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Questions and Answers on What’s Happening with the RPOADS Form

Q.            I heard the RPOADS form is changing?

A.             On March 15, 2023, the Commission began accepting public comments on proposed changes to the rule that includes the Residential Property and Owners’ Association Disclosure Statement (RPOADS), 21 NCAC 58A .0114.  If this rulemaking proposal is adopted by the Commission and Rules Review Commission, the changes will become effective July 1, 2023. In order to receive updates regarding rulemaking, subscribe to the Commission’s mailing list.

Q.            So what is changing and why?

A.             The biggest change would be moving the RPOADS form out of the rule. Right now, the form is embedded in the rule, and it is difficult, if not impossible to make even the simplest formatting or appearance changes, or even clarify the instructions, without going through the rulemaking process.  Moving the form out of the rule will allow those more technical changes to be done easily and will allow the form to receive an updated appearance so that it is a little more user friendly for brokers and consumers. When you look at the rule, you will see the form is marked out. Under the rulemaking proposal, it’s not being eliminated! It’s just coming out of the rule.

Q.            Would the Commission add new topics to the form without rulemaking?

A.             No. The topics covered in the disclosure must be itemized in either the Residential Property Disclosure Act (N.C.G.S. 47E) (“the law”), or the rule (21 NCAC 58A .0114), and those topics cannot be changed without going through the full rulemaking process. Note that the rule only itemizes the topics not contained in the law, so you have to look at both the law and the rule to see all of the required topics. 

Q.           What questions are proposed to be added to the form, and why?

A.             The Commission is considering adding questions based on public comments received from brokers, attorneys, and others. For example, whether or not any private well has been tested and, if so, when and whether or not a property is in a historic district. Elevators are being covered as well, after the passage of Weston’s Law last year. As a result of federal discussions regarding a mandatory national flood disclosure and a petition filed for rulemaking regarding flood questions, the Commission is considering adding 5 questions related to flooding. A couple of existing questions are also being edited or clarified.

Q.            Will brokers still have input in changes to the form that don’t require rulemaking?

A.             Absolutely. Any substantial change to the topics require the rule to undergo the rulemaking process or a legislative change. The Commission also adopted internal policies and procedures that require any minor change to be published for at least 30 days on its homepage to allow for written comments before the Commission makes final changes. These suggested changes will be published in the Bulletin as well.

Q.            Does this change a broker’s duty?

A.            No.  A broker’s duty is not changing at all. In fact, the Commission is hoping to make it clearer to sellers that even if they check ‘No Representation’ a broker still has a duty to discover and disclose material facts about the property. That standard has not changed.

Stephanie Walker: 2023 Larry A. Outlaw Excellence in Education Award Recipient

2023 Larry A. Outlaw Excellence in Education Award recipient, Stephanie Walker, with past award recipients (from left to right) George Bell, Kelly Allen, Len Elder, Travis Everette, Mel Black, and Matt Davies.

Stephanie Walker of Outer Banks is the 2023 recipient of the Larry A. Outlaw Excellence in Education Award. She is North Carolina Real Estate Commission approved instructor and education provider. An active member of both the North Carolina Real Estate Instructors Association (NCREEA) and the national Real Estate Educators Association (REEA), Walker has attained the REEA Gold Standard Instructor designation. She has been nationally recognized as REEA Educator of the Year in 2021 and received the NCREEA Program of the Year award in 2019.

The Larry A. Outlaw Excellence in Education Award is bestowed upon real estate instructors who have exhibited excellence in, and have made outstanding contributions to, real estate education in North Carolina.The Commission established the award in 2016 to honor the late former Director of the Education and Licensing Division of the North Carolina Real Estate Commission. Larry A. Outlaw, both an attorney and licensed real estate instructor, served as Director of the Education and Licensing Division for 35 years, from its creation in January 1979, until his retirement February 1, 2014.

Outlaw continually worked to improve real estate prelicensing education and to expand real estate education, creating and implementing continuing education program in 1994 and a postlicensing education program in 2006. He advocated for and achieved minimum standards for approval of real estate instructors that included not only effective teaching skills, but real estate brokerage experience as well. He also worked to assure the excellence of the Commission’s licensing examination. Outlaw was a founding member of the REEA, serving as its National President in 1990-1991.

Any approved North Carolina real estate instructor may be nominated for the award. The Commission considers nominations from brokers, instructors, students, and the general public while evaluating the criteria of each nominee. As this year’s recipient, Walker exemplifies an instructor whose ongoing contribution to the profession honors the award’s eponym.

THE NCREC 2023 Spring Educators Conference

The North Carolina Real Estate Commission was pleased to host its 2023 Spring Educators Conference on Tuesday, March 21, 2023, at the McKimmon Center in Raleigh. The theme of the conference was NCREC Trek: Exploring Brave New Educational Worlds.

The registration for the conference was limited to 300 participants. Mel Black, Commission Chair, opened the conference with a welcome to all of the attendees. After the welcome, the day-long event featured the following presentations by Commission Staff members and the Keynote Speaker.

The conference concluded with the presentation of the 2023 Larry A. Outlaw Excellence in Education Award to Stephanie Walker by Commission Chair Black. The Commission established the Larry A. Outlaw Excellence in Education Award in 2016 to honor the Commission’s late former Director of Education and Licensing Division. This year’s recipient of the Larry A. Outlaw award, Stephanie Walker, demonstrated ongoing excellence in outstanding contributions to real estate education in North Carolina.

The Commission thanks North Carolina’s real estate educational community for its continued interest and support, and congratulates Stephanie Walker on her award.

Frequently Misunderstood Terms Seen and Heard by NCREC Regulatory Affairs Division Staff

By Stephen Fussell, Chief Consumer Protection

At the Commission, we hear and read lots of statements from real estate brokers. Some of those statements imply that the brokers who made them did not understand the terms they were using. Here are some clarifications for some of the things we routinely hear and read.

The North Carolina Real Estate Commission (“Commission”) and NC Realtors (“NCR”) are two different organizations.

Client vs. Customer: A client is someone with whom a broker has a written agency agreement. The broker represents the client and has a fiduciary duty to act in the best interests of the client at all times. Prior to entering into the written agency agreement, the client was a customer.  Additionally, in serving a client, a broker may assist a customer. A broker must be fair and honest with a customer. However, a broker does not represent a customer or have a fiduciary duty to act in a customer’s best interest.

Example #1: A property manager represents a landlord (client). A property manager may assist a prospective tenant (customer) in viewing a rental property and entering into a lease for the landlord’s property.

Example #2: A listing agent may show their listing to an unrepresented prospective buyer (a customer) and prepare an offer for the buyer without representing the buyer. The listing agent must review a Working With Real Estate Agents Disclosure with the buyer at first substantial contact and mark the “Unrepresented Buyer” section at the bottom of the form.

Offer vs. Contract: An offer is an oral or written expression of a willingness to buy, sell or lease at a specified price and terms. A contract is a signed, written agreement that memorializes all of the terms and conditions agreed upon by the parties. Buyers usually submit offers. If sellers sign the offer without changes and communicate this fact to the buyers, then the offer becomes a contract. If sellers make changes to the offer they receive, then the sellers have created a counteroffer. The sellers must initial the changes and sign the counteroffer and the buyers must initial the changes and communicate their acceptance in order for the counteroffer to become a contract.

Acceptance of an offer occurs when the last party to receive an offer or counteroffer signs the offer/counteroffer. Acceptance must then be communicated to all parties before the offer becomes a contract. Pursuant to the Statute of Frauds, there is no such thing as “verbal acceptance” of a real estate sales offer. If a seller says they will accept an offer, it has no effect until the seller actually signs the offer without making any changes to it and then communicates that fact to the buyer. Brokers should never use the terms, “verbal acceptance” and “verbally accepted,” as these terms are misleading and may cause a buyer or seller to falsely believe that a valid contract has been formed. If an offer is not signed by all parties, then it’s not a contract. For more information on the Commission, agency, offer & acceptance, and many other topics, check out the many brochures, publications, and videos available at ncrec.gov.

Continuing Education: It’s Almost Time

Have you taken your CE courses for the 2022-2023 license year? Do you know which courses you need to take?

The CE deadline is quickly approaching and brokers must ensure they complete their continuing education requirements to maintain an active real estate license.

Rule 58A .1702 dictates that to maintain an active license, a broker must take eight (8) hours of CE each year.

*A BIC or BIC-eligible Broker who takes the General Update course and an elective will maintain an active license but will lose their BIC Eligible status and BIC designation.

Not sure which Update course you need to take? Log into your license record here on the Commission’s website to check your license status before registering for a course.

CE Course Search

CE Update and elective courses are offered in variety of formats.  Update courses are offered in person and via synchronous distance learning (aka, “live online” instruction using Zoom or similar technologies).  Elective courses are also offered via distance courses (self-paced online courses).

To search for in-person and “live-online” CE Update and elective courses:

  1. go to www.ncrec.gov;
  2. click on the Education menu;
  3. click on Search CE Course Schedules; and
  4. click on Search Providers.

To search for providers that offer self-paced, online CE elective courses:

  1. go to www.ncrec.gov;
  2. click on the Education menu; and
  3. click on List of Distance CE Providers.

For more information, contact the Education and Licensing Division at LS@ncrec.gov or 919.875.3700.

License Renewal: It’s Coming!

When can I renew my license?

The annual period for renewal of your real estate license will begin at midnight on May 15 and end at 11:59 pm on June 30.

What will happen if I don’t renew by June 30?

If you do not renew your license online by 11:59 pm on June 30, your license will expire. To reinstate an expired license, you must pay a $90 fee between July 1 and December 31. Failure to reinstate the former license by December 31 will result in your having to submit a new application, including application fee and criminal background report. You will also be required to take additional education and/or pass the state license examination. https://www.ncrec.gov/Licensing/Reinstatement

NOTE: If you are a BIC or BIC Eligible and your license expires or changes to inactive status on July 1, you will automatically lose BIC Eligible status and, in turn, BIC designation (if applicable). If that happens, and you wish to regain BIC Eligible status, you must (1) return the license to active status; (2) meet the experience requirements for BIC designation; (3) take the 12-hour Broker-in-Charge Course before re-designation; and (4) complete and submit the Request for BIC Eligible Status and/or Designation form (REC 2.25).  Rule 58A .0110 for detailed instructions regarding regaining BIC Eligible status and BIC designation.

Will you send me a reminder to renew?

We will send several email reminders to your email address of record. We will not send a paper reminder. Log into your record here to make sure your email address is up-to-date.

Questions about the renewal process? For more information, review the Commission’s Renewal Video and/or contact the Education and Licensing Division at LS@ncrec.gov or 919.875.3700.

Correcting Postlicensing Myths and Misconceptions

You CAN take Postlicensing courses with an inactive license status.

A provisional broker (PB) does not have to be actively affiliated with a BIC to take any of the required Postlicensing education. A PB must complete all 3 Postlicensing courses within 18 months from the date the license is originally issued, whether or not the license is ever activated, [Commission Rule 58A .1902(b)] to remain eligible for an active NC real estate license.

RECOMMENDATION: Plan to complete all Postlicensing as soon as possible after licensure, even if you currently have no plans to activate your license.

You MUST pass the proctored end-of-course exam for an individual Postlicensing course to earn credit for completion.

A Post course must be completed (including successfully passing the end-of-course exam) within 180 days of course enrollment per Commission Rule 58H .0207(b) … not from when the student begins taking the course. This distinction is particularly important for self-paced distance courses where students may not begin the course right away or when scheduling the proctored end-of-course exam may take several days or weeks after completion of the instructional modules. Commission rules do not allow for an extension of the 180-day course completion deadline for any reason.

RECOMMENDATION: Plan to complete courses as soon as possible after enrollment. If you purchase a package containing all 3 Post courses, be sure to take each end-of-course exam as you complete that course’s instruction vs waiting to take all 3 exams together at the end. By delaying the exams, you run the risk of your 180-day courses expiring before all 3 exams can be scheduled or passed. With no possibility of course extensions, the entire course(s) has to be retaken for credit.

 You CANNOT get an extension for completion of Postlicensing education.

Commission rules do not allow for an extension for any reason. If all 3 Post courses have not been completed within the 18 months after initial licensure, the license will be placed on inactive status until activation criteria can be met in accordance with Commission Rule 58A .1902(c).

 You MAY have to retake a Postlicensing course to activate your license.

To activate an inactive license that was on provisional status, all 3 Post courses must have been completed within the 2 years immediately preceding the request to activate. A Post course completed more than 2 years ago expired and will have to be retaken prior to license activation per Commission Rule 58A .1902(c).

RECOMMENDATION: Finish all 3 Post courses as soon as possible to remove the provisional status from your license.

You CANNOT waive any Postlicensing courses if you waived taking the NC license examination to obtain your NC license based on your licensure in another state.

Commission Rule 58A .1905(c) prohibits a broker from waiving any of the 90 hours of the NC Post education requirement if they were issued a NC license per Rule 58A .0511(b)(2) and thereby did not take any NC Prelicensing coursework or pass the NC license examination.

RECOMMENDATION: As a best practice to protect the brokerage’s clients, BICs who affiliate such brokers might require that they complete all 3 Post courses sooner than the 18 months mandated by Commission rule. The mandatory Post education is important to familiarize brokers from other jurisdictions with NC-specific real estate brokerage laws, rules, and practices.

The April 2023 Commission Meeting will be in Edenton, NC!

The North Carolina Real Estate Commission is pleased to announce that it will be holding its April 19-20, 2023, business meeting and hearings in Edenton, North Carolina. You are cordially invited to join the Commission members for coffee on Wednesday, April 19th at 9:00, before the meeting begins, and to stay or attend the meeting at any time throughout the day.

The business meeting is expected to begin Wednesday at 9:30 and to last until mid-afternoon.

The meeting will be held at:

Historic 1767 Chowan County Courthouse

117 East King Street

Edenton, NC 27932

The Commission members welcome the opportunity to meet you and hear your thoughts. While not required, we will appreciate your RSVP by April 12th to exec@ncrec.gov for planning purposes. We look forward to seeing you in Edenton!

Staff Appearances

Len Elder, Director of Education & Licensing, and Kizzy Crawford Heath, Legal Education Officer, spoke at the Durham Regional Association of Realtors meeting on March 1.

Tech Corner: Online Payment Systems

Do you have online payment systems such as CashApp, PayPal, Venmo, or Apple Pay? Are you using these online payment systems to receive money while acting in a fiduciary capacity? Do you have a trust account?

Rule 58A .0116(a) requires brokers to deposit all monies received while acting in a fiduciary capacity into a trust or escrow account no later than three banking days following receipt of the funds unless an exception is met.

The Commission is aware that brokers are utilizing online payment systems such as CashApp, PayPal, Venmo, and Apply Pay to transfer funds in brokerage transactions.

Pursuant to Rule 58A .0116(b),

…a broker may only accept custody of a check or other negotiable instrument made payment to the seller of real property as payment for an option or due diligence fee or to the designated agent in a sales transaction for the purpose of delivering the instrument or the seller or designated agent.

These online payment systems are not considered negotiable instruments.

Further, if a broker uses these online payment systems to take custody of funds even if the intent is to assist a customer or their principal with transferring funds to a seller, the broker may be in violation of Commission rules.

However, if a client or consumer would like to use an online payment system to transfer funds, they are permitted to do so. However, the broker/brokerage may not do so without establishing the online payment system as a trust or escrow account per Commission rule requirements.

For more information, contact Regulatory Affairs at 919.719.9180.