The Commission would like to remind licensed real estate firms and certified education providers of the critical importance of maintaining their business entities with the North Carolina Secretary of State (NCSOS). Ensuring your entity remains in good standing with the NCSOS is not just a formality but is a legal requirement with serious consequences for noncompliance.
Annual Requirements with the NCSOS
All entities registered with the NCSOS, including corporations, LLCs, and limited partnerships, must meet annual requirements to maintain their active status. These requirements typically include filing an annual report and paying any associated fees by the designated deadline. However, specific obligations can vary based on the type of entity. The Secretary of State has a page on its website titled, Maintaining Registration, which breaks down these ongoing obligations for each type of entity into more detail.
Consequences of Noncompliance
Failing to meet these requirements may result in the administrative dissolution, revocation, or suspension of the entity by the NCSOS. Without an active and compliant status, the entity is prohibited by law from conducting any business activities, including engaging in real estate transactions or offering education as a certified provider.
To ensure compliance, the NCREC conducts regular checks of licensed real estate firms and certified education providers registered with the Secretary of State. If your entity is found to be administratively dissolved, revoked, or otherwise not in good standing with the NCSOS, the Commission will require immediate corrective action.
Even if your firm license or education provider certification remains active and in good standing with the Commission, you cannot lawfully conduct business through an entity that is not in compliance with the Secretary of State. Entities must reinstate their status before resuming business operations. Failure to comply with NCSOS requirements can result in the cancellation of your firm license or education provider certification.
However, any action taken by the Commission is only the beginning of the potential repercussions for failing to maintain your entity’s status with the NCSOS. Operating through an entity that has been administratively dissolved or revoked exposes brokers to significant legal and financial risks. Under North Carolina law, an inactive entity cannot enter into enforceable contracts, which could invalidate real estate transactions and agreements, leaving both you and your clients at significant risk. Additionally, continuing to conduct business through a noncompliant entity may result in personal liability for business debts and obligations, as the legal protections offered by the entity structure may no longer apply. Brokers who knowingly continue to operate through a dissolved or revoked entity could find themselves personally responsible for legal claims, penalties, or damages arising from real estate transactions.
Avoiding Disruption to Your Business
Maintaining your entity with the Secretary of State is a straightforward process. File your annual reports, pay any required fees on time, and address any compliance issues promptly. If your entity’s status becomes inactive or noncompliant, act quickly to reinstate it to avoid serious legal consequences. The NCSOS provides an online system where you can check your status and file necessary documents to remain in good standing.
Failure to maintain your entity’s status will not only disrupt your ability to conduct business but could result in significant legal and financial consequences. While the Commission can cancel your firm license or education provider certification if you fail to resolve your status, the loss of limited liability protections and legal standing is also a considerable risk. For more information about the annual requirements to maintain your entity with the NCSOS, you will want to visit their website at www.sosnc.gov.