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My license is expired! How do I reinstate it?
To maintain a current license, brokers must renew their license annually between May 15 and June 30. The license of a broker who fails to renew during that period will expire on June 30, and that broker must cease all brokerage activities immediately.
What steps must a broker take to reinstate an expired license? That answer depends on how long the license has been expired.
To reinstate a license expired for less than 6 months:
- Go to the Commission’s homepage (www.ncrec.gov);
- Click on Reinstate your License;
- Enter your license number and PIN (last 4 of your SSN unless you have changed it);
- Answer required questions; and
- Pay the $90 reinstatement fee.
NOTE: Following expiration, a broker’s license is reinstated on inactive status. To regain active status, brokers must submit a License Activation / Affiliation form (REC 2.08).
To reinstate a license expired for 6 months but no more than 2 years:
- Successfully complete one 30-hour Postlicensing course (course must be completed within 6 months prior to submitting reinstatement application); and
- Submit a reinstatement application with the $90 application fee and all required documentation, including criminal background report;
-OR-
- Submit a reinstatement application with the $90 application fee and all required documentation, including criminal background report; and
- Pass the National and State sections of the license exam.
NOTE: Following expiration, a broker’s license is reinstated on inactive status. To regain active status, brokers must submit a License Activation / Affiliation form (REC 2.08).
To reinstate a license expired for more than 2 years:
- Successfully complete the 75-hour NC Broker Prelicensing course;
- Submit a license application with the $100 original application fee and all required documentation, including criminal background report; and
- Pass the National and State sections of the license exam.
NOTE: You will be licensed as a provisional broker and be subject to the 90-hour Postlicensing education program. To gain active status, you must submit a License Activation / Affiliation form (REC 2.08).
For more information, review Commission Rule 58A .0505 or visit the “Reinstate your License” page on the Commission’s website. You may also contact the Commission’s Education & Licensing Division at ls@ncrec.gov or 919-875-3700.
North Carolina Department of Revenue: Privilege License Tax
N.C.G.S. Section 105-41 required every individual in North Carolina who practiced a profession or engaged in a business to obtain from the North Carolina Department of Revenue (hereafter “NCDOR”) a statewide license for the privilege of practicing a profession or engaging in the business.
However, Session Law 2023-134 repealed this requirement under the General Statutes. Effective July 1, 2024, real estate brokers and other professionals are no longer required to apply to the NCDOR for a privilege license, or renew an existing privilege license, each year beginning July 1, 2024. The last license period will be for the fiscal year, July 1, 2023 to June 30, 2024.
If you would additional information regarding this change, read the Privilege Tax Bulletin published by the North Carolina Department of Revenue.
Case Study: Material Facts
FACTS: A broker listed a seller’s family home for sale. The broker informed the seller about the purpose and requirements of the Residential Property and Owners’ Association Disclosure Statement (RPOADS). Having not lived in the home for several years, the seller had limited knowledge about the property’s condition. The broker clarified that the seller could choose to make no representations regarding the home’s condition without misrepresenting it.
The seller felt overwhelmed by the information requested and decided to make no representations. The listing agent further explained the broker’s duty to disclose any material facts and/or defects and pointed out a few issues the broker noticed during the walk-through. The RPOADS remained unchanged, but the broker did list the discussed defects in the property description. The broker did note several areas of pooling water in the backyard but failed to do any further investigation and made no disclosures.
The property sold quickly in a cash transaction. Several months later, the home flooded during tropical storms. Following the flooding, the new owner learned that the property was located in a federal flood plain. The previous owner did not carry flood insurance and had marked “No Representation” for questions about flooding on the RPOADS. Since the buyer did not use a lender, flood insurance wasn’t required.
ISSUE: Did the listing broker comply with N.C.G.S. §93A-6(a)(1)?
ANALYSIS: No. N.C.G.S. § 93A-6(a)(1) 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 making any willful or negligent misrepresentation or any willful or negligent omission of material fact.
A material fact is any fact that could affect a reasonable person’s decision to buy, sell, or lease real property. Therefore, a broker has an affirmative duty to take reasonable steps to discover and disclose material facts to all parties in a transaction. Additionally, brokers are expected to take reasonable steps to discover all pertinent facts that are necessary to serve their clients’ interest. In this case study, the listing broker neglected to investigate the property properly.
The Commission also determines whether or not a broker knew of the existence of a material fact by analyzing documents and reviewing written correspondence. The Commission uses the Reasonableness Standard to evaluate a broker’s duty to discover and disclose material facts. This standard dictates that a broker has a duty to discover and disclose any particular material fact if a reasonably knowledgeable and prudent broker would have discovered the fact during the course of the transaction and while acquiring information about the property.
In this scenario, the listing broker neglected to perform further research on the property to discover that it was in a federal flood zone. The listing broker did not act like a reasonably prudent broker because they failed to gather relevant facts about the property itself. The Commission expects brokers to know or research whether a property they have listed is in a flood zone. Every broker must exercise reasonable care and diligence in discovering and disclosing all material facts to all interested parties in a timely manner in adherence to N.C.G.S. § 93A-6(a)(1).
As a result of this omission and the listing broker’s failure to adhere to N.C.G.S. § 93A-6(a)(1), the listing broker may be subject to disciplinary action by the Commission.
RESOURCES:
N.C.G.S. § 93A-6(a)(1), 93A-6(a)(8), and 93A-6(a)(10)
License Law and Commission Rules: Rule 58A .0114
Articles: 2022-2023 General Update Course
Disciplinary Actions
ANDY ALBRIGHT PROPERTIES LLC (GRAHAM) – The Commission accepted the voluntary surrender of the real estate firm license, effective May 22, 2024. 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.
PHILIP D BLACK (CHARLOTTE) – By Consent, the Commission reprimanded Black, effective May 1, 2024. The Commission found that Black, the broker-in-charge, self-reported an audit revealed that, in some cases, the firm had unknowingly paid commissions to unlicensed entities in connection with sales transactions. The internal audit found 205 unlicensed entities did not meet the requirements to receive compensation for brokerage services. Subsequent investigation by the Commission’s auditor revealed that the actual number of firms that had been established by affiliated brokers to receive compensation but were not licensed was 170.
DANIEL CALLAHAN (CHARLOTTE) – By Consent, the Commission suspended the broker license of Callahan for a period of 9 months, effective May 1, 2024. The Commission then stayed the suspension in its entirety upon certain conditions. The Commission found that Callahan listed a property he had purchased from a seller who had provided an inspection report. Respondent advertised that the inspection report would be made available to a buyer only after submission of an offer to purchase. Respondent failed to provide the report or otherwise disclose the material facts from the inspection report until after he had accepted the offer.
COASTAL ASSOCIATES REALTY LLC (KITTY HAWK) – By Consent, the Commission reprimanded the firm, effective May 1, 2024. The Commission found that the firm listed the subject property for sale. The subject property was located across from a coastal waterway. The firm advertised the subject property in the MLS as “Boasting Sound Views and Stunning Sunsets” and “Top level…perfect for an office with water view…” The firm’s affiliated broker who acted as the listing agent knew but failed to disclose in writing that the sellers owned the waterfront lot located across from the subject property and planned to build a house on the waterfront lot. Buyer’s Agent was aware the sellers owned the waterfront lot.
DAVID CHRISTOPHER DAWE (SALISBURY) – By Consent, the Commission suspended the broker license of Dawe for a period of 12 months, effective May 1, 2024. The Commission then stayed the suspension in its entirety upon certain conditions. The Commission found that Dawe failed to adequately supervise an affiliated provisional broker and ensure that an affiliated provisional broker timely completed all required postlicensing. The provisional broker was placed on inactive status for failure to complete postlicensing and continued to engage in real estate brokerage activity.
EXP REALTY LLC (CHARLOTTE) – By Consent, the Commission reprimanded the firm, effective May 1, 2024. The Commission found that an audit performed by the firm revealed that, in some cases, the firm had unknowingly paid commissions to unlicensed entities in connection with sales transactions. The internal audit found 205 unlicensed entities did not meet the requirements to receive compensation for brokerage services. Subsequent investigation by the Commission’s auditor revealed that the actual number of firms that had been established by affiliated brokers to receive compensation but were not licensed was 170.
EXP REALTY LLC (CHARLOTTE) – By Consent, the Commission reprimanded the firm, effective May 22, 2024. The Commission found that the firm failed to ensure that the firm’s advertising disclosed the seller-client’s desire to keep a 0.53 acre parcel. In a separate transaction, the broker-in-charge of the firm listed for sale in or around Asheville, North Carolina a 2.46 acre parcel of unimproved land in a small residential subdivision. The firm failed to ensure a dual agent included certain restrictions in the listing agreement or the purchase contract.
MAURICE D FUTRELL (WILMINGTON) – By Consent, the Commission suspended the broker license of Futrell for a period of 3 years, effective May 1, 2024. The Commission then stayed the suspension in its entirety upon certain conditions. The Commission found that Futrell, following a guilty plea, was convicted of Class I Felony Possession of Cocaine stemming from a May 2021 arrest. Pursuant to the conviction, Futrell was sentenced to 6 to 17 months, suspended, was placed on 24 months supervised probation, and was ordered to participate in a drug awareness/prevention program and pay costs. Futrell reported his criminal conviction 11 days after the 60-day reporting requirement.
DAWN M GILLIAM (ROCK HILL, SC) – By Consent, the Commission reprimanded Gilliam, effective May 22, 2024. The Commission found that Gilliam represented buyers who submitted an offer for the subject property. The offer was pending acceptance when Gilliam arranged a one-hour showing for her clients. After the designated showing time lapsed, Gilliam and her clients remained in the subject property, preventing another broker and her buyer-clients from accessing and viewing the property during their scheduled time. Gilliam informed the other broker that her clients had entered into a verbal contract regarding the subject property.
GOOD HIKE REALTY LLC (ASHEVILLE) – By Consent, the Commission suspended the firm license for a period of 12 months, effective May 1, 2024. The Commission then stayed the suspension in its entirety upon certain conditions. The Commission found that the firm listed a property for sale and the firm’s broker-in-charge relied on the square footage contained in a prior listing for the subject property and incorrectly advertised the square footage in the MLS. The firm’s broker-in-charge failed to discover and disclose that the sellers did not obtain a permit for a newly installed hot tub and deck, for which a permit was required.
WHITNEY O HAWKINS (KITTY HAWK) – By Consent, the Commission suspended the broker license of Hawkins for a period of 12 months, effective May 1, 2024. The Commission then stayed the suspension following a 1-month active period upon certain conditions. The Commission found that Hawkins was the listing agent for the subject property, which was located across from a coastal waterway. Hawkins advertised the subject property in the MLS as “Boasting Sound Views and Stunning Sunsets” and “Top level…perfect for an office with water view…” Hawkins failed to disclose in writing that the sellers owned the waterfront lot located across from the subject property and planned to build a house on the waterfront lot. Buyer’s Agent was aware the sellers owned the waterfront lot.
RALPH W HAWKINS JR (KITTY HAWK) – By Consent, the Commission suspended the broker license of Hawkins for a period of 12 months, effective May 1, 2024. The Commission then stayed the suspension in its entirety upon certain conditions. The Commission found that Hawkins was the co-listing agent for the subject property, which was located across from a coastal waterway. Hawkins advertised the subject property in the MLS as “Boasting Sound Views and Stunning Sunsets” and “Top level…perfect for an office with water view…” Hawkins failed to disclose in writing that the sellers owned the waterfront lot located across from the subject property and planned to build a house on the waterfront lot. Buyer’s Agent was aware the sellers owned the waterfront lot.
DEBRA ANN HOLLOMAN (DENVER) – By Consent, the Commission suspended the broker license of Holloman for a period of 12 months, effective May 1, 2024. The Commission then stayed the suspension in its entirety upon certain conditions. The Commission found that Holloman listed two “to be built” homes on two vacant lots and failed to enter into a listing agreement with the seller of the vacant lots prior to the listing. After a buyer entered into a contract with the builder for the new construction home, Holloman prepared an offer to purchase one of the vacant lots on behalf of the builder. Holloman failed to obtain and remit the due diligence fee or earnest money deposit. The builder did not close on the vacant lot and has not returned the buyer’s deposit.
MICHELLE ARELIS IBARRA (SALISBURY) – By Consent, the Commission suspended the broker license of Ibarra for a period of 12 months, effective May 1, 2024. The Commission then stayed the suspension following a 1-month active period upon certain conditions. The Commission found that Ibarra, while on provisional broker status, failed to complete postlicensing education within 18 months of licensure and was placed on inactive status. Ibarra engaged in real estate activity while on inactive status, including scheduling appointments, attending inspections, communicating about closing information, scheduling the final walk-through, and attending closing.
AMANDA M. JORDAN (GREENSBORO) – Following a hearing, the Commission revoked the broker license of Jordan for five years, effective April 11, 2024. The Commission found that Jordan represented the buyer in the subject transaction. Jordan repeatedly engaged in unprofessional conduct, including the use of profane and derogatory language, during the course of the subject transaction, which contributed to her buyer-client terminating the contract and ceasing a working relationship with Jordan. Jordan inappropriately provided legal advice to her buyer-client, failed to provide and review WWREA at first substantial contact, and failed to respond to a Letter of Inquiry from the Commission within 14 days.
TAMMY ROHRER (GRAHAM) – The Commission accepted the voluntary surrender of the real estate license of Rohrer, effective May 22, 2024. The Commission dismissed without prejudice allegations that Rohrer violated provisions of the Real Estate License Law and Commission Rules. Rohrer neither admitted nor denied misconduct.
RYAN PATRICK ROSS (ASHEVILLE) – By Consent, the Commission suspended the broker license of Ross for a period of 12 months, effective May 1, 2024. The Commission then stayed the suspension in its entirety upon certain conditions. The Commission found that Ross was the listing agent for the subject property. Ross relied on the square footage contained in a prior listing for the subject property and incorrectly advertised the square footage in the MLS. Ross failed to discover and disclose that the sellers did not obtain a permit for a newly installed hot tub and deck, for which a permit was required.
KATERYNA RUSH (KITTY HAWK) – By Consent, the Commission reprimanded Rush, effective May 1, 2024. The Commission found that Rush was the broker-in-charge of a firm at the time of closing of the subject property for which an affiliated broker was the listing agent. The subject property was located across from a coastal waterway. The firm advertised the subject property in the MLS as “Boasting Sound Views and Stunning Sunsets” and “Top level…perfect for an office with water view…” Rush failed to disclose in writing that the sellers owned the waterfront lot located across from the subject property planned to build a house on the waterfront lot. Buyer’s Agent was aware the sellers owned the waterfront lot.
THE PATHWAY GROUP LLC (SALISBURY) – By Consent, the Commission suspended the firm license for a period of 12 months, effective May 1, 2024. The Commission then stayed the suspension in its entirety upon certain conditions. The Commission found that the firm failed to adequately supervise an affiliated provisional broker. The firm failed to ensure that an affiliated provisional broker timely completed all required postlicensing. The provisional broker was placed on inactive status for failure to complete postlicensing and continued to engage in real estate brokerage activity.
TOY K WARDEN (KITTY HAWK) – By Consent, the Commission reprimanded Warden, effective May 1, 2024. The Commission found that Warden was the broker-in-charge of a firm at the time an affiliated broker listed the subject property for sale. The subject property was located across from a coastal waterway. The firm advertised the subject property in the MLS as “Boasting Sound Views and Stunning Sunsets” and “Top level…perfect for an office with water view…” Warden failed to disclose in writing that the sellers owned the waterfront lot located across from the subject property and planned to build a house on the waterfront lot. Buyer’s Agent was aware the sellers owned the waterfront lot.
Can I Get Paid?
By Leslie Schwartz, Information Officer
While NCREC is not able to settle compensation disputes per 21 NCAC 58A .0109, there are several common compensation questions that brokers and BICs ask our Information Officers via phone call and email. Below are some common questions and responses.
Agents who are affiliated with firms, or were affiliated with a firm when conducting brokerage, should only be paid by the BIC of that firm for work completed under that BIC, or their current BIC. License rule 58A .0120(b) states, “An affiliated 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.”
I was working under an agency agreement and got a property under contract for my clients. Two weeks before closing, my license went inactive. My BIC informed me that my license was inactive, and I stopped all brokerage activity. Can I get paid for the work I did before my license went inactive?
You may be paid for work performed while your license was active in accordance with your firm’s policies and any compensation agreement you have with the firm. This could be your full commission split, or a referral agreement with the other agent who finished your transaction. In the event of a dispute between you and your firm, NCREC does not have the authority to compel the firm to pay you. A conversation with the BIC would be appropriate. If a resolution cannot be reached between the broker and the BIC, then it might be appropriate to seek legal counsel. NCREC’s publication License Law and Rules Comments states that, “…payment could properly be made for commissions earned while the license was on active status, even if the license is inactive or expired at the time of payment. The determining factor is whether the license was on active status at the time all services were rendered which generated the commission” (pg. 8). If your firm determines that your fee was earned by your actions while your license was active, they could pay you.
I was working at a firm in June and got my seller clients’ property under contract. Shortly after, my spouse got a new job, and we moved out of state. I left the firm to be unaffiliated, and my BIC assigned a new listing agent to finish the transaction. Can I be paid commission for procuring the buyer, marketing the property, etc.?
Maybe. Like the first example, the BIC can compensate you for brokerage activity that was completed with an active license. Existing firm policy or a signed referral agreement would be the best practice to indicate the amount of money that you earned prior to assigning the contract to another broker. If you did not get this in writing prior to leaving the firm, a conversation with the BIC would be appropriate. If you and the BIC can’t agree, then you may wish to consult a private attorney.
I was working for a buyer client under an oral buyer agency agreement for a few months, but the market has been rough. Finally, in late July, we got a property under contract, and we reduced our buyer agency agreement to writing prior to making the offer. A week before closing in September, the listing agent contacted me to ask why my license was inactive. I didn’t realize it was. Apparently, I forgot to complete my CE and my license has been inactive since before we signed our agency agreement and got this property under contract. Can I be paid if I fix the CE issue and regain active status before closing?
Probably not. A licensee on inactive status cannot perform brokerage activity, including entering into agency agreements or assisting a buyer in making an offer. You may be entitled to some compensation for brokerage work performed prior to going on inactive status and/or after regaining active status, so you should discuss this with your BIC. If you signed any other contracts while your license was inactive, you cannot be paid for any work done on those transactions during the period of license inactivity.
My license is current but inactive. A friend of mine wants to buy a house. I know a great broker with whom I used to work. Can I be paid a referral fee for connecting the two of them?
No. Licensees must be on active status to conduct brokerage activity. The agent who accepts your referral cannot pay a referral fee to an unlicensed person, or a person with an inactive license. G.S. 93A-6(a)(9) specifically gives the Commission the power to take disciplinary action if a licensee compensates someone in violation of the License Law.
My license is active, but I do not work as an affiliated broker under a BIC as I just write referrals. However, my daughter is about to buy her first house. Can I work as her buyer agent for compensation?
Yes. Commission Rule A.0110(a) requires sole proprietors to also be a BIC if they are soliciting business, advertising, affiliating other agents, or holding trust monies. Since working as a buyer agent for a family member requires none of these, this brokerage activity would be acceptable as long as you do not offer to hold any escrow deposits. You will need to enter into a written brokerage agreement prior to writing any offers and address in it your compensation.
My mom has an active real estate license but isn’t affiliated with a firm. I am about to buy my first house and trust no one more with this big purchase than my mom. When I asked her to represent me, she said she’d also give me the commission earned. Can she do that?
Maybe. While the License Law does not prohibit a broker from sharing all or part of their commission with a party to the transaction, the money cannot be paid outside of closing and should be reflected on the closing disclosure. If there is a lender involved, the lender will have to approve the concession, and not all borrowers may qualify. Be sure your buyer understands this – if the lender does not approve, the buyer cannot receive the concession in any other way. If the lender approves it, and the amount is reflected accurately on the closing disclosure, then this should be fine. You should consult the closing attorney about how to accomplish this.
I’m a provisional broker with a signed buyer agency agreement. I recently changed firms, but my buyer clients decided they wanted to stay at the original firm. They don’t have a property under contract yet, but I have shown them dozens of houses and spent many hours working to educate them about the market, the standard offer to purchase contract, and the home-buying process. If they buy a house under my old firm, can I get any payment from that? And how would that money come to me?
Maybe. In this scenario, it would be best to have a signed referral agreement indicating your split of any commission before you leave the firm, or an established firm policy that addresses this scenario. If neither of these is the case, then you should discuss this with your previous BIC. If you and the BIC work out a payment agreement, your previous BIC can pay you through your new BIC. G.S. 93A-6(a)(5) indicates that a provisional broker cannot accept compensation for brokerage activity from anyone other than their BIC. . If you can’t come to terms with the previous BIC, you could consider consulting an attorney.
My BIC just fired me unexpectedly and removed me from affiliation with the firm. I have a transaction closing tomorrow. She said she won’t pay me. Is that legal?
Maybe. The firm owns the agency agreement and any commissions tied to it. As in the example where a broker left the firm voluntarily, your BIC could choose to pay your commission at your previously agreed split, or a portion of it in accordance with any affiliation agreement or company policy. However, if you and the BIC are in disagreement about whether the money is owed, you will need to seek the commission through the appropriate legal process.
I am retired, but I am considering taking a job as a “transaction coordinator.” I do have an active license, but I am not affiliated with any firms, and I don’t conduct brokerage activity anymore. In this new position, I will make sure all of the paperwork is signed and organized and that none is missing per a list of required documents on behalf of agents who hire me. Can I charge a flat fee for these services?
Yes, this job does not require a real estate license if there is no brokerage taking place and payment is made by a flat fee. You can refer to a prior article for other tasks that unlicensed persons or licensed persons not looking to perform brokerage services can perform.
In conclusion, an ounce of prevention is worth a pound of cure. If you are a BIC, review your firm policies to see if each of these scenarios are clearly addressed. If you are an affiliated agent, it could be beneficial to consult your firm policy and your BIC in advance of any of these issues arising. Make sure you know how to remain compliant with the License Law and Rules, in addition to working within the bounds of your established firm policy, so that you are never faced with the sobering realization that you just worked for free.
Staff Appearances
Brian Heath, Consumer Protection Officer, spoke at Coldwell Banker HPW on May 7.
Bruce Rinne, Information Officer, spoke at BlueCoast Realty Corporation on May 21.
Diversity, Equity, and Inclusion
In the Commission’s December 2023 eBulletin Diversity, Equity, and Inclusion update, we reported on our efforts to engage with and attract diverse groups of young professionals to the real estate industry. Over the last year the Commission’s Diversity, Equity, and Inclusion (DEI) Officer has worked in collaboration with state and local REALTOR® associations and various industry organizations to establish partnerships with Historically Black Colleges and Universities (HBCUs) throughout the state.
Through these partnerships, the Commission has been able to engage with students at five of the ten North Carolina HBCUs at events such as career fairs, luncheons, guest lecture series, panels, and other campus sponsored events. Students were exposed to a variety of professional opportunities in real estate, expanded their professional networks, and gained access to scholarship and internship opportunities. Through this initiative, the Commission established an internship program and has hired two summer interns for 8 weeks, with one intern in the Accounting Division and one intern in the Education and Licensing Division.
The Commission is continuously working to expand our programming under this initiative, with plans to include high schools, other colleges, and consumers in our efforts. If you would like to be a part of our programing, please contact us here and Commission staff will be in contact with you.
Tech Corner: How to Renew Your License
Link: https://share.synthesia.io/844cae67-b19b-4015-a537-1009ff9bcc78
Case Study: Agency
FACTS: A broker conducts a listing appointment for an older home in a desirable neighborhood. During the meeting, the broker discusses the price, fees, disclosures, marketing, and other listing considerations.
The broker produces a comparative market analysis (CMA) with an estimated listing price range of $250,000-$262,000. The seller agrees to a $259,000 list price and signs a listing agreement and the required disclosures. Prior to publicly posting the listing of the property, the broker contacts the seller-client with a potential investor who would be interested in the property.
The investor is shown the property and submits a cash offer of $225,000. The seller-client is not interested in the low offer. The broker attempts to pressure the seller-client into accepting the offer since the offeror is not asking for any inspections and will close quickly.
The seller-client accepts the offer and completes the transaction. A few months later, the property is back on the market for $320,000. Upon further research, the seller learns that the investor who bought the property is the father-in-law of the listing broker; the CMA was purposefully inaccurate; and the broker intended to profit from the subsequent sale.
ISSUE: Did the broker comply with the License Law and Commission rules?
ANALYSIS: No. Brokers owe fiduciary duties to their clients. These fiduciary duties prohibit brokers from self-dealing. Commission Rule 58A .0104(p) specifically requires listing brokers who want to purchase their client’s property to disclose in writing their conflict of interest and to advise the seller-client that they may want to seek independent counsel. Before the listing broker contracts to purchase the property, they must disclose to the seller-client in writing that the seller has a right to terminate the listing. If the seller does not terminate the listing, the listing broker must still transfer the listing agreement to another broker affiliated with the firm.
The North Carolina Real Estate Commission has long made clear the implications regarding brokers and self-dealing. When a principal engages a real estate broker as their agent, they are entitled to loyalty and obedience. This means that the broker must prioritize the interests of the principal above their own personal, business, or familial concerns. The principal’s interests take precedence, and the broker must refrain from engaging in any actions that may compromise or dilute this loyalty. In this case, the broker misrepresented the probable selling price and pressured the seller-client into accepting an under-value offer made by a family member.
Furthermore, North Carolina General Statute 93A-6(a)(4), (8) and (10) gives the Commission authority to discipline brokers who act for more than one party without the knowledge of all parties for whom they act (here, the seller-client and the family member), who are unworthy or incompetent to act as a real estate broker in a manner as to endanger the interest of the public, and for conduct which constitutes improper, fraudulent, or dishonest dealing.
The Commission determines whether a broker acted competently by analyzing documents, interviewing witnesses, and reviewing written correspondence. The Commission uses the Reasonableness Standard to evaluate a broker’s expected competency. A broker must exercise the degree of skill, care, and diligence that a reasonably prudent real estate broker would exercise under similar circumstances.
N.C.G.S. § 93A-6(a)(15) 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 violating any rule adopted by the Commission.
As a result of this fraudulent self-dealing and the potential violations of License Law and Commission rules, the broker may be subject to disciplinary action by the Commission.
RESOURCES:
N.C.G.S. § 93A-6(a)(8), 93A-6(a)(10), and 93A-6(a)(15)
License Law and Commission Rules: Rule 58A .0104
Articles: NCREC Bulletins – Self-Dealing
2021-2022 General Update Course – Broker Fiduciary Duties