THINK BEFORE YOU ACT

The Commission frequently sees complaints on the same issues. Here’s guidance on how to avoid some of what is most commonly reported: 

1. Lockbox Codes: DON’T share lockbox code with clients or unauthorized individuals. Granting access to a property without your presence is a violation. Obey your client, but not if it means breaking rules or laws. Do not share the code to a lockbox even if you are running late and plan to be there soon, if the property is presumed to be vacant, or even if the property is under contract and expected to close and the buyer wants one more look. Reschedule, have the client wait, or send another licensed broker. 

2. Limited-Service Agreements: Limited service agreements do not excuse you from your duties as a licensee. You must still discover and disclose material facts, ensure accurate advertising, and review the RPOADS with the seller for accuracy. 

3. FSBO (Broker Edition): 

• Selling Your Own Property: You can select “No Representation” in the RPOADS, however, if you have actual knowledge or should know of a material fact, as a licensed brokeor you still have a duty to disclose. NCGS § 93A-6(b)(3) authorizes the Commission to discipline a broker for violations of license law and Commission rules when transactions involve your personally owned property. 

• Limited-Service Listings & Your Own Property: You are a broker and you list your property with a limited services broker. Fine. However, your limited-service agreement doesn’t shield you from your duties as a broker to discover and disclose. As a licensed owner, you should inform your limited-service listing agent and must disclose to potential buyers any material facts about which you know or should reasonably know. 

• Buying to repair/renovate and sell (Flipping): Disclose everything, including occupancy certificates, permits, and unlicensed contractor use. Make sure you are following laws and local rules involving permitting. Check behind your contractors, ensuring permits are filed and obtained. Make sure you have a certificate of compliance and/or certificate of occupancy. Keep your records of repair and remodeling. 

• Unrepresented Buyers: Make it clear to the buyer if you are working with them in some way but do not represent them. Be careful of what advice, if any, you give to unrepresented buyers about your own listing. 

4. Inspection Reports: 

• Disclosure: You do not have to provide copies of inspection reports, but you MUST disclose material facts within them. 

• Review: Thoroughly review reports with your client and provide advice based on the findings. Confirm whether information from the report differs from advertising. For example, does the report mention a septic system but it’s listed as being on city sewer? Seek help understanding reports if needed from more experienced brokers or relevant licensed professionals. 

5. Fraudulent Listings: Be vigilant for red flags with no-meet sellers. DO NOT skip verification. 

• Cases of scam sellers are on the rise. 

• Email addresses with matching names are insufficient. 

• Questionable driver’s license photocopies are red flags. 

• Attorney verification after contract formation is too late. Your duty to verify starts before signing an agency agreement. 

• What can you do? 

1. Have a video conference or in-person meeting (accept no excuses). 

2. Ask for a government issued ID and review it to make sure it isn’t questionable. 

3. Pull the deed(s) and match the names.  

4. Ask neighbors about the property/owner. 

5. Do social media research. 

6. Have the “seller” provide a notarized statement identifying themselves as owner. 

7. Take notice and address the red flags! 

• Review these Bulletins from 2022 and 2023, for red flags and more information. 

If you take reasonable steps, you are unlikely to be disciplined if a complaint is filed. Don’t assume this won’t happen to you. This scam is increasingly popular, and many North Carolina brokers have already encountered it.  

6. Buying Own Listing: If you are the owner’s listing agent and you want to buy their property yourself, you have a conflict of interest. Disclose the conflict of interest in writing to the seller and advise them to seek independent counsel. Terminate the listing or transfer it before you or your firm makes an offer. Inform the seller of their right to terminate. 

7. Working with Real Estate Agents Disclosure: Simply emailing the form is insufficient. Review it with your client or customer, and document that review in the email. Having a conversation about the Disclosure is necessary. The Disclosure is not just another form to get signed when the client signs the agency agreement or contract.  Practice using the Disclosure so you are comfortable presenting it. 

In conclusion: The solutions to avoiding these common complaints are straightforward and require reasonable effort. When in doubt, ask your broker-in-charge, ask a more experienced broker, ask a relevant licensed professional, or contact the Commission for guidance (although they cannot give legal advice, Commission staff can give guidance on rules and possibly other resources). Protect your clients and your license – think before you act.