Some commercial brokers have been surprised to learn that the Real Estate License Law (Chapter 93A of the North Carolina General Statutes) and the Commission’s rules apply to commercial brokers as well as residential brokers. While there are some laws and rules that apply only in residential transactions, in general, most apply to both residential and commercial brokers alike. Here is a brief review of some important laws and rules that apply to everyone.
Any person or firm must first obtain a real estate license to engage in commercial or residential real estate brokerage activities. Commercial or residential real estate firms other than sole proprietorships must obtain separate firm licenses. An out-of-state broker who wishes to engage in commercial transactions in North Carolina may choose to either obtain a North Carolina broker license or a limited non-resident commercial broker license requiring affiliation with a resident North Carolina broker.
In both commercial and residential sales transactions:
• Brokers must review the Working With Real Estate Agents brochure with prospective buyers and sellers at first substantial contact. (Note: The brochure is not required for leasing transactions. Although the North Carolina Association of REALTORS® (NCAR) has created a form for use by its members in commercial leasing transactions, use of NCAR’s form is not required by the Commission.)
• A commercial or residential listing agent must enter into a written listing agreement before beginning to market a seller’s property, including placing a “For Sale” sign on a seller’s property.
• A commercial or residential buyer agent must enter into a written buyer agency agreement no later than the point at which a buyer-client is ready to write an offer. Dual agency is permitted only after obtaining the advance, written authorization of all parties or sets of parties. Any broker who fails to properly establish his or her agency relationship in writing in a transaction is prohibited by law from receiving any compensation either directly or indirectly from the transaction.
Similarly, in commercial or residential leasing transactions:
• Brokers who represent landlords must enter into written property management agreements before beginning to market or manage the landlords’ properties.
• Brokers who represent a commercial or residential tenant must enter into a written agency agreement with the tenant no later than the point at which the tenant is ready to negotiate or sign a lease. Dual agency requires the advance, written authorization of all parties. Brokers, who represent landlords or tenants without written agency agreements, are prohibited from receiving compensation from those transactions.
Commercial and residential brokers must also handle trust monies in accordance with the Commission trust account rules, disclose material facts, retain transaction records for three years, and furnish all parties with copies of agency agreements and contracts.
This article is not intended to address all of the rules, but to remind both commercial and residential brokers of some of the Commission’s requirements. When in doubt about any of the Commission’s rules, brokers should contact the Commission’s office and a member of our staff will be glad to provide more information and/or clarification.
This article came from the February 2014-Vol44-3 edition of the bulletin.