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Artificial Intelligence Legal and Ethical Considerations

Video Link: https://youtu.be/5aay7DlDQTY

Artificial Intelligence is a powerful tool in real estate and everyday life offering brokers, firms, educators, and consumers ways to analyze market data, automate communications, and simplify transactions. However, with the growing use of AI comes legal and ethical responsibilities that real estate professionals must understand.  

Fair Housing Compliance: Artificial intelligence tools can unintentionally cause harm with algorithm bias. For example, algorithms may limit the visibility of property listings to specific demographics based on historical data or online patterns. This could violate the Fair Housing Act, as well as state laws, if certain protected classes are excluded. The National Fair Housing Alliance is addressing this issue and working to eliminate bias in algorithmic based systems used in housing and financial services. NFHA’s Tech Equity Initiative is working to outline ethical standards for responsible tech and advance effective policies for regulating AI tools in the tech field. Brokers are ultimately responsible for ensuring their marketing and outreach practices align with Fair Housing Laws, regardless of tools used.  

Privacy: Some AI platforms rely on personal data, location history, finances, and other protected information. Brokers using AI-generated property valuations, chatbots, or targeted ad tools should be transparent with clients about how their technology works and what data is needed. 

Transparency: Clients and customers have a right to know how decisions are being made, especially when it involves automated programs.  

Over-Reliance: Artificial intelligence should enhance workplace duties and tasks, not replace it. While automation is helpful, you should not rely on the technology and always make sure to review any automated output.  

Stay Informed: As AI technologies evolve It is important to stay informed about their use and potential implications. You should do your research on third-party tools, understand the data inputs and outputs, and ensure that these systems align with North Carolina License Law and Commission Rules.  

Artificial Intelligence offers some efficient tools to modernize and simplify real estate in North Carolina, but its use must be approached with caution and ethical standards. Intelligence offers some efficient tools to modernize and simplify real estate in North Carolina, but its use must be approached with caution and ethical standards.

Reminder: Satisfy Your NC Broker Continuing Education Requirement Before the June 10 Deadline

This article was republished from the May 2025 eBulletin.

As we approach the end of the 2024–2025 license year, it’s a great time to make sure you’ve satisfied your North Carolina broker continuing education (CE) requirements. Every year, thousands of brokers wait until the last minute—don’t be one of them! 

What Are the CE Requirements? 

In accordance with Rule 58A .1702, all North Carolina brokers must complete eight (8) hours of CE each license year to maintain an active license. These hours are broken down into: 

The deadline to complete CE for this license year is June 10, 2025, at 11:59 PM EST. 

How to Check Your CE Status 

If you’re unsure whether you’ve completed your CE for the year: 

  1. Visit the Commission’s website: www.ncrec.gov 
  1. Click on Licensing, then select Licensee Login 
  1. After logging in, select “CE License Information” 

There, you’ll see your current CE status. If the “Update Hours” or “Elective Hours” show a zero, you still need to complete that part of your requirement before the deadline. 

How to Find and Register for CE Courses 

To search for in-person or synchronous (live online) CE courses: 

  1. Go to www.ncrec.gov 
  1. Click on Education in the top menu 
  1. Select Search CE Course Schedules 

You can filter results by course (number), provider, instructor, or location. 

Update courses must be taken “live,” either in person or via synchronous instruction. Elective courses, however, are offered in multiple formats including self-paced online (asynchronous distance education). 

To find self-paced elective providers: 

  1. Visit www.ncrec.gov 
  1. Click Education 
  1. Select List of Distance CE Providers 

After Completing Your CE Courses 

After you complete a CE course, the education provider is required to issue you a course completion certificate and report your completion to the Commission within seven (7) days. 

It’s your responsibility to: 

If your course hasn’t appeared within 10 days, contact the education provider promptly to ensure it’s submitted. 

Don’t Forget to Renew Your License 

You can renew your license online between May 15 and June 30, 2025. While CE does not need to be completed before you renew, it must be completed before June 10 to avoid your license status changing to inactive. 

Case Study: Trust Money

FACTS:  A broker collected $2,000 in rent for a property they managed for a landlord-client.  Instead of depositing the rent in a trust account, the broker deposited the check into their personal account and then wrote a check to the landlord-client from the personal account.   

ISSUE:  Did the broker fulfill their duties under License Law and Commission rules? 

ANALYSIS:  No, the broker did not fulfill their duties.  N.C.G.S. § 93A-6(a)(12) states that the Commission has power to suspend or revoke at any time a license issued under the provisions of this Chapter, or to reprimand or censure any licensee, if, following a hearing, the Commission adjudges the licensee to be guilty of: 

(12) Commingling the money or other property of his or her principals with his or her own or failure 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 relate to or concern that person’s or entity’s interest or investment in real property, provided, these accounts 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.  

Commingling is defined as the illegal practice by a real estate broker of maintaining personal or business funds in the same account with trust funds held for others. The $2,000 rent check received by the broker was deposited in the broker’s personal account.  Therefore, the broker commingled their personal funds with money belonging to another person (in this case, the landlord-client) in violation of N.C.G.S. § 93A-6(a)(12). 

The broker has also violated Commission Rule 58A. 0116 which states: 

All monies received by a broker acting in his or her fiduciary capacity (hereinafter “trust money”) shall be deposited in a trust or escrow account as defined in Rule .0117(b) of this Section no later than three banking days following the broker’s receipt of such monies. 

The broker deposited the rent check in their personal account and not a trust or escrow account as required by the Rule. 

To avoid these violations, brokers must deposit all monies received from others into a trust or escrow account.  In a sales transaction, trust monies include earnest money deposits, money for maintenance, repairs, or inspections, buyer funds for closing, seller proceeds from closing, and a security deposit or rent for early/late possession of the property. 

In a rental transaction, trust monies include tenant security deposits, rent, and application fees, as well as funds held by the broker to pay for repairs to the owner’s property.  In addition, for vacation rentals, trust monies include administration fees, travel insurance, and sales tax.  

Once trust monies are deposited into a trust or escrow account, an ACH transfer can be initiated from the account to the appropriate party. 

Brokers-in-charge should ensure that all affiliated brokers are familiar with Commission Rule 58A. 0116, including the 3-day requirements for deposits. 

RESOURCES:

N.C.G.S. § 93A-6(a)(12)

Commission Rule:  58A .0116

Articles: “Avoid These 10 Common Mistakes to Make Trust Account Management Trouble Free”

Reminder: License Renewal Frequently Asked Questions Page

Do you have questions about the license renewal process? If so, the Commission has published a new License Renewal FAQ page on its website! This page is designed to provide you with clear guidance on how to renew your license and answer some of your most frequently asked questions.  

Whether you are an affiliated broker, broker-in-charge, or qualifying broker managing a firm, these FAQs are here to ensure your license remains current and not expired. 

Key Information You’ll Find: 

  1. When to Renew: Mark your calendars! The renewal period starts at midnight on May 15 and ends at 11:59pm on June 30 annually. 
  1. How to Renew: Simply visit our homepage at www.ncrec.gov and follow the prompts: 
  1. Continuing Education: You can renew your license even if your CE courses haven’t been completed by June 10. Remember, your license must be renewed by June 30 to avoid having an expired license on July 1. 
  1. Renewal Fee: The renewal fee is $45.00 and can be paid securely online via Visa, MasterCard, Discover, American Express, or PayPal. 
  1. Confirmation: Receive a printable confirmation upon completion of your renewal process. 
  1. Payment Methods: Online renewal is mandatory. We do not accept checks, cash, or credit card payments over the phone or in person at our office. 
  1. Digital Pocket Card: Download your new digital pocket card immediately after renewal. You may also print it for your convenience. 
  1. Expiration Consequences: If you miss the June 30 deadline, your license will be expired on July 1.  In order to reinstate your license, you must visit our “Reinstate your License” page for reinstatement procedures. 
  1. BIC Eligible Status: Failure to renew your license on time will terminate your BIC Eligible status. Brokers must ensure they renew prior to June 30th to maintain their BIC Eligible status.  
  1. Need Help? Contact our License Specialists at ls@ncrec.gov for any renewal inquiries. We’re here to assist you! 

Video Link: https://youtu.be/6hFeaDjsRio

Question Corner

Question: I would like to terminate my affiliation with the BIC of my brokerage. Which form do I need to submit to the Commission?

Answer: If a broker wishes to terminate their affiliation with a firm or sole proprietorship, they must submit the Request to Terminate Your Affiliation with a Firm or Sole Proprietorship, Form 2.22. The Commission will process the form within 3-5 business days and brokers will be emailed a Notice of License Record Change acknowledging the requested change. If brokers do not receive a Notice within 30 days, they will need to contact the Commission and inquire about the status of their form submission.  

Question: What happens if a BIC submits a Request to Terminate Your Affiliation with a Firm or Sole Proprietorship, Form 2.22?

Answer: Before a BIC submits a Request to Terminate Your Affiliation with a Firm or Sole Proprietorship, Form 2.22, they should consider that the submission will affect all licensees currently under their supervision at the office. Provisional brokers will be placed on inactive status and “full” brokers will remain on active status at their home addresses but will no longer be affiliated with the firm or sole proprietorship.  

To prevent this, the new BIC should submit a new properly completed Request for BIC Eligible Status and/or Broker-in-Charge Designation (REC 2.25) PRIOR to the outgoing BIC submitting the Request to Terminate Your Affiliation with a Firm or Sole Proprietorship, Form 2.22.  

Brokers are confusing two forms: the Request to Terminate Your Affiliation with a Firm or Sole Proprietorship (Form 2.22) and the Request to Remove Licensee From Broker Supervision (Form 2.13). Form 2.22 is used by an individual broker to terminate their own affiliation with a firm or sole proprietorship and Form 2.13 is used by a BIC to remove a full or provisional broker from being affiliated with that BIC.  

NOTE: It is imperative for brokers to understand that prior to submitting a form, they are certifying the accuracy of the information. Therefore, the Commission may use the submission of inaccurate information as evidence against a broker in a disciplinary action.

Quick Tips

If you do not see a CE course completion on your own CE record when you log in as yourself within 7 business days of course completion, call your school and tell them to report it to the NCREC immediately.

T. Royals, Senior License Specialist

Did you know that the Real Estate Licensing in North Carolina (RELINC) booklet is required reading for new Broker applicants? Find it under Licensing/Applicants”

A. Allison, License Specialist

When creating an account within the NCREC Training Portal, please remember to remove NA before entering your license number. Don’t forget to enter your license number.

A. Conyers, Logistics and Program Manager

Please remember to renew both your Broker’s License and Firm’s License if you have one and there are separate Links.

S. Debnam, License Specialist

Reminder: Have you taken your CE for 2024-2025?

Link: https://youtu.be/QG1ppyOzz5Q

Reminder: Form Submission

I accidentally submitted a form to the Commission with inaccurate information. What do I need to do? 

Brokers who accidentally submit inaccurate/erroneous information should promptly try to correct the mistake.  

In general, you cannot stop the automatic processing of the form with erroneous information. The better option is to correct it with the new, accurate form.  

NOTE: Each form that is submitted to the Commission is processed separately by Commission staff. Further, the Commission expects brokers to submit the correct form related to the type of change they are requesting for their license record. At the beginning of each form, the Commission has provided a brief description of the form and the requirements for completion. It is essential that brokers read the forms thoroughly to ensure that they are affiliating or terminating with the correct brokerage, and/or designating themselves as BIC of appropriate entities while not affecting the affiliations of other brokers.

Reminder: Instructor Submission of Equivalent Credit

Have you taught the Update Course for 2024-2025? Have you developed an approved CE course or taught an approved CE course for the first time this license year? Have you submitted the Request for Continuing Education Equivalent Credit Form (7.13)?  

If not, and you want to receive equivalent credit, then you must submit the Request for Continuing Education Equivalent Credit Form (7.13) prior to June 17, 2025. Additionally, you must submit this form for the Update Course that you taught which coincides with your license status. 

If you have additional questions, please email educ@ncrec.gov. 

Video Link: https://youtu.be/ZTDDhnzORCU

Reminder: Renew Your Instructor Approval

Have you completed your six hours of instructor development credit? 

Commission-approved instructors must complete six hours of real estate instructor educational programs each license year before renewing their instructor approval. The Guidelines for Instructional Educational Requirement (Form REC 3.78) detail the rule requirements, outline available education options, and offer links to these resources. It is advised to submit renewal applications for instructor approval well in advance of June 30th to ensure prompt processing. For further inquiries, please consult the Commission’s website.