On April 1, 2006, North Carolina will take a big step toward enhancing professionalism in its real estate brokerage community and helping to assure that real estate consumers are served by better qualified practitioners. That is the implementation date for changes that rank as the most significant since enactment of the Real Estate License Law in 1957.
Highlights of the Law Changes
• Increasing the education required to obtain a real estate license.
• Adding a substantial postlicensing education requirement that all new licensees must satisfy.
• Eliminating the “salesperson” license category as part of a “broker only” licensing system.
• Converting existing “salesperson” licenses to “broker” licenses and requiring licensees to either demonstrate substantial recent brokerage experience or take additional education.
• Requiring prospective brokers-in-charge of real estate offices to complete additional specialized education and possess substantial brokerage experience.
Advisory committees of the Commission and the North Carolina Association of REALTORS® had reported to the Commission problems with brokers who had become brokers-in-charge of real estate offices with little or no actual real estate experience. They also expressed concern that many newly licensed salespersons did not appear to possess a thorough knowledge of some very important aspects of brokerage practice. It was further noted that real estate consumers did not differentiate between salespersons and brokers as to the level of service they expected. The Commission determined that the best solution was to adopt a “broker only” licensing system, to increase education requirements for new licensees, and to require brokers-in-charge to be better qualified. Legislation to accomplish these goals and objectives was proposed by the Commission and enthusiastically supported and promoted by the REALTORS® Association. The legislation was unanimously enacted by both houses of the General Assembly and signed into law by Governor Easley.
Since enactment of the law changes, the Commission and its staff have been working diligently to adopt the many rules and policies, develop courses, create computer programs and complete a multitude of other tasks necessary to implement this massive new program on April 1 – – in addition to processing a record number of license applications and broker-in-charge declarations.
But perhaps the most challenging task which the Commission has encountered has been that of informing and educating licensees about the coming changes and how it will affect them. Articles have been published in this newsletter, information posted on the Commission’s website, notices sent to real estate schools and instructors and letters sent to all salespersons and brokers-in-charge.
To respond to the heavy volume of calls that this has generated, additional help has been recruited and trained. Nevertheless, you may still encounter delays contacting the Commission office. For this reason, the Commission requests your patience and understanding during this very busy time and asks for your cooperation by carefully reading this article, the letters to salespersons and brokers-in-charge reprinted in this Bulletin and other explanatory materials available to you on the Commission’s website, www.ncrec.state.nc.us.
Following is a more detailed discussion of the new licensing requirements, the April 1 conversion of salesperson licenses to “provisional broker” licenses, and the new broker-in-charge requirements.
Persons applying for real estate licenses on or after April 1, 2006 must first complete a 75-hour prelicensing course (currently 67 hours). Upon passing the license examination, they will be issued a “provisional broker” license (technically a broker license on “provisional” status) which is actually the same as a current salesperson license with regard to activities the provisional broker is authorized to perform. Thus, provisional brokers must continue to be supervised by a broker-in-charge and may not, of course, be broker-in-charge of their own or any other office. The license certificate will only say “Broker”, but the pocket card will reflect that it is on “provisional” status.
Persons with provisional broker licenses issued or reinstated on or after April 1 must complete three 30-hour postlicensing courses within three years after licensure (at least one course each year). Upon completing the threepostlicensing courses, the “provisional” status of the broker’s license will be terminated. If a provisional broker fails to complete at least one course by the end of the first year (or a second course by the end of the second year), his or her license will be placed on “inactive” status until the required education is completed. And if a provisional broker fails to complete all three postlicensing courses within three years, the license will be cancelled and the former licensee must satisfy the requirements for license reinstatement.
The postlicensing courses will be offered by the same schools that offer prelicensing courses and will include a final examination. When the Commission receives notice from the school that the provisional broker has completed the final course, it will terminate the “provisional” status of the license. [Nonresident North Carolina licensees can satisfy the postlicensing education requirement by taking courses or obtaining a broker license in another state. See the guidelines for nonresident licensees on the Commission’s website, www.ncrec.state.nc.us.]
SALESPERSON LICENSES TO PROVISIONAL BROKER LICENSES
Also on April 1, all salesperson licenses will be converted to “provisional broker” licenses. Persons licensed as salespersons between October 1, 2005 and March 31, 2006 must satisfy the postlicensing education requirement described above to avoid having their “provisional” broker licenses placed on “inactive” status or eventually cancelled. Persons licensed as salespersons before October 1, 2005 must, prior to April 1, 2008, either complete a 24-hour Broker Transition Course or demonstrate at least four years full-time (or equivalent) brokerage experience within the previous six years to avoid having their “provisional” broker licenses placed on “inactive” status.
How to Terminate “Provisional”
Status by Taking the
Broker Transition Course
If your salesperson license was issued before October 1, 2005 (look at the issuance date on your license certificate) and you cannot satisfy the experience option, you will need to take the 24 classroom hour Broker Transition Course. This course will have no “end-of-course exam” and will count as your continuing education elective course for the license period in which you take it (or carryover credit if you have already taken your elective course for the period). The course will be offered by continuing education Update Course sponsors who will report your completion of the course to the Commission. So you will not need to request termination of “provisional” status upon completing this course. [Nonresident North Carolina licensees may take courses in another state to satisfy this requirement. See the guidelines for nonresident licensees on the Commission’s website, www.ncrec.state.nc.us.
How to Terminate “Provisional”
Status Based Upon
Real Estate Experience
You may have the “provisional” status of your broker license terminated without taking the Broker Transition Course if:
1. Your salesperson license was issued before October 1, 2005; and
2. You have at least four years experience as a licensed broker and/or salesperson at the time you request termination of “provisional” status (which can include experience acquired between April 1, 2006 and April 1, 2008); and
3. Your experience was acquired within six years preceding the time you request termination of “provisional” status; and
4. You were working as a broker or salesperson on a full-time (or equivalent part-time) basis and your license was on active status when you acquired the experience. “Full-Time” means at least 40 hours per week. Only experience performing activities that require a real estate license (listing, selling, property management, etc.) is acceptable, including experience obtained in another state. Experience gained as a licensed real estate assistant is acceptable. But you cannot claim credit for work performed as a secretary, bookkeeper or manager of a real estate office, or as a leasing agent performing acts exempt from licensure – even though you were licensed as a broker or salesperson at the time.
To request the Commission to terminate the “provisional” status of your broker license:
1. Go to the Commission’s website, www.ncrec.state.nc.us
2. On the website, go to “Licensee Login” and enter your license number and PIN.
3. From the “Menu”, select “Provisional Broker Certification of Experience” which will contain a statement for you to certify to the Real Estate Commission that you possess the experience required to terminate the “provisional” status of your broker license.
4. Enter the information requested on the “Certification of Experience” screen, and you will be promptly sent a new license pocket card reflecting that your broker license is no longer on “provisional” status.
By submitting the above information to the Real Estate Commission, you are certifying to the Commission that you possess the experience required to terminate the “provisional” status of your broker license. You will not, at that time, be required to produce evidence of your experience, but you should be prepared if the Commission later asks you to do so. Here are some suggestions for records you may wish to have on hand should the Commission request you to verify your real estate experience. They are listed in the order preferred by the Commission.
1. Written statement(s) from your current and/or former broker(s)-in-charge or other firm officials giving the dates of your affiliation with the firm(s) and stating that during those dates, you were engaged in the business of a real estate broker and/or salesperson on a full-time basis (at least 40 hours per week) or, if not full-time, the approximate number of hours worked per week; and/or
2. Transaction documents (copies of sales contracts, agency agreements, leases, etc.) from the period for which you are seeking credit; and/or
3. A list of transactions in which you participated during the period for which you are seeking credit giving the approximate dates of the transactions, types of properties involved, the names of the parties and any other agents in the transaction, and a description of your role in them (listing agent, rental agent, etc).
Due to the large number of persons expected to seek termination of the “provisional” status of their broker licenses based upon their real estate experience, the Real Estate Commission staff will be unable to evaluate or comment on the adequacy of your experience. Therefore, if you will not be able to produce for the Commission upon request documentation which reasonably demonstrates that you were engaged in the business of a licensed real estate broker and/or salesperson on a full-time (or equivalent part-time) basis for at least four out of the past six years prior to certifying your experience, you are advised to complete the 24-hour Broker Transition Course.
Generally, all active real estate firms and sole proprietorships must have a broker-in-charge designated with the Commission for each real estate office. (There are exceptions for “sole practitioners” who have no associates, handle no trust monies, and don’t advertise or otherwise promote their services as a broker in any way; and for certain Subchapter S corporations.)
If you want to become a broker-in-charge on or after April 1, 2006 you must:
1. Hold an active broker license which is not on “provisional” status; and
2. Possess two years full-time (or equivalent part-time) experience as a broker and/or salesperson in North Carolina or another state within the previous five years, or have equivalent education/experience; and
3. Complete the Commission’s 12 classroom hour Broker-In-Charge Course within three years prior to or 120 days following your designation as broker-in-charge. You will receive continuing education elective course credit during the license period in which the course is taken. This course will be offered by the Commission at various locations each month. Brokers-in-charge may obtain the course schedule and register for the course via the Commission’s website,www.ncrec.state.nc.us.
[Nonresident brokers-in-charge whose offices are in another state are exempt from the course requirement.]
How to Certify and Verify
Beginning April 1, to designate yourself as a broker-in-charge, you should access the Commission’s website, www.ncrec.state.nc.us, and complete online the “Broker-In-Charge Declaration Form”. It will contain a statement for you to certify to the Real Estate Commission that you possess the experience required to qualify as a broker-in-charge. You will not be required to produce evidence of your experience at that time, but you may later be requested to do so by the Commission. For more information on what constitutes acceptable experience and how to verify it, see the previous discussion about how to terminate “provisional broker” status based on real estate experience and how to verify such experience.
Beginning July 1, 2006, all brokers-in-charge must complete a four classroom hour Broker-In-Charge Annual Review Course each full license period after being designated a broker-in-charge. When you take the review course, it will count as your continuing education elective course for the license period, but you must still complete the Real Estate Update continuing education course each license period. The content of the Broker-In-Charge Annual Review Course will change each year.
Future Breaks in Service
If you are designated broker-in-charge before April 1, 2006 and have satisfied the current or new broker-in-charge education requirement, you may continue to serve indefinitely as broker-in-charge so long as there is no break in your service for any reason. If there is a break in service, and you subsequently want to again become a broker-in-charge, you must satisfy the education and experience requirements in effect at that time. If you terminate yourself as broker-in-charge from one office and simultaneously designate yourself broker-in-charge of another office with the same or a different firm, this will not be considered a break in service.
This article came from the March 2006-Vol36-3 edition of the bulletin.