Have you created a business entity to conduct brokerage activity? Are you interested in receiving compensation through your business entity?
According to Rule 58A .0502 every business entity other than a sole proprietorship must apply for and obtain from the Commission a firm license before engaging in business as a real estate broker receiving brokerage compensation. To complete a firm license application, the applicant must:
provide the registered legal and assumed names for the business entity;
provide the SOSID assigned by the NC Secretary of State (not applicable for partnerships);
provide physical and mailing addresses for all office locations;
designate a Qualifying Broker (QB); and
designate a Broker-in-Charge (BIC) for each office location.
Commission staff has noticed that there are five common mistakes that brokers make while completing the firm license application. These mistakes can lead to a firm license application being marked incomplete or a broker being designated as a BIC of a firm inadvertently.
To assist brokers with avoiding these five common mistakes, Commission staff recommends review of Rules 58A .0110 and 58A .0502before submitting a firm license application. Doing so will help ensure that brokers do not:
designate their affiliated brokerage as the new firm’s Qualifying Broker (QB);
The firm license application provides an explanation for a Qualifying Broker. A Qualifying Broker must be a principal that holds a broker license on active status in good standing or a licensed business entity if the Qualifying Broker-entity has as its QB a natural person who is a licensed broker. A common mistake is including the broker’s current brokerage as the QB in the application when their affiliated brokerage will not serve as the QB for the new firm.
designate their current BIC as the new firm’s BIC;
According to Rule 58A .0110(c), a licensed real estate firm does not have to designate a BIC if the entity is organized for the sole purpose of receiving compensation, is treated as a pass-through business by the United States Internal Revenue Service, has no principal branch office, and no licensed person associated with it other than its QB. However, applicants are designating their current BIC as the new firm’s BIC. This can cause their current BIC to be removed as BIC from the current firm.
affiliate licensed brokers with the legal business entity and not designate a BIC for the new firm;
This issues arises due to multiple licensed brokers being associated with the legal business entity. If licensed brokers are associated with the legal business entity, the QB must indicate that there are other licensed brokers affiliated with the firm which will require the QB to designate a BIC for the firm.
Remember, a BIC is required for a licensed business entity to conduct brokerage activity or receive compensation if there will be any other licensed individuals affiliated with the firm other than the QB.
complete the application inaccurately (e.g. include email address in the wrong field, include an incomplete postal address).
Also, the firm license application must include an operating agreement or written description of the rights and duties of the managers, and the name of each manager if the business entity is a limited liability company. If the operating agreement or written description is not included, Commission staff will mark the firm license application as incomplete.
To apply for a firm license, go to www.ncrec.gov and click on Apply for a Firm License. If you have any questions about the firm licensing process, contact the Education and Licensing Division at 919.875.3700.