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Diversity, Equity, and Inclusion Article

Throughout the last year, the North Carolina Real Estate Commission has worked tirelessly to grow and expand our outreach programming, which was developed in part to engage with and attract diverse groups of young professionals to the real estate industry.

We accomplished a lot during the last year, none of which would have been possible without the support of our licensees and dedicated industry partners, and for this we are extremely appreciative.

Highlighted below are some of the things we accomplished in 2024: 

We look forward to continuing to move this programming forward in 2025 and your continued participation and support.  If you would like to be a part of our programming, please contact us here and Commission staff will be in contact with you.  

Case Study: Square Footage

FACTS:  A broker is instructed by her seller-client to hire a vendor to measure her property. The vendor indicates that the property has 2,619 square feet of permitted space and 1,001 square feet of an unpermitted in-law suite. The broker represents that the property has 3,620 square feet in the MLS, which includes the unpermitted in-law suite.

The seller-client enters into a contract with a buyer and accepts a back-up contract on the property. Buyer #1 terminates the contract due to financing during the due diligence period. Buyer #2 hires a vendor to conduct a property inspection. During the inspection, Buyer #2 is informed that the in-law suite is unpermitted and terminates the contract due to misrepresentation. The broker fails to revise the MLS listing after both Buyer #1 and Buyer #2 terminate their respective contracts.

ISSUE: Is it mandatory under Commission rules for a broker to state the square footage of a property in a listing? Did the broker fulfill their duties?

ANALYSIS:  No, and no. Brokers are not required by License Law and Commission rules to report the square footage of properties offered for sale (or rent); however, when they do report square footage, the information they provide must be accurate. The Commission clarifies this position in their resource entitled, Residential Square Footage Guidelines. These guidelines also assist brokers with how to measure, calculate, and report (both orally and in writing) the living area contained in detached and attached single-family residential dwellings.

The Commission is aware that brokers who are members of a professional trade association may be required to report the square footage of a property in a listing. Therefore, the Commission recommends brokers to carefully follow the Residential Square Footage Guidelines or any other standards that are comparable to them, including those approved by the American National Standards Institute, Inc. (ANSI) which are recognized by the Commission as comparable standards. Further, brokers should be aware of the standards a vendor may use and the differences within the standards when they are hired to measure a property.

In the scenario above, the broker should include the unpermitted section within the property separately and disclose it to all parties in writing. Written disclosure ensures brokers are not misrepresenting the property and/or misleading the buyer. Buyers should be made aware of the unpermitted section’s size and location in the property as well. Essentially, brokers should clearly identify unpermitted space within a property in the listing description.

If a broker makes any willful or negligent misrepresentation or pursues a course of misrepresentation through advertising, they may be subject to disciplinary action by the Commission. For example, if the advertised square footage is wrong, the listing agent and firm may be held responsible. Further, per Rule 58A .0110, the BIC is responsible for all advertising, so they too may be subject to disciplinary action.

RESOURCES:

N.C.G.S. § 93A-6(a)(1), N.C.G.S. § 93A-6(a)(8), and 93A-6(a)(10)

License Law and Commission Rules: 58A .0110

Articles: 2022-2023 Update Course Section, “Material Facts: Speak Up”

Residential Square Footage Guidelines

Your Square Footage Measurement Must Be Right When Listing a Property

Reminder: Square Footage

Can tax records be used as a resource for square footage measurements?

No. Brokers cannot utilize tax records as a resource for square footage measurements. If a broker finds after measuring the property, that the square footage measurement differs from the information in the tax records, there may be other issues, like a permit, that need to be investigated and resolved. Blueprints are also not an acceptable resource for square footage measurements.

If you have any additional questions, please go to the Commission’s website and review the resource Residential Square Footage Guidelines.

New Year’s Resolutions for Real Estate Brokers in 2025: Focus on Education and Staying Informed

As 2025 begins, North Carolina brokers have a perfect opportunity to enhance their expertise and better serve their clients. A focus on education and staying informed about evolving rules and laws is essential in today’s changing environment. Here are resolutions to guide your professional growth this year.

1. Stay Updated on Rules and Laws

The North Carolina real estate industry is governed by regulations that can change quickly. Make it a priority to monitor updates to Commission Rules. Sign up for notifications on rule-making activities to stay ahead of any changes that impact your practice Subscribe to the Commission’s mailing list to receive notice of rulemaking (rule changes, additions, or deletions).

2. Be Proactive with Continuing Education

If you have not already completed your Continuing Education (CE) for the 2024-2025 license period, don’t wait until the June 10th deadline. Completing your CE requirements early ensures compliance and reduces the stress of last-minute planning. Use this opportunity to take courses that align with your professional goals or address emerging trends in the market. 

3. Foster Diversity and Inclusivity

Make it a priority to understand and meet the needs of clients from all backgrounds. Familiarize yourself with Fair Housing laws and adopt practices that ensure every client feels respected and welcomed. Consider diversity training or community outreach initiatives to broaden your understanding of the unique challenges some consumers may face.

4. Engage in Mentorship and Education

Share your knowledge by mentoring new agents or hosting educational sessions for clients. Teaching reinforces your expertise and strengthens your professional reputation. 

Conclusion:

In 2025, focusing on education and staying informed about regulatory changes will help you stand out as a trusted professional. By committing to continuous learning, mastering new tools, and staying engaged with the latest industry updates, you’ll provide exceptional service and build lasting success. Make this year your most knowledgeable and impactful yet!

Reminder: Preparing your 2024 Clients for the 2025 Tax Season

With 2025, comes the ponderous task of closing out files for 2024. Why not generate some good will along with what is usually an administrative chore?

Like you, your buyer and seller clients from 2024 are starting to gather their records in order to prepare and file their income tax returns. Think how appreciative they would be if you sent them a copy of the settlement statement from their real estate transaction, so they do not have to hunt for it.

Guess what? You can also include your well wishes for the New Year and your contact information for possible referrals.

Reminder: Annual Rulemaking

The Commission is initiating its annual rulemaking process by proposing rules with an effective date of July 1, 2025. Rulemaking is the procedure through which the Commission interprets laws by adopting, amending, or repealing rules. As part of the permanent rulemaking process, the Commission drafts proposed rule language and submits it to the Office of Administrative Hearings (OAH). OAH then publishes the proposed text in the North Carolina Register and notifies interested parties that the Commission has begun the process to amend, adopt, or repeal a rule.

Proposed text will be published on January 15,2025 and can be found on the Commission’s website starting at that time. Once the proposed text is published, interested parties have two opportunities to provide feedback. The first is the public comment period, which lasts 60 days and allows individuals to submit written comments to the Commission. If you would like to submit a written comment, you may submit it to the Rulemaking Coordinator at public.comment@ncrec.gov.

The Commission will accept public comments between January 15, 2025-March 16, 2025. The second opportunity occurs during a public hearing held shortly after the proposed text is published. The public hearing will be held at High Point University, Anne Kerr Ballroom, One N University Parkway, High Point, NC 27260, on Wednesday, February 19, 2025, beginning at 9:00AM. During these forums, stakeholders can voice their support for or opposition to the proposed rule.

After the public comment period and public hearing conclude, the Commission reviews all submitted comments and determines whether to amend, adopt, or reject the proposed rule text. The Commission will be reaching their final decision for rulemaking on March 19, 2025. Once the final text is approved by the Rules Review Commission, the Commission will publish the approved rules.

New Commission Member: Farah Lisa Sebti

Farah Lisa Sebti is a graduate of the UNC School of Law and is currently an attorney with Sebti Law, where she has practiced since December 2019. Previously, she was with Alston and Bird in Raleigh-Durham, NC, where she represented banks, mortgage lenders and mortgage servicers in claims arising under contracts, federal regulations, and state law. She also practiced with DLA Piper LLP in New York from 2010 – 2015 in the firm’s commercial litigation and securities practice groups. Licensed in both North Carolina and New York, Ms. Sebti was named to the 2015 New York Metro and 2017 North Carolina Super Lawyers Rising Stars lists. Before becoming an attorney, Ms. Sebti worked for several years in New York City at Cosmopolitan Magazine. 

She has attended three of North Carolina’s venerable academic institutions: UNC Chapel Hill, Duke, and East Carolina University. She was born and raised in her mother’s hometown of Greenville, North Carolina; her father is from Casablanca, Morocco.  She currently lives in Charlotte with her husband and twelve-year-old son. 

Ms. Sebti was appointed to the Commission by Governor Roy Cooper.

Happy New Year!

As we welcome the New Year, the North Carolina Real Estate Commission extends its heartfelt gratitude to all real estate brokers for their hard work and dedication. Your professionalism and commitment to the profession continue to elevate the standards of real estate brokerage in North Carolina.

This year, we wish you success, growth, and new opportunities in your real estate career. The Commission is here to support you by providing educational resources and guidance on regulatory compliance. As you navigate the dynamic real estate market, we encourage you to stay up to date with License Law and Commission Rules.

For any questions about License Law and Commission Rules, or permissible brokerage activities, feel free to contact Regulatory Affairs at regulatoryaffairs@ncrec.gov.

May the year ahead bring you happiness and success in all your real estate endeavors!

Year End Wrap-Up

It’s been a busy year at the Real Estate Commission, and as we wrap up 2024 and look towards 2025, let’s review some of the major events of the year.

The NAR Settlement

First on every REALTORS®’ mind: the National Association of Realtors’ settlement.  While the settlement applies only to brokers who are members of the Association, it has had a broad impact on brokerage practice. If you haven’t heard about this then your license must be expired or inactive and you need to reinstate it before December 31, 2024 (hint, hint). 

In November 2024, final court approval was granted in the nationwide anti-trust class action lawsuit that alleged that NAR’s practices inflated broker commissions.  NAR agreed to two rule changes that went into effect in August prior to the approval of the settlement.  First, REALTORS® can no longer include the buyer agent’s compensation when listing homes on the MLS. Second, buyers can negotiate their own agent’s pay and formalize it in a signed contract. 

First, let’s distinguish between brokers and REALTORS®.  The Real Estate Commission licenses brokers, but REALTORS® are licensed brokers who are also voluntary members of the NAR trade association.  One does not have to be a REALTOR® to be a broker, but you must be a broker to be a REALTOR®. 

Second, please remember that Rule 21 NCAC 58A .0104 already requires that all agency agreements must be in writing.  So, while the new NAR rule change calls for a signed contract between the buyer and their REALTOR® that addresses compensation, the Real Estate Commission has required this for some time now and it is not a new requirement in North Carolina. What is new is the timing, and that applies only to REALTORS®.  They must now have an agreement signed prior to touring a home with a buyer.  

Revised RPOADS

The Commission revised the Residential Property and Owners’ Association Disclosure Statement (RPOADS) effective July 1, 2024.  While the new RPOADS  has a slightly different format and larger font, most of the questions remained the same with the addition of more detailed questions addressing flooding and related issues. 

As a reminder, the RPOADS is used for residential properties and is filled out by the seller, not the broker.  As to sellers, North Carolina is an  “as is/buyer beware/caveat emptor” state (however you want to say it), which means an unlicensed seller may choose not to disclose any material facts by selecting “no representation” (the “NR” circle on the RPOADS). However, if the seller is a licensed broker, they are required to comply with Commission rules, which require aevery broker to disclose any material facts about the property that they know or should reasonably know, even in personal transactions.  So even if the seller chooses to not disclose, the broker still must.  And while it’s not a requirement, the best practice would be to disclose it in writing! 

Trending in 2024

Fraud continues to plague the real estate industry throughout the country.  Seller imposters, identity theft, and wire fraud are on the rise as consumers have reported losing out on billions of dollars per year to various types of scams.  Know the red flags and always verify information to ensure that you are protecting the best interests of your clients and helping to prevent fraudulent activity.

What Comes Next?

As we move into 2025, the Commission continues to move forward with proposed rulemaking. The proposed changes can be found on the Commission’s homepage under License Law and Rule Changes.  The public comment period opens on January 15, 2025, and we encourage you to submit your comments in writing to Public.Comment@ncrec.gov by March 17, 2025.  In addition to the comment period, the Commission encourages you to attend the February 2025 public hearing on the proposed rule changes in High Point.

And finally, Happy New Year to all of our licensees and educators from the Commission and its Staff. 

Disciplinary Actions

RACHEL L ALLES (CHARLOTTE) – By Consent, the Commission reprimanded Alles effective November 13, 2024. The Commission found that Alles, acting as the broker-in-charge of Higher Tech Realty NC LLC, supervised a listing agent who had been licensed for over 18 years. The listing agent’s seller-client completed a Residential Property Owners’ Association Disclosure Statement, and marked the property as having city water, city sewer, septic, and a private well. Alles was the broker-in-charge responsible when the listing was placed on the Multiple Listing Services (“MLS”), in which the property was described as having city water, city sewer, and septic. The listing agent misrepresented the property as being on city water when in fact it was served by a shared well.   After closing, the buyer discovered the property did not have city water, and that the well was a shared well. Alles failed to ensure the advertisement for the property was accurate.

ASSISTANCE IN THE JOURNEY LLC (WINSTON-SALEM) – By Consent, the Commission suspended the real estate firm license of Assistance in the Journey LLC for a period of 9 months, effective December 15, 2024. The Commission then stayed the suspension in its entirety upon certain conditions. The Commission found that Assistance acted as designated listing brokers providing services for Assistance’s seller-client. Assistance misrepresented the heated square footage (“SF”) in its advertising. After the purchase, the buyer discovered that the advertised SF was 25% greater than the actual SF. A private settlement has been reached with the buyer.

JOHN F BARNHART (SANFORD) – The Commission accepted the permanent voluntary surrender of the real estate license of Barnhart, effective December 11, 2024. The Commission dismissed without prejudice allegations that Barnhart violated provisions of the Real Estate License Law and Commission Rules. Barnhart neither admitted nor denied misconduct.

MICHELLE B BENNETT (CHARLOTTE) – By Consent, the Commission reprimanded Bennett effective December 31, 2024. The Commission found that in August 2023, Bennett failed to verify whether homeowner association covenants allowed for the rental of the subject property.

HEIDI E CHRISTIE (WINSTON-SALEM) – By Consent, the Commission suspended the broker license of Christie for a period of 30 months, effective December 15, 2024. The Commission then stayed the suspension in its entirety upon certain conditions. The Commission found that Christie acted as co-listing agent in a designated dual agency transaction. Christie misrepresented the heated square footage (“SF”) in advertising. Christie hired a photographer who was not licensed as an appraiser or real estate broker to provide measurements and failed to review the advertising and measurements for accuracy. After the purchase, the buyer discovered that the advertised SF was 25% greater than the actual SF. A private settlement has been reached with the buyer. Christie attended trainings for brokers on SF representation and signed documentation attesting that the measurements adhered to firm policy when they did not.

CRYSTAL G FRANKLIN COPAS (SANFORD) – By Consent, the Commission suspended the broker license of Copas for a period of 6 months, effective November 15, 2024. The Commission then stayed the suspension in its entirety upon certain conditions. The Commission found that in June 2023, Copas listed property owned by an investor. Copas failed to include the types of agency offered on the WWREA disclosure, and failed to include the effective date, expiration date, and agency authorization in the listing agreement, but later rewrote both to include omitted information. A buyer went under contract for the property and emailed Copas the valuation from the buyer’s VA appraisal including a list of repairs to which the valuation was subject. The seller completed a septic repair and had plumbing issues inspected but the buyer terminated the contract when the buyer could not make up the difference in the VA appraised value. Copas failed to fully disclose the VA-identified remaining repair issues to the second buyer. The second buyer terminated in part due to inspection issues and newly discovered title issues and received a partial refund of the due diligence fee. Copas received the second buyer’s inspection report and provided that inspection report to the final buyer.

MARINA J DANE (CAROLINA BEACH) – The Commission revoked the real estate broker license of Dane, with no eligibility to apply for reinstatement for a period of 1 year from the effective date of December 11, 2024. The Commission found that on or about July 5, 2023, Dane fraudulently scheduled a showing at a property listed for sale so that she could access the property for her own personal use.

AIMEE L GENDRICH (JACKSONVILLE) – By Consent, the Commission reprimanded Gendrich effective December 15, 2024. The Commission found that Gendrich served as property manager for a landlord residing out of the country. Gendrich failed to conduct an inspection of the residence upon entering into the property management agreement and failed to conduct an inspection of the residence when the tenant vacated. In separate sales transactions in which Gendrich represented buyer-clients, Gendrich failed to deliver a detailed and accurate copy of the closing statement and properly identify repair requests in the Due Diligence Request and Agreement.

HIGHER TECH REALTY NC LLC (CHARLOTTE) – By Consent, the Commission reprimanded Higher Tech Realty NC LLC effective November 13, 2024. The Commission found that in September 2022, the Firm acted as listing agent for a property owner. The seller-client completed a Residential Property Owners’ Association Disclosure Statement and described the property as having city water, city sewer, septic, and a private well. The Firm advertised the property on the Multiple Listing Services (“MLS”), as having city water, city sewer, and septic, misrepresenting that the property was on city water when in fact it was on a shared well.   After closing, the buyer discovered the property did not have city water, and that the well was a shared well. The Firm failed to ensure the MLS listing for Subject Property was accurate.

LANTERN REALTY & DEVELOPMENT LLC (KANNAPOLIS) – By Consent, the Commission reprimanded Lantern Realty & Development LLC effective December 11, 2024. The Commission found that in or around May 2023, the Firm listed a residential property and advertised the property as “[t]his home has been fully remodeled; new roof, HVAC, water heater, electrical and plumbing.” After closing on the property, the buyer discovered the electrical did not meet code requirements and paid to have the electrical service updated from 75 amps to 200amps. The Firm failed to disclose the property was not renovated in compliance with the law and misrepresented it in the advertisement.

ASHLEY S LAY (WINSTON-SALEM) – By Consent, the Commission suspended the broker license of Lay for a period of 30 months, effective December 15, 2024. The Commission then stayed the suspension following a 1-month active period upon certain conditions. The Commission found that Lay acted as co-listing agent in a designated dual agency transaction. Lay misrepresented the heated square footage (“SF”) for the subject property in advertising. Lay also acted as seller’s agent for the sellers in their purchase of the property and had access to information indicating that the advertised number was wrong. After the purchase, the buyer discovered that the advertised SF was 25% greater than the actual SF. Lay attended trainings for brokers on SF representation and signed documentation attesting that the measurements adhered to firm policy. A private settlement has been reached with the buyer.

JOHN K LAY (WINSTON-SALEM) – By Consent, the Commission reprimanded Lay effective December 15, 2024. The Commission found that Lay acted as broker-in-charge for a licensed team. The team and Firm advertised the subject property and misrepresented the heated square footage (“SF”). After the purchase, the buyer discovered that the advertised SF was 25% greater than the actual SF. Lay failed to ensure his firm’s advertisements were accurate and that affiliated brokers adhered to firm policies. A private settlement has been reached with the buyer.

SHAWN K MAYERS (KINSTON) – The Commission accepted the voluntary surrender of the real estate broker license of Mayers, effective December 11, 2024, with no right to reapply for 2 years. The Commission dismissed without prejudice allegations that Mayers violated provisions of the Real Estate License Law and Commission Rules. Mayers neither admitted nor denied misconduct.

JESSICA L MOORE (WINSTON-SALEM) – By Consent, the Commission suspended the broker license of Moore for a period of 12 months, effective December 15, 2024. The Commission then stayed the suspension in its entirety upon certain conditions. The Commission found that Moore acted as designated buyer-agent for a client.  The designated listing agent and firm advertised the subject property and misrepresented the heated square footage (“SF”). Moore pointed out to her buyer-client that she believed the SF was inaccurate but failed to measure herself or discuss the possible inaccuracy with the designated listing agents. Moore completed her firm’s Broker Confirmation Form in which she agreed that she did not observe any gross discrepancies in SF at the time of showing. After the purchase, the buyer discovered that the advertised SF was 25% greater than the actual AF. A private settlement has been reached with the buyer.

PIER 24 REALTY LLC (JACKSONVILLE) – By Consent, the Commission reprimanded Pier 24 Realty effective December 15, 2024. The Commission found that the Firm provided property management services and maintained security deposit and rental trust accounts. The Firm failed to ensure that the trust accounts were labeled as “trust” or “escrow.” The Firm failed to maintain complete property ledgers and records that would provide a complete audit trail.

MILLS A TOWLER (JACKSONVILLE) – By Consent, the Commission suspended the broker license of Towler for a period of 2 years, effective September 16, 2024. The Commission then stayed the suspension following a 3-month active period upon certain conditions. The Commission found that Towler acted as listing agent for a property and received a home inspection report and additional information from the buyer under contract regarding a leaking bathroom drainpipe and damaged subfloor. The contract terminated after the parties could not come to agreement on repairs and Towler failed to update his listing or otherwise disclose these material facts to three subsequent buyers.