if the Commission is sat-

ised that the applicant possesses the moral character neces-

sary for licensure, the Commission shall issue to the applicant

a limited nonresident commercial real estate broker license.

A .1804 Active Status

Broker licenses issued under this Section shall be issued

on active status and shall remain valid only so long as the li-

censee’s license in the qualifying state remains valid and on

active status. In addition, a license issued to a salesperson

under this Section shall remain valid only while the salesper-

son is acting under the supervision of a real estate broker in

accordance with the applicable laws and rules in the quali-

fying state. Individuals licensed under this Section shall im-

mediately notify the Commission if his or her license in the

qualifying state lapses or expires, is suspended or revoked,

made inactive, or is placed in abeyance for any reason.

A .1805 Renewal

(a) A license issued under this Section shall expire on

June 30 following issuance unless it is renewed in accor-

dance with the provisions of Rule .0503 and Rule .1711 of

this Subchapter.

(b) e Commission shall not renew a license issued un-

der this Section unless the licensee has demonstrated that he

or she has complied with the requirements of paragraph (a)

of this rule and that his or her license in the qualifying state

is on active status in good standing and is not lapsed, ex-

pired, suspended, revoked, or in abeyance for any reason.

A .1806 Limitations

(a) A person licensed under this Section may act as a real

estate broker in this state only if:

(1) he or she does not reside in North Carolina;

(2) the real property interest which is the subject

of any transaction in connection with which he or

she acts as a broker in this state is commercial real

estate as that term is dened in Rule .1802 of this

Section; and

(3) he or she is aliated with a resident North Car-

olina real estate broker as required in rule .1807 of

this Section.

(b) A nonresident commercial real estate broker licensed

under the provisions of Section .1800 of this Subchapter

shall not act as or serve in the capacity of a broker-in-charge

of a rm or oce in North Carolina.

A .1807 Aliation With Resident Broker

(a) No person licensed under N.C.G.S. 93A-9(b) shall en-

ter North Carolina to perform any act or service for which li-

censure as a real broker is required unless he or she has rst en-

tered into a brokerage cooperation agreement and declaration

of aliation with an individual who is a resident in North Car-

olina licensed as a North Carolina real estate broker.

(b) A brokerage cooperation agreement as contemplat-

ed by this rule shall be in writing and signed by the resident

North Carolina broker and the non-resident commercial li-

censee. It shall contain:

(1) the material terms of the agreement between the

signatory licenses;

(2) a description of the agency relationships, if any,

which are created by the agreement among the non-

resident commercial licensee, the resident North

Carolina broker, and the parties each represents;

(3) a description of the property or the identity of

the parties and other information sucient to iden-

tify the transaction which is the subject of the ali-

ation agreement; and

(4) a denite expiration date.

form provided by the Commission and shall identify the non-

resident commercial licensee and the aliated resident North

Carolina licensee. It shall also contain a description of the du-

ties and obligations of each as required by the North Carolina

Real Estate License Law and rules duly adopted by the Com-

mission. e declaration of aliation may be a part of the

brokerage cooperation agreement or separate from it.

(d) A nonresident commercial licensee may aliate with

more than one resident North Carolina broker at any time.

However, a nonresident commercial licensee may be ali-

ated with only one resident North Carolina broker in a sin-

gle transaction.

(e) A resident North Carolina broker who enters into a

brokerage cooperation agreement and declaration of alia-

tion with a nonresident commercial licensee shall:

(1) verify that the nonresident commercial licensee

is licensed in North Carolina;

(2) actively and directly supervise the nonresident

commercial licensee in a manner which reasonably in-

sures that the nonresident commercial licensee com-

plies with the North Carolina Real Estate License Law

and rules adopted by the Commission; and

(3) promptly notify the Commission if the nonresi-

North Carolina Real Estate License Law and Commission Rules

dent commercial licensee violates the Real Estate Li-

cense Law or rules adopted by the Commission; and

(4) insure that records are retained in accordance

with the requirements of the Real Estate License

Law and rules adopted by the Commission; and

(5) maintain his or her license on active status con-

tinuously for the duration of the brokerage coop-

eration agreement and the declaration of aliation.

(f) e nonresident commercial licensee and the ali-

ated resident North Carolina broker shall each retain in his

or her records a copy of brokerage cooperation agreements

and declarations of aliation from the time of their cre-

ation and for at least three years following their expiration.

Such records shall be made available for inspection and re-

production by the Commission or its authorized representa-

tives without prior notice.

A .1808 Trust Monies

A nonresident commercial broker acting as real estate bro-

ker in North Carolina shall deliver to the North Carolina res-

ident broker with whom he or she is aliated all money be-

longing to others received in connection with the nonresident

commercial broker’s acts or services as a broker. Upon receipt

of the funds, the resident North Carolina broker shall cause

the funds to be deposited in a trust account in accordance

with the provisions of Rule .0116 of this Subchapter.

A .1809 Advertising

In all advertising involving a nonresident commer-

cial licensee’s conduct as a North Carolina real estate bro-

ker and in any representation of such person’s licensure in

North Carolina, the advertising or representation shall con-

spicuously identify the nonresident commercial licensee as

a “Limited Nonresident Commercial Real Estate Broker.”

A .1810 Payment Of Fees

Commissions, fees, or other compensation earned by a

nonresident commercial licensee shall not be paid direct-

ly to the licensee if said licensee is employed by or working

for a real estate broker or rm. Instead, such fees or com-

pensation shall be paid to the licensee’s employing broker

or rm.

SECTION .1900

POSTLICENSING EDUCATION

A .1901 Purpose and Applicability

is section prescribes specic procedures relating to the

postlicensing education requirement for real estate brokers

as prescribed by G.S. 93A-4(a1).

A .1902 Postlicensing Education Requirement

(a) e 90-hour Postlicensing education program pur-

suant to G.S. 93A-4(a1) shall consist of the following three

30 instructional hour courses prescribed by the Commis-

sion:

(1) Postlicensing Course 301;

(2) Postlicensing Course 302; and

(3) Postlicensing Course 303.

(b) A provisional broker as described in G.S. 93A-4(a1)

shall complete all Postlicensing courses pursuant to Para-

graph (a) of this Rule within 18 months following the date

of initial licensure.

Postlicensing courses pursuant to Paragraph (b) of this Rule, the

provisional broker’s license shall be placed on inactive status.

(d) A provisional broker seeking to activate a license that

was placed on inactive status pursuant to Paragraph (c) of

this Rule shall:

(1) complete all three Postlicensing Courses de-

scribed in Paragraph (a) of this Rule within the pre-

vious two years;

(2) satisfy the continuing education requirements

for license activation described in Rule .1703 of this

Subchapter; and

(3) le an activation form with the Commission

pursuant to Rule .0504 of this Subchapter.

A .1904 Denial Or Withdrawal Of Postlicensing

Education Credit

(a) e Commission may deny Postlicensing education

credit claimed by a provisional broker or reported by an ed-

ucation provider for a provisional broker, and may with-

draw Postlicensing education credit previously awarded by

the Commission to a provisional broker and make appropri-

ate license status changes for that broker upon nding that

the provisional broker:

(1) or education provider provided incorrect or in-

complete information to the Commission concern-

ing Postlicensing education completed by the provi-

sional broker;

(2) failed to comply with the attendance require-

ment pursuant to 21 NCAC 58H .0207; or

(3) was mistakenly awarded Postlicensing education

credit due to an administrative error.

(b) When Postlicensing education credit is denied or with-

drawn by the Commission under Paragraph (a) of this Rule,

the provisional broker shall remain responsible for satisfying

the Postlicensing education requirement in G.S. 93A-4(a1).

censing education credit through misrepresentation of fact,

dishonesty or other improper conduct is subject to disci-

plinary action pursuant to G.S. 93A-6.

A .1905 Waiver of 90‑hour Postlicensing Education

Requirement

a) A provisional North Carolina real estate broker may

apply for a waiver of one or more of the three 30-hour

Postlicensing courses described in Rule .1902 of this Sec-

tion in the following circumstances:

North Carolina Real Estate License Law and Commission Rules

(1) the broker has obtained equivalent education to

the Commission’s Postlicensing course(s) pursuant

to Rule .1902 of this Section. In this case, the waiver

request shall include the course(s):

(A) jurisdiction of delivery;

(B) title;

(D) beginning and end dates; and

(E) subject matter description.

(2) the broker has obtained experience equivalent to

40 hours per week as a licensed broker or salesper-

son in another state for at least ve of the seven years

immediately prior to application for waiver, which

shall include the applicant’s:

(A) employer;

(B) title at employer;

(D) hours per week devoted to brokerage;

(E) approximate number of transactions;

(F) areas of practice;

(G) approximate percentage of time devoted to

each area of practice;

(H) description of applicant’s role and duties;

(I) managing broker’s name, telephone num-

ber, and email address; and

(J) ocial certication of licensure issued within

the six months preceding application from a jurisdic-

tion within a state, territory, or possession of the

United States or Canada in which the applicant

holds a current real estate license that has been

active within the three years prior to application.

(3) the broker has obtained experience equivalent

to 40 hours per week as a licensed North Caroli-

na attorney practicing in real estate matters for the

two years immediately preceding application, which

shall include the applicant’s:

(A) rm or practice name;

(B) law license number;

(D) hours per week devoted to real estate law

practice;

(E) approximate number of closings conducted;

(F) description of practice; and

(G) manager or supervising attorney’s name,

telephone number, and email address, if appli-

cable.

(b) e Commission shall not consider education or ex-

perience obtained in violation of any law or rule as fullling

the requirements for waiver of the 90-hour postlicensing ed-

ucation requirement.

hour postlicensing education requirement if the broker was

issued a license pursuant to Rule .0511(b)(2) of this Section.

SECTION .2000

ANNUAL REPORTS

A .2002 Escrow account

(a) e Commission shall establish an escrow account

or accounts with a nancial institution or institutions law-

fully doing business in this State into which the Commis-

sion shall deposit and hold fees tendered during any peri-

od of time when, pursuant to G.S. 93B-2(d), the Commis-

sion’s authority to expend funds has been suspended. e

Commission shall keep funds deposited into its escrow ac-

count or accounts segregated from other assets, monies, and

receipts for the duration of the suspension of the Commis-

sion’s authority to expend funds.

(b) e Commission may deposit into and maintain in

its escrow account such monies as may be required to avoid

or eliminate costs associated with the account or accounts.

SECTION .2100

BROKERS IN MILITARY SERVICE

A .2101 Applicability

is Section shall apply to every broker whose license is

not revoked, suspended, or surrendered, or who is otherwise

the subject of a disciplinary order, and who is eligible for an

extension of time to le a tax return under the provisions of

G.S. 105-249.2 and 26 U.S.C. 7508.

.2102 Postponement of fees

(a) A Broker described in 21 NCAC 58A .2101 shall not

be required to pay renewal fees accrued during the time to

be disregarded described in 26 U.S.C. 7508 until the June

30 immediately following the end of such time. e pro-

visions of 21 NCAC 58A .0504 notwithstanding, during

such time and until the June 30 immediately thereafter, the

license of a broker other than a provisional broker shall re-

main on active status. During such time, the license of a

provisional broker shall not expire, but shall remain on ac-

tive status only if the provisional broker remains under the

supervision of a broker-in-charge.

(b) All fees postponed by operation of this subsection

shall be due and payable on June 30 immediately following

the time to be disregarded as described in 26 U.S.C. 7508.

A .2103 Postponement of Continuing Education

(a) A broker described by 21 NCAC 58A .2101 shall not

be required to complete the continuing education required as a

condition of license renewal for any June 30 license expiration

date if that date falls during the time to be disregarded described

in 26 U.S.C. 7508 until the June 10 immediately following the

end of such time to be disregarded. If such time ends on or af-

ter May 1, the broker shall have until September 1 of the same

year to complete the required continuing education.

(b) If a broker entitled to a postponement of continuing

North Carolina Real Estate License Law and Commission Rules

education under this Rule accumulates a deciency in his

or her continuing education of 16 or more hours because

of the length of the time to be disregarded under 26 U.S.C.

7508, the broker may satisfy the deciency by satisfying the

requirements of 21 NCAC 58A .1703(c) established for an

inactive broker returning to active status.

continuing education under this Rule shall not be placed on

inactive status for failure to complete continuing education

until the deadline for completion set out in Paragraph (a) of

this Rule has passed.

A .2104 Postponement of Postlicensing Education

A broker described by Rule .2101 of this Section who is

a provisional broker shall not be required to complete any

postlicensing education during the period to be disregard-

ed under 26 U.S.C. 7508 until the 180th day following

the ending of such period. e broker’s license shall not be

placed on inactive status or cancelled for his or her failure to

complete the required postlicensing education prior to the

deadline established in this Rule.

A .2105 Proof of Eligibility

It shall be the responsibility of every broker eligible for

the postponement of fees and education requirements es-

tablished by this Section to demonstrate his or her eligibility

and the beginning and ending of the time to be disregarded

as described in 26 U.S.C. 7508.

SECTION .2200

BROKER PRICE OPINIONS

AND COMPARATIVE MARKET ANALYSES

A .2201 Applicability

is Section applies to broker price opinions and com-

parative market analyses provided for a fee by a real estate

broker whose license is not on provisional status pursuant to

Article 6, Chapter 93A of the General Statutes.

A .2202 Standards

(a) A broker performing a broker price opinion or com-

parative market analysis for a fee shall comply with all the

requirements in G.S. 93A-83 and in this Rule.

(b) A broker shall only accept an assignment to provide

a broker price opinion or comparative market analysis for a

property if the broker has knowledge of the real estate mar-

ket, direct access to real estate market sales or leasing data,

and brokerage or appraisal experience in the subject proper-

ty’s geographic location.

comparative market analysis for a property unless the bro-

ker can exercise objective, independent judgment free of any

inuence from any interested party in the performance of

his or her analysis of the facts relevant to determination of a

probable selling or leasing price.

(d) A broker shall not provide a broker price opinion or

comparative market analysis for a property unless the broker

has personally inspected the exterior and interior of that prop-

erty, provided, however, that an inspection of the exterior or

interior is not required if this is waived in writing by the party

for whom the opinion or analysis is being performed.

(e) When developing a broker price opinion or compar-

ative market analysis for a property or interest therein, a bro-

ker shall utilize methodology such as analysis of sales or in-

come of sold or leased properties comparable to the subject

property or capitalization as is appropriate for the assign-

ment and type of subject property.

(f) When analyzing sales or income of properties com-

parable to the property that is the subject of a broker price

opinion or comparative market analysis assignment, a bro-

ker shall comply with the following standards:

(1) e broker shall select from reliable information

sources a minimum of three sold or leased comparable

properties for use in his or her analysis that are similar

to the subject property with regard to characteristics

such as property type, use, location, age, size, design,

physical features, amenities, utility, property condition

and conditions of sale. e comparable properties se-

lected shall reect the prevailing factors or market con-

ditions inuencing the sale or lease prices of similar

properties in the subject property’s local market; and

(2) e broker shall make adjustments to the sell-

ing or leasing price of selected comparable properties

for dierences between the characteristics of the com-

parable properties and the subject property as neces-

sary to produce a credible estimate of the probable sell-

ing or leasing price. Adjustments shall be considered

for dierences in property characteristics such as loca-

tion, age, size, design, physical features, amenities, utili-

ty, condition, economic or functional obsolescence and

conditions of sale. e amounts of adjustments shall

reect the values that the local real estate market plac-

es on the dierences in the characteristics in question.

(g) A broker price opinion or comparative market anal-

ysis provided to the party for whom the opinion or analysis

is being performed shall address, in addition to matters re-

quired to be addressed by G.S. 93A-83 and other provisions

of this Rule, the following items:

(1) a description of the comparable properties used in

the analysis (including any unsold properties listed for

sale or rent that were used as comparable properties);

(2) the adjustments made to the selling or leasing

prices of comparable properties;

(3) local real estate market conditions;

(4) if the date on which the sale or lease of a comparable

property became nal is more than six months prior to

the eective date of the broker price opinion or compar-

ative market analysis, an explanation of why the com-

parable property was used in the analysis and a descrip-

tion of the market conditions aecting the comparable

North Carolina Real Estate License Law and Commission Rules

property at the time the sale or lease became nal; and

(5) each method used in deriving the estimate of

probable selling or leasing price.

(h) In connection with a broker price opinion or compara-

tive market analysis, an estimated probable leasing price may be

reported by a broker as a lease rate and an estimated probable

selling or leasing price may be reported by a broker either as a

single gure or as a price range. When the estimated probable

selling or leasing price is stated as a price range and the high-

er gure exceeds the lower gure by more than 10 percent, the

broker shall include an explanation of why the higher gure ex-

ceeds the lower gure by more than 10 percent.

North Carolina Real Estate License Law and Commission Rules

Subchapter 58B

Timeshares

SECTION .0100

TIMESHARE PROGRAM REGISTRATION

B .0101 Application for Registration

(a) A timeshare program seeking registration shall apply

to the Commission on a form available on the Commission’s

website and shall, in addition to the requirements set forth

in G.S. 93A-52, set forth:

(1) the timeshare program’s physical and mailing

address and telephone number;

(2) the developer’s name, address, telephone num-

ber, email address, type of business structure with

supporting documentation, and legal counsel’s con-

tact information, if any;

(3) information concerning the developer’s title or

right to use the real property on which the project is

located, including a title opinion provided by an in-

dependent attorney performed within 30 days pre-

ceding the date of application;

(4) a description of the timeshare estate to be sold or

conveyed to purchasers;

(5) the developer’s past real estate development ex-

perience and any criminal, bankruptcy, and occupa-

tional licensing history;

(6) the developer’s nancial information including

the following:

(A) an audited nancial statement within

the previous six months;

(B) loan commitments for completion of

the timeshare program; and

marketing, and operations of the timeshare pro-

gram;

(7) the Registrar, Program Broker, marketing entity

and managing entity’s:

(A) name;

(B) business and email address;

(D) telephone number, and

(E) executed Adavit of Designation, if applicable,

that includes:

(i) the timeshare program name, registra-

tion number, and address;

(ii) the name of the designated individual

and license number, if applicable, or nancial insti-

tute;

(iii) the designated individual’s address,

email address, and telephone number; and

(iv) a notarized signature of the designated

individual.

(8) the names and real estate license number of bro-

kers associated with the timeshare program; and

(9) a signed adavit by the developer.

(b) An entity that owns timeshares at a timeshare pro-

gram where there are one of more existing registered devel-

opers may also apply to the Commission for registration of

its timeshare, provided that the entity does not control a

registered developer, is not controlled by a registered devel-

oper, and is not in common control of the program with a

registered developer.

B .0102 Registration Fee

e timeshare program registration fee pursuant to Rule

.0101 of this Subchapter shall be:

(1) one thousand dollars ($1,000) for programs

with 16 or more units;

(2) seven hundred dollars ($700.00) for programs

with 15 or fewer units, and

(3) four hundred fty dollars ($450.)00) for pro-

grams oering to resell 51 or more units through a home-

owner association which has acquired the units in satisfac-

tion of unpaid assessments by prior owners.

B .0103 Renewal of Timeshare Program Registra‑

tion

(a) A developer seeking a renewal of a timeshare proj-

ect registration shall submit a complete renewal application

on a form available on the Commission’s website that sets

forth the:

(1) timeshare program’s name, registration number,

and mailing address;

(2) developer’s name, telephone number, and email

address;

(3) the full legal name of brokers that are associated

with the time share project and their real estate li-

cense numbers;

(4) names and license numbers of brokers associated

with the timeshare program;

(5) name, address, email address, telephone number,

real estate broker license number if applicable, and

the assignment date for the:

(A) the managing entity;

(B) the marketing entity;

(D) the independent escrow agent, pursuant to

G.S. 93A-42(a); and

(E) program broker, pursuant to 93A-58(c);

(6) certication that the information contained in

the renewal registration is accurate and current on

the date of the renewal application; and

(7) the developer’s attorney or project broker’s sig-

nature.

North Carolina Real Estate License Law and Commission Rules

(b) e developer shall submit a renewal registration fee

of eight hundred dollars ($800.00) for the timeshare pro-

grams not oered for resale by a homeowner association. A

homeowners association shall submit a renewal registration

fee of four hundred fty dollars ($450.00).

registration renewal application shall be grounds for disci-

plinary action by the Commission pursuant to G.S. 93-A(b)

(13).

B .0104 Amendments to Timeshare Program

Registra tion

(a) A developer shall notify the Commission within 30

days after any material change in the information contained

in the time share program registration.

(b) A material change shall be any change which reects

a dierence in:

(1) the nature, quality or availability of the purchas-

er’s ownership or right to use the timeshare;

(2) the nature, quality or availability of any ameni-

ty at the project;

(3) developer’s title, control or right to use the real

property on which the project is located;

(4) information concerning the developer, the man-

aging or marketing entities, independent escrow

agent, registrar, or program broker, previously led

with the Commission; or

(5) purchaser’s right to exchange his or her unit;

however, a change in the information required to be

disclosed to a purchaser by G.S. 93A-48 shall not be

a material change.

registration shall submit each document to be amended

with new or changed information underlined in red. Every

amendment submitted shall be accompanied by a cover let-

ter signed by the developer or the developer’s attorney con-

taining a summary of the amendment and a statement of

reasons for which the amendment has been made. e cov-

er letter shall state:

(1) the name and address of the timeshare program

and registration number;

(2) the name and address of the developer;

(3) the document or documents to which the

amendment applies;

(4) whether or not the changes represented by the

amendment required the assent of the timeshare

owners and, if so, how the assent of the timeshare

owners was obtained; and

(5) the recording reference in the oce of the regis-

ter of deeds for the changes, if applicable.

(d) If the ownership of a developer of a registered time-

share program changes, the new developer shall le a new

timeshare program registration application pursuant to Rule

.0101 of this Subchapter. Said reling shall be without fee.

B .0105 Notice of Termination

A developer seeking to terminate its interest in a time-

share program shall le a Notice of Termination form avail-

able on the Commission’s website and shall set forth the

timeshare program’s:

(1) name:

(2) physical, mailing, and email addresses;

(3) telephone number;

(4) reason the developer is terminating its interest;

(5) date of termination

(6) new owner, if the developer’s interest will be sold or

transferred; and

(7) the signature of the developer.

SECTION .0200

PUBLIC OFFERING STATEMENT

B .0201 General Provisions

(a) Information contained in a public oering statement

pursuant to G.S. 93A-44(b) shall be accurate on the day it

is supplied to a purchaser.

(b) e inclusion of false or misleading statements in a

public oering statement shall be grounds for disciplinary

action by the Commission.

B .0202 Public Oering Statement Summary

In addition to the requirements in G.S. 93A-44, a public

oering statement shall contain a page prescribed by the Com-

mission and completed by the developer entitled Public Oer-

ing Statement Summary in a conspicuous type. e Public Of-

fering Statement Summary shall read as follows:

PUBLIC OFFERING STATEMENT SUMMARY

NAME OF PROJECT:

NAME AND REAL ESTATE LICENSE NUMBER OF

BROKER (IF ANY):

Please study this Public Oering Statement carefully. Satisfy

yourself that any questions you may have are answered before you

decide to purchase. If a salesperson or other representative of the

developer has made a representation which concerns you, and you

cannot nd that representation in writing, ask that it be pointed

out to you.

NOTICE

UNDER NORTH CAROLINA LAW, YOU MAY

CANCEL YOUR TIMESHARE PURCHASE WITH‑

OUT PENALTY WITHIN FIVE DAYS AFTER SIGN‑

ING YOUR CONTRACT. TO CANCEL YOUR TIME‑

SHARE PURCHASE, YOU MUST MAIL, ELEC‑

TRONICALLY MAIL, OR HAND DELIVER WRITTEN

NOTICE OF YOUR DESIRE TO CANCEL YOUR

PURCHASE TO (name and address of project). IF

North Carolina Real Estate License Law and Commission Rules

YOU CHOOSE TO MAIL YOUR CANCELLATION

NOTICE, THE NORTH CAROLINA REAL ESTATE

COMMISSION RECOMMENDS THAT YOU USE

REGISTERED OR CERTIFIED MAIL AND THAT

YOU RETAIN YOUR POSTAL RECEIPT AS PROOF

OF THE DATE YOUR NOTICE WAS MAILED. UPON

CANCELLATION, ALL PAYMENTS WILL BE RE‑

FUNDED TO YOU.

B .0203 Receipt for Public Oering Statement

(a) Prior to the execution of any contract to purchase a

time share, a time share developer or a time share salesper-

son shall obtain from the purchaser a written receipt for

the public oering statement, which shall display, directly

over the buyer signature line in type in all capital letters,

no smaller than the largest type on the page on which it

appears, the following statement: DO NOT SIGN THIS

RECEIPT UNLESS YOU HAVE RECEIVED A COM-

PLETE COPY OF THE PUBLIC OFFERING STATE-

MENT.

(b) Receipts for public oering statements shall be

maintained as part of the records of the sales transaction.

SECTION .0300

CANCELLATION

B .0301 Proof of Cancellation

(a) e postmark date axed to any written notice

of a purchaser’s intent to cancel his or her time share pur-

chase shall be presumed by the Commission to be the date

the notice was mailed to the developer. Evidence tending

to rebut this presumption shall be admissible at a hearing

before the Commission.

(b) Upon receipt of a purchaser’s written notice of his

or her intent to cancel his or her time share purchase, the

developer, or his or her agent or representative, shall retain

the notice and any enclosure, envelope or other cover in

the developer’s les at the project, and shall produce the

le upon the Commission’s request.

at a time share project and a purchaser gives written notice

of his or her intent to cancel his or her time share purchase

that is received by a developer or sales sta other than the

one from whom his or her time share was purchased, the

developer or sales sta receiving such notice shall prompt-

ly deliver it to the proper developer who shall then honor

the notice if it was timely sent by the purchaser.

SECTION .0400

TIMESHARE SALES OPERATIONS

B .0401 Retention of Timeshare Records

(a) A developer shall maintain or cause to be main-

tained complete timeshare records for a period of not less

than three years after the completion or termination of a

timeshare sale, rental, or exchange.

(b) Timeshare records shall include, at a minimum,

copies of the following:

(1) oers to purchase

(2) applications and contracts to purchase;

(3) rent or exchange timeshares;

(4) records of deposits;

(5) maintenance and disbursement of funds re-

quired to be held in trust;

(6) receipts;

(8) compensation of timeshare salespersons;

(9) public oering statement and summary; and

(10) any other records pertaining to the time-

share transaction or termination.

spection and reproduction to the Commission or its au-

thorized representatives without prior notice.

B .0402 Timeshare Agency Agreements and Dis‑

closure

Timeshare sales transactions conducted by brokers on

behalf of a developer are subject to 21 NCAC 58A .0104.

SECTION .0500

HANDLING AND ACCOUNTING OF FUNDS

B .0501 Timeshare Trust Funds

(a) Except as otherwise permitted by G.S. 93A-45(c),

all monies received by a time share developer or a timeshare

broker in connection with a timeshare salesperson in con-

nection with a timeshare sales transaction shall be depos-

ited into a trust or escrow account immediately following

receipt and shall remain in such account for ten days from

the date of sale or cancellation by the purchaser, whichev-

er rst occurs.

(b) All monies received in connection with a time

timeshare transaction shall be delivered immediately to

his or her program broker.

SECTION .0600

PROGRAM BROKER

B .0601 Designation of Program Broker

(a) e developer shall designate a program broker for

each registered timeshare program. e developer shall le

with the Commission an Adavit of Timeshare Program

Broker available on the Commission’s website and shall set

forth the timeshare program’s:

(1) name and registration number

(2) program broker’s name, business and email ad-

dress, real estate license number, telephone number, and no-

tarized signature.

(b) e developer shall le with the Commission a new

Adavit of Timeshare Program Broker within 10 days of

any change in the program broker.

North Carolina Real Estate License Law and Commission Rules

provisional brokers as dened in G.S. 93A-4(a1) shall not

be designed as a program broker.

B .0602 Duties of the Program Broker

(a) e program broker shall:

(1) display the timeshare program registration cer-

ticate at the project;

(2) ensure that each broker aliated with the pro-

gram has complied with Rules .0503 and .0504 of

this Subchapter;

(3) notify the Commission of any change in the

developer or material change pursuant to Rule

.0104(b) of this Subchapter;

(4) deposit and maintain the trust or escrow ac-

count of the timeshare program and the records per-

taining thereto;

(5) retain and maintain the timeshare program’s re-

cords pursuant to Rule .0401 of this Subchapter.

(b) e program broker shall review all contracts, pub-

lic oering statements and other documents distributed to

the timeshares program’s purchasers to ensure that the doc-

uments comport with the requirements of the Article 4 of

Chapter 93 of the North Carolina Statues and the rules ad-

opted by the Commission, and to ensure that true and accu-

rate documents have been given to the purchasers.

writing of any change in his or her status as program broker

within 10 days.

North Carolina Real Estate License Law and Commission Rules

SECTION .0100 – GENERAL

G .0101 Per Diem

A member of the Real Estate Commission shall receive

a per diem payment of two hundred dollars ($200.00) for

each day during which the member is engaged in business

for or on behalf of the Real Estate Commission.

G .0102 Location

(a) e oce of the North Carolina Real Estate Com-

mission is located at 1313 Navaho Drive, Raleigh, North

Carolina. e mailing address is Post Oce Box 17100, Ra-

leigh, North Carolina 27619-7100.

(b) Forms and information about the oce may be ob-

tained from the Commission’s website at www.ncrec.gov.

G .0103 Denitions

e following denitions apply throughout this Chapter

and to all forms prescribed pursuant to this Chapter:

(1) “Branch Oce” means any oce in addition to

the principal oce of a broker that is operated in

connection with the broker’s real estate business.

(2) “BIC” means a broker-in-charge pursuant to

G.S. 93A-2(a1).

(3) “BIC Eligible” means a broker’s license status

who has satised the broker-in-charge qualication

requirements and led application pursuant to G.S.

93A-4.2 and 21 NCAC 58A .0110.

(4) “Commission” means the North Carolina Real

Estate Commission.

(5) “Commission’s website” means www.ncrec.gov.

(6) “Day” means calendar day unless the rule ex-

pressly states otherwise. e rst day counted is the

day following the act, event, or transaction that trig-

gered the tolling of the designated time period.

(7) “Fee” means a payment made to the Commis-

sion by a bank check, certied check, money order,

debit card, credit card, or other electronic means and

is nonrefundable once the payment has been pro-

cessed.

(8) “Firm” means a partnership, corporation, limited

liability company, association, or other business en-

tity, except for a sole proprietorship.

(9) “Form” means an original form template provid-

ed by the Commission and completed by the sub-

mitting party.

(10) “Oce” means any place of business where acts

are performed for which a real estate license is re-

quired or where monies received by a broker act-

ing in a duciary capacity are handled or records for

such trust monies are maintained.

Subchapter 58G

North Carolina Real Estate Commission

(11) “Principal Oce” means the oce so desig-

nated in the Commission’s records by the qualifying

broker of a licensed rm or the broker-in-charge of a

sole proprietorship.

G .0104 Limited Education Requirements for Public

Health Emergency [Expired Rule]

G .0105 Limited Instructor Education Requirements

for Public Health Emergency [Expired Rule]

North Carolina Real Estate License Law and Commission Rules

Subchapter 58H

Real Estate Education

SECTION .0100

GENERAL

H .0101 Denitions

e following denitions apply throughout this Sub-

chapter and to all forms prescribed pursuant to this Chap-

ter:

(1) “Assessment” means a quiz or evaluation that

tests a student’s mastery of the learning objective.

(2) “Blended learning” means any combination of

distance education, synchronous distance learning,

and in-person methods of instruction.

(3) “Branch location” means any location in addi-

tion to the principal address of an education provid-

er that oers Prelicensing or Postlicensing Courses.

(4) “Continuing education” means a continuing ed-

ucation elective or Update Course.

(5) “Distance education” means a method of in-

struction accomplished through the use of media

whereby teacher and student are separated by dis-

tance and time.

(6) “End-of-course examination” means an exami-

nation administered at the conclusion of a course

that tests students’ knowledge and mastery of all

course subjects mandated by the Commission pre-

scribed course syllabus.

(7) “Instructional hour” means 50 minutes of in-

struction and 10 minutes of break time.

(8) “Instructor development program” means cours-

es of instruction designed to assist real estate instruc-

tors in the performance of Prelicensing, Postlicens-

ing, or continuing education instructor duties or in

the development of teaching skills.

(9) “Learning objective” means a statement of what

a student will be able to do after completing a unit

or course. A learning objective shall be structured in

accordance with Bloom’s Taxonomy.

(10) “License Examination Performance Record”

means the percentage of an instructor’s or educa-

tion provider’s students who, within 30 days of com-

pleting a Prelicensing course pursuant to 21 NCAC

58H .0207(a), take and pass the license examina-

tion, as dened in 21 NCAC 58A .0402, on their

rst attempt.

(11) “Postlicensing course” means any one of the

courses comprising the 90 hour Postlicensing edu-

cation program pursuant to G.S. 93A-4(a1) and 21

NCAC 58A .1902.

(12) “Prelicensing course” means a single course

consisting of at least 75 hours of instruction on sub-

jects prescribed by the Commission pursuant to

G.S. 93A-4(a).

(13) “Public education provider” means any propri-

etary business or trade school licensed by the State

Board of Community Colleges under G.S. 115D-90

or approved by the Board of Governors of the Uni-

versity of North Carolina that conducts approved

real estate courses.

(14) “Syllabus” means a document that includes

each topic and subtopic addressed during the course

and for each topic and subtopic describes the scope

and depth of coverage, timing, and references to

course materials, and also demonstrates opportuni-

ties for student interactions throughout the course,

such as discussion boards, chat areas, group activi-

ties, and quizzes.

(15) “Synchronous distance learning” means the in-

structor and students are separated only by distance

and not time, allowing for real-time monitoring of

student participation.

(16) “Update Courses” means the General Update

Course and the Broker-in-Charge Update Course.

(17) “Unit” means a segment of distance education

that is based upon a topic or subtopic in the course

syllabus that lasts no longer than one hour.

SECTION .0200

REAL ESTATE EDUCATION PROVIDERS

H .0201 Applicability

is Section applies to all real estate education providers

oering approved real estate courses. Public education pro-

viders shall be exempt from the rules in this Section unless

the rule specically requires compliance.

H .0202 Application for Education Provider

Certication

(a) Any community college, junior college, or university

located in this State and accredited by the Southern Associa-

tion of Colleges and Schools seeking education provider cer-

tication shall apply to the Commission on a form available

on the Commission’s website and shall set forth the:

(1) education provider’s name;

(2) education director’s name and contact informa-

tion;

(3) education director’s email address;

(4) education provider’s address;

(5) education provider’s telephone number;

(6) education provider’s website address;

(7) type of public institution;

(8) Prelicensing, Postlicensing, and Continuing Ed-

ucation courses to be oered by the applicant; and

North Carolina Real Estate License Law and Commission Rules

(9) a signed certication by the education director

that courses shall be conducted in compliance with

the rules of this Subchapter.

(b) Any other person or entity seeking education pro-

vider certication shall apply to the Commission on a form

available on the Commission’s website and shall set forth the

following criteria in addition to the requirements in G.S.

93A-34(b1):

(1) the website, physical and mailing address, and

telephone number of the principal oce of the edu-

cation provider;

(2) the education director’s license number, if ap-

plicable, email and mailing address, and telephone

number;

(3) the North Carolina Secretary of State Identica-

tion Number, if applicable;

(4) the physical address of each proposed branch lo-

cation, if applicable;

(5) the type of ownership entity;

(6) a signed Consent to Service of Process and Plead-

ings form available on the Commission’s website, if

a foreign entity;

(7) the Prelicensing, Postlicensing, and Continuing

Education courses to be oered by the applicant;

and

(8) a signed certication by the education director

that courses shall be conducted in compliance with

the rules of this Subchapter.

vider applying under Paragraph (b) of this Rule shall be two

hundred dollars ($200.00) for each proposed education pro-

vider location. Provided however, education providers shall

not be required to obtain a certication for every location a

Continuing Education course is oered.

(d) If any education provider relocates any location or

opens additional branch locations during any licensing pe-

riod, the education director shall submit an original applica-

tion for certication of that location pursuant to this Rule.

(e) In the event that any education provider advertises

or operates in any manner using a name dierent from the

name under which the education provider is certied, the

education provider shall rst le an assumed name certi-

cate in compliance with G.S. 66-71.4 and shall notify the

Commission in writing of the use of such an assumed name.

An education provider shall not advertise or operate in any

manner that would mislead a consumer as to the education

provider’s actual identity.

(f) An application from an individual or entity with an

ownership interest of 10 percent or greater in a certied ed-

ucation provider that has been limited, denied, withdrawn,

or terminated pursuant to Rule .0210 of this Section shall

be denied if led within one year from the eective date of

the limitation, denial, withdrawal, or termination.

H .0203 Education Director

(a) All education providers shall designate an education

director, who shall:

(1) supervise all education provider operations re-

lated to the conduct of oering Prelicensing, Postli-

censing, and Continuing Education courses;

(2) ensure that each approved instructor meets the

requirements of Rule .0302 of this Subchapter;

(3) ensure that each continuing education elective

course instructor meets the requirements of Rule

.0402(a)(5) of this Subchapter;

(4) ensure each course utilizes course materials pur-

suant to Rule .0205 of this Section;

(5) sign course completion certicates;

(6) submit to the Commission all required fees, ros-

ters, reports, and other information;

(7) submit to the Commission the name and the in-

structor number of each course instructor within 10

days of employment;

(8) ensure compliance with all statutory and rule re-

quirements governing the certication and opera-

tion of the education provider;

(9) take steps to protect the security and integrity of

course examinations at all times; and

(10) act as the education provider’s liaison to the

Commission.

(b) Public education providers shall designate one per-

manent employee to serve as the education director.

prior to the guest lecturer teaching a course session. Educa-

tion directors shall ensure that all guest lecturers possess ex-

perience related to the particular subject area the guest lec-

turer is teaching. Guest lecturers may be utilized to teach

collectively up to one-fourth of any Prelicensing or Postli-

censing course.

(d) e education director shall ensure all instructors

that teach Prelicensing or Postlicensing courses by methods

other than distance education are observed at least once an-

nually for a minimum of one hour of live uninterrupted in-

struction by either the education director or a Commission-

approved Prelicensing or Postlicensing instructor present in

the classroom. Education directors who are also instructors

may, upon written request to the Commission, be evaluat-

ed by a Commission monitor. e evaluation shall be based

on the instructor’s teaching abilities pursuant to Rule .0304

of this Subchapter. e instructor shall receive the written

evaluation of his or her instructional performance within 30

days of observation.

(e) e education director for any education provider

shall view the Commission’s Education Director video elec-

tronically within 30 days of initial designation and annually

within 45 days immediately preceding expiration of educa-

tion provider certication.

(f) Education providers shall notify the Commission

within 10 days of any change in education director during

North Carolina Real Estate License Law and Commission Rules

the certication period.

(g) e education director shall admit any Commission

authorized representative to monitor any class or provide

access to a distance education course without prior notice.

Such representatives shall not be required to register or pay

any fee and shall not be reported as having completed the

course.

(h) An education director shall dismiss a student from

the course who is found to have cheated in any manner on

a course examination and shall not award a passing grade or

any partial completion of the course. e education director

shall report the cheating incident in writing to the Commis-

sion within 10 days.

H .0204 Policies and Procedures Disclosure

(a) An education provider shall publish to prospective

students and provide to all students upon enrollment a Poli-

cies and Procedures Disclosure.

(b) In addition to the information required by G.S. 93A-

34(c)(5), an education provider’s Policies and Procedures

Disclosure shall include:

(1) the name and address of the Commission, along

with a statement that any complaints concerning the

education provider or its instructors should be di-

rected to the Commission;

(2) a statement that the education provider shall

not discriminate in its admissions policy or practice

against any person on the basis of age, sex, race, col-

or, national origin, familial status, handicap status,

or religion;

(3) the education provider’s most recent annual Li-

cense Examination Performance Record and the

Annual Summary Report data as published by the

Commission;

(4) the all-inclusive tuition and fees for each partic-

ular course;

(5) a written course cancellation and refund policy;

(6) a list of all course and reference materials re-

quired;

(7) the course completion requirements pursuant

to Rule .0207 of this Section and 21 NCAC 58A

.1705; and

(8) a signed certication acknowledging the stu-

dent’s receipt of the Policies and Procedures Disclo-

sure prior to payment of any portion of tuition or

registration fee without the right to a full refund.

graph (b) of this Rule and G.S. 93A-34(c)(5), an education

provider oering distance education, synchronous distance

learning, or blended learning courses shall include:

(1) a list of hardware and software or other equip-

ment necessary to oer and complete the course;

(2) the contact information for technical support;

and

(3) a description of how the end-of-course examina-

tion shall be administered to the student.

H .0205 Course Materials

(a) All courses shall have course materials that cover cur-

rent North Carolina real estate related laws, rules, and prac-

tices. e nature and depth of subject matter coverage shall

be consistent with the competency and instructional levels

prescribed by the syllabus for the course for which approv-

al is sought.

(b) Postlicensing courses shall utilize the current edition

of the North Carolina Real Estate Manual. e North Car-

olina Real Estate Manual may be purchased on the Com-

mission’s website in electronic format for twenty ve dollars

($25.00) per license year and as a print publication for fty

dollars ($50.00).

course materials no later than the rst class session.

H .0206 Advertising and Recruitment Activities

(a) Any education provider utilizing its License Exami-

nation Performance Record or Annual Summary Report for

advertising or promotional purposes shall only use the most

recent annual License Examination Performance Record or

Annual Summary Report as published on the Commission’s

website in a manner that is not misleading or false.

(b) Education providers shall not make or publish, by

way of advertising or otherwise, any false or misleading

statement regarding employment opportunities that may be

available as a result of completion of a course oered by that

education provider or acquisition of a real estate license.

recommendations of any person or organization for adver-

tising or otherwise unless such person or organization has

consented in writing to the use of the endorsement or rec-

ommendation. In no case shall any person or organization

be compensated for an endorsement or recommendation.

(d) Education providers shall not oer Postlicensing

courses only for brokers aliated with a particular real es-

tate broker, rm, franchise, or association.

(e) Education providers may oer and advertise courses

in addition to those approved by the Commission pursuant

to this Subchapter provided that references to such courses

are not made or published in a manner that implies approv-

al by the Commission.

(f) Instructional time and materials shall be utilized for

instructional purposes only.

(g) All Continuing Education course advertisements and

promotional materials shall specify the number of Continu-

ing Education credit hours to be awarded by the Commis-

sion for the course.

(h) e education provider name shall be used in all

publications and advertising.

H .0207 Course Completion Certicates and Reports

(a) For each Prelicensing course taught, an education

North Carolina Real Estate License Law and Commission Rules

provider shall provide a course completion certicate within

180 days of enrollment that is signed by the education di-

rector to each student that:

(1) in synchronous distance learning and in-person

courses attend at least 80 percent of all scheduled in-

structional hours or in distance education completes

all units and assessments; and

(2) obtains a grade of at least a 75 percent on the

end-of-course examination.

(b) For each Postlicensing course taught, an education

provider shall provide a course completion certicate within

180 days of enrollment that is signed by the education di-

rector to each student that:

(1) in synchronous distance learning and in-person

courses attend at least 90 percent of all scheduled in-

structional hours or in distance education completes

all units and assessments; and

(2) obtains a grade of at least a 75 percent on the

end-of-course examination.

and students shall not use textbooks or other materials on

the end-of-course examination. End-of-course examina-

tions administered in a distance education, blended learn-

ing, or synchronous distance learning course shall include

proctoring or other security measures designed to verify the

identity of the student taking the examination and ensure

that students are not using textbooks or other materials on

the end-of-course examination.

(d) For each continuing education course taught, an ed-

ucation provider shall provide a course completion certi-

cate signed by the education director to each student that

meets the requirements of 21 NCAC 58A .1705.

(e) e course completion certicate shall identify the

course, date of completion, student, and instructor.

(f) An education director shall submit a Course Com-

pletion Report within seven calendar days of any student

completing any real estate course pursuant to the education

provider’s Policies and Procedures Disclosure. e Course

Completion Report shall include:

(1) each student’s legal name;

(2) each student’s email address and telephone num-

ber;

(3) each student’s unique identication number, if

reporting a Prelicensing course;

(4) each student’s real estate broker license number,

if applicable;

(5) the course completion date;

(6) the education provider’s name and number;

(7) the course number; and

(8) the instructor’s name and number.

(g) For each Prelicensing or Postlicensing course taught,

an education director shall submit a Summary Report no

later than the fth day of the month. e Summary Report

shall contain the previous month’s data. e Summary Re-

port shall include the:

(1) name of the instructor(s);

(2) title of course(s);

(3) number of students who paid tuition in each

course and did not receive a refund;

(4) number of students who met all course require-

ments pursuant to Paragraph (a) and (b) of this

Rule; and

(5) number of students who satised Subparagraph s

(a)(1) and (b)(1) of this Rule but did not satisfy Sub-

paragraphs (a)(2) and (b)(2) of this Rule.

(h) Education providers shall electronically submit the

per student fee prescribed by G.S. 93A-4(a2) and G.S. 93A-

38.5(d). No fee shall be required for public education pro-

viders or an agency of federal, state, or local government.

H .0208 Education Provider Records

All education provider records shall be retained for three

years by the education provider and be made available to the

Commission during an investigation or application process.

Education provider records shall include:

(1) enrollment and attendance records;

(2) each student’s end-of-course examination with

grade and graded answer sheet;

(3) a master copy of each end-of-course examina-

tion with its answer key, course title, course dates

and name of instructor;

(4) all instructor evaluations pursuant to Rule

.0203(d) of this Section;

(5) advertisements;

(6) ARELLO or IDECC certications;

(7) bulletins, catalogues, Policies and Procedures

Disclosure, and other ocial publications;

(8) course schedules;

(9) student course materials;

(10) signed certications pursuant to Rule .0204(b)

(6) of this Section; and

(11) statements of consent pursuant to Rule .0206(c)

of this Section.

H .0209 Expiration and Renewal of Education

Provider Certication

(a) All education provider and public education provid-

er certications shall expire annually on June 30 following

certication.

(b) An education provider or public education provider

seeking renewal of its certication shall submit an electronic

application which shall include the following information:

(1) the education provider or public education pro-

vider’s:

(A) name;

(B) number;

(D) telephone number; and

(E) website address, if applicable; and

(2) the education director’s name and signature;

North Carolina Real Estate License Law and Commission Rules

(3) all approved real estate courses oered;

(4) a copy of the education provider’s Policies and

Procedures Disclosure, if applicable;

(5) proof of bond as required in G.S. 93A-36, if ap-

plicable; and

(6) a certication that the course meets the require-

ments of Subchapter 58H.

fees to renew the education provider certication or course

renewal.

(d) e education provider certication renewal fee shall

be one hundred dollars ($100.00) for each education pro-

vider location.

(e) e renewal fee for an education provider to oer

a Prelicensing or Postlicensing course at any of its loca-

tions during the licensed period shall be twenty-ve dollars

($25.00) per Prelicensing or Postlicensing course.

(f) e renewal fee for an education provider to renew

an approved continuing education elective course shall be

fty dollars ($50.00) per elective course.

(g) e materials fee for an education provider to re-

new an Update course approval shall be one hundred dol-

lars ($100.00).

(h) If an education provider or public education provid-

er certication has expired, the education provider shall sub-

mit an application for original certication pursuant to Rule

.0202 of this Subchapter.

(i) Commission approval of all continuing education

courses shall expire on June 30. In order to obtain approv-

al for an expired continuing education course, an educa-

tion provider shall submit an original application pursuant

to Rule .0401 of this Subchapter.

(j) If an education provider transfers an aggregate of 50

percent or more of the ownership interest, the education

provider shall notify the Commission in writing within 10

days of the transfer.

(k) On or before July 1, 2021, all education providers

shall modify approved courses to comply with this Subchap-

ter.

H .0210 Limitations, Denial, Withdrawal, or

Termination of Education Provider Certication

(a) e Commission may deny or withdraw certication

of an education provider or suspend, revoke, or deny renew-

al of the certication of an education provider upon nding

that an education provider:

(1) was found by a court or government agency of

competent jurisdiction to have violated any state or

federal law;

(2) made any false statements or presented any false,

incomplete, or incorrect information in connection

with an application;

(3) failed to provide or provided false, incomplete,

or incorrect information in connection with any re-

port the education provider is required to submit to

the Commission;

(4) presented to its students or prospective students

false or misleading information relating to its in-

structional program, to the instructional programs

of other institutions, or related to employment op-

portunities;

(5) collected money from students but refused or

failed to provide the promised instruction;

(6) failed to submit the per student fee as required

by G.S. 93A-4(a2) or 93A-38.5(e).

(7) refused at any time to permit authorized repre-

sentatives of the Commission to inspect the educa-

tion provider’s facilities or audit its courses;

(8) or education director violated the rules of this

Subchapter or was disciplined by the Commission

under G.S. 93A-6;

(9) obtained or used, or attempted to obtain or use,

in any manner or form, North Carolina real estate li-

cense examination questions;

(10) failed to provide to the Commission, within 30

days of the Commission’s request during an investi-

gation or application process, a written plan describ-

ing the changes the education provider made or in-

tends to make in its instructional program includ-

ing instructors, course materials, methods of student

evaluation, and completion standards to improve

the performance of the education provider’s students

on the license examination;

(11) provided the Commission a fee that was dis-

honored by a bank or returned for insucient funds;

(12) has its Certicate of Authority revoked by the

NC Secretary of State pursuant to G.S. 55-15-30;

(13) has been subject to a revenue suspension or sus-

pended by the NC Secretary of State pursuant to

G.S. 105-230;f

(14) has been administratively dissolved by the NC

Secretary of State pursuant to G.S. 57D-6-06;

(15) failed to utilize course materials pursuant to

Rule .0205 of this section;

(16) failed to submit reports pursuant to Rule .0207

of this section;

(17) provided false incomplete, or misleading infor-

mation relating to real estate licensing, education

matters, or the broker’s education needs or license

status;

(18) discriminated in its admissions policy or prac-

tice against any person on the basis of age, sex, race,

color, national origin, familial status, handicap sta-

tus, or religion; or

(19) refused or failed to comply with the provisions

of this Subchapter.

(b) A broker shall be subject to discipline pursuant to

G.S. 93A-6 if the broker engages in dishonest, fraudulent,

or improper conduct in connection with the operations of

an education provider if that broker:

North Carolina Real Estate License Law and Commission Rules

(1) has an ownership interest in the education pro-

vider;

(2) is the education director; or

(3) is an instructor for an education provider.

tion Performance Record fails to exceed 40 percent in each

of the previous two license years and the education provid-

er was certied by the Commission during the entire two

years, the Commission shall limit the education provider’s

certication such that the education provider shall not oer

prelicensing or postlicensing course. Said limitations shall

be eective July 1st of the Calendar year following the Com-

mission’s determination.

e education provider shall be eligible to have the

limitation removed one year after the limitation is imposed

provided that the education provider has:

(1) provided a written plan describing the changes

the education provider has made or intends to make in its

instructional program to improve the performance of the

students on the license examination;

(2) consulted with a designated Commission sta

member to review the written plan and needs for improve-

ment; and

(3) employed an instructor with no limitations to

teach prelicensing and postlicensing courses.

(d) A limited education provider is eligible to renew its

certication however, a renewal shall not remove the limita-

tion provided under Paragraph (c) of this Rule.

(e) When ownership of a certied education provid-

er is transferred and the education provider ceases to oper-

ate as the certied entity, the certication is not transferable

and shall terminate on the eective date of the transfer. All

courses shall be completed by the eective date of the trans-

fer. e transferring owner shall report course completion(s)

to the Commission. e new entity shall obtain an original

certication for each location where the education provider

will conduct courses as required by G.S. 93A-34 and Rule

.0202 of this Section prior to advertising courses, register-

ing students, accepting tuition, conducting courses, or oth-

erwise engaging in any education provider operations.

H .0216 Limited Education Provider Petition for

Reconsideration

(a) An education provider may submit a written peti-

tion to reconsider the determination made pursuant to Rule

.0210(c) of this Section. e petition shall be accompanied

by any documentary evidence that contradicts the Commis-

sion’s determination pursuant to Rule .0210(c) of this Sec-

tion.

(b) e petition pursuant to Paragraph (a) of this Rule

shall be submitted to the Commission within 60 days from

the date of receipt of notication of the certication limita-

tion or the Commission’s determination shall be nal.

Paragraph (b) of this Rule and any response submitted in

writing by Commission sta and enter a nal determina-

tion within 90 days from the date of receipt of such petition.

SECTION .0300

APPROVED INSTRUCTORS

H .0301 Prelicensing, Postlicensing, and Update

Course Instructor Approval

(a) Approval of an instructor to teach Prelicensing and

Postlicensing courses shall authorize the instructor to teach

courses only in conjunction with and at certied education

providers pursuant to Rule .0202 of this Subchapter.

(b) An instructor approved to teach Prelicensing and

Postlicensing courses may elect to also teach Update cours-

es upon initial approval, renewal, or any time while holding

such approval.

any certied education provider pursuant to Rule .0202 of

this Subchapter. An approved instructor may not indepen-

dently conduct an Update course unless the instructor has

also obtained certication as an education provider.

H .0302 Application and Criteria for Instructor

Approval

(a) An individual seeking original instructor approval

shall submit an application on a form available on the Com-

mission’s website that shall require the instructor applicant

to indicate the course(s) for which approval is being sought

and set forth the instructor applicant’s:

(1) legal name, address, email address, and tele-

phone number;

(2) real estate license number and instructor num-

ber, if any, assigned by Commission;

(3) criminal and occupational licensing history, in-

cluding any disciplinary actions;

(4) education background, including specic real

estate education;

(5) experience in the real estate business;

(6) real estate teaching experience, if any;

(7) signed Consent to Service of Process and

Pleadings for nonresident applicants; and

(8) signature.

(b) An instructor applicant shall demonstrate that the

instructor applicant possesses good reputation and character

pursuant to G.S. 93A-34(c)(9) and has:

(1) a North Carolina real estate broker license that

is not on provisional status;

(2) completed continuing education sucient to

activate a license under 21 NCAC 58A .1703;

(3) completed 60 semester hours of college-level ed-

ucation at an institution accredited by any college ac-

crediting body recognized by the U.S. Department of

Education;

(4) completed the New Instructor Seminar within

the previous six months; and

North Carolina Real Estate License Law and Commission Rules

(5) within the previous seven years has either:

(A) two years full-time experience in real estate

brokerage with at least one year in North Carolina;

(B) three years of instructor experience at a

secondary or post-secondary level;

structor approval in another jurisdiction; or

(D) qualications found to be equivalent by

the Commission, including a current North

Carolina law license and three years’ full time

experience in commercial or residential real es-

tate transactions or representation of real estate

brokers or rms.

broker shall:

(1) attend at least ninety percent of all scheduled

hours; and

(2) demonstrate the ability to teach a 15-minute

block of a single Prelicensing topic in a manner con-

sistent with the course materials.

(d) Prior to teaching any Update course, an approved in-

structor shall take the Commission’s annual Update Instruc-

tor Seminar for the current license period and attend at least

90 percent of all scheduled hours. e Update Instructor

Seminar shall not be used to meet the requirement in Rule

.0306(b)(4) of this Section.

H .0303 Limitation, Denial or Withdrawal of

Instructor Approval

(a) e Commission may deny or withdraw approval of

any instructor applicant or approved instructor upon nd-

ing that the instructor or instructor applicant:

(1) has failed to meet the criteria for approval de-

scribed in Rule .0302 of this Section or the criteria

for renewal of approval described in Rule .0306 of

this Section at the time of application or at any time

during an approval period;

(2) made any false statements or presented any false,

incomplete, or incorrect information in connection

with an application for approval or renewal of ap-

proval or any report that is required to be submitted

to the Commission;

(3) has failed to submit to the Commission any

report, course examination, or video recording re-

quired by these Rules;

(4) has failed to demonstrate the ability to teach

a Prelicensing, Postlicensing, or Update course in a

manner consistent with the course materials;

(5) taught a Prelicensing course and failed to pro-

vide to the Commission, within 30 days of the Com-

mission’s request during an investigation or applica-

tion process, w written plan describing the chang-

es the instructor has made or intends to make in his

or her instructional program to improve the perfor-

mance of the instructor’s students on the license ex-

amination;

(6) has been convicted of, pleaded guilty to, or

pleaded no contest to, a misdemeanor or felony vi-

olation of state or federal law by a court of compe-

tent jurisdiction;

(7) has been found by a court or government agency

of competent jurisdiction to have violated any state

or federal regulation prohibiting discrimination;

(8) has obtained, used, or attempted to obtain or

use, in any manner or form, North Carolina real es-

tate license examination questions except that the

instructor or instructor applicant may sit for their

own initial examination for licensure;

(9) has failed to take steps to protect the security of

end-of-course examinations;

(10) failed to take any corrective action set out in the

plan described in Subparagraph (a)(5) of this Rule or

as otherwise requested by the Commission;

(11) engaged in any other improper, fraudulent, or

dishonest conduct;

(12) failed to utilize course materials pursuant to

Rule .0205 of this Subchapter;

(13) has taught or conducted a course in any man-

ner that discriminated against any person on the ba-

sis of age, sex, race, color, national origin, familial

status, handicap status, or religion; or

(14) failed to comply with any other provisions of

this Subchapter.

(b) If an instructor’s annual License Examination Perfor-

mance Record fails to exceed 40 percent in each of the previ-

ous two license years and the instructor was approved by the

Commission during the entire previous two years, the Com-

mission shall limit the instructor’s approval such that the in-

structor shall not teach prelicensing or postlicensing cours-

es. Said limitation shall be eective July 1st of the calendar

year following the Commission’s determination.

e instructor shall be eligible to have the limitation re-

moved one year after the limitation is imposed provided

that the instructor has:

(1) provided a written plan describing the changes

the instructor has made or intends to make in his or her in-

structional program to improve the performance of the stu-

dents on the license examination;

(2) consulted with a designated Commission sta

member to review the written plan and needs for improve-

ment; and

(3) attended the Commission’s New Instructor

Seminar.

approval; however, a renewal shall not remove the limita-

tions provided under Paragraph (b) of this Rule.

H .0304 Instructor Conduct and Performance

(a) All instructors shall ensure that class sessions are con-

ducted at the scheduled time and for the full amount of

North Carolina Real Estate License Law and Commission Rules

time that is scheduled or required. Instructors shall conduct

courses in accordance with the Commission’s rules, and any

applicable course syllabi, instructor guide, or course plan.

Instructors shall conduct classes demonstrating the ability

to:

(1) state student learning objectives at the begin-

ning of the course and present accurate and relevant

information;

(2) communicate correct grammar and vocabulary;

(3) utilize a variety of instructional techniques that

require students to analyze and apply course con-

tent, including teacher-centered approaches, such as

lecture and demonstration, and student-centered ap-

proaches, such as lecture discussion, reading, group

problem solving, case studies, and scenarios;

(4) utilize instructional aids, such as:

(A) whiteboards;

(B) sample forms and contracts;

(D) charts; and

(E) videos.

(5) utilize assessment tools, such as:

(A) in-class or homework assignments, and

(B) quizzes and midterm examinations for Pre-

licensing and Postlicensing courses.

(6) avoid criticism of any other person, agency, or

organization;

(7) identify key concepts and correct student mis-

conceptions; and

(8) maintain control of the class.

(b) Instructors shall not obtain, use, or attempt to ob-

tain or use, in any manner or form, North Carolina real es-

tate license examination questions.

H .0305 Digital Video Recordings

(a) Upon request of the Commission during an investi-

gation, an education provider or approved instructor shall

submit a digital video recording depicting an instructor

teaching a specied course topic.

(b) Any digital video recording submitted to the Com-

mission shall:

(1) have been made within 12 months of the date of

submission;

(2) be recorded either on a digital video disc (DVD),

USB drive, or similar medium;

(3) be unedited;

(4) display a visible date and time stamp during the

entire video recording;

(5) include a label identifying the instructor, the

course title, subject being taught, and dates of the

video instruction;

(6) include student materials used in the production

of the video recording;

(7) have visual and sound quality to allow reviewers

to see and hear the instructor; and

(8) show at least a portion of the students present in

a live audience.

ed during an investigation shall be 30 days after the date of

the next scheduled course, but no later than 120 days after

the Commission’s request.

H .0306 Renewal and Expiration of Instructor

Approval

(a) Commission approval of instructors shall expire an-

nually on June 30 following issuance of approval.

(b) Any approved instructor shall le an electronic ap-

plication for renewal of approval within the 45 days imme-

diately preceding expiration of approval. e instructor re-

newal application shall set forth the instructor’s:

(1) legal name, address, email address, and tele-

phone number;

(2) real estate license number and instructor num-

ber assigned by Commission;

(3) any criminal convictions and occupational li-

cense disciplinary actions within the past year;

(4) proof of attendance since approval or last renew-

al of a real estate instructor educational program of

at least six hours, such as the:

(A) Commission’s Spring Educators Conference

or New Instructor Seminar;

(B) NC Real Estate Educators Association’s con-

ference or instructor development workshop; or

ence or instructor development workshop.

(5) courses for which he or she is seeking approval

as an instructor; and

(6) signature.

been expired for less than six months, the former instruc-

tor shall meet the requirements set forth in Paragraph (b)

of this Rule.

(d) If an instructor approval has been expired for more

than six months, the former instructor shall le an appli-

cation for original approval pursuant to Rule .0302 of this

Section.

H .0307 Limited Instructor Petition for

Reconsideration

(a) An instructor may submit a written petition to recon-

sider the determination made pursuant to Rule .0303(b) of

this Section. e petition shall be accompanied by any doc-

umentary evidence that contradicts the Commission’s deter-

mination pursuant to Rule .0303(b) of this Section.

(b) e petition pursuant to Paragraph (a) of this Rule

shall be submitted to the Commission within 60 days from

the date of receipt of notication of the approval limitation

or the Commission’s determination shall be nal.

Paragraph (b) of this Rule and any response submitted in

North Carolina Real Estate License Law and Commission Rules

writing by Commission sta and enter a nal determina-

tion within 90 days from the date of receipt of such petition.

SECTION .0400

REAL ESTATE COURSES

H .0401 Approval of Real Estate Education Course

(a) Prior to obtaining the Commission’s written approv-

al of a real estate education course, education providers shall

not oer, advertise, or otherwise represent that any real es-

tate education course is, or may be, approved for credit in

North Carolina.

(b) An education provider seeking original approval of

a proposed course shall complete an application on a form

available on the Commission’s website that requires the ap-

plicant to set forth:

(1) the title of the proposed course;

(2) the education provider’s legal name, address, and

telephone number;

(3) the education director’s legal name and signa-

ture;

(4) the education provider’s number;

(5) the credit hours awarded for completing the

course;

(6) the subject matter of the course;

(7) the identity of the course owner;

(8) the written permission of the course owner, if

other than the applicant;

(9) the identity of prospective instructors;

(10) a description of the method by which the edu-

cation provider will proctor the end-of-course exam-

ination for Prelicensing and Postlicensing courses;

(11) a description of the mechanism used for veri-

cation of possession of required course materials;

and

(12) a copy of the course guide, which shall include:

(A) course objectives;

(B) learning objectives for each topic;

(D) instructional methods and aids to be em-

ployed; and

(E) all course materials that will be provided to

students.

ucation course shall submit an application for original ap-

proval pursuant to Paragraph (b) of this Rule as well as:

(1) a full copy of the course on the medium to be

utilized for instruction;

(2) a description of the method by which the edu-

cation provider will verify and record student atten-

dance;

(3) a list of hardware and software or other equip-

ment necessary to both oer and complete the

course;

(4) the contact information for the technical sup-

port service for the course;

(5) all hardware and software necessary to review the

submitted course at the expense of the applicant;

and

(6) an outline demonstrating the course meets the

minimum course hours measured by a reading speed

of 225 words per minute and the actual duration of

audio and video les.

(d) An applicant seeking approval to oer a synchronous

distance learning course shall submit an application for orig-

inal approval pursuant to Paragraph (b) of this Rule as well

as:

(1) a full copy of the course on the medium to be

utilized for instruction;

(2) a description of the method by which the edu-

cation provider will verify and record student attendance;

(3) a list of hardware and software or other equip-

ment necessary to both oer and complete the course;

(4) the contact information for the technical sup-

port service for the course.

(5) all hardware and software necessary to review

the submitted course at the expense of the applicant; and

(6) an outline demonstrating the course meets the

minimum course hours measured by a reading speed of 225

words per minute and the actual duration of audio and vid-

eo les.

(e) An applicant seeking approval to oer a synchronous

distance learning course shall submit an application for orig-

inal approval pursuant to Paragraph (b) of this Rule as well

as:

(1) a description of the method y which the educa-

tion provider will verify and record student attendances;

(2) a list of hardware and software or other equip-

ment necessary to both oer and complete the course; and

(3) the contact information for the technical sup-

port service for the course.

(f) An application pursuant to Paragraph (c) of this Rule

shall not be approved by the Commission if:

(1) the course cannot be reviewed in its entirety; or

(2) the course does not meet the minimum course

hours pursuant to G.S. 93A-4 and 21 NCAC 58A

.1702 measured by a reading speed of 225 words per

minute and the actual duration of audio and vid-

eo les.

(g) An education provider seeking approval to oer a

currently approved course shall complete an application on

a form available on the Commission’s website that requires

the applicant to set forth the:

(1) title of the course;

(2) applicant’s legal name, address, and telephone

number;

(3) applicant’s education director’s legal name;

(4) applicant’s education provider number;

(5) identity of the course owner;

(6) written permission of the course owner, if other

North Carolina Real Estate License Law and Commission Rules

than the applicant;

(7) identity of prospective instructors;

(8) certication that the originally approved course

will not be altered;

(9) a description of the mechanism used for verica-

tion of possession of required course materials;

(10) a description of the method by which the edu-

cation provider will proctor the end-of-course exam-

ination for Prelicensing and Postlicensing courses;

(11) a description of the method by which the edu-

cation provider will verify and record student atten-

dance;

(12) education director’s signature; and

(13) for synchronous distance learning courses:

(A) a list of hardware and software or other

equipment necessary to both oer and complete

the course; and

(B) the contact information for the technical

support service for the course.

(h) An education provider shall submit a one hundred

dollar ($100.00) fee for each application submitted pursu-

ant to Paragraph (g) of this Rule for any continuing educa-

tion course. e application shall be deemed approved ten

business days after the Commission has received the appli-

cation and fee, unless the Commission noties the appli-

cant otherwise.

(i) An education provider shall submit a forty dollar

($40.00) fee per Prelicensing or Postlicensing course oered

at any of its branch locations. No fee shall be required for

public education providers or an agency of federal, state, or

local government.

(j) An education provider shall submit a one hundred

dollar ($100.00) fee per elective course. No fee shall be re-

quired for public education providers or an agency of feder-

al, state, or local government.

H .0402 Continuing Education Elective Course

Requirements

(a) Continuing education elective courses shall:

(1) cover subject matter related to real estate broker-

age practice and oer knowledge or skills that will

enable brokers to better serve real estate consumers

and the public interest;

(2) consist of at least four hours of instruction;

(3) oer four continuing education credit hours;

(4) include handout materials for students that pro-

vide the information to be presented in the course;

and

(5) be taught only by an instructor who possesses at

least one of the following:

(A) a baccalaureate or higher degree in a eld re-

lated to the subject matter of the course;

(B) three years’ full-time work experience within

the previous 10 years that is related to the sub-

ject matter of the course;

previous 10 years teaching the subject matter of

the course; or

(D) education or experience or both found by

the education director to be equivalent to one of

the above standards.

(b) Education providers shall notify the Commission

in writing before making any changes in the content of an

elective course. However, changes in course content that are

technical in nature do not require written notication dur-

ing the approval period, but shall be reported at the time

the education provider requests renewal of course approval.

H .0403 Commission Created Update Courses

(a) e Commission shall annually develop Update

courses and shall produce instructor and student materials

for use by education providers.

(b) An education provider shall submit a one hundred

dollar ($100.00) materials fee to oer the Update course.

modied Update course pursuant to Paragraph (f) of this

Rule shall also submit the written permission of each of the

course owners, if other than the applicant.

(d) Education providers shall use the Commission-de-

veloped course materials to conduct Update courses. Educa-

tion providers shall provide a copy of the course materials to

each broker taking an Update course.

(e) All Update course materials developed by the Com-

mission are the sole property of the Commission and are

subject to the protection of copyright laws. Violation of the

Commission’s copyright with regard to these materials shall

be grounds for disciplinary action or other action as permis-

sible by law.

(f) With advance approval from the Commission, edu-

cation providers and approved instructors may make modi-

cations to the Update course when the Update course is be-

ing promoted to and conducted for a group of brokers that

specialize in a particular area of real estate brokerage. Such

modications shall relate to the same general subject matter

addressed in the prescribed Update course and the Update

course as modied shall achieve the same educational objec-

tives as the unmodied Update course. Where certain sub-

ject matter addressed in the prescribed Update course is not

directly applicable to the group of brokers who specialize

in the particular area of real estate brokerage being target-

ed, dierent subject matter and education objectives may be

substituted with the prior written consent of the Commis-

sion. All modied Update course materials shall be the joint

property of the Commission and the education provider or

approved instructor approved to make such modications,

or as otherwise determined by written agreement. Violation

of the Commission’s copyright with regard to these materi-

als shall be grounds for disciplinary action or other action as

permitted by law.

(g) e Update Course shall be oered by education pro-

North Carolina Real Estate License Law and Commission Rules

viders only as an in-person and synchronous distance-learn-

ing course.

H .0404 Course Scheduling

(a) Continuing Education courses shall be scheduled

and conducted in a manner that limits class sessions to a

maximum of eight instructional hours in any given day. e

maximum permissible class session without a break shall be

90 minutes. Courses scheduled for more than four instruc-

tional hours in any given day shall include a meal break of

at least one hour.

(b) An education provider shall not oer, conduct, or al-

low a student to complete any continuing education course

between June 11 and June 30, inclusive.

Continuing Education course shall require students to com-

plete the course within 30 days of the date of registration

or the date the student is provided the course materials and

permitted to begin work, whichever is the later date.

(d) Education providers shall not utilize a scheduling

system that allows students to enroll late for a course and

then complete their course work in a subsequently sched-

uled course. Late enrollment shall be permitted only if the

enrolling student can satisfy the minimum attendance re-

quirement set forth in Rule .0207 of this Subchapter.

(e) Education providers shall notify the Commission of

all scheduled course oerings no later than 10 days prior to

a scheduled course beginning date.

(f) e notice required by Paragraph (e) of this Rule

shall include:

(1) the education provider name;

(2) the education provider number; and

(3) for each scheduled course:

(A) the name and course number;

(B) the scheduled beginning and ending dates,

if applicable;

ing any scheduled lunch breaks; and

(D) the name of the instructor and instructor

number.

(g) If there is a change or cancellation within ve days of

the scheduled course date, then the education director shall

provide notice to the Commission within 24 hours of the

change or cancellation.

H .0415 Distance Education Courses

(a) At the beginning of a course, distance education

courses shall include an orientation that:

(1) explains the course syllabus;

(2) identies all required materials and resources, if

any;

(3) states the maximum time a student is allowed to

complete the course; and

(4) instructs students on how to navigate within the

course.

(b) Distance education courses shall include a naviga-

tion menu within the course platform that allows students

to access the:

(1) instructor’s name and contact information;

(2) course syllabus and schedule;

(3) course materials, if any;

(4) Policies and Procedures Disclosure pursuant to

Rule .0204 of this Section; and

(5) contact information for the course’s technical

support.

and students shall complete an assessment for each unit pri-

or to beginning the subsequent unit.

100

North Carolina Real Estate License Law and Commission Rules

101

North Carolina Real Estate License Law and Commission Rules

102

North Carolina Real Estate License Law and Commission Rules

INTRODUCTION

hese comments on selected North Carolina Real Es-

tate License Law and Real Estate Commission Rules

provisions are intended to assist real estate licens ees, preli-

censing course students and others in understanding the Li-

cense Law and Commission rules. e comments are orga-

nized in a topic format that often diers from the sequence

in which the topics are addressed in the License Law and

Commission rules. e topics selected for comment here

are not only of particular impor tance in real estate broker-

age practice but also are likely to be tested on the real estate

license examination. e appropriate references to the Li-

cense Law and Commis sion rules are provided beside each

listed topic.

REQUIREMENT FOR A LICENSE

General [G.S. 93A‑1 and 93A‑2]

ny person or business entity who directly or indi-

rectly engages in the business of a real estate bro-

ker for compensation or the promise thereof while physical-

ly in the state of North Carolina must have a North Caro-

lina real estate broker license. In North Carolina, a real es-

tate licensee may only engage in brokerage as an “agent” for

a party to a transaction. us, a real estate licensee is com-

monly and appropriately referred to as a real estate “agent”

even though the latter term does not actually appear in the

License Law. Note that a real estate “licensee” is NOT au-

tomatically a “REALTOR®.” A licensed real estate agent is a

REALTOR® only if he/she belongs to the National Associa-

tion of REALTORS®, a private trade association. us, the

term REALTOR® should not be used to generally refer to all

real estate licensees.

License Categories [G.S. 93A‑2]

ere is only one “type” of license, a broker license;

however, there are several license status categories as de-

scribed below:

Provisional Broker – is is the “entry level” license sta-

tus category. A person who has met all the license quali-

cation requirements (including a 75-hour prelicensing course

and passing the Commission’s license examination) is initial-

ly issued a broker license on “provisional” status and is

referred to as a “provisional broker.” A provisional bro-

ker generally may perform the same acts as a broker whose

license is NOT on provisional status so long as he or she

is supervised by a broker who is a designated broker-in-

charge. A provisional broker may not operate independent-

ly in any way. G.S. 93A-2(a2) denes a “provisional bro-

ker” as “...a real estate broker who, pending acquisition and

documentation to the Commission of the education or expe-

rience prescribed by G.S. 93A-4(a1), must be supervised by a

broker-in-charge when performing any act for which a real es-

tate license is required.”

is license status category is comparable to a “salesper-

son” license in most other states except that it is a temporary

license status category. Provisional brokers may not retain

this status indenitely – they must complete required postli-

censing education to remove the “provisional” status of their

licenses and to remain eligible for “active” license status.

Broker – A “provisional broker” who satises all postli-

censing education requirements to terminate the “provision-

al” status of such license becomes a “broker” without hav-

ing to take another license examination. A broker is NOT

required to be supervised by a broker-in-charge in order to

hold an “active” license. An applicant who holds a current

real estate license in another U.S. jurisdiction that is equiva-

lent to NC’s broker license and that has been on active sta-

tus within the previous three (3) years may pass the State

portion of the license examination and be issued a broker li-

cense (assuming requisite character requirements are met).

All others must rst be licensed in North Carolina as a pro-

visional broker and then satisfy the postlicensing education

requirement to become a non-provisional broker.

Most frequently, brokers elect to work for another bro-

ker or brokerage rm. Brokers may also elect to operate in-

dependently as a sole proprietor; however, with limited ex-

ceptions, such broker will have to qualify for and designate

himself or herself as a broker-in-charge in order to operate

independently and perform most brokerage activities (dis-

cussed further below under “broker-in-charge” and also in

a subsequent section on brokers-in-charge that appears near

the end of this appendix).

Broker-In-Charge – G.S. 93A-2(a1) denes a “broker-

in-charge” as “...a real estate broker who has been designat-

ed as the broker having responsibility for the supervision of real

estate provisional brokers engaged in real estate brokerage at a

particular real estate oce and for other administrative and

supervisory duties as the Commission shall prescribe by rule.”

Commission Rule A.0110 requires that each real estate of-

ce must have a broker who meets the qualication require-

ments to serve as “broker-in-charge” of the oce and who

has designated himself or herself as the broker-in-charge of

that oce. As is the case with “provisional broker,” “broker-

in-charge” is not a separate license, but only a separate license

status category. A broker who is to serve as the broker-in-

charge (BIC) of an oce (including working independent-

ly) must be designated as a BIC with the Commission.

LICENSE LAW AND RULES COMMENTS

Comments on Selected Provisions of the

North Carolina Real Estate License Law

and Real Estate Commission Rules

103

North Carolina Real Estate License Law and Commission Rules

To qualify for designation as a broker-in-charge, a bro-

ker’s license must be on “active” status but NOT on “pro-

visional” status, the broker must have two years full-time

or four years part-time brokerage experience within the

previous ve years and the broker must complete a 12-hour

Broker-In-Charge Course no earlier than one year prior or

120 days after designation. Broker-in-charge requirements

are addressed in detail in a separate subsequent section titled

“Broker-In-Charge.”

Limited Nonresident Commercial Broker – A broker

or salesperson residing in a state other than North Caroli-

na who holds an active broker or salesperson license in the

state where his or her primary place of real estate business

is located may apply for and obtain a North Carolina “lim-

ited nonresident commercial broker license” that entitles

such licensee to engage in transactions for compensation in-

volving “commercial real estate” in North Carolina. While

the non-resident limited broker will remain aliated with

his/her out of state real estate company and will not have a

North Carolina broker-in-charge, the non-resident licens-

ee must enter into a “notication of broker aliation” and

a “brokerage cooperation agreement” with a resident North

Carolina broker not on provisional status and the licensee

must be supervised by the North Carolina broker while per-

forming commercial real estate brokerage in North Caro-

lina. A limited nonresident commercial broker license is a

separate license.

Licensing of Business Entities [G.S. 93A‑1 and 2; Rule

A.0502]

In addition to individuals (persons), “business entities” also

must be licensed in order to engage in real estate brokerage.

Any corporation, partnership, limited liability company, asso-

ciation or other business entity (other than a sole proprietor-

ship) must obtain a separate real estate rm broker license.

Activities Requiring a License [G.S. 93A‑2]

Persons and business entities who for consideration or the

promise thereof perform the activities listed below as an agent

for others are considered to be performing brokerage activities

and must have a real estate license unless specically exempt-

ed by the statute (see subsequent section on “Exemptions”).

ere is no exemption for engaging in a limited number

of transactions. A person or entity who performs a broker-

age service for compensation in even one transaction must

be licensed, whether such compensation is termed a “refer-

ral fee,” “nder’s fee,” or other terminology. Similarly, no fee

or other consideration is so small as to exempt one from the

application of the licensing statute when acting for another

in a real estate transaction. Brokerage activities include:

1. Listing (or oering to list) real estate for sale or

rent, including any act performed by a real estate li-

censee in connection with obtaining and servicing a

listing agreement. Examples of such acts include, but

are not limited to, soliciting listings, providing infor-

mation to the property owner, and preparing listing

agreements or property management agreements.

2. Selling or buying (or oering to sell or buy) real

estate, including any act performed by a real estate

licensee in connection with assisting others in selling

or buying real estate. Examples of such acts include,

but are not limited to, advertising listed property for

sale, “show ing” listed property to pro spec tive buy-

ers, provid ing information about listed property to

pro spec tive buyers (other than basic property facts

that might commonly appear in an advertisement in

a newspaper, real estate publication or internet web-

site), negotiating a sale or purchase of real estate, and

assisting with the completion of contract oers and

counteroers using preprinted forms and communi-

cation of oers and acceptances.

3. Leasing or renting (or oering to lease or rent) real

estate, including any act performed by real estate li-

censees in connection with assisting others in leasing

or renting real estate. Examples of such acts include,

but are not limited to, advertising listed property for

rent, “showing” listed rental property to prospective

tenants, providing information about listed rental

property to prospective tenants (other than basic

property facts that might commonly appear in an

advertisement in a newspaper, real estate publication

or internet website), negotiating lease terms, and as-

sisting with the completion of lease oers and coun-

teroers using preprinted forms and communication

of oers and acceptances.

4. Conducting (or oering to conduct) a real estate

auction. (Mere criers of sale are excluded.) NOTE:

An auction eer’s license is also required to auction real

estate.

5. Selling, buying, leasing, assigning or exchanging

any interest in real estate, including a leasehold

interest, in connection with the sale or purchase

of a business.

6. Referring a party to a real estate licensee, if done

for compensation. Any arrangement or agreement

between a licensee and an unlicensed person that

calls for the licensee to compensate the unlicensed

person in any way for nding, introducing or refer-

ring a party to the licensee has been determined by

North Carolina’s courts to be prohibited under the

License Law. erefore, no licensee may pay a nder’s

fee, referral fee, “bird dog” fee or similar compensation

to an unlicensed person.

Unlicensed Employees — Permitted Activities

e use of unlicensed assistants and other unlicensed of-

ce personnel in the real estate industry is very widespread

and the Commission is frequently asked by licensees what

acts unlicensed persons may lawfully perform. As guidance

to licensees, the Commission has prepared the following

list of acts that an unlicensed assistant or employee may

lawfully perform so long as the assistant or employee is sal-

aried or hourly paid and is not paid on a per-transaction

104

North Carolina Real Estate License Law and Commission Rules

basis.

An unlicensed, salaried employee MAY:

1. Receive and forward phone calls and electronic mes-

sages to licensees.

2. Submit listings and changes to a multiple listing ser-

vice, but only if the listing data or changes are com-

piled and provided by a licensee.

3. Secure copies of public records from public repositories

(i.e., register of deeds oce, county tax oce, etc.).

4. Place “for sale” or “for rent” signs and lock boxes on

property at the direction of a licensee.

5. Order and supervise routine and minor repairs to

listed property at the direction of a licensee.

6. Act as a courier to deliver or pick up documents.

7. Provide to prospects basic factual information on

listed property that might commonly appear in ad-

vertisements in a newspaper, real estate publication

or internet website.

8. Schedule appointments for showing property listed

for sale or rent.

9. Communicate with licensees, property owners, pros-

pects, inspectors, etc. to coordinate or conrm ap-

pointments.

10. Show rental properties managed by the employee’s

employing broker to prospective tenants and com-

plete and execute preprinted form leases for the rent-

al of such properties.

11. Type oers, contracts and leases from drafts of pre-

printed forms completed by a licensee.

12. Record and deposit earnest money deposits, tenant

security deposits and other trust monies, and other-

wise maintain records of trust account receipts and

disbursements, under the close supervision of the of-

ce broker-in-charge, who is legally responsible for

handling trust funds and maintaining trust accounts.

13. Assist a licensee in assembling documents for closing.

14. Compute commission checks for licensees aliated

with a broker or rm and act as bookkeeper for the

rm’s bank operating accounts.

Exemptions [G.S. 93A‑2(c)]

e following persons and organiza tions are speci cally

exempted from the requirement for real estate licen sure:

1. A business entity selling or leasing real estate owned

by the business entity when the acts performed are in

the regular course of or are incident to the manage-

ment of that real estate and the investment therein.

is exemption extends to ocers and employees of

an exempt corporation, the general partners of an ex-

empt partnership, and the managers of an exempt

limited liability company when engaging in acts or

services for which the corporation, partnership or

limited liability company would be exempt.

2. A person acting as an attorney-in-fact under a power

of attorney from the owner authorizing the nal con-

summation of performance of any con tract for the

sale, lease or exchange of real estate. (Note: is lim-

ited exemption applies only to the nal completion

of a transaction already com menced. e licensing

require ment may not be circum vented by obtaining

a power of attor ney.)

3. An attorney-at-law who is an active member of the

North Carolina State Bar only when performing an

act or service that constitutes the practice of law un-

der Chapter 84 of the General Statutes. us, the

attorney exemption is strictly limited and attorneys

generally may NOT engage in real estate brokerage

practice without a real estate license.

4. A person acting as a receiver, trust ee in bankruptcy,

guardian, administrator or executor or any person

acting under a court order.

5. A trustee acting under a written trust agree ment,

deed of trust or will or the trustee’s regular salaried

employees.

6. Certain salaried employees of broker- property

manag ers. (See G.S. 93A-2(c)(6) for details.)

7. An individual owner selling or leasing the owner’s

own property.

8. A housing authority organized under Chapter 157 of

the General Statutes and any regular salaried employee

with regard to the sale or lease of property owned by

the housing authority or to the subletting of property

which the housing authority holds as tenant.

THE REAL ESTATE COMMISSION

Composition [G.S. 93A‑3(a)]

he Real Estate Commission consists of nine (9)

members who serve three-year terms. Seven mem-

bers are appointed by the Governor and two are appointed

by the General Assembly upon the recommendations of the

Speaker of the House of Representatives and the President

Pro Tempore of the Senate. At least three (3) members must

be licensed brokers. At least two (2) members must be “pub-

lic members” who are NOT involved directly or indirectly

in the real estate brokerage or appraisal businesses.

Purpose and Powers [G.S. 93A‑3(a), (c) and (f); G.S.

93A‑6(a) and (b);G.S. 93A‑4(d), 4.2 and 93A‑33]

e principal purpose of the Real Estate Commis sion

is to protect the interests of members of the general pub-

lic in their dealings with real estate brokers. is is accom-

plished through the exercise of the following statutory pow-

ers granted to the Commis sion:

1. Licensing real estate brokers and brokerage rms, and

registering time share projects.

2. Establishing and administering prelicensing educa-

tion programs for prospective licensees and postli-

censing and continuing education programs for li-

censees.

3. Providing education and information relating to the

real estate brokerage business for licensees and the

105

North Carolina Real Estate License Law and Commission Rules

general public.

4. Regulating the business activities of brokers and bro-

kerage rms, including disciplining licensees who

violate the License Law or Commission rules.

It should be noted that the Commis sion is speci cally

prohibited, however, from regulating commis sions, salaries

or fees charged by real estate licens ees and from arbitrating

disputes between parties regarding matters of contract such

as the rate and/or division of commissions or similar mat-

ters. [See G.S. 93A-3(c) and Rule A.0109.]

Disciplinary Authority [G.S. 93A‑6(a)‑(c)]

e Real Estate Commission is authorized to take a va-

riety of disciplinary actions against licensees who the Com-

mission nds guilty of violating the License Law or Com-

mission rules while acting as real estate licensees. ese

are: repri mand, censure, license suspension and license

revoca tion. e License Law also permits a licensee un-

der certain circumstances to surrender his/her license with

the consent of the Commission. Disciplinary actions taken

against licensees are regularly reported in the Commission’s

periodic newsletter which is distributed to all licensees and

also may be reported in local and regional newspapers.

It should be noted that licensees may be subject to the

same disciplinary action for committing acts prohibited by

the License Law when selling, leasing, or buying real estate

for themselves, as well as for committing such acts in trans-

actions handled as agents for others. [G.S. 93A-6(b)(3)]

e Commission also has the power to seek in its own

name injunctive relief in superior court to prevent any per-

son (licensees and others) from violating the License Law

or Commission rules. A typical example of when the Com-

mission might pursue injunctive relief in the courts is where

a person engages in real estate activity without a license or

during a period when the person’s license is suspended, re-

voked or expired. [G.S. 93A-6(c)]

Any violation of the License Law or Commission rules is

a criminal oense (misdemeanor) and may be prose cuted in a

court of law. However, a nding by the Commission that a

licensee has violated the License Law or Commission rules

does not consti tute a crimi nal conviction. [G.S. 93A-8]

PROHIBITED ACTS BY LICENSEES

.S. 93A-6 provides a list of prohibited acts which

may result in disciplinary action against licensees.

Discussed below are various prohibited acts, except for those

related to handling and accounting for trust funds, broker’s

responsibility for closing statements, and the failure to deliv-

er certain instruments to parties in a transaction, which are

discussed in the subsequent sections on “General Brokerage

Provisions” and “Handling Trust Funds.”

Important Note

e provisions of the License Law relating to misrep-

resentation or omission of a material fact, conict of inter-

est, licensee competence, handling of trust funds, and im-

proper, fraudulent or dishonest dealing generally apply in-

dependently of other statutory law or case law such as the

law of agency. Nevertheless, other laws may aect the appli-

cation of a License Law provision. For example, the N.C. Ten-

ant Security Deposit Act requires an accounting to a tenant for

a residential security deposit within 30-60 days after termina-

tion of a tenancy. License Law provisions (and Commission

rules) require licensees to account for such funds within a rea-

sonable time. Thus, in this instance, a violation of the Tenant

Security Deposit Act’s provisions would also be considered a

violation of the License Law.

Similarly, the law of agency and the law of contracts as de-

rived from the common law may impact the application of Li-

cense Law. us, a licensee’s agency status and role in a trans-

action might aect the licensee’s duties under the license law.

Examples of how an agent’s duties under the License Law

may be aected by the applica tion of other laws are included

at various points in this section on “Prohibited Acts by Li-

censees.”

Misrepresentation or Omission [G.S. 93A‑6(a)(1)]

Misrepresentation or omission of a material fact by a li-

censee is prohibited, and this prohibition includes both

“willful” and “negligent” acts. A “willful” act is one that is

done intentionally and deliberately, while a “negligent” act

is one that is done unintention al ly. A “misrepresentation”

is commu nicating false information, while an “omission”

is failing to provide or disclose information where there is a

duty to provide or disclose such information.

Material Facts

For purposes of applying G.S. 93A-6(a)(1), whether a

fact is “material” depends on the facts and circum stances

of a particular transaction and the application of statutory

and/or case law. e Commission has historically interpret-

ed “material facts” under the Real Estate License Law to in-

clude at least:

Facts about the property itself (such as a struc tural de-

fect or defective mechanical systems);

Facts relating directly to the property (such as a pend-

ing zoning change or planned highway con struction

in the immediate vicinity); and

Facts relating directly to the ability of the agent’s

principal to complete the transaction (such as a

pending foreclosure sale).

Facts that are known to be of special importance to a

party (such as a buyer wanting the ability to add a pool.)

Regardless of which party in a transaction a real estate agent

represents, the facts described above must be disclosed to both

the agent’s principal and to third parties the agent deals with on

the principal’s behalf. In addition, an agent has a duty to dis-

close to his or her principal any information that may aect the

principal’s rights and interests or inuence the princi pal’s deci-

sion in the transaction.

Death or Serious Illness of Previous Property Oc-

cupant — Note, however, that G.S. 39-50 and 42-14.2

speci cally provide that the fact that a property was occu-

106

North Carolina Real Estate License Law and Commission Rules

pied by a person who died or had a serious illness while oc-

cupying the property is NOT a material fact. us, agents

do not need to voluntarily disclose such a fact. If a prospec-

tive buyer or tenant specically asks about such a matter, the

agent may either decline to answer or respond honestly. If,

however, a prospective buyer or tenant inquires as to wheth-

er a previous owner or occupant had AIDS, the agent is pro-

hibited by fair housing laws from answering such an inqui-

ry because persons with AIDS are considered to be “handi-

capped” under such laws and disclosure of the information

may have the eect of discriminating against the property

owner based on the handicapping condition.

Convicted Sex Oender Occupying, Having Occu-

pied or Residing Near a Property — Note also that the

same North Carolina statutes (G.S. §39-50 and §42-14.2)

that state the death or serious illness of a previous occupant

of a property is not a material fact in a real estate transaction

contain a similar provision relating to convicted sex oend-

ers. e statutes provide that when oering a property for

sale, rent or lease, “…it shall not be a material fact…that a

person convicted of any crime for which registration is re-

quired by Article 27A of Chapter 14 of the General Statutes

[statutes establishing registration programs for sex oenders

and sexually violent predators] occupies, occupied or resides

near the property; provided, however, that no seller [or land-

lord or lessor] may knowingly make a false statement regard-

ing such fact.” erefore, an agent involved in a transaction

is not required to volunteer to a prospective buyer or tenant

any information about registered sex oenders as described

above. If a buyer or tenant specically asks about sex oend-

ers in a neighborhood, an agent need only answer truthfully

to the best of his/her knowledge. In the absence of a specif-

ic inquiry about this matter from the buyer, an agent repre-

senting the buyer who knows, for example, that a registered

sex oender lives in the immediate area, will probably want

to disclose the information in the interest of serving his/her

buyer-client even though not required by law to do so. On

the other hand, in the absence of a specic inquiry by the

buyer, if the agent who knows such information represents

the seller, the agent will probably want to check with his/her

seller-client before disclosing that information since volun-

tary disclosure is likely not in the seller’s best interest. Any

agent also has the option of advising a prospective buyer or

tenant about how to check the statewide sex oender regis-

try online at www.sexoender.ncsbi.gov/search.aspx.

is introductory information should assist in under-

standing G.S. 93A-6(a)(1), which establishes four sepa rate

(although closely related) categories of conduct which are

prohibited. ese are discussed below, and a few examples of

prohibited conduct are provided for each category.

Willful Misrepresentation — is occurs when a licensee

who has “actual knowledge” of a material fact deliber ately mis-

informs a buyer, seller, tenant or landlord concern ing such fact.

Note: e following examples of willful misrepresenta tion

apply regardless of the licensee’s status (seller’s agent or buy-

er’s agent) or role (listing agent or selling agent).

Example: An agent knows that a listed house has a se-

vere problem with water intrusion in the crawl space

during heavy rains. In re sponse to a question from

a prospec tive buyer who is being shown the house

during dry weather, the agent states that there is no

water drainage problem.

Example: An agent knows that the heat pump at a

listed house does not function properly, but tells a

pro spective buyer that all mechanical systems and

applianc es are in good condition.

Example: An agent knows that the approximate mar-

ket value of a house is $225,000, but tells the prop-

erty owner that the house is worth $250,000 in order

to obtain a listing.

Negligent Misrepresentation — is occurs when a li-

censee unin tentionally misinforms a buyer, seller, tenant or

landlord concern ing a material fact either because the licensee

does not have actual knowledge of the fact, because the licensee

has incorrect information, or because of a mistake by the licens-

ee. If a reasonably prudent licensee “should reason ably have

known” the truth of the matter that was misrepresent ed,

then the licensee may be guilty of “negligent misrep resenta-

tion” even though the licensee was acting in good faith.

Negligent misrepresentation by real estate licensees oc-

curs frequently in real estate transactions. A very common

situation is the recording of incor rect information about a

property in an MLS listing due to the negligence of the list-

ing agent. When a prospective buyer is subsequently pro-

vided the incorrect informa tion from the MLS by the agent

working with the buyer, a negligent misrepresentation by

the listing agent occurs.

A listing agent is generally held to a higher standard with

regard to negligent misrepresentation of material facts about a

listed property to a buyer than is a selling agent who is acting

as a seller’s subagent. is is because (1) e listing agent is

in the best position to ascertain facts about the property, (2)

the listing agent is expected to take reasonable steps to assure

that property data included with the listing is correct and

(3) it is generally considered reasonable for a selling agent to

rely on the accuracy of the listing data except in those situ-

ations where it should be obvious to a reasonably prudent

agent that the listing information is incorrect. However, a

buyer’s agent may in some cases be held to a higher standard

than a seller’s subagent because of the buyer’s agent’s duties to

the buyer under the law of agency and the buyer’s agent’s special

knowl edge of the buyer’s particular situation and needs.

Example: An agent has previously sold several lots in

a subdivision under development and all those lots

passed a soil suitability test for an on-site septic sys-

tem. e agent then sells Lot 35 without checking

as to wheth er this lot satises the soil test; however,

the agent informs the buyer that Lot 35 will support

107

North Carolina Real Estate License Law and Commission Rules

an on-site septic system when in fact the contrary is

true. (While the agent’s conduct may not rise to the

level of willful disregard for the truth of the matter,

the agent was at least negligent in not checking the

soil test result on Lot 35 and is therefore guilty of

negligent misrepre senta tion. is result is not aect-

ed by the agent’s agency status or role in the trans-

action.)

Example: An owner tells a listing agent with ABC

Realty that his house has 1850 heated square feet.

Without verifying the square footage, the agent re-

cords 1850 square feet on the listing form and in

the listing information published in the local MLS.

e house is subsequently sold by a sales agent with

XYZ Realty who tells the buyer that ac cording to the

MLS data, the house has 1850 square feet. e buyer

later discovers that the house actually has only 1750

square feet. e listing agent is guilty of a negli gent

misrep resentation. Although the selling agent direct-

ly communicated the incorrect infor mation to the

buyer, he/she probably acted reason ably in relying on

the data in MLS. In this case, if the selling agent had

no rea son to doubt the MLS data, the selling agent

is not guilty of a negli gent misrepresenta tion. Note,

how ever, that if the square footage discrep ancy had

been suciently large that a reason ably prudent sell-

ing agent should have known the listed data was in-

correct, then the selling agent would also have been

guilty of negligent misrepresenta tion. e result in

this partic ular example is not aected by the sell-

ing agent’s agency status (seller’s subagent or buyer’s

agent), although this might be a factor in other situa-

tions.

Willful Omission — is occurs when a licensee has “ac-

tual knowledge” of a material fact and a duty to disclose such

fact to a buyer, seller, tenant, or landlord, but deliberately fails

to disclose such fact.

Example: An agent knows that a zoning change is

pending that would adversely aect the value of a

listed property, but fails to dis close such information

to a prospective buyer. e agent has commit ted a

willful omission regardless of the agent’s agency sta-

tus or role in the transaction.

Example: An agent knows that a listed house has a ma-

jor defect (e.g., crumbling foundation, no insulation,

malfunctioning septic tank, leaking roof, termite in-

festation, or some other problem) but fails to disclose

such information to a prospective buyer. e agent

has commit ted a willful omission and this result is

not aected by the agent’s agency sta tus or role in the

transaction.

Example: A selling agent working with a buyer as a

subagent of the seller learns that the buyer is will-

ing to pay more than the price in the buyer’s oer,

but fails to disclose this information to the seller (or

listing agent) when presenting the oer. e selling

agent has committed a willful omission. If, however,

the selling agent were acting as a buyer’s agent, then

the result would be dierent because the agent does

not repre sent the seller and has a duty not to dis-

close to the seller condential buyer information that

would be harmful to the buyer’s interest.

Example: A bu y er’s agent be c o mes aware that the seller

with whom his buyer is negotiat ing is under pressure

to sell quickly and may accept much less than the list-

ing price. Believing such information should always be

kept con dential, the buyer’s agent does not pro vide

the buyer with this infor mation. e buyer’s agent is

guilty of a willful omission. An agent must disclose to

his/her principal any infor mation that might aect the

principal’s decision in the trans action.

Example: Suppose in the immediately preceding exam-

ple that the seller’s property is listed with the rm of

the buyer’s agent where it repre sents both the seller

and the buyer. In this situation, the buyer’s agent

would not be considered to have committed a willful

omission under the License Law by not disclosing

the infor mation about the seller’s personal situation

to the buyer.

Negligent Omission — is occurs when a licensee does

NOT have actual knowledge of a material fact and consequent-

ly does not disclose the fact, but a reasonably prudent licensee

“should reasonably have known” of such fact. In this case, the

licensee may be guilty of “negligent omission” if he/she fails

to disclose this fact to a buyer, seller, tenant or land lord, even

though the licensee acted in good faith in the transac tion.

e prohibition against negligent omission creates a

“duty to discover and disclose” material facts which a reason-

ably prudent licensee would typically have discov ered in the

course of the transaction. A listing agent is typically in a much

better position than a selling agent to discover material facts

relating to a listed property and thus, will be held to a higher

standard than will a selling agent acting as a seller’s subagent.

On the other hand, a buyer’s agent in some circumstances may

be held to a higher standard than a seller’s sub agent because of

the buyer’s agent’s duties to the buyer under the law of agen-

cy, particularly if the buyer’s agent is aware of a buyer’s special

needs with regard to a property. Again we see how the agency

relationships between agents and principals to a transaction

and the licensee’s role in the transaction can aect a licens-

ee’s duties and responsibilities under the License Law.

Instances of negligent omission occur much less fre-

quently than instances of negligent misrepresenta tion. is

is because most facts about a listed property are recorded

on a detailed property data sheet from which information

is taken for inclusion in MLS listings. If incorrect informa-

tion taken from an MLS listing is passed on to a prospective

purchaser, then a “misrepresentation,” rather than an “omis-

sion,” has occurred. Nevertheless, there are examples of neg-

ligent omission which can be cited.

108

North Carolina Real Estate License Law and Commission Rules

Example: A listing agent lists for sale a house located

adjacent to a street that is about to be widened into

a major thoroughfare. e thoroughfare project has

been very contro versial and highly publicized. e

city recently nalized its decision to proceed with the

project and the plans for the street widening are re-

corded in the city planner’s oce. A buyer, working

with a selling agent, makes an oer to buy the house.

e listing agent does not disclose the street widening

plans to the buyer or selling agent and claims later that

he/she was not aware of the plans. In this situation,

both the listing and selling agents are probably guilty

of negli gent omission because each “should reason-

ably have known” of the street widening plans, clear ly

a material fact, and should have dis closed this fact to

the buy er. is result is not aected by whether the

selling agent is a buyer agent or seller’s subagent.

Example: A seller has a 30,000 square foot commer cial

property for sale which cannot be expanded under

local zoning laws. e buyer is looking for property

in the 25,000 - 30,000 square foot range, but has

told his buyer’s agent that he needs a property where

he can expand to 50,000 square feet or more in the

future. e seller does not think to advise the buyer’s

agent that the property cannot be expanded, and the

buyer’s agent makes no inquiry about it although

he is aware of the buyer’s special needs. If the buyer

purchases the property without knowing about the

restriction on expansion, the buyer’s agent is guilty

of a negligent omission for failing to discover and

disclose a special circumstance that the agent knew

was especially important to his/her client.

Making False Promises [G.S. 93A‑6(a)(2)]

Real estate brokers are prohibited from “making any

false promises of a character likely to inuence, persuade or

induce.” e promise may relate to any matter which might

inu ence, persuade or induce a person to per form some act

he/she might not otherwise perform.

Example: An agent promises a prospective apartment

tenant that the apartment will be repainted before the

tenant moves in. e agent then fails to have the work

done after the lease is signed.

Example: An agent promises a property owner that

if he/she lists his/her house for sale with the agent’s

rm, then the rm will steam-clean all the carpets

and wash all the windows. e rm then fails to have

the work done after the listing contract is signed.

Other Misrepresentations [G.S. 93A‑6(a)(3)]

Real estate brokers are prohibited from pursuing a course

of misrepresentation (or making of false promises) through

other agents or salespersons or through advertising or oth-

er means.

Example: In marketing subdivision lots for a develop-

er, a broker regularly advertises that the lots for sale

are suitable for residential use when in fact the lots

will not pass a soil suitability test for on-site sewage

systems.

Example: A broker is marketing a new condominium

complex which is under construction. Acting with the

full knowledge and consent of the broker, the broker’s

agents regularly inform prospective buyers that units

will be available for occupancy on June 1, when in fact

the units won’t be available until at least September 1.

Conict of Interest [G.S. 93A‑6(a)(4) and (6); Rule

A.0104(d)] and (i)

Undisclosed Dual Agency. G.S. 93A-6(a)(4) prohib-

its a real estate agent from “acting for more than one party in

a transac tion with out the knowledge of all parties for whom he

or she acts.” Commis sion Rule A.0104(d) and (i) takes this

a step further by provid ing that a broker or brokerage rm

representing one party in a transaction shall not under take

to represent another party in the transaction without the ex-

press written authority (i.e., authoriza tion of dual agency)

of each party (subject to one exception, explained as part of

the dual agency discussion in the “General Brokerage Provi-

sions” section). A typical violation of this provision occurs

when the agent has only one principal in a transaction but

acts in a manner which benets another party without the

principal’s knowl edge. In such a situation, the agent violates

the duty of loyalty and consent owed to his principal.

Example: A house is listed with Firm X. When show ing

the house to a prospective buyer not represented by

Firm X, an agent of Firm X advises the buyer to oer

substantially less than the listing price because the

seller must move soon and is very anxious to sell the

property fast. e agent and Firm X are contractu-

ally obligated to repre sent only the seller. By advising

the pro spective buyer as indi cated in this ex ample,

the agent is acting to benet the buyer without the

seller’s know ledge and con sent. is act violates both

the License Law and the Law of Agen cy.

Example: An agent with Firm Y assists her sister in pur-

chas ing a house listed with Firm X without advising

Firm X or the seller of her relationship with the buy-

er. e agent is “ocially” acting as a subagent of the

seller in the transaction. In this situa tion, there is an

inherent conict of interest on the part of the agent.

If the agent does not dis close her relation ships to

both parties, then the agent violates both the License

Law and Law of Agency. In fact, since her allegiance

lies with her sister, the agent should instead act as a

buyer’s agent from the outset. e same would be

true if the buyer were a close friend or business asso-

ci ate of the agent, or in any way en joyed a special

relation ship to the agent which would clearly inu-

ence the agent to act in behalf of the buyer rather

than the seller.

Self-dealing. G.S. 93A-6(a)(4) also prohibits any

“self-dealing” on the part of an agent. For example, if an

agent attempts to make a secret prot in a transac tion where

109

North Carolina Real Estate License Law and Commission Rules

he is sup posed to be representing a princi pal, then the agent

violates this “conict of interest” provi sion.

Example: An agent lists a parcel of undeveloped

proper ty which is zoned for single-family residential

use. e agent knows that this property is about to

be rezoned for multi-fa mily residential use, which

will greatly increase the property’s value. Rather than

informing the seller of this fact, the agent oers to

buy the property at the listed price, telling the seller

that he wants to acquire the property as a long-term

invest ment. e deal closes. Several months later, af-

ter the rezoning has been accomplished, the agent

sells the property at a substan tial prot.

Representing Another Broker without Consent. G.S.

93A-6(a)(6) prohibits a licensee from “representing or at-

tempting to represent a real estate broker other than the bro-

ker by whom he or she is engaged or associated, without the

ex press knowl edge and con sent of the broker with whom he

or she is associated.” While brokers may work for or be asso-

ciated with more than one real estate company at the same

time, so long as they have the express consent of all brokers-

in-charge, provisional brokers may never engage in broker-

age activities for more than one company at a time.

Improper Brokerage Commission [G.S. 93A‑6(a)(5)

and (9)]

A broker may NOT pay a commission or valuable con-

sideration to any person for acts or servic es performed in vi-

olation of the License Law. [G.S. 93A-6(a)(9)] is provision

atly prohibits a broker from paying an unlicensed person for

acts which require a real estate license. Following are examples

of prohibited payments:

Example: e payment by brokers of commissions to

previously licensed sales associates who failed to prop-

erly renew their licenses for any acts performed after

their licenses had expired. Note that payment could

properly be made for commissions earned while the

license was on active status, even if the license is inac-

tive or expired at time of payment. e determining

factor is whether the license was on active status at

the time all services were rendered which generated

the commission.

Example: e payment of a commission, salary or fee

by brokers to unlicensed employees or independent

contractors (e.g., secretaries, “trainees” who haven’t

passed the license examination, etc.) for performing

acts or services requiring a real estate license.

Example: e payment by licensees of a “nder’s fee,”

“referral fee,” “bird dog fee,” or any other valuable

consideration to unli censed persons who nd, intro-

duce, or bring together parties to a real estate trans-

ac tion. is is true even if the ultimate consumma-

tion of the transaction is accom plished by a licensee

and even if the act is performed without expecta-

tion of compensation. us, a licensee may NOT

compensate a friend, relative, former client or any

other unlicensed person for “refer ring” a prospec tive

buyer, seller, landlord or tenant to such licensee. is

prohibition ex tends to “owner referral” programs at

condominium or time share complexes and “tenant

referral” programs at apartment complexes.

In addition, a provisional broker may NOT accept any

compensation for brokerage services from anyone other

than his employing broker or broker age rm. Conse quently,

a broker may not pay a com mission or fee directly to a provi-

sional broker of another broker or rm. Any such payment must

be made through the provisional broker’s employing broker or

rm. [G.S. 93A-6(a)(5)]

Note: See also the discussion of Rules A.0109 and A.0120

on “Brokerage Fees and Compensation” under the subsequent

section titled “General Brokerage Provisions.”

Unworthiness and Incompetence [G.S. 93A‑6(a)(8)]

is broad provision authorizes the Real Estate Com-

mission to discipline any licensee who, based on his or her

conduct and consideration of the public interest, is found to

be unworthy or incompetent to work in the real estate busi-

ness. A wide range of conduct may serve as the basis for a

nding of unworthiness or incompetence, including con-

duct which violates other specic provi sions of the License

Law or Commission rules. Here are a few examples of im-

proper conduct which do not specically violate another Li-

cense Law provision but which might support a nding of

unwor thiness or incompetence.

1. Failure to properly complete (ll in) real estate con-

tracts or to use contract forms which are legally ad-

equate.

2. Failure to diligently perform the servic es required un-

der listing con tracts or property manage ment con-

tracts.

3. Failure to provide accurate in come/expense reports to

property owners.

Improper Dealing [G.S. 93A‑6(a)(10)]

is broad provision prohibits a real estate licensee from

engaging in “any other conduct [not specically prohib ited

elsewhere in the License Law] which consti tutes improper,

fraudulent or dishonest dealing.” e deter mination as to

whether particular conduct consti tutes “improper, fraudu-

lent or dishonest dealing” is made by the Real Estate Com-

mission on a case-by-case basis. erefore, a broad range of

con duct might be found objectionable under this provision,

depending on the facts in a case.

One category of conduct which violates this provision is

any breach of the duty to exercise skill, care, and diligence

in behalf of a client under the Law of Agency. (Note that

other breaches of Agency Law duties constituting either a

“misrepre sentation or omission,” a “conict of interest” or a

“failure to properly account for trust funds” are covered by

other specic statutory provisions.)

Another category of conduct which violates this provi-

sion is any violation of the State Fair Housing Act. is is

mentioned separately under the “Discriminatory Practices”

110

North Carolina Real Estate License Law and Commission Rules

heading.

Example: An agent assists a prospective buyer in per-

petrating a fraud in connection with a mortgage

loan application by preparing two contracts — one

with false information for submission to the lending

institu tion, and another which represents the actual

agree ment between seller and buyer. (is prac tice is

commonly referred to as “dual con tracting” or “con-

tract kiting.”)

Example: A broker lists a property for sale and agrees

in the listing contract to place the listing in the local

MLS, to advertise the property for sale, and to use his

best eorts in good faith to nd a buyer. e broker

places a “For Sale” sign on the property, but fails to

place the property in the MLS for more than 30 days

and fails to otherwise adver tise the property during

the listing period. (e broker has failed to exercise

reason able skill, care and diligence in behalf of his

client as required by the listing contract and the Law

of Agen cy.)

Example: An agent is aware that the owners of a house

listed with his company are out of town for the week-

end, yet the agent gives a prospective buyer the house

keys and allows such prospect to look at the listed

house without accompanying the prospect. (e

agent has failed to exercise reasonable skill, care and

dili gence in behalf of his client.)

Discriminatory Practices [G.S. 93A‑6(a)(10); Rules

A.1601 and A.0120]

Any conduct by a licensee that violates the provisions of

the State Fair Housing Act is consid ered by the Commis-

sion to constitute “improper conduct” and to be a violation

of the License Law.

Additionally, a licensee shall not conduct brokerage ac-

tivities or otherwise promote their status as a real estate bro-

ker in any manner that discriminates on the basis of race,

color, religion, national origin, sex, familial status, or dis-

ability.

Practice of Law [G.S. 93A‑4(e); G.S. 93A‑6(a)(11); Rule

A.0111]

Real estate licensees may not perform for others any legal

service described in G.S. 84-2.1 or any other legal service.

Following are several examples of real estate-related legal ser-

vices which licensees may NOT provide.

1. Drafting legal documents such as deeds, deeds of

trust, leases and real estate sales contracts for others.

Al though licensees may “ll in” or “com plete” pre-

printed real es tate contract forms which have been

drafted by an attor ney, they may NOT under any

circum stances complete or ll in deed or deed of

trust forms.

2. Abstracting or rendering an opinion on legal title to

real property.

3. Providing “legal advice” of any na ture to clients and

customers, includ ing advice concerning the nature of

any interest in real estate or the means of holding

title to real estate. (Note: Although provid ing advice

con cerning the legal ramications of a real estate

sales contract is prohibit ed, merely “explaining” the

provi sions of such a con tract is not only accept able,

but highly recommend ed.)

Violating any Commission Rule [G.S. 93A‑6‑(a)(15)]

e law also has a “catch-all” provision that subjects a li-

censee to disciplinary action for violating any rule adopted

by the Commission.

Note: e provisions of G.S. 93A-6(a)(12)-(14) are ad-

dressed elsewhere in these “Comments” under the “General

Brokerage Provisions” section.

Other Prohibited Acts [G.S. 93A‑6(b)]

In addition to those prohibited acts previously dis cussed,

G.S. 93A-6(b) prescribes several other specic grounds for

disciplinary action by the Commission, including:

1. Where a licensee has obtained a li cense by false or

fraudulent representation (e.g., falsifying documen-

ta tion of prelicens ing education, failing to disclose

prior crimi nal convictions, etc.).

2. Where a licensee has been convicted of, or pled guilty

or no contest to, a number of listed misdemeanors

or felonies plus any other oense that shows pro-

fessional untness or involves moral turpitude that

would reasonably aect the licensee’s performance in

the real estate business.

3. Where a broker’s unlicensed employee, who is ex-

empt from licensing under G.S. 93A-2(c)(6) (prop-

erty management exception), has committed an

act which, if committed by the broker, would have

consti tuted a violation of G.S. 93A-6(a) for which

the broker could be disciplined.

4. Where a licensee who is also licensed as an appraiser,

attorney, home inspector, mortgage broker, general

contractor, or another licensed profession or occupa-

tion has been disciplined for an oense under any

law involving fraud, theft, misrepresentation, breach

of trust or duciary responsibility, or willful or negli-

gent malpractice..

Lastly, be aware that under (b)(3), licensees may be dis-

ciplined for violating any of the 15 provisions under subsec-

tion (a) when selling, buying, or leasing their own property.

GENERAL BROKERAGE PROVISIONS

iscussed below are selected Commission rules relat-

ed to general brokerage.

Agency Agreements and Disclosure [G.S. 93A‑13 and

Rule A.0104

Provided below is a brief summary of the various provi-

sions of the Commission’s rule regarding agency agreements

and disclosure. For a much more in-depth discussion of this

rule and its application, the reader is referred to the Commis-

111

North Carolina Real Estate License Law and Commission Rules

sion’s North Carolina Real Estate Manual.

Agency Agreements. G.S. 93A-13 and Rule A.0104(a)

requires all agency agreements for brokerage services (in both

sales and lease transactions) to be in writing and signed by the

parties thereto. Rule A .0104(a):

• Requires agency agreements with property owners

(both sellers and lessors) of any type of property to be

in writing prior to the broker providing any services;

• Allows an express oral buyer/tenant agency agree-

ment from the outset of the relationship, but the agree-

ment must be reduced to writing no later than the time

any party to the transaction makes an oer. As a practi-

cal matter, this oral agreement needs to address all key

aspects of the relationship, including agent compensa-

tion, authorization for dual agency, etc.

(Note: A buyer/tenant agency agreement must be

in writing from the outset if it seeks to limit the buyer/

tenant’s right to work with other agents or binds the

client to the agent for any denite time period. In

other words, an oral buyer/tenant agency agreement

must be “non-exclusive” and must be for an indenite

period and terminable by the client at any time.)

Further, every written agency agreement of any kind

must also:

• Provide for its existence for a denite period of time

and terminate without prior notice at the expira-

tion of that period. [Exception: an agency agreement

between a broker and a landlord to procure tenants

for the landlord’s property may allow for automatic

renewal so long as the landlord may terminate with

notice at the end of any contract or renewal period.]

• Contain the Rule A.0104(b) non-discrimination (fair

housing) provision, namely: “e broker shall con-

duct all brokerage activities in regard to this agree-

ment without respect to the race, color, religion, sex,

national origin, handicap or familial status of any

party or prospective party.” (is provision must be

set forth in a clear and conspicuous manner which

shall distinguish it from other provisions of the agen-

cy agreement.)

• Include the license number of the individual licensee who

signs the agreement.

Allowing an agent to work with a buyer under an express

oral buyer agency agreement is intended to address the prob-

lem of buyers being reluctant to sign a written buyer agen-

cy agreement at the outset of their relationship with a buy-

er agent. e idea underlying this approach is to allow an

agent to work temporarily with a prospective buyer as a buy-

er’s agent under an oral agreement while the agent establish-

es a rapport with the buyer that makes the buyer feel more

comfortable with signing a written buyer agency agreement.

Although the rule allows oral buyer/tenant agency agree-

ments until the point in time when any party is ready to make

an oer, it nevertheless is highly advisable that agents have

such agreements reduced to writing and signed by the buyer/

tenant at the earliest possible time in order to avoid misun-

derstanding and conict between the buyer/tenant and agent.

Recall also that the agent must obtain a written buyer/tenant

agency agreement from the client not later than the time ei-

ther party to the transaction extends an oer to the other. In

practice, this means the buyer agent should reduce the agen-

cy agreement to writing rst, then write up an oer, in order

to ensure that no oer is made to a seller without having the

written agency agreement completed.

If the buyer will not sign a written buyer agency agree-

ment prior to making or receiving an oer, then the agent

may not continue to work with the buyer as a buyer’s agent.

Moreover, the agent may not begin at this point to work with

the buyer as a seller’s subagent unless the agent (1) fully ad-

vises the buyer of the consequences of the agent switching

from buyer’s agent to seller’s agent (including the fact that

the agent would have to disclose to the seller any informa-

tion, including “condential” information about the buyer,

that might inuence the seller’s decision in the transaction),

(2) obtains the buyer’s consent, and (3) obtains the consent

of the seller and listing rm, which is the seller’s agent. e

foregoing applies equally to brokers working with tenants as

a tenant agent.

Agency Disclosure Requirement. While Rule

A.0104(a) requires all agency agreements, whether for lease

or sales transactions, to be in writing, the Rule A.0104(c)

agency disclosure requirement applies only to sales transactions.

It requires licensees to provide prospective buyers and sellers, at

“rst substantial contact,” with a copy of the Working with

Real Estate Agents disclosure, to review the disclosure with

them and then reach an agreement regarding their agency re-

lationship. e licensee providing the disclosure should also

include his/her name and license number on the form. Note

that the obligation under this rule is not satised merely by

handing the prospective seller or buyer the form to read.

e agent is required to review the contents with the pro-

spective buyer or seller and then reach agreement with the

prospective buyer or seller as to whether the agent will work

with the buyer or seller as his/her agent or as the agent of

the other party.

In the case of a prospective seller, the agent may either

(1) act as the seller’s agent, which is the typical situation and

requires a written agreement from the outset of their rela-

tionship, or (2) work with the seller as a buyer’s agent if the

agent already represents a prospective buyer.

In the case of a prospective buyer, the agent may either

(1) act as the buyer’s agent under either an oral or written

agreement as addressed in Rule A.0104(a), or (2) work with

the buyer as a seller’s agent, disclosure of which must be in

writing from the outset.

Disclosure of Agency Status by Sellers’ Agents and

Subagents to Prospective Buyers: Paragraph (e) of Rule

A.0104, like paragraph (c), requires a seller’s agent or sub-

112

North Carolina Real Estate License Law and Commission Rules

agent in sales transactions to disclose his/her agency status

in writing to a prospective buyer at the “rst substantial con-

tact” with the buyer. It is recommended that sellers’ agents

make this required written disclosure using the form pro-

vided for this purpose in the Working with Real Estate Agents

disclosure that must be provided to buyers (as well as to sell-

ers) at rst substantial contact. is form has a place for the

buyer to acknowledge receipt. e disclosure may, howev-

er, also be made using a dierent form — the most impor-

tant point is that the disclosure be made in writing in a timely

manner. e reason for this requirement is that buyers tend

to assume that an agent they contact to work with them in

locating a property for purchase is “their” agent and work-

ing primarily in their interest. is may or may not be the

case in reality. e purpose of the disclosure requirement is to

place prospective buyers on notice that the agent they are deal-

ing with is NOT “their” agent before the prospective buyer dis-

closes to the agent information which the buyer would not want

a seller to know because it might compromise the buyer’s bar-

gaining position.

Most frequently, “rst substantial contact” will occur

at the rst “face-to-face” meeting with a prospective buyer.

However, the point in time that “rst substantial contact”

with a prospective buyer occurs will vary depending on the

particular situation and may or may not be at the time of

the rst or initial contact with the prospective buyer. Many

rst contacts are by telephone and do not involve discus-

sions which reach the level that would require disclosure,

although some initial phone contacts, especially those with

out-of-town buyers, could reach this level.

“First substantial contact” occurs at the point in time when

a discussion with a prospective buyer begins to focus on the buy-

er’s specic property needs and desires or on the buyer’s nan-

cial situation. Typically, that point in time is reached when

the agent is ready to solicit information from the prospec-

tive buyer that is needed to identify prospective properties

to show the buyer. erefore, an agent planning to work with

a prospective buyer as a seller’s agent or subagent should assure

that disclosure of his/her agency status is made in writing to the

prospective buyer prior to obtaining from the prospective buyer

any personal or condential information that the buyer would

not want a seller to know.

A few examples of such personal or condential infor-

mation include: e maximum price a buyer is willing to pay

for a property; the buyer’s ability to pay more than the price of-

fered by the buyer; or the fact that a buyer has a special interest

in purchasing the seller’s property rather than some other simi-

lar property. In any event, the disclosure must be made pri-

or to discussing with the prospective buyer his/her specif-

ic needs or desires regarding the purchase of a property. As

a practical matter, this means the disclosure will always need

to be made prior to showing a property to a prospective buyer.

e best policy is to simply make the disclosure at the earli-

est possible time.

If rst substantial contact occurs by telephone or by

means of other electronic communication where it is not

practical to provide written disclosure, the agent shall im-

mediately disclose by similar means whom he/she represents

and shall immediately, but in no event later than three days

from the date of rst substantial contact, mail or otherwise

transmit a copy of the written disclosure to the buyer.

Disclosure of Agency Status by Buyers’ Agents to Sell-

ers or Sellers’ Agents. Paragraph (f) of Rule A.0104 requires

a buyer’s agent to disclose his/her agency status to a seller or

seller’s agent at the “initial contact” with the seller or sell-

er’s agent. “Initial contact” will typically occur when a buy-

er’s agent telephones or otherwise contacts the listing rm

to schedule a showing. e initial disclosure may be oral,

but a written conrmation of the previous oral disclosure

must be made (except in auction sale transactions) no lat-

er than the time of delivery of an oer to purchase. e

written conrmation may be (and usually is) included in

the oer to purchase. In fact, Commission Rule A.0112(a)

(19) requires that any preprinted oer to purchase and con-

tract form used by an agent include a provision providing

for conrmation of agency status by each real estate agent

(and rm) involved in the transaction.

Consent to Dual Agency. Paragraph (d) of Rule A.0104

requires generally that an agent must obtain the written au-

thority of all parties prior to undertaking to represent those

parties as a dual agent. It is important to note that this re-

quirement applies to all real estate transactions (sales and

lease/rentals), not just sales transactions. [In sales transac-

tions, this written authority to act as a dual agent is usually

included in the listing and buyer agency contracts. If those

contracts do not grant such authority, then the agent must

have both the seller and buyer consent to the dual agency

prior to beginning to act as a dual agent for both parties.]

Paragraph (d) of Rule A.0104 currently requires written

authority for dual agency from the formation of the relation-

ship except situations where a buyer/tenant is represented by an

agent working under an oral agency agreement as permitted

by A.0104(a), in which case written authority for dual agency

must be obtained no later than the time one of the parties rep-

resented by the agent working as a dual agent makes an oer

to purchase, sell, rent, lease, or exchange real estate to the oth-

er party. us, it is permissible for the agent to operate for a

limited period of time under an oral dual agency agreement.

It is very important to remember that G.S. 93A-6(a)(4) still

requires agents to obtain the consent of all parties prior to

beginning to act as a dual agent for those parties. erefore,

it is essential that agents electing to operate as a dual agent

for a limited period of time without obtaining this authority

in writing still explain fully the consequences of their acting

as a dual agent and obtain the parties’ oral consent.

As a practical matter in sales transactions, agents will fre-

quently have already obtained written authority to act as a

dual agent for in-house sales transactions at the time the ini-

tial written listing or buyer agency agreement is executed.

However, under Paragraph (a) of Rule A.0104, many buyer’s

113

North Carolina Real Estate License Law and Commission Rules

agents may elect to work with their buyer clients for a peri-

od of time under an oral buyer agency agreement. Paragraph

(d) permits such buyer’s agents to also operate for a limited

period of time as a dual agent under an oral agreement in or-

der to deal with situations where a buyer client is interested

in a property listed with the agent’s rm. Note that, although

an oral dual agency agreement for a limited period of time is

permitted by Commission rules, it is strongly recommended that

agents have any dual agency agreement in writing from the out-

set of the dual agency arrangement. is will provide the agent

with some evidence that the matter of dual agency was dis-

cussed with the parties and that they consented to it. Such

evidence could prove quite useful if a party later asserts that

the agent did not obtain their consent for dual agency in a

timely manner.

Auction Sales Exemption. Paragraph (g) of Rule A.0104

provides that the provisions of Paragraphs (c), (d) and (e) of

the Rule shall not apply to real estate licensees represent-

ing sellers in auction sales transactions. Note that in auction

sales, the real estate agents involved almost invariably work

only as seller’s agents and this fact is considered to be self-ev-

ident. us, there is no need for agents to distribute and re-

view the Working with Real Estate Agents brochure, no need

for disclosure of agency status by the seller’s agents, and no

dual agency. For the unusual situation where a buyer may be

represented by an agent in an auction sale transaction, Para-

graph (h) of Rule A.0104 provides that such a buyer’s agent

shall, no later than the time of execution of a written agree-

ment memorializing the buyer’s contract to purchase, pro-

vide the seller or seller’s agent with a written conrmation

that he/she represents the buyer.

Dual Agency Status of Firm. Paragraph (i) of Rule

A.0104 codies in the Commission’s rules the common law

rule that a rm which represents more than one party in the same

real estate sales transaction is a dual agent, and further states that

the rm, through the brokers aliated with the rm, shall dis-

close its dual agency to the parties. In other words, dual agen-

cy is not limited to those situations where an individual agent

is working with both a buyer client and seller client (or lessor

and commercial tenant) in the same transaction. If one agent

of a rm is working with a buyer client of the rm and an-

other agent of the same rm is working with a seller client of

the rm in a transaction involving the sale of the seller client’s

property to the buyer client, then the rm is a dual agent (as

it holds both agency agreements). However, a rm functions

through its employees, namely, its associated agents; thus, un-

der the common law, whenever the rm is a dual agent of cer-

tain parties in a transaction, all licensees aliated with that

rm are also dual agents of those parties in that transaction.

Designated Agency. Paragraphs (j) - (m) of Rule A.0104

authorize real estate rms to engage in a form of dual agen-

cy practice referred to in the rule as “designated agency” in

certain sales transactions involving in-house dual agency.

“Designated agency involves appointing or “designating” an in-

dividual agent(s) in a rm to represent only the interests of the

seller and another individual agent(s) to represent only the in-

terests of the buyer when a rm has an in-house dual agency sit-

uation.

e principal advantage of the designated agency ap-

proach over the “standard” dual agency approach is that

each of a rm’s clients (seller and buyer) receive fuller repre-

sentation by their designated agent. In the typical dual agen-

cy situation, client advocacy is essentially lost because the

dual agent may not seek an advantage for (i.e., “advocate”

for) one client to the detriment of the other client. e dual

agent must remain completely neutral and impartial at all

times. Designated agency returns “advocacy” to the servic-

es provided by the respective designated agents and allows

them to more fully represent their respective clients.

Authority to practice designated agency must be in writ-

ing no later than the time a written dual agency agreement is

required under A.0104(d). Additional required procedures

for practicing designated agency are clearly spelled out in

Paragraphs (j) - (m) and are not discussed further here. For

more detailed coverage of dual and designated agency, the

reader is once again referred to the Commission’s North Car-

olina Real Estate Manual.

Dual Agency by Individual Agent. Paragraph (n) of

Rule A.0104 authorizes individual agents representing both

the buyer and seller in the same real estate sales transaction

pursuant to a written dual agency agreement to include in

the agreement a provision authorizing the agent not to dis-

close certain “condential” information about one party to

the other party without permission from the party about

whom the information pertains. is provision is intend-

ed to allow individual dual agents to treat condential in-

formation about their clients in a manner similar to that al-

lowed for rms practicing designated agency.

Brokers As Parties to Transactions. ere is an inher-

ent conict of interest presented by a broker representing

the very party against whom the broker, as an interested par-

ty, is negotiating. Paragraph (o) of Rule A.0104 prohibits a

broker who is selling property in which the broker has an

ownership interest from representing a buyer of the proper-

ty. Except that a broker who is selling commercial real estate,

as dened in Rule .1802 of this Subchapter, in which the

broker has less than 25% ownership interest may represent

a buyer of that property if the buyer consents to the repre-

sentation after full written disclosure of the broker’s owner-

ship interest. However, a rm listing a property owned by

a broker aliated with the rm may represent a buyer of

that property so long as the individual broker representing

the buyer does not have an ownership interest in the prop-

erty and the buyer consents to the representation after full

disclosure. Paragraph (p) of Rule A.0104 prohibits a list-

ing broker or rm from purchasing a property listed by that

broker or rm unless they rst disclose to the seller in writ-

ing that a potential conict of interest exists and that the

seller may want to seek independent counsel. Prior to the

listing broker entering into a purchase contract, the individ-

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North Carolina Real Estate License Law and Commission Rules

ual listing broker and rm must either terminate the listing

agreement or transfer the listing to another broker in the

rm. Prior to the rm entering into a purchase contract, the

listing broker and rm must disclose to the seller in writ-

ing that the seller has the right to terminate the listing. e

broker or rm must terminate the listing upon the request

of the seller.

Broker Name and Address [Rule A.0103]

A broker must notify the Commission in writing (may

include online) within 10 days of each change in personal

name, rm name, trade name, residence address and rm

address, telephone number, and email address.

If a broker intends to advertise in any manner using a

rm name or assumed name which does not set forth the

surname of the broker, the broker must rst le an assumed

name certicate in compliance with GS 66-71.4 and must

also notify the Commission of the use of such rm name or

assumed name. For individuals and partnerships, a name

is “assumed” when it does not include the surname of the

licensee(s). For a rm required to be registered with the

Secretary of State, a name is “assumed” when it is dier-

ent from the rm’s legal name as registered with the Sec-

retary of State. Note: most franchisees operate under as-

sumed names. An Assumed Name certicate can be led in

the Register of Deeds oce for uploading to the statewide

database maintained by the Secretary of State.

A licensee operating as a sole proprietorship, partnership

or business entity other than a corporation or limited liabili-

ty company may NOT include in its legal or assumed name

the name of an unlicensed person or a provisional broker.

A broker who proposes to use a business name that in-

cludes the name of another active, inactive or cancelled bro-

ker must have the permission of that broker or his or her au-

thorized representative. is rule provision is intended to

prohibit a broker or rm from using without proper autho-

rization the name of some other broker or former broker

who is not currently associated with the broker or rm, such

as a former associate or a deceased broker.

Advertising [Rule A.0105]

A licensee must have the proper authority to advertise. A

broker may not advertise or display a “for sale” or “for rent”

sign on a property without the written consent of the owner

or the owner’s authorized agent. A broker may not advertise

any brokerage service for another without the consent of his

or her broker-in-charge and without including in any adver-

tisement the name of the rm or sole proprietorship with

which the broker is associated.

e rule also prohibits any advertisement by a licensee

that indicates an oer to sell, buy, exchange, rent or lease

real property is being made by the licensee’s principal with-

out the involvement of a broker – i.e., a “blind ad.” All ad-

vertising by a licensee must indicate that it is the advertisement

of a broker or brokerage rm.

Delivery of Instruments [G.S. 93A‑6(a); Rule A.0106]

Among other things, this rule, which implements G.S.

93A-6(a)(13), requires agents to deliver to their customer or cli-

ent copies of any required written agency agreement, contract,

oer, lease, rental agreement, option or other related transac-

tion document within three days of the broker’s receipt of the

executed document. Regarding oers, this does NOT mean

that agents may in every case wait up to three days to pres-

ent an oer to a seller. Rather, it means that an agent must,

as soon as possible, present to the seller any oer re ceived by

the agent. If the agent is the “selling agent,” then the oer

should be immediately presented to the “listing agent” who

should, in turn, immediately present the oer to the seller.

e “three-day” provision is included only to allow for situa-

tions where the seller is not immediately available (e.g., sell-

er is out of town), and repre sents an outside time limit with-

in which oers must always be presented. In all cases where

the seller is available, the oer should be presented as soon

as possible.

e same rule also means that a prospective buyer who

signs an oer must immediately be provided a copy of such

oer. (A photo copy is acceptable for this pur pose.) Do NOT

wait until after the oer is accepted (or rejected) by the seller.

In addition, this rule means that an oer must be imme-

diately presented to a seller even if there is a contract pend-

ing on the property. Of course, in this instance, it is essential

that the agent also advise the seller that serious legal prob-

lems could result from the seller’s acceptance of such oer

and that the seller should contact an attorney if he is inter-

ested in treating the oer as a “back-up” oer or in attempt-

ing to be released from the previously signed contract.

Copies of any signed sales contract or lease must also be

promptly delivered to the parties within the three-day peri-

od. Clients should be provided a copy of the agency agree-

ment upon signing, since both parties presumably are pres-

ent, but certainly within three days of receipt by the broker.

Finally, G.S. 93A-6(a)(14) requires a broker to provide

his/her client a detailed and accurate closing statement show-

ing the receipt and disbursement of all monies relating to

the transaction about which the broker knows or reasonably

should know. A broker may rely on a closing statement pre-

pared by an attorney but must review the statement for ac-

curacy.

Retention of Records [Rule A.0108]

Brokers are required to retain records pertaining to their

brokerage transactions for three years from the successful or

unsuccessful conclusion of the transaction or the disburse-

ment of all trust monies pertaining to that transaction, which-

ever occurs later. However, if the broker’s agency agreement

is terminated prior to the conclusion of the transaction, the

broker shall retain transaction records for three years after the

agency agreement is terminated or the disbursement of all

funds held by or paid to the broker in connection with the

transaction, whichever occurs later. Documents that must be

retained include sale contracts, leases, oers (even those not

accepted), agency contracts, earnest money receipts, trust ac-

count records, disclosure documents, closing statements, bro-

115

North Carolina Real Estate License Law and Commission Rules

ker cooperation agreements, broker price opinions and com-

parative market analyses (including notes and supporting doc-

umentation), advertising, sketches, and any other records re-

lating to a transaction. For example, other records would in-

clude vendor invoices, written communications with a ten-

ant or client, and Working with Real Estate Agent Disclosures

signed by customers who may not have become clients.

Rule A .0108(d) also requires an individual broker to pro-

vide a copy of such records including written agency disclo-

sures, agency agreements, and contracts to the rm or sole

proprietorship with which they are aliated within three days

of the broker’s receipt of such documents.

Brokerage Fees and Compensation [Rules A.0109,

A.0120]

ese rule address various issues associated with the dis-

closure of and sharing of compensation received by a real es-

tate licensee.

Disclosure to principal of compensation from a ven-

dor or supplier of goods or services. Paragraph (a) prohib-

its a licensee from receiv ing any form of valuable consider-

ation from a vendor or supplier of goods or services in con-

nection with an expenditure made on behalf of the licensee’s

principal in a real estate transaction without rst obtaining

the written consent of the principal.

Example: A broker manages several rental units for vari-

ous owners and routinely employs Ajax Cleaning Ser-

vice to clean the units after the tenants leave. e bro-

ker pays Ajax a $50 per unit fee for its services out of

rental proceeds received and deposited in his trust ac-

count. Ajax then “refunds” to the broker $10 for each

$50 fee it receives, but the property owners are not

aware that the broker receives this payment from Ajax

in addition to his regular brokerage fee. e broker

in this situation is making a secret prot without the

property owners’ knowledge and is violating the rule.

Disclosure to a party of compensation for recommend-

ing, procuring or arranging services for the party. Para-

graph (b) prohibits a licensee from receiving any form of valu-

able consideration for recom mending, procuring, or arranging

services for a party to a real estate transaction without full and

timely disclosure to such party. e party for whom the servic-

es are recom mend ed, procured, or arranged does not have to

be the agent’s principal.

Example: An agent sells a listed lot to a buyer who

wants to build a house on the lot. Without the buy-

er’s knowl edge, the agent arranges with ABC Home-

builders for ABC to pay the agent a 3% referral fee

if the agent recom mends ABC to the buyer and the

buyer employs ABC to build his house. e agent

then recommends ABC to the buyer, ABC builds the

buyer’s house for $100,000 and ABC secretly pays

the agent $3,000 for his referral of the buyer. e

agent has violat ed this rule. (Note that the buyer in

this situation likely paid $3,000 more for his house

than was necessary be cause it is very likely the builder

added the agent’s referral fee to the price he charged

the buyer for building the house. e main point

here is that the buyer had the right to know that the

agent was not providing disinterested advice when

recommend ing the builder.)

Example: A selling agent in a real estate trans action,

while acting as a subagent of the seller, recommends

to a buyer who has submitted an oer that the buyer

apply to Ready Cash Mort gage Company for his

mortgage loan. e agent knows that Ready Cash

will pay him a “referral fee” of $100 for sending him

the buyer’s business if the loan is made to the buyer,

but the agent does not disclose this fact to the buyer.

If the agent subsequently accepts the referral fee from

the lender, he will have violated this rule. (e buyer

has the right to know that the agent’s recommenda-

tion is not a disinterest ed one.)

Disclosure to principal of compensation for broker-

age services in sales transactions. Paragraph (c) deals with

disclosure to a licensee’s principal of the licensee’s compen-

sation in a sales transaction from various sources other than

in situations addressed in paragraphs (a) and (b). A broker

may not receive any compensation, incentive, bonus, rebate

or other consideration of more than nominal value (1) from

his or her principal unless the compensation, etc. is provid-

ed for in a written agency contract or (2) from any other

party or person unless the broker provides to his or her prin-

cipal a full and timely disclosure of the compensation.

Example: ABC Homebuilders oers to pay any broker

who procures a buyer for one of ABC’s inventory

homes a bonus of $1,000 that is in addition to any

brokerage commission the broker earns under any

agency contract and/or commission split agreements.

Any broker working with a buyer-client who is con-

sidering the purchase of one of ABC’s homes must

comply with the disclosure requirement and disclose

the bonus to the buyer in a timely manner. Note:

If ABC Homebuilders also oers a bonus of $2,000

on a second sale of one of its homes and $3,000 on a

third sale, and if a buyer’s broker has already sold one

of ABC’s homes, then the broker must disclose to his

or her buyer principal the entire bonus program and

that his or her bonus will be at least $2,000 if the

buyer purchases an ABC home.

Nominal compensation. Compensation is considered to

be “nominal” if it is of insignicant, token or merely sym-

bolic worth. e Commission has cited gifts of a $25 bot-

tle of wine or a $50 dinner gift certicate as being examples

of “nominal” compensation paid to a broker that do not re-

quire the consent of the broker’s principal.

Full and timely disclosure. Paragraph (d) of Rule A.0109

explains what is meant by “full and timely disclosure” in

paragraphs (a), (b) and (c). “Full” disclosure includes a de-

scription of the compensation, incentive, etc. including its

value and the identity of the person or party by whom it will

116

North Carolina Real Estate License Law and Commission Rules

ated broker may receive commission or a referral fee directly

from the escrow agent or closing attorney.

Broker-In-Charge [Rule A.0110].

Requirement to Have a Broker-In-Charge. Paragraph

(a) of Rule A.0110 states the general rule that each real

estate rm is required to have a broker designated by the

Commission who meets the qualication requirements to

serve as “broker-in-charge” of the rm’s principal oce

and a dierent broker to serve in the same capacity at each

branch oce. It is important to note, as discussed previous-

ly under “License Requirement,” that “broker-in-charge”

is not a separate license, but only a separate license status cat-

egory. No broker may be broker-in-charge of more than one

oce location at a time, and no oce of a rm shall have

more than one designated broker-in-charge. Rule A.0110(a)

describes the lone exception in the rare circumstance when

two or more rms share the same oce space. Note that

G .0103 denes the terms “oce,” “principal oce” and

“branch oce” – these denitions are not repeated here.

Exception to BIC Requirement for Certain Firms.

Paragraph (c) of Rule A.0110 provides: A licensed real es-

tate rm is not required to have a BIC if it: (1) has been

organized for the sole purpose of receiving compensation

for brokerage services furnished by its qualifying broker

through another rm or broker; (2) is treated for tax pur-

poses as a pass-through business by the U.S. Internal Rev-

enue service; (3) has no principal or branch oce; and (4)

has no licensed or unlicensed person associated with it other

than its qualifying broker.

Sole Proprietors. In addition to each rm having to have

a broker-in-charge for each oce, most broker-sole proprietors

(including sole practitioners) also must be a broker-in-charge.

Rule A.0110 (b) provides that every sole proprietorship

shall designate as a broker-in-charge if the sole proprietor-

ship: (1) engages in any transaction where a broker is re-

quired to deposit and maintain monies belonging to others

in a trust account; (2) engages in advertising or promoting

services as a broker in any manner; OR (3) has one or more

other brokers aliated with him or her in the real estate

business. Note, however, that maintenance of a trust ac-

count by a broker solely for holding residential tenant secu-

rity deposits received by the broker on properties owned by

the broker in compliance with G.S. 42-50 shall not, stand-

ing alone, subject the broker to the requirement to be desig-

nated as a broker-in-charge.

e most misunderstood of the three broker-in-charge

triggering requirements for sole proprietors cited above is #

(2): “...engages in advertising or promoting services as a broker in

any manner.” Acts of a sole proprietor that trigger the BIC

requirement under # (2) include, but are not limited to: Plac-

ing an advertisement for services as a broker in any form or any

medium; distributing business cards indicating they are a real

estate broker; orally soliciting the real estate business of others;

or listing a property for sale (which inherently involves holding

oneself out as a broker and advertising).

or may be paid. e disclosure is “timely” when it is made in

sucient time to aid a reasonable person’s decision-making.

In a sales transaction, the disclosure may be made orally, but

must be conrmed in writing before the principal makes or

accepts an oer to buy or sell.

Restrictions on compensation disclosure require-

ment. Paragraph (e) claries that a broker does NOT have

to disclose to a person who is not his or her principal the

compensation the broker expects to receive from his or her

principal, and further claries that a broker does NOT have

to disclose to his principal the compensation the broker ex-

pects to receive from the broker’s employing broker/rm

(i.e., the individual broker’s share of the compensation paid

to the broker’s employing broker/rm).

Commission will not arbitrate commission disputes.

G.S 93A-3(c) provides that the Commission shall not make

rules or regulations regulating commission, salaries, or fees

to be charged by licensees. Paragraph (f) of Rule A.0109

augments that statutory provision by providing that the

Commission will not act as a board of arbitration regard-

ing such matters as the rate of commissions, the division of

commissions, pay of brokers and similar matters.

Compensation of unlicensed persons by brokers pro-

hibited. G.S. 93A-6(a)(9) authorizes the Commission to

take disciplinary action against a licensee for paying any per-

son for acts performed in violation of the License Law. Para-

graph (g) of Rule A.0109 simply augments this statutory

provision by providing an armative statement that a licens-

ee shall not in any manner compensate or share compensa-

tion with unlicensed persons or entities for acts performed

in North Carolina for which a license is required. [Note that

NC brokers may split commissions or pay referral fees to li-

censees of another state so long as the out-of-state licensee

does not provide any brokerage services while physically in

North Carolina.] One narrow, limited exception to this re-

striction is provided in Paragraph (h) – licensees may pay re-

ferral fees to travel agents who contact them to book vacation

rentals only, so long as well-dened procedures are followed.

RESPA prohibitions control. Finally, Paragraph (i) of

Rule A.0109 provides that nothing in this rule permits a li-

censee to accept any fee, kickback, etc. that is prohibited by

the federal Real Estate Settlement Procedures Act (RESPA)

or implementing rules, or to fail to make any disclosure re-

quired by that act or rules.

Commission Disbursement

Paragraph (a) of Rule A.0120 bars a licensee from requir-

ing or demanding that an escrow agent or attorney split a

broker’s commission or pay all or part to another person or

entity. While a licensee may request that the closing attor-

ney disburse payments to third parties, it is a violation of the

rule for such licensee to threaten or otherwise force such dis-

bursement. It is the licensee’s duty to ensure such payments

are made, not the escrow agent or closing attorney.

Similarly, an aliated broker must receive a commis-

sion or referral fee from their broker-in-charge. An unali-

117

North Carolina Real Estate License Law and Commission Rules

tus and BIC Designation simultaneously.

Broker-In-Charge (BIC) Duties. e designated bro-

ker-in-charge is the primary person the Commission will

hold responsible for the supervision and management of an

oce. See paragraph (g) of Rule A.0110 for a list of the spe-

cic responsibilities of a broker-in-charge.

Maintaining BIC Eligible Status. To maintain BIC El-

igible status, paragraph (g) of Rule A.0110 requires that a

broker must:

• Renew his or her broker license in a timely manner

each license year and keep the license on active status at all

times.

• Complete each license year the four-hour mandatory

Broker-in-Charge Update Course (BICUP) as well as any

approved four-hour CE elective.

e broker must begin taking the BICUP course during

the same license year of designation, unless the broker com-

pleted the General Update (GENUP) course prior to des-

ignation.

e BICUP Course satises the broker’s four-hour man-

datory continuing education Update course requirement. If

a broker with BIC Eligible status fails to take both the BI-

CUP and one elective CE course by June 10 in any giv-

en year when required, then the broker will lose BIC Eli-

gible status, and BIC designation if applicable, the follow-

ing July 1.

Termination of BIC Eligible Status and Broker-In-

Charge Designation. Paragraph (i) of Rule A.0110 provides

that a broker’s BIC Eligible status, and, if currently designat-

ed as a BIC, his or her BIC designation, shall be terminated if

the broker: made any false statements or presented any false,

incomplete, or incorrect information in connection with an

application; fails to complete the 12-hour Broker-in-Charge

Course pursuant to Paragraph (e) of the Rule; fails to time-

ly renew his or her broker license, or the broker’s license has

been suspended, revoked, or surrendered; or fails to timely

complete the Broker-in-Charge Update Course (BICUP) and

a four credit hour elective course in any license year.

Regaining Lost BIC Eligible Status and BIC Desig-

nation. Pursuant to Rule A .0110(m), once a broker’s BIC

Eligible status has been terminated, the broker must com-

plete the following steps in the order prescribed to regain

the status:

1. e broker must rst have a license on active status. If

the license has expired, it must rst be reinstated. If

the license is inactive due to a CE deciency, then the

licensee must rst complete whatever CE is neces-

sary to reactivate the license and in either case, must

then submit a reactivation form to the Commission

requesting that the license be placed back on active

status. A broker who has lost his or her BIC Eligi-

ble status should not take either the 12-hour BIC

Course or the BICUP course prior to ocially reac-

tivating his/her license with the Commission.

2. Once back on active status, the broker must possess

erefore, a broker-sole proprietor may lawfully provide

only limited brokerage services without a designated BIC. A

couple of examples of permissible brokerage activities by a

broker-sole proprietor who is NOT a designated BIC in-

clude receiving a referral fee from another broker or broker-

age rm for referring business to the broker or rm or rep-

resenting a relative or friend as a buyer’s broker in a sales

transaction provided the broker has not solicited the busi-

ness, has not advertised or promoted his or her services, and

does not hold earnest money beyond the time it is required

to be deposited in a trust account.

e practical eect of these requirements is that a broker

who will be operating independently in most cases must also

designate himself or herself as a BIC. e real signicance of

these requirements for a sole proprietor will be better under-

stood when the qualication requirements to serve as a BIC

are subsequently discussed.

Requirements for BIC-Eligible Status. Paragraph (e) of

Rule A .0110 states that, in order for a broker to be desig-

nated as a BIC for a sole proprietorship, real estate rm, or

branch oce, the broker must FIRST have BIC Eligible sta-

tus. A broker must request BIC Eligible status on a form

provided by the Commission.

e qualifying requirements for BIC Eligible Status,

pursuant to paragraph (e) of Rule A .0110, are:

• Broker license must be on “active” status but NOT

on “provisional” status. A provisional broker is in-

eligible to serve as broker-in-charge, as is a broker

whose license is inactive or expired.

• Broker must have at least 2 years of full-time or 4 years

of part-time real estate brokerage experience within

the previous 5 years or be a North Carolina licensed

attorney with a practice that consisted primarily of

handling real estate closings and related matters in

North Carolina for 3 years immediately preceding

application. e requirement is for actual broker-

age experience, not just having a license on “active”

status. Note that by submission of the request form

to the Commission, a broker certies that he or she

possesses the required experience. e Commission

may at its discretion require the broker to provide

evidence of possessing the required experience.

• After obtaining BIC Eligible status, a broker must

complete the Commission’s 12-hour Broker-In-

Charge Course within 120 days of designation (un-

less the 12-hour course has been taken within the

previous year). Failure to complete this course within

120 days will result in the broker losing BIC Eligible

status. e broker must then take the course before

he or she may again be granted BIC Eligible status.

Requesting Designation as Broker-in-Charge (BIC).

A broker who has BIC Eligible status may request BIC Des-

ignation on a form provided by the Commission at any time

so long as the broker continuously maintains his/her BIC

Eligible status. e broker may also request BIC Eligible sta-

118

North Carolina Real Estate License Law and Commission Rules

“no,” or “no representation.” Failure to provide a buyer with

this form may allow the buyer to cancel the contract by no-

tifying the seller in writing within three calendar days of

contract acceptance.

Note: Licensees in residential real estate transactions

have a duty under G.S. 47E-8 to inform their clients of the

client’s rights and obligations under the statute. e Real

Estate Commission also views the Real Estate License Law

as imposing on licensees working with sellers and buyers

certain additional responsibilities to ensure statutory com-

pliance and serve their clients’ interests. Licensees are ex-

pected to “assist” sellers with completion of the form but

should not complete the form for a seller or advise a seller

as to what representation (or No Representation) to make.

at being said, licensees should be certain to advise sellers

that the licensee is obligated by law to disclose all material

facts about or relating to the seller’s property to prospective

buyers regardless of what representation the seller makes on

the disclosure form. e licensee should also review the sell-

er’s completed disclosure statement for accuracy and com-

pleteness. See the Commission’s North Carolina Real Estate

Manual for a full discussion of the disclosure law and an

agent’s duties.

Sellers must also provide a Mineral and Oil and Gas Man-

datory Disclosure Statement (MOGS) to buyers prior to

making an oer to purchase and contract. e form has been

developed by the Real Estate Commission and is available for

download from the Commission’s website, www.ncrec.gov.

It is a separate form and is in addition to the Residential Prop-

erty and Owner’s Association Statement. A disclosure state-

ment is not required for some transaction. For a complete list

of exemptions, see G.S. 47E-2.

Broker’s Responsibility for Closing Statements [G.S.

93A‑6(a)(14)

e cited statute requires a broker, “…at the time a sales

transaction is consummated, to deliver to the broker’s client a

detailed and accurate closing statement showing the receipt and

disbursement of all monies relating to the transaction about

which the broker knows or reasonably should know.” e stat-

ute goes on to provide that if a closing statement is prepared

by an attorney or lawful settlement agent, a broker may rely

on the delivery of that statement, but the broker must review

the statement for accuracy and notify all parties to the closing

of any errors. Since virtually every residential transaction in

North Carolina is closed by an attorney (or lawful settle-

ment agent), it is standard practice for brokers to adopt the

attorney’s settlement statement to satisfy this License Law

requirement.

Commission Guidelines. A settlement statement is a

detailed report of all monies received and disbursed by the

settlement agent in connection with a real estate sales trans-

action. It is essential that the settlement statement be accu-

rate and that a copy be provided to each party. e settle-

ment statement is prepared by the settlement agent – the in-

dividual conducting the closing, which in North Carolina is

the experience required for initial designation and

must rst complete the 12-hour BIC Course prior

to requesting BIC Eligible status and re-designation

as a BIC regardless of when the broker may have

previously taken the 12-hour course. ere are no

exceptions to this requirement to retake the 12-hour

course prior to re-designation.

Notice to Commission When BIC Status Ends. A

BIC must notify the Commission in writing within 10 days

upon ceasing to serve as BIC of a particular oce. [See Para-

graph (g).]

Exception for certain pass-through businesses. See

Paragraph (c).

Nonresidents. Nonresident individuals and rms hold-

ing a NC broker and/or rm license and engaging in bro-

kerage activity in NC are subject to the same requirements

as NC resident brokers/rms with regard to when they must

have a designated broker-in-charge. us, a nonresident

company engaging in brokerage in NC must have a broker-

in-charge of the company who holds an active NC broker

license for purposes of its NC business, although the oce

need not be physically located in North Carolina. Similarly,

a nonresident NC broker sole practitioner engaging in activ-

ity that triggers the broker-in-charge requirement for a resi-

dent NC broker sole practitioner (see previous discussion on

this subject) also must be designated as a broker-in-charge

for NC brokerage purposes as without a BIC, a company

has no oce anywhere.

Drafting Legal Instruments [Rule A.0111]

is rule prohibits licensees from drafting legal instru-

ments, e.g., contracts, deeds, deeds of trust, etc., but does

allow them to ll in the blanks on preprinted sales or lease

contract forms, which is not construed to be the unauthor-

ized practice of law.

Oers and Sales Contracts [Rule A.0112]

is rule species what minimum terms must be con-

tained in any preprinted oer or sales contract form a licens-

ee, acting as an agent, proposes for use by a party in a real

estate transaction.

Reporting Criminal Convictions [Rule A.0113]

Licensees are required to report to the Commission any

criminal convictions for a felony or misdemeanor, military

court-martial conviction, notarial commission sanction, or

any restriction, suspension or revocation of a professional li-

cense within sixty (60) days of the nal judgment or order

in the case. is reporting requirement is ongoing in nature.

Note that Driving While Impaired (DWI) is a misdemeanor

and must be reported.

Residential Property and Owners’ Association

Disclosure Statement [Rule A.0114]

State law (Chapter 47E of the General Statutes) requires

that most residential property owners complete a disclosure

form to give to prospective purchasers. e form seeks to

elicit information about the condition of the property by

asking various questions, to which owners may answer “yes,”

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North Carolina Real Estate License Law and Commission Rules

disburses.

• A broker should notify the settlement agent if the

broker believes there are any errors or omissions on

the statement.

HANDLING TRUST FUNDS

his section addresses those aspects of handling trust

funds that are taught in the Real Estate Broker Pre-

licensing Course and tested on the real estate license exam-

ination for entry-level brokers. All brokers are encouraged

to take the Basic Trust Account course for a fuller treatment

of this subject. e Basic Trust Account course is an online,

self-paced course and registration is available on the Com-

mission’s website at www.ncrec.gov.

Denition of Trust Money

In the context of real estate transactions, “trust money”

is most easily dened as money belonging to others received by

a real estate broker who is acting as an agent in a real estate

transaction. It is also any money held by a licensee who acts

as the temporary custodian of funds belonging to others. Such

money must be held in trust even if the circumstances are

only collateral to the licensee’s role as an agent in a real estate

related matter, e.g., a listing agent receives monies from his

out of town seller for yard maintenance while the proper-

ty is being marketed. e most common examples of trust

money are:

• Earnest money deposits

• Down payments

• Tenant security deposits

• Rents

• Homeowner association dues and assessments, and

• Money received from nal settlements

In the case of resort and other short-term rentals, trust

money also includes:

• Advance reservation deposits

• State (and local, if applicable) sales taxes on the

gross receipts from such rentals

Trust or Escrow Account [G.S. 93A‑6(a)(12) & (g);

93A‑45(c); Rule A.0116, .0117]

One of the most basic tenets of broker accountability

when handling trust money is that it must be deposited into

a trust or escrow account as described below. A “trust ac-

count” or “escrow account” (the terms are synonymous for

Commission purposes) is simply a bank account into which

trust money (and only trust money) is deposited. e three

primary features of a trust or escrow account are that it is:

1) separate, containing only monies belonging to oth-

ers,

2) custodial, meaning only the broker or the broker’s des-

ignated employee has disbursement control over the ac-

count, but no one who has funds in the account has

that ability, and

3) available on demand, that is, the funds may be with-

drawn at any time without prior notice.

Type and Location of Trust Account. A broker’s trust

almost always the closing attorney or a nonlawyer assistant

working under the supervision of the closing attorney.

e TRID (Tila-RESPA Integrated Disclosures) rule be-

came eective October 3, 2015, and applied to loan applica-

tions received on or after October 3, 2015. e TRID rule

replaced the HUD-1 settlement statement (RESPA) and

nal Truth-in-Lending statement (TILA) with two Clos-

ing Disclosure (CD) documents, one for the borrower and

a separate one for the seller. Closing disclosures are dis-

closures only and are not equivalent to a settlement state-

ment. While the HUD-1 is no longer used in TRID-gov-

erned transactions, other types of settlement statements may

be used, such as settlement/closing statements created and

published by the American Land Title Association (ALTA).

Also, the HUD-1 may be used as the settlement statement

in non-TRID-governed transactions, such as cash transac-

tions, construction loans, or purchases of investment prop-

erty.

e Commission has published in its North Carolina

Real Estate Manual the following guidelines regarding bro-

kers’ responsibilities for settlement statements:

• A broker must conrm the accuracy of all entries

about which s/he has direct knowledge. Such items

include, but may not be limited to: the sale price;

amount of the due diligence fee and earnest money

deposit; amount of the brokerage commission and

split; any amounts due either party under the oer

to purchase and contract, e.g., closing costs paid by

seller, as well as any sums paid by or due to third par-

ties related to the transaction, if the broker knows or

should know about the expense.

• As to amounts paid by or due to third parties, brokers

generally may assume that the amounts for charges

and fees as stated on the settlement statement are

correct unless there is something that would lead a

reasonable broker to suspect that an amount is incor-

rect. As to all debits and credits related to the trans-

action, whether paid before or at closing, the broker

must:

1) review and conrm that all charges and credits

have been properly debited or credited to the

seller or buyer and are entered in the correct col-

umn; and

2) review and conrm the accuracy of the calcula-

tions for all prorated items, escrow reserves, in-

terim interest, excise tax and the “bottom line g-

ures,” i.e., total settlement charges to each party,

cash from borrower-buyer, and cash to seller.

• If a broker is aware of any expense related to the trans-

action paid to or by either party or any third party

that is not included on the settlement statement, the

broker must notify both the settlement agent and the

lender of the omission, as the settlement statement

should reect all expenses and payments related to

the transaction, not just monies the settlement agent

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North Carolina Real Estate License Law and Commission Rules

ed into this one common trust account. However, brokers

who are active in both sales and property management often

nd it helpful to use more than one trust account. For ex-

ample, they may wish to keep a “general sales trust account”

for earnest money deposits, settlement proceeds, etc., and a

“rental trust account” for tenant security deposits, rents, and

related receipts. Although it is not required, many brokers

involved in property management and leasing elect to main-

tain an additional “security deposit trust account” to keep

tenant security deposits separate from rents and other relat-

ed receipts. However, Rule A.0118(a) requires brokers who

handle homeowner or property owner association funds to

maintain a separate trust account for each property owner asso-

ciation or homeowner association they manage. e funds of

one homeowner association are not to be commingled with

funds from any other association nor with any general trust

monies. e broker also must provide the association with

periodic written statements not less than once each quarter

reporting all monies received, disbursed, and due, but not

paid (i.e., delinquent), as well as the balance of funds in the

account.

“Commingling” Prohibited. [G.S. 93A-6(a)(12)] e

basic statutory provision relating to a licensee’s handling of

the money or property of others states that a broker may

not “commingle” his or her own money or property with

the money or property of others. is means that a broker

may not maintain funds belonging to others in the same

bank account that contains his or her personal or business

funds. Funds belonging to others must be held in a trust ac-

count and, except as described below regarding “bank ser-

vice charges on trust accounts,” a broker may not deposit

his or her own funds in that trust account. e prohibition

against commingling also means, for example, that a bro-

ker who has an ownership interest in property is preclud-

ed from depositing monies (e.g., earnest money, rent, secu-

rity deposits, etc.) related to that property in his brokerage

trust account.

Bank Service Charges on Trust Accounts. Trust ac-

counts usually are subject to the same service charges as reg-

ular checking accounts. Whenever possible, brokers should

arrange for the depository/bank either to bill the broker for

these expenses or charge these expenses to the broker’s per-

sonal or general operating account. However, if such ar-

rangements cannot be made, the Commission will per-

mit a broker to deposit and maintain in his trust account

a maximum of $100.00 of his personal funds (or such oth-

er amount as may be required) to cover (not avoid) such

charges. So, if a broker’s monthly service charges and other

fees typically are $100, then the broker may deposit up to

$200 of his/her own money to cover these charges. A bro-

ker who deposits any of his/her own money in the trust ac-

count to cover bank charges must be careful to properly en-

ter and identify these personal funds in his/her trust account

records by use of a personal funds ledger. While this techni-

cally constitutes “commingling,” it is permissible commin-

account or escrow account must be:

1) a demand deposit account

2) in a federally insured depository institution

3) lawfully doing business in North Carolina

4) that agrees to make the account records available for

inspection by Commission representatives. [G.S.

93A-6(g)]

us, for the purpose of holding most trust money, the

bank can be located outside North Carolina if the foregoing

conditions are met.

Designation of Trust Account and FDIC Insurance. A

broker-in-charge who must maintain a trust account must

ensure that the bank properly designates the account and

that the words “trust account” or “escrow account” appear

on all signature cards, bank statements, deposit tickets and

checks. Even though the escrow account typically is in the

name of the company or broker, so long as the broker prop-

erly designates the account as a “trust” or “escrow” account

and keeps accurate records that identify each owner of the

funds and/or depositor (buyer, seller, lessor, lessee, etc.), the

depositors are protected from the funds being “frozen” or

attached if the broker/trustee becomes insolvent, incapaci-

tated, dies, has tax liens, becomes involved in a lawsuit, etc.

Failure to properly designate an account titled in the name

of the company/broker as a trust or escrow account may re-

sult in attachment of the account by others to collect a judg-

ment or denial of FDIC insurance coverage as to each indi-

vidual’s interest in the account.

So long as the account is properly designated as a trust/

escrow account, all deposits are insured by the Federal Deposit

Insurance Corporation (FDIC) up to $250,000 per each in-

dividual for whom funds are held. us, a broker’s trust ac-

count may contain $500,000 total, but all funds are fully in-

sured so long as no one individual’s interest in the account ex-

ceeds $250,000. (Note, however, that an individual still may

be underinsured if the individual maintains accounts in his/

her individual name at the same nancial institution as the

broker’s trust/escrow account.)

When a Trust Account Is Required. A broker must open

and maintain a trust account when the broker or any ali-

ated licensee takes possession of trust money. A broker who

is inactive or otherwise not using his/her real estate license is

not required to open or maintain a trust account because s/

he should not be engaged in brokerage nor receiving mon-

ies belonging to others. Similarly, if an active practicing bro-

ker does not collect or otherwise handle the funds of others,

no trust account is required. Note: A broker who leases resi-

dential property he or she owns to tenants may be required

to maintain a trust account under 42-50 NC Residential

Landlord Tenant law.

Number of Trust Accounts. Except for brokers who are

managing homeowner or property owner association funds,

a broker holding trust money is only required to have one

trust account. All earnest money deposits, tenant securi-

ty deposits, rents, and other trust monies may be deposit-

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North Carolina Real Estate License Law and Commission Rules

gling to avoid the greater evil of using other people’s money

to pay these bank charges.

Interest-Bearing Trust Account. Both G. S. 93A-6(a)

(12) and Rule A.0116(c) permit a broker to deposit trust

money into an interest-bearing trust account so long as the

broker rst obtains written authorization for deposit in an

interest-bearing account from all parties having an interest

in the monies being held. Such authorization must specify

how and to whom the interest will be paid. If the authoriza-

tion is contained in an oer, contract, lease or other transac-

tion instrument, it must be set forth in a conspicuous man-

ner that distinguishes it from other provisions of the instru-

ment. Remember, however, that all trust accounts must be

a demand account, so investment of trust monies in any type

of security, such as a government bond or a xed term cer-

ticate of deposit, is prohibited.

Broker-In-Charge Responsible for Trust Accounts.

[Rule A.0117; Rule A.0110(g)(4)] Rule A.0117(a) requires

a broker to maintain complete records showing the depos-

it, maintenance and withdrawal of money belonging to the

broker’s principals or held in escrow or in trust for the broker’s

principals. Paragraph (h) of that rule also provides that the

Commission may inspect trust account records periodical-

ly without prior notice and whenever the records are perti-

nent to investigation of a complaint against a licensee. Rule

A.0110(g)(4) renes this requirement by specifying that a

broker-in-charge (BIC) is responsible for the proper mainte-

nance of real estate trust accounts and records pertaining thereto.

Custodian of Trust Account Records Other an the

Broker-In-Charge. While a broker-in-charge may trans-

fer possession of trust money to a bookkeeper, secretary,

or some other clerical employee to record and deposit the

funds in a trust account and to maintain trust account re-

cords, the broker-in-charge nonetheless remains responsible

for the care and custody of such funds. Brokers-in-charge

should closely and diligently supervise the acts of all persons

having access to the trust account, since nal accountability

for the accuracy and integrity of the account rests with the

broker-in-charge. Access to trust money should be limited and

carefully controlled.

Disbursement of Earnest Money [Rule A0116(e)] is

rule permits a broker-in-charge to transfer an earnest mon-

ey deposit from his/her trust account to the closing attorney

or other settlement agent not more than ten (10) days prior

to the anticipated settlement date. Earnest money may not

be disbursed prior to settlement for any other purpose with-

out the written consent of the parties. us, earnest money

may not be used by the broker to pay for inspection reports

or other services on behalf of the buyer prior to settlement

without the written consent of the seller, and vice-versa.

Disputed Trust Funds. Rule A.0116(d) addresses dis-

puted trust funds as follows: “In the event of a dispute be-

tween buyer and seller or landlord and tenant over the re-

turn or forfeiture of any deposit other than a residential ten-

ant security deposit held by a broker, the broker shall retain

said deposit in a trust or escrow account until the broker has

obtained a written release from the parties consenting to its

disposition or until disbursement is ordered by a court of

competent jurisdiction.” e rule also references the G.S.

93A-12 procedures for depositing disputed funds with the

Clerk of Court as well as when one party abandons his or

her claim to the disputed funds. However, these procedures

are beyond the scope of these materials and are more im-

portant for brokers-in-charge to know.

Handling of Trust Money [Rule A.0116(a), (b) & (g)]

e general rule is that all trust monies received by a licens-

ee must be deposited in a trust account within three banking

days of receipt. Exception: Earnest money received with of-

fers to purchase and tenant security deposits in connection

with leases must be deposited in a trust account not later than

three banking days following acceptance of the oer to purchase or

lease agreement unless the deposit is tendered in cash in which

event it must be deposited within three banking days follow-

ing receipt, even if the contract or lease has not been accept-

ed. In part, this is because cash is immediately available and

may be refunded within a day of deposit, unlike checks which

may require a few days to clear.

Understand that a broker may choose to immediately de-

posit a check received for an earnest money deposit or tenant

security deposit and is not required to wait until contract accep-

tance unless so instructed by the buyer/tenant. Of course, early

deposit may cause problems if the oer to purchase or lease is

not accepted and the prospective buyer or tenant understand-

ably wants their deposit to be immediately returned. e date

of acceptance should be shown in the purchase or lease agree-

ment to determine when the three banking days begins.

Receipt of Trust Money by Provisional Broker. [Rule

A.0116(b)(1)&(2), Rule A.1808.] All trust money received by a

provisional broker must be delivered immediately to the provi-

sional broker’s broker-in-charge. In other words, provisional bro-

kers may not retain or hold trust money any longer than abso-

lutely necessary to deliver the trust money to his/her broker-in-

charge. Similarly, trust monies received by a nonresident limit-

ed commercial broker are to be delivered immediately to and

held by the resident North Carolina broker with whom the

nonresident is aliated. Brokers-in-charge should have written

policies that clearly state the procedures to be followed when

any agent aliated with the company, whether a provisional or

non-provisional broker, receives trust monies.

Handling Option Money and Due Diligence Fee.

Rule A.0116(b)(4) states in part: “A broker may accept cus-

tody of a check or other negotiable instrument made pay-

able to the seller of real property as payment for an option

or due diligence fee, but only for the purpose of delivering

the instrument to the seller. While the instrument is in the

custody of the broker, the broker shall, according to the in-

structions of the buyer, either deliver it to the seller or return

it to the buyer. e broker shall safeguard the instrument

and shall be responsible to the parties on the instrument for

its safe delivery as required by this Rule. A broker shall not

122

North Carolina Real Estate License Law and Commission Rules

“active” status may prepare a broker price opinion

(BPO) or comparative market analysis (CMA) for a

fee for a variety of persons and entities for a variety of

reasons, not just for actual or prospective brokerage

clients. Note, however, that a provisional broker may

NOT perform a BPO or CMA for a fee for anyone.

[G.S. §93A-83(a) and (b)]

 A broker may NOT prepare a BPO (or CMA) for an

existing or potential lienholder or other third party

where the BPO is to serve as the basis to determine

the value of a property for the purpose of originating a

mortgage loan, including rst and second mortgages,

renances or equity lines of credit. [G.S. §93A-

83(b)(6)]

 A BPO or CMA may only estimate the “probable

selling price” or “probable leasing price” of a property,

not the “value” of a property. Moreover, if a BPO

or CMA does propose to estimate the “value” or

“worth” of a property, it shall be legally considered a

“real estate appraisal” that may only be prepared by a

licensed or certied real estate appraiser, not by a real

estate broker. [G.S. §93A-83(f )]

 A BPO or CMA provided for a fee must be per-

formed in accordance with the requirements of Ar-

ticle 6 of the Real Estate License Law and standards

set forth in rules adopted by the North Carolina Real

Estate Commission. [Rules, Ch. 58, Section A.2200]

 A BPO or CMA must be in writing and must address

those matters specically required by the statute or

Commission rule. [G.S. §93A-83(c)]

Standards for BPOs and CMAs Performed for Com-

pensation. Article 6 of the Real Estate License Law pro-

vides a number of standards that must be followed when a

broker is performing a BPO/CMA for a fee. Additional-

ly, the Commission has adopted rules (Section A.2200) set-

ting forth specic standards for brokers when performing

such standards. A broker performing a BPO/CMA utilizes

the same valuation concepts and methodology as an apprais-

er performing an appraisal; however, the analysis associated

with a BPO/CMA is less comprehensive and detailed than

with an appraisal, and the regulatory standards for brokers

performing BPOs/CMAs are less stringent than those re-

quired for real estate appraisers performing appraisals. [See

G.S. 93A-83 and especially Commission Rule 58A.2202.]

Reporting Probable Selling/Leasing Price as a

“Range.” In recognition of the fact that brokers perform-

ing BPOs/CMAs are not expected to be as precise in their

analysis and adjustments to comparable properties as an

appraiser when performing an appraisal, the Commision’s

rules permit reporting in a BPO/CMA of probable selling

price or leasing price (lease rate) as either a single gure or

as a price range. e applicable rules also states: “When the

estimate states a price range and the higher gure exceeds

the lower gure by more than ten (10%), the broker shall

include an explanation as to why the variance is more than

retain such an instrument for more than three business days

after the acceptance of the option or other sales contract.”

e rule is basically self-explanatory. In the rule, “custo-

dy” means possession. Recall that option money or a due

diligence fee is paid directly to the seller, to whom the check

is written as payee, and so it is not appropriate for a broker

to deposit these checks into his/her trust account because

the check is not payable to the broker or real estate compa-

ny as is the case with earnest money checks. Either the list-

ing agent or buyer’s agent may hold the check or negotiable

instrument until negotiations are completed and a contract

is formed, at which point the check should be delivered to

the seller as soon as possible.

If, however, a buyer for some reason gives a broker cash for

the option money or due diligence fee, then the broker must im-

mediately deposit the cash in his/her trust account pending con-

tract formation as cash must always be deposited into a trust ac-

count within three banking days of receipt — no exceptions.

If the parties enter into a contract, then the broker would

write a check from the trust account payable to the seller, not-

ing in the memo section and trust account records that it is

for the option fee or due diligence fee from the buyer.

Safeguarding Trust Money; Improper Use of Trust

Money. [Rule A.0116(g)] is rule places on every licensee

the responsibility to safeguard the money or property of

others coming into his or her possession according to the

requirements of the License Law and Commission rules.

In addition, it states that: “A broker shall not convert the

money or property of others to his or her own use, apply such

money or property to a purpose other than that for which

it was intended or permit or assist any other person in the

conversion or misapplication of such money or property.”

BROKER PRICE OPINION AND

COMPARATIVE MARKET ANALYSIS

[G.S. 93A, Article 6; Commission Rules Chapter 58A,

Section .2200]

Denitions. General Statute §93A-82 of the North

Carolina Real Estate License Law and General Statute §93E-

1-4(7c) of the North Carolina Appraisers Act both dene

a “broker price opinion” (“BPO”) and a “comparative

market analysis” (“CMA”) as “…an estimate prepared by

a licensed real estate broker that details the probable sell-

ing price or leasing price of a particular parcel of or interest

in property and provides a varying level of detail about the

property’s condition, market, and neighborhood, and infor-

mation on comparable properties, but does not include an

automated valuation model.” us, the terms “BPO” and

“CMA” have exactly the same legal meaning even though an

estimate provided for a seller or buyer client or prospective

client is most commonly referred to as a CMA and an esti-

mate performed for a third party for a purpose other than

mortgage loan origination (for example, a foreclosure or

short sale decision) is typically referred to as a BPO.

• A “non-provisional” broker with a current license on

123

North Carolina Real Estate License Law and Commission Rules

10 percent. [Rule A.2202(h)]

Use of Income Analysis Methodology Now Required

Where Appropriate. e revised statutes eliminated the

old Appraisers Act restriction that a broker’s CMA for actu-

al or prospective clients and for compensation was permitted

only if the sales comparison approach was the only meth-

od used to derive an indication of the probable sales price.

A broker performing a BPO or CMA to determine an esti-

mated “probable selling price or leasing price” is now required

to utilize methods involving the analysis of income where

appropriate (i.e., income capitalization or gross rent multi-

plier methodology for income-producing properties) as well

as the sales comparison method. [G.S. §93A-83(c)(3) and

Commission Rule A.2202(e)]

Competence to Perform BPO/CMA. Although Article

6 of the License Law and Section A.2200 of the Commis-

sion’s rules do not specically require a broker to perform

a BPO/CMA in competent manner, the reader should re-

member that the License Law has always made incompe-

tence a basis for disciplinary action and those provisions also

apply to the performance of BPOs and CMAs. If a broker is

not qualied by way of education and experience to proper-

ly utilize the appropriate methodology required for a partic-

ular property (for example, income capitalization for a com-

mercial property), then the broker is expected to decline the

assignment.

CMAs/BPOs Performed for NO FEE. Any broker

(non-provisional or provisional) has always been permitted

to perform a BPO/CMA for any party when NO FEE is

charged, and this continues to be the case under the revised

law and rules. Note that the Commission does not consider

compensation of a broker for general brokerage services under

a brokerage agreement to constitute a “fee” under Article 6 of

N.C.G.S. §93A. “General brokerage services” means servic-

es provided under a brokerage agreement to property own-

ers in connection with listing/selling/leasing property and to

prospective buyers or tenants in connection with purchasing

or leasing a property. Such services include the provision by

a licensee of a CMA or BPO. Similarly, the possibility of

entering into a brokerage agreement (and earning a broker-

age fee) does not constitute a “fee” when a licensee performs

a CMA/BPO for a prospective client without charging a fee

for the CMA/BPO. It is important for licensees to remember,

however, that the Commission expects every CMA/BPO per-

formed by a licensee to be performed in a competent manner

and without any undisclosed conict of interest, even if no fee is

received for the CMA/BPO. us, as a practical matter, a li-

censee performing a CMA/BPO for no fee should still look to the

standards described in Commission Rule 58A .2202 for guid-

ance regarding the proper performance of a CMA/BPO.

For a full explanation of the law and rules governing

BPOs and CMAs, and a Sales Comparison Analysis Illus-

tration, the reader is referred to the Commission’s North

Carolina Real Estate Manual, which may be ordered

through the Commission’s website at www.ncrec.gov.

NORTH CAROLINA REAL ESTATE COMMISSION

P. O. BOX 17100

RALEIGH NC 27619-7100

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