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THE BROKER’S LEGAL MAP: A GUIDE FOR BROKERS TO NC LAW AND RULES

North Carolina real estate brokers juggle many responsibilities. While you don’t need to be a lawyer to practice real estate, a working knowledge of the statutes and rules that govern your business is essential to keeping your license and your clients’ trust. This guide offers a summary of key laws brokers should be aware of as part of competent practice.

North Carolina Real Estate License Law (Chapter 93A) and Commission Rules (21 NCAC Chapter 58)

The foundation of authority to act as a broker is found in Chapter 93A of the North Carolina General Statutes. Here, you will find broker licensing requirements, the Commission’s disciplinary authority, and the rules governing continuing education, broker-in-charge status, and broker price opinions. If you’re ever unsure where to look, this is a good start. Rules adopted by the Commission under the Administrative Code are found in the North Carolina Administrative Code, 21 NCAC Chapter 58, and cover day-to-day practice, including agency agreements, advertising, delivery of instruments, handling of trust money, disclosures, record retention, and education. Both are available here (See the Commission’s home page for proposed and recent rule changes).

Residential Transactions: Landlord and Tenant Law

North Carolina brokers frequently handle residential leases in addition to sales, and understanding landlord-tenant law is crucial. NCGS § 42 establishes laws relating to the obligations and duties of landlords and tenants and includes the Tenant Security Deposit Act, which mandates the how residential tenant security deposits are to be handled.

Disclosures and Due Diligence

North Carolina law imposes specific disclosure duties on sellers and brokers. Under the Residential Property Disclosure Act, sellers must complete the Residential Property and Owners’ Association Disclosure Statement (RPOADS), and brokers must ensure it is delivered to prospective buyers. Beginning in 2024, sellers are also required to disclose prior flood damage. Brokers facilitating inspections should be aware that only licensed professionals may perform home inspections under the Home Inspector Licensure Act.  

Title, Insurance, and Risk

Title and risk management are integral to every transaction. The Title Insurance Act, regulates entities that issue insurance policies guaranteeing ownership. In transactions with financing, NCGS § 53-244, governs lender obligations in connection with mortgage loan commitments. Additionally, environmentally sensitive properties—particularly those in coastal regions—may be subject to development restrictions under the Coastal Area Management Act (CAMA).

Fair Housing Act

Any conduct by a broker that violates the North Carolina State Fair Housing Act, the Federal Fair Housing Act, or Local Fair Housing Ordinances also constitute a violation of the Real Estate License Law. Brokers must not engage in discriminatory practices in the sale, leasing, or financing of housing.

Administrative Procedures Act

The Administrative Procedures Act establishes the framework by which North Carolina agencies, including the Real Estate Commission, adopt rules and conduct administrative hearings. It ensures separation between investigative, advocacy, and adjudicative functions in agency proceedings and provides due process protections to licensees subject to discipline.

HOAs and COAs

Real estate brokers working with planned communities or condominiums should be aware of the statutory frameworks that govern them. The Planned Community Act applies to most homeowner associations (HOAs) formed after January 1, 1999, while the Condominium Act governs condominiums created on or after October 1, 1986. Many HOAs are organized as nonprofit corporations and thus operate under the North Carolina Nonprofit Corporation Act.

Vacation Rental Act

The growth of the tourism industry in North Carolina led to a greatly expanded market of privately owned residences that are rented to tourists for vacation, leisure, and recreational purposes. Rental transactions conducted by the owners of these residences or licensed real estate brokers acting on their behalf present unique situations not normally found in the rental of primary residences for long terms. The Vacation Rental Act regulates the competing interests of landlords, real estate brokers, and tenants.

Local Ordinances and Rules

While strict adherence to state and federal laws is required, a broker in North Carolina must also pay attention to local ordinances and rules for the area in which their business occurs. Each locality may have different regulations for brokerage and adherence to them is crucial for successful practice.

Conclusion

While you’re not expected to memorize every statute, knowing where to look and what governs your work is part of your responsibility as a broker. When in doubt, consult your broker-in-charge, the Commission’s website, or legal counsel. Knowledge is not only power, it’s also protection.

Disciplinary Actions

RICHARD H FLEMING (CLAYTON) – By Consent, the Commission reprimanded Fleming effective June 30, 2025. The Commission found that Fleming listed a vacant lot for sale. Fleming failed to take adequate steps to verify the identity of the seller of the vacant lot, resulting in the loss of the $5,000 due diligence fee paid on behalf of the buyer.

ALLISON M LONG (MINT HILL) – By Consent, the Commission reprimanded Long effective June 30, 2025. The Commission found that Long was the listing agent of the subject property. Prior to the listing, Long was contacted by a woman claiming to be the owner of the subject property. Long failed to take adequate steps to verify the identity of the seller of the subject property, resulting in the loss of the $5,000 due diligence fee paid on behalf of the buyer.

JILL JORDAN (RALEIGH) – By Consent, the Commission suspended the broker license of Jordan for a period of 12 months, effective June 16, 2025. The Commission then stayed the suspension in its entirety upon certain conditions. The Commission found that Jordan listed her personally owned real property but failed to fully disclose material facts regarding structural repairs to a buyer. The buyer terminated the contract after the parties could not agree on a due diligence request and Jordan refunded the buyer’s due diligence fees and paid their inspection costs. Jordan performed additional repairs, revised the RPOADS, and disclosed a structural engineer’s report to a second buyer but failed to fully disclose defects from the first inspection that had not been repaired.

LATASHIA S MCDONALD (RALEIGH) – By Consent, the Commission suspended the broker license of McDonald for a period of 30 days, effective June 18, 2025. The Commission found that McDonald’s buyer-clients went under contract with a property and McDonald scheduled a showing appointment for the buyer-clients to visit the occupied property. The seller vacated the property to accommodate the scheduled showing. McDonald provided the buyers with the lock-box code to the property and allowed the buyers to enter the property without McDonald being present.

RACHEL A WITHERS (RALEIGH) – By Consent, the Commission reprimanded Withers effective June 13, 2025. The Commission found that Withers represented a buyer in a residential transaction and failed to visit the property with the buyer, but had another agent on her team attend on her behalf. Withers failed to identify that the lot size was actually 0.25 acres, and not 0.8 acres as advertised in the listing. An empty lot was located next to the subject property.

Current Stats: Monthly Licensee Count as of June 1, 2025

Home Inspections – Broker Duties

Home inspections provide buyers with critical information needed to make an informed decision when purchasing a home. Buyers often rely on the recommendation of their broker when choosing a home inspector. This article will address considerations that should be made when brokers are recommending a home inspector.

In North Carolina, individuals who perform home inspections for compensation or hold themselves out as licensed home inspectors must be licensed by the North Carolina Home Inspector Licensure Board (HILB). The HILB licenses individual home inspectors but does not regulate or license home inspection companies. The individual completing the inspection on site must be licensed. The HILB maintains a searchable directory of active licensees on its website.

Licensed home inspectors must provide a written contract to the client that states the home inspection will be performed in accordance with the North Carolina Home Inspector Licensure Board Standard of Practice (SOP). The contract must contain the inspector’s name, license number, and may include limitations on liability for errors and omissions, including those that lead to property damage or injury, or for not meeting the standard of care expected of a license home inspector. Understanding the scope and limits of the inspection at the outset is critical to managing expectations and protecting the client’s interests.

During a home inspection, systems and components required to be inspected by the SOP will be inspected for defects. For each system inspected, the inspector will:

  1. Describe the system,
  2. Identify any Defects,
  3. Explain the Implications of the defect, and
  4. Direct the client to appropriate next steps.

This is known as the “DDID” framework which ensures consumers understand not only what is wrong, but why it matters and what they should do about it. However, inspection reports that include repair estimates or offers to make repairs are not allowed as they may create a conflict of interest.

Following the inspection, customers are provided with a written home inspection report. The report will include a summary page, but the entire report should be reviewed to identify all systems and components that may not be functioning as intended or appear not to be functioning as intended based upon tangible evidence. The summary and report may also include safety concerns identified during the home inspection.

Under Home Inspector Licensure Law, a person who is not licensed as a home inspector cannot inspect two or more systems or components for a fee. There is an exception for licensed general contractors who are preparing bid specifications and estimates for construction work. Similarly, licensed plumbing contractors may inspect plumbing systems and licensed electrical contractors may inspect electrical systems. However, these professionals cannot inspect additional systems unless they are also licensed by the HILB. Typically, these tradespeople are brought in as follow-up specialists when a licensed home inspector identifies a concern that requires repair or further evaluation by a specialist.

Critically, brokers must not rely on a home inspection report that they know or reasonably should know was prepared by an unlicensed individual. Even if an unlicensed individual performed the inspection at no charge, claims that their company employs a licensed home inspector, or claims that licensure is not required, the broker may still be subject to disciplinary action under N.C. Gen. Stat. § 93A-6(a)(8) and (10) for unreasonably relying on an inspection report by an unlicensed individual.

For example, a listing broker provides a buyer’s agent with a copy of a pre-listing inspection report prepared by an unlicensed individual. The buyer’s agent is unfamiliar with the inspector and makes no inquiry into their credentials but counsels the buyer client that they can rely on the report when moving forward with the purchase. After closing, defects are discovered that were not contained in the report. The buyers may then seek recourse against the unlicensed individual and the brokers who recommended the inspector.

To summarize, brokers should exercise due diligence in connection with recommending home inspections as follows:

The position of Education Officer is currently available at the North Carolina Real Estate Commission office in Raleigh

EMPLOYMENT OPPORTUNITY AVAILABLE

The position of Education Officer is currently available with the North Carolina Real Estate Commission in Raleigh. A summary is outlined below.

Summary:
Designs and develops educational content for Commission programs, courses,  publications and the Commission’s website under the supervision and direction of the Director and Assistant Director of the Education & Licensing Division.

Employment Schedule:

Click here to apply.

Disciplinary Actions

ALL AMERICAN REALTY OF THE TREASURE COAST LLC (HAYESVILLE) – The Commission accepted the permanent voluntary surrender of the real estate firm license of All American Realty of the Treasure Coast LLC, effective May 21, 2025. The Commission dismissed without prejudice allegations that the Firm violated provisions of the Real Estate License Law and Commission Rules. The Firm neither admitted nor denied misconduct.

DAVID HUNT CHURCH (CHARLOTTE) – Following a hearing, the Commission suspended the broker license of Church for a period of six months, effective April 30, 2025. The Commission found that Church was the builder, seller, and listing agent on a newly-constructed home. Church advertised the property contained 1,200 square feet of heated living area. An appraiser for a potential buyer measured the property and found it contained only 1,093 square feet. Church maintained that he personally measured the property and that he did not err in his square footage calculation, even though three independent appraisers’ measurements indicated the square footage to be more than 9% less than what Church advertised.  The Commission found Church misrepresented the heated square footage for the property in advertising and failed to update the MLS to reflect the correct square footage. 

JOY L COTTO (MOORESVILLE) – The Commission accepted the voluntary surrender of the real estate license of Cotto, effective May 21, 2025, with no right to reapply for two years. The Commission dismissed without prejudice allegations that Cotto violated provisions of the Real Estate License Law and Commission Rules. Cotto neither admitted nor denied misconduct.

RACHEL A DUNNAVANT (CHARLOTTE) – By Consent, the Commission reprimanded Dunnavant effective May 21, 2025. The Commission found that as listing agent for a seller of residential property, Dunnavant hired a vendor to measure the property’s heated square footage. Dunnavant misrepresented the heated square footage in her advertisement by mistakenly using the vendor’s combined above-grade number as the measurement of one floor in the three-floor property. The bank’s 2020 appraisal valued the property at above the purchase price but noted a lower heated square footage than the advertisement. The buyer discovered the error in 2024 when a new measurement was taken when they were selling the property.

NANCY J JOHNSON (HAYESVILLE) – The Commission accepted the permanent voluntary surrender of the real estate license of Johnson, effective May 21, 2025. The Commission dismissed without prejudice allegations that Johnson violated provisions of the Real Estate License Law and Commission Rules. Johnson neither admitted nor denied misconduct.

DALE E LOFTIS (ROCK HILL) – By Consent, the Commission suspended the broker license of Loftis for a period of 12 months, effective May 1, 2025. The Commission then stayed the suspension in its entirety upon certain conditions. The Commission found that a provisional broker under Loftis’s supervision failed to remind her buyer-client on the day of closing to call the closing attorney for wiring instruction, as previously conveyed to the buyer-client by the provisional broker and as indicated in the attorney’s initial instructions. Instead, the provisional broker advised her client to pay closing costs based upon instructions in an email to the buyer-client allegedly from the closing attorney.  The email was in fact fraudulent.  Loftis failed to properly supervise the provisional broker in a manner to ensure the provisional broker performed services in compliance with License Law and Commission rules.

SARAH KATHERINE LOFTIS (ROCK HILL) – By Consent, the Commission suspended the broker license of Loftis for a period of 12 months, effective May 1, 2025. The Commission then stayed the suspension in its entirety upon certain conditions. The Commission found that Loftis, acting as buyer-agent, failed to advise her buyer-client on the day of closing to call the closing attorney for wiring instruction as previously conveyed to buyer-client by Loftis and as indicated in the attorney’s initial instructions. Instead, Loftis advised her client to pay closing costs based upon instructions the buyer-client received in an email allegedly from the closing attorney.  The email was in fact fraudulent.

NEAL J MORTENSEN II (WILMINGTON) – The Commission accepted the permanent voluntary surrender of the real estate license of Mortensen, effective May 21, 2025. The Commission dismissed without prejudice allegations that Mortensen violated provisions of the Real Estate License Law and Commission Rules. Mortensen neither admitted nor denied misconduct.

MATTHEW JAMES SARVER (CORNELIUS) – Following a hearing, the Commission reprimanded Sarver effective April 24, 2025. The Commission found that Sarver was the listing agent of a home and received a text from a prospective buyer’s agent stating “radon came back at 14.8. At least the seller got free money to fix it.” Sarver communicated this message back to his seller-clients and they planned to install a radon mitigation system.  Sarver relisted the property and failed to disclose the potential high levels of radon to prospective buyers, including another buyer who went under contract to purchase the property prior to the installation of a radon mitigation system.

Commission Presentations

May 2025 Presentations

Patrick H. Bell, Commission Member, Mel Black, Commission Member, and Kristen Fetter, Assistant Director of Regulatory Affairs, spoke at Gaston Association of REALTORS® on May 7th.  

Bryan Boyd, Deputy Legal Counsel, spoke at Haystack Realty Group on May 7th.  

Bruce Rinne, Information Officer, spoke at Mark Spain Real Estate on May 7th.   

Bruce Rinne, Information Officer, spoke at 220 Agents on May 8th.  

Bruce Rinne, Information Officer, spoke at OWN Real Estate on May 15th.  

June 2025 Presentations 

*These presentations are subject to change due to the availability of Commission members and/or staff.* 

Lyndi James, Auditor, will speak at Coldwell Banker Sea Coast Advantage June 10th.  

Mel Black, Commission Member, and Janet Thoren, Director of Regulatory Affairs, will speak at Cleveland County Association of REALTORS® on June 11th.  

James Beaty, Commission Member, and Kristen Fetter, Assistant Director of Regulatory Affairs, will speak at the Winston-Salem Association of REALTORS® on June 17th. 

Dillian Hecht, Associate Legal Counsel II, will speak at Allen Tate Glenwood on June 24th.  

Fair Housing

June is National Homeownership Month, a time to recognize the value of owning a home and the opportunities it creates for financial stability, personal growth, and stronger communities. Originally launched in 1995 by President Bill Clinton as a week-long initiative, it was expanded into a month-long observance by President George W. Bush in 2002. 

While we celebrate the benefits of homeownership, it’s equally important to acknowledge that this goal has not always been accessible to everyone. Fair housing policies are essential to ensuring that individuals, regardless of race, color, national origin, religion, sex, familial status, or disability, have an equal opportunity to become homeowners without facing discrimination. 

National Homeownership Month is a powerful reminder that owning a home should not be a privilege for a few but a possibility for all. Promoting fair housing means turning the dream of homeownership into a reality attainable for all. 

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.