Did you know that 2027 will mark the 100th year of real estate regulation in North Carolina? In 1927, the General Assembly created the first North Carolina Real Estate Commission. It consisted of three members, each with at least five years’ experience in the profession, appointed by the Governor to three-year terms after the initial staggered terms. According to North Carolina Public-Local Laws of 1927, Chapter 241, members were required to select a chairman from their number, adopt necessary rules and regulations, employ assistants and clerical staff, maintain copies of proceedings and records, and receive compensation for their service.
The 1927 Act differentiated between real estate brokers and real estate salesmen. A broker was defined as a person, corporation, or firm who for compensation sold, auctioned, exchanged, bought, leased, or rented real estate. A salesman (sic) was defined as any person who for compensation was engaged by a broker to perform any of the above-mentioned real estate activities.
The major responsibility of the Commission was to issue licenses, renewable annually, for those wishing to engage in the real estate profession. All applicants were to be of good character and competent in the profession. Further, every applicant had to provide the Commission with two letters of recommendation from real estate owners from their county of residence, attesting to their reputation and competency. Brokers were also required to provide information on the firm with which they were associated. Applicants for a salesman’s license were to include information on previous real estate experience, the companies with which they were employed, and statements from their last employers. Also, all applications were to be accompanied by required fees.
An application could be refused if the Commission determined that an applicant was unqualified. In such cases, a hearing could be held to review the application. Licenses could be revoked for a variety of fraudulent, dishonest, or improper actions, including misrepresentation, making false promises, acting for more than one party without the knowledge of all parties, and incompetency. Before revocation, the Commission had to conduct a hearing at which the Respondent had the right to be represented by counsel. The District Superior Court had the right to review all Commission decisions in such cases. The Commission could also impose penalties for violation of this law. Moreover, upon conviction a person or firm could be liable for fines or imprisonment.
The 1927 law was declared discriminatory and unconstitutional by the North Carolina Supreme Court in the landmark case, State vs. Warren. However, this case only applied to eight counties in the state and was challenged legally. In January 1937, the North Carolina Supreme Court declared that the law was discriminatory and unconstitutional, contravening Article I, section 7, of the North Carolina State Constitution, since it applied only to real estate brokers and salesmen in eight designated counties and not to those in other counties.
Later in 1937, the General Assembly again enacted legislation to regulate the real estate profession. Definitions of real estate brokers and salesmen were appropriated from the 1927 law. Like the earlier Commission, the 1937 Commission was to receive applications and issue licenses. Qualifications enunciated in the 1927 law were repealed, with the exception that applicants had to pass a written examination administered by Commission representatives. Individuals engaged in the real estate profession for at least a year before the effective date of this legislation were to be exempted from taking the examination. Reasons for revocation and suspension of licenses were also repealed from the 1927 law, including provisions for hearings, the right to counsel, and the right to appeal to the Superior Court.
Although the 1937 law went into effect on June 1, 1937, sixty-four counties were exempted by the legislature, and once again the law was challenged in court. In March 1939, the North Carolina Supreme Court handed down a decision declaring the Real Estate License Act of 1937 to be unconstitutional. The court held that since the act set up state-wide requirements for real estate licensing but only applied them to thirty-six counties, it was discriminatory and was in fact a local act regulating trade in contravention of Article III, Section 29, of the North Carolina State Constitution. Accordingly, the General Assembly later that month abolished the North Carolina Real Estate Commission and liquidated its assets. It would be eighteen years before the state again attempted comprehensive regulation and licensing of the real estate profession in North Carolina.
The current North Carolina Real Estate Commission was established in 1957 by the General Assembly under Chapter 93A of the General Statutes. Since its inception, the North Carolina Real Estate Commission has issued licenses with consecutive numbers. License number 1 was issued to CE Phillips in 1957. That license is on display at the Durham Regional Association of REALTORS® where he served as President. At the time of this publication, the Commission has issued 367,700 broker, 42,746 firm, and 1,030 limited nonresident commercial licenses.