THE BROKER’S LEGAL MAP: A GUIDE FOR BROKERS TO NC LAW AND RULES
North Carolina real estate brokers juggle many responsibilities. While you don’t need to be a lawyer to practice real estate, a working knowledge of the statutes and rules that govern your business is essential to keeping your license and your clients’ trust. This guide offers a summary of key laws brokers should be aware of as part of competent practice.
North Carolina Real Estate License Law (Chapter 93A) and Commission Rules (21 NCAC Chapter 58)
The foundation of authority to act as a broker is found in Chapter 93A of the North Carolina General Statutes. Here, you will find broker licensing requirements, the Commission’s disciplinary authority, and the rules governing continuing education, broker-in-charge status, and broker price opinions. If you’re ever unsure where to look, this is a good start. Rules adopted by the Commission under the Administrative Code are found in the North Carolina Administrative Code, 21 NCAC Chapter 58, and cover day-to-day practice, including agency agreements, advertising, delivery of instruments, handling of trust money, disclosures, record retention, and education. Both are available here (See the Commission’s home page for proposed and recent rule changes).
Residential Transactions: Landlord and Tenant Law
North Carolina brokers frequently handle residential leases in addition to sales, and understanding landlord-tenant law is crucial. NCGS § 42 establishes laws relating to the obligations and duties of landlords and tenants and includes the Tenant Security Deposit Act, which mandates the how residential tenant security deposits are to be handled.
Disclosures and Due Diligence
North Carolina law imposes specific disclosure duties on sellers and brokers. Under the Residential Property Disclosure Act, sellers must complete the Residential Property and Owners’ Association Disclosure Statement (RPOADS), and brokers must ensure it is delivered to prospective buyers. Beginning in 2024, sellers are also required to disclose prior flood damage. Brokers facilitating inspections should be aware that only licensed professionals may perform home inspections under the Home Inspector Licensure Act.
Title, Insurance, and Risk
Title and risk management are integral to every transaction. The Title Insurance Act, regulates entities that issue insurance policies guaranteeing ownership. In transactions with financing, NCGS § 53-244, governs lender obligations in connection with mortgage loan commitments. Additionally, environmentally sensitive properties—particularly those in coastal regions—may be subject to development restrictions under the Coastal Area Management Act (CAMA).
Fair Housing Act
Any conduct by a broker that violates the North Carolina State Fair Housing Act, the Federal Fair Housing Act, or Local Fair Housing Ordinances also constitute a violation of the Real Estate License Law. Brokers must not engage in discriminatory practices in the sale, leasing, or financing of housing.
Administrative Procedures Act
The Administrative Procedures Act establishes the framework by which North Carolina agencies, including the Real Estate Commission, adopt rules and conduct administrative hearings. It ensures separation between investigative, advocacy, and adjudicative functions in agency proceedings and provides due process protections to licensees subject to discipline.
HOAs and COAs
Real estate brokers working with planned communities or condominiums should be aware of the statutory frameworks that govern them. The Planned Community Act applies to most homeowner associations (HOAs) formed after January 1, 1999, while the Condominium Act governs condominiums created on or after October 1, 1986. Many HOAs are organized as nonprofit corporations and thus operate under the North Carolina Nonprofit Corporation Act.
Vacation Rental Act
The growth of the tourism industry in North Carolina led to a greatly expanded market of privately owned residences that are rented to tourists for vacation, leisure, and recreational purposes. Rental transactions conducted by the owners of these residences or licensed real estate brokers acting on their behalf present unique situations not normally found in the rental of primary residences for long terms. The Vacation Rental Act regulates the competing interests of landlords, real estate brokers, and tenants.
Local Ordinances and Rules
While strict adherence to state and federal laws is required, a broker in North Carolina must also pay attention to local ordinances and rules for the area in which their business occurs. Each locality may have different regulations for brokerage and adherence to them is crucial for successful practice.
Conclusion
While you’re not expected to memorize every statute, knowing where to look and what governs your work is part of your responsibility as a broker. When in doubt, consult your broker-in-charge, the Commission’s website, or legal counsel. Knowledge is not only power, it’s also protection.