By Brenda H. Badger, Records Officer
Licensees who are thinking of establishing a real estate firm will want to first understand what is required of them by the North Carolina Real Estate License Law and Commission rules.
There is only one instance where a firm license is not required: a sole proprietorship, which is a business owned and managed by one person who is personally liable for all of its debts and obligations. Every other business entity must be licensed by the Commission and meet various other requirements as outlined below.
The first step in the firm licensing process is to fully complete the “Application for Real Estate Firm License”, which you can obtain by calling the Commission or by emailing a request to educ@ncrec.state.nc.us. Submit it with any related documents indicated in the application and a fee of $30 to the Commission.
Information required on the application includes:
• Legal name of the applying firm.
• Type of business entity (corporation, partnership, limited liability company or other).
• Address of the firm’s principal office.
• Foreign (out-of-state) firm’s principal office address in North Carolina .
• Secretary of State Identification Number (SOSID).
• Principal broker of the firm and broker license number.
• Names and real estate license numbers of corporate officers and shareholders, partners, managers and members, or principals.
• Designation of a broker-in-charge for each office and a “Broker-in-Charge Declaration” form for each one. (If firm licensure is solely for the purpose of receiving compensation for brokerage services performed by the principal broker through another firm, a broker-in-charge designation is not required.)
• History of any criminal convictions and/or charges pending and professional license disciplinary actions relating to any person listed on the application.
• Business intent, if any, to sell or market time shares in North Carolina .
In conjunction with the application, the broker-in-charge must assure that Commission records show an affiliation with the new firm of each broker or salesperson and supervision of each salesperson by the broker-in-charge. A form for these purposes is available from the Commission and on its website, http://www.ncrec.state.nc.us .
Further details of the firm licensing requirements are described in the application itself and in Commission rules, especially rules A.0502 Business Entities, A.0506 Salesperson To Be Supervised By Broker, and A.0110 Broker-in-Charge.
Frequently Asked ??
• Is errors and omissions insurance required? – No.
• Can I work from home? – Yes, but your home becomes the legal address of the licensed entity and, thus, the legal address on Commission records of any licensed salespersons or brokers affiliated with your firm.
• What type of firm should I establish? – That is a business decision that you make depending upon what business and/or financial goals you wish to accomplish. We ask only that you describe the type of firm you are establishing on the application and provide the Commission with a SOSID (Secretary of State Identification Number), if required by state law, and have available any organization documents for Commission review.
• Can a sole proprietor supervise agents?– Yes, as a broker-in-charge.
•As a sole proprietor can I use an assumed name for my business that is different from the legal name?– If you are a sole proprietor using a name that does not set forth your surname, you must first register your assumed name with theCounty Register of Deeds. You should not include the name of a salesperson or unlicensed person in the name of your sole proprietorship.
• Must I declare myself as broker-in-charge? – A licensed real estate firm is not required to have a broker-in-charge if it:
•Has been organized for the sole purpose of receiving compensation for brokerage services furnished by its principal broker through another firm or broker.
• Is designated a Subchapter S corporation by the United States Internal Revenue Service.
•Has no branch office; and
•Has no person associated with it other than its principal broker.
• Is a “privilege license” required for my firm? – The Commission does not issue “privilege licenses”. For information concerning privilege licenses, contact the North Carolina Department of Revenue, (919) 733-3673.
Commonly Used Terms
Principal broker: a principal of a business entity who holds a broker license on active status and in good standing. A firm must have a principal broker to receive a firm license.
Broker-in-charge: an individual who holds a broker license and is so identified to the Commission as such on the Broker-in-Charge Declaration form.
Sole proprietorship: a firm owned and managed by one individual who is solely responsible for all of its debts and obligations.
This article came from the February 2005-Vol35-3 edition of the bulletin.