Real Estate Manual Update
Every 2 to 3 years the Real Estate Manual is revised and updated per the latest law, rule and practice changes. The newest revision of the Real Estate Manual is now available through an online subscription under the Publications tab on our website. Or, order a print copy in late April.
Property Check/Fraud Alert Available At Many County Register of Deeds Websites
In North Carolina, 60 county Register of Deeds websites have a property notification alert service where you can enter your information, and be alerted if any documents are recorded regarding your property. Due to increasing instances of deed fraud and fake seller scams, it is highly recommended that you sign up for this free service if available in your county. They are named differently depending on the county, including Fraud Alert, Property Check and Property Notification, but they all serve the same purpose of sending you an email notice of a newly recorded document. For more information about deed fraud and actions to take if you become a victim, read this consumer article on our website.
You are invited!
The monthly Real Estate Commission meetings are always open to the public, and you are invited to attend in person or online via Zoom. The meeting next month is April 19th in Edenton at the Historic 1767 Chowan County Courthouse. A Zoom link will be available at ncrec.gov on the day of the meeting.
By Tiffany Ross- Consumer Resource Officer & Bruce Rinne- Information Officer
Consumers need to be aware that there is now an organized effort of scammers engaging in deed fraud. They create deeds with false signatures of the seller, and have them illegally notarized by someone who is not a notary, or a real notary who was willing to accept a payoff and falsely notarize the document. These fraudulent documents are being taken to the Registers of Deeds and recorded, transferring the ownership from the unsuspecting rightful owner, to a new owner, who may or may not be a real person.
If undiscovered, this property may then be listed and sold to a bona fide purchaser for value. If this is the case, the new owner, this legitimate purchaser, is now the rightful owner of the property. The money has been stolen by the fraudster, and the original property owner has had their property stolen from them.
There is typically nothing that the property owner in a case like this did wrong. There is nothing they did to cause a scammer to target them, and if they are not made aware quickly enough, they may not be able to take action to stop it.
Many Register of Deeds offices in North Carolina now have a fraud alert that owners can sign up for to receive an email if there is any documentation filed against their property. If a fraudulent document is discovered, the property owner must take immediate action to try to retrieve rightful ownership of their property.
Actions to Take Immediately:
If you have not been a victim and would like to know ways to help protect yourself or your property, you may consider registering your property on the Torrens System. It is a lengthy and somewhat expensive process, but would prevent a property from being able to be fraudulently transferred.
There are other services that claim some ability to assist with protecting your identity/property, that offer monitoring and insurance you can purchase, that can assist you if you have to incur legal expenses to sue to reacquire your property. Just like any other crime, you should be aware and take precautions to protect yourself and your loved ones as much as you can. Keeping an eye on your property with the Register of Deeds regularly (some sources recommend monitoring your property weekly) is the best way to prevent yourself from becoming an unsuspecting victim of this type of scheme.
How You Can Protect Your Clients:
1 – Educate them! The more people know, the more they can be on alert and check on their property more frequently.
2 – Be aware that fraudulent buyers and sellers are on the rise, and brokers must exercise extra caution in verifying both. Be suspicious of would-be clients that will not meet with you by a video chat or means that will allow you to see and speak with them.
3 – Check the deed and public records for a property your buyer-client is considering purchasing, or that your seller-client is considering selling, to make sure that there wasn’t a suspicious recent transfer in ownership that could be fraudulent. If suspicious, dig deeper, make efforts to contact the listing agent or seller if not listed, to be certain the due diligence has been performed to properly identify the seller as legitimate.
4 – If you discover that a fraudulent transfer has occurred, assist your client in taking immediate action described above to have the best chance of restoring their property, if they are the seller. If your client is the buyer, notify the rightful owner of the transfer even if you are the buyer’s agent, as your duty to discover and disclose material facts is to all interested/involved parties, not just your client.
By Tiffany Ross- Consumer Resource Officer & Bruce Rinne- Information Officer
The North Carolina Real Estate Commission has been receiving an increasing number of calls and emails about fraudulent rental ads attempting to scam innocent people out of their security deposits or application fees. These scam artists can be located anywhere in the world, yet claim they are local property owners. Here is information about rental scams and the Red Flags to alert you of a potential scam.
How You Can Avoid a Rental Scam
Many rental scams take place on social media. For example, a fake owner or fake property manager posts on Facebook, Craigslist, Twitter or other social media outlets. The posts look legitimate and may even have actual pictures of the real property they are claiming to be renting. In reality, the scammer has no connection to the property or right to advertise it, but the ad will ask for upfront payments to even view the property, or first month’s rent or a security deposit in advance. They may promise the money will be held in a trust account, and the destination appears to be legitimate, but it really goes to a scammer who is never heard from again. Being aware of this scam and not falling for these tactics can prevent the loss of hundreds or even thousands of dollars.
Action You Can Take:
Red Flags That You May Be Dealing With a Scammer
What To Do If You Are Already a Victim Of a Rental Fraud Scam
If you have already responded to a fake ad and sent money, only to never hear from the scammer again, you can contact the North Carolina Attorney General’s office to notify them of the scam and provide as much information as you can. You can also contact local law enforcement (sheriff or police) and submit an internet crime complaint to the FBI to report the scam and see if there is any chance of recovery.
How You Can Protect Your Clients
If you work in sales and have clients that need to rent before purchasing a home, educate them on these dangers and assist them by looking up properties listed in the MLS or refer them to legitimate property management company websites in your area. Provide information like this article to help them to avoid the scams and traps, and assist them with verifying property owners through a public records search. Stay in contact with them, and make sure they are aware of NC Landlord and Tenant laws. They can contact the Commission’s Regulatory Affairs Division at (919) 719-9180 if they have questions or concerns about the actions of a licensed property manager. Or, they can contact the Attorney General’s office (877-566-7226) if they have concerns about the actions of an unlicensed property owner, managing their own property, or other unlicensed property management activity.
Wire Fraud Conferences
Wire Fraud conferences began last week and will be held across the State this spring and summer. Since 2015, wire fraud has become increasingly targeted towards real estate transactions resulting in the loss of BILLIONS of dollars. With growing usage of electronic funds transfers, real estate is targeted because of the large amounts of money exchanged. From due diligence deposits, to earnest money, buyer funds to close, seller proceeds and mortgage payoff funds, there are several opportunities for a scammer to try to intercept money in a transaction. Come and learn about wire fraud schemes, how they are successful, and how to avoid them yourself and/or for your clients. Read last month’s Bulletin article for more details about the conferences. The next session is 3/13/23 in Raleigh, with several more to come. Register now for the Raleigh or subsequent conferences!
Illegal Covenants Are Not Enforceable
NCREC recently received a call from a broker about a restrictive covenant in a neighborhood that stated ‘No race other than Caucasian.’ The seller and broker were concerned about how to address this covenant, as it was recorded to the property in 1955. Since then, there have been many Federal and State Fair Housing laws and rules passed declaring housing discrimination against protected classes illegal. Those protected classes are: race, color, religion, sex (including sexual orientation or gender identity), national origin, familial status (including pregnancy) and disability. If there are covenants that are recorded on a property that are now illegal, these cannot be enforced. A broker should disclose the existence of the covenant if they are aware of it, and the fact that it is legally unenforceable. While there is proposed federal legislation in the works, there has not yet been a law passed that removes such covenants.
You are invited!
The monthly Real Estate Commission meetings are always open to the public, and you are invited to attend in person or online via Zoom. The meeting this month is March 15th here at the Commission building. A Zoom link will be available at ncrec.gov on the day of the meeting.
Pending Cases: The Commission entered into consent agreements to suspend 9 licenses, denied the
issuance of 1 license, accepted the voluntary surrender of 5 licenses, closed cases without action
against 7 licensees, and ordered hearings in cases involving 20 licensees.
License Applications Involving Character Issues: License applicants who have character issues such
as prior criminal convictions or disciplinary action by another licensing board are separately considered by the Commission. Decisions are made based upon criminal background checks, information supplied by the applicant, and in-person interviews.
Total candidates considered: 11; total approved: 7.
License Examination Results: A summary of key data relating to persons taking the exam for the first time is provided below:
Individuals Tested for the First Time | ||||
Took prelicense course | Hold license from another state | |||
January 2023 | February 2022 through January 2023 | January 2023 | February 2022 through January 2023 | |
# Tested | 457 | 6078 | 14 | 285 |
% Pass both sections | 51% | 49% | N/A | N/A |
% Pass National section | 77% | 78% | N/A | N/A |
% Pass State section | 54% | 53% | 79% | 37% |
Legislative Report: The Director of Regulatory Affairs reviewed the Legislative Report, summarizing bills that are currently pending in the General Assembly that relate to real estate brokerage, occupational licensing, or other matters of interest to the Commission. Staff reviewed House Bill (HB) 29 – Support Private Property Rights, which provides that inclusion of real property on a comprehensive transportation plan is not, standing alone, a material fact. The Commission voted to remain neutral regarding HB29.
Petition for Rulemaking: The Director of Regulatory Affairs reminded the Commission that at the December meeting, the Commission reviewed a petition for rulemaking from the NRDC (Natural Resources Defense Council), North Carolina Justice Center, the North Carolina Disaster Recovery and Resilience School, Robeson County Church and Community Center, and NC Field Petitioners. The Director of Regulatory Affairs stated that staff recommend approving the petition with the understanding that changes would be proposed to address various flood issues in the Residential Property and Owners’ Association Disclosure Statement. The Commission voted to grant the petition in accordance with staff recommendations.
Proposed Text for Rule 58A .0114 and RPOADS: Staff provided an overview of the proposed text for Rule 58A .0114 and the Residential Property Owners Association Disclosure Statement (RPOADS). Staff proposes that the Commission eliminate the RPOADS form from Rule 58A .0114. Mr. Black commended staff on the addition of the Instructions to Real Estate Brokers to the RPOADS. The Commission accepted the proposed text for Rule 58A .0114 and the RPOADS.
Wire Fraud Seminars: The Director of Regulatory Affairs provided a brief update on six Wire Fraud Seminars scheduled throughout the state between March 2, 2023, and August 2, 2023. The Commission is co-sponsoring this event with the North Carolina State Bar and Investors Title Insurance Company. Registration is open and Commission members are encouraged to attend.
Report on Update Instructor Seminars: The Director of Education & Licensing provided a report on the Update Instructor Seminars for the 2022-2023 license year to date. The Commission approved the 2022-2023 UIS budget and voted to waive the fee for the Update Instructor Seminar for the 2022-23 license year.
License Examination Results: The Director of Education & Licensing provided a report on the license examination results from July 1, 2021, to February 1, 2023. The Commission commended the Education & Licensing staff on the revised presentation of the License Examination Results.
Larry A. Outlaw Excellence in Education Award Selection: The Commission voted to meet in closed session with staff to select the recipient of the Larry A. Outlaw Excellence in Education Award. The recipient of the Award will be announced at the March 21 Educators Conference.
Report on License Numbers: As of February 1, 2023, there are 126,472 brokers and firms licensed by the Commission, as follows:
Next Commission Meeting: The next Commission meeting will be held at 9:00 a.m., Wednesday, March 15, 2023, in the Commission’s office in Raleigh and is open to the public. It also can be viewed via Zoom online video.
New Instructor Seminars
Due to high demand, several new instructor seminars were created and added to the schedule. These seminars will be offered in 2 formats until May: in person every other month, and by zoom. More seminars will be available in July and/or August, after the license renewal period has ended. If you have an interest in becoming a real estate instructor and meet the requirements, you may register for this course.
Property Manager Concerns
The NCREC sometimes receives calls about private owners managing their own property, and concerns that they are not following Landlord/Tenant Laws. While the NCREC cannot regulate the actions of a private property owner that does not have a real estate license, owners are still subject to following NC and Federal Laws concerning Fair Housing and Landlord and Tenant responsibilities. If you have a concern about the actions of an unlicensed property owner managing their own property, you should contact the Attorney General’s office for assistance.
You are invited!
The monthly Real Estate Commission meetings are always open to the public, and you are invited to attend in person or online via Zoom. The meeting next month is March 15th here at the Commission building. A Zoom link will be available at ncrec.gov on the day of the meeting.
Tech Survey
Last month’s eBulletin included a survey for licensees to provide input about tech needs. The input was very helpful in developing a plan, topics and resources that NCREC can provide to our licensees in the identified areas of need. In response to the survey results, there will now be a Tech Corner in the monthly Real Estate Bulletin and in the Update classes specifically dedicated to tech topics.
Wholesaler Warning
We have received calls from unrepresented sellers who were approached by investors or wholesalers who contracted to buy their property. When the buyer did not complete the closing of the contract on time, the seller assumed the contract had expired and was no longer valid. This was not necessarily the case. For example, the standard residential contract form provides that “If the Delaying Party fails to complete Settlement and Closing within seven (7) days of the Settlement Date (including any amended Settlement Date agreed to in writing by the parties), then the Delaying Party shall be in breach and the Non-Delaying Party may terminate this Contract”. In general, a written termination is best, even if the closing date has passed.
Some investors/buyers/wholesalers will put a lien on the property for their interest in the contract if it is not terminated in writing, even if they did not close by the date indicated. The investor/buyer/wholesaler then demands that the seller pay a large sum of money to clear the lien before they can sell to a new buyer. Regardless of the source of the contract, we highly recommend consulting with an attorney to look out for your best interests when termination questions arise.
You are invited!
The monthly Real Estate Commission meetings are always open to the public, and you are invited to attend in person or online via Zoom. The meeting this month is February 15th here at the Commission building. A Zoom link will be available at ncrec.gov on the day of the meeting.
Pending Cases: The Commission entered into consent agreements to suspend 13 licenses, left cases pending involving 7 licensees, reprimanded 3 licenses, accepted the voluntary surrender of 1 license, closed cases without action against 10 licensees, and ordered hearings in cases involving 13 licensees.
License Applications Involving Character Issues: License applicants who have character issues such as prior criminal convictions or disciplinary action by another licensing board are separately considered by the Commission. Decisions are made based upon criminal background checks, information supplied by the applicant, and in-person interviews.
Total candidates considered: 11; total approved: 6.
License Examination Results: A summary of key data relating to persons taking the exam for the first time is provided below:
Individuals Tested for the First Time | ||||
Took prelicense course | Hold license from another state | |||
December 2022 | January 2022 through December 2022 | December 2022 | January 2022 through December 2022 | |
# Tested | 462 | 6231 | 16 | 287 |
% Pass both sections | 49% | 49% | N/A | N/A |
% Pass National section | 77% | 78% | N/A | N/A |
% Pass State section | 53% | 52% | 50% | 36% |
Annual Rulemaking: Staff provided a report on the status of the annual rulemaking. They noted that the proposed rules approved by the Commission at the November 2022 meeting will be published in the North Carolina Register for public comment, and that the rulemaking hearing is scheduled for Wednesday, February 15, 2023. The rules will be voted on at the April Commission meeting.
Rule 21 NCAC 58A .1711: Upon the recommendation of staff, the Commission voted to begin the formal process to consider the repeal of Rule 21 NCAC 58A .1711
Petition for Rulemaking: The Director of Regulatory Affairs reminded the Commission that at the December meeting, the Commission received a petition for rulemaking from the NRDC (Natural Resources Defense Council), North Carolina Justice Center, the North Carolina Disaster Recovery and Resilience School, Robeson County Church and Community Center, and NC Field Petitioners. At that time, the Commission asked staff to contact the Petitioners and to make recommendations regarding the Petition and other possible changes to Rule 21 NCAC 58A .0114 at the January meeting. The Director of Regulatory Affairs reported that they and other members of the Regulatory Affairs staff had a productive meeting with representatives of the Petitioners, and will bring suggested changes to the North Carolina Residential Property and Owners Association Disclosure for the Commission’s consideration to the February 15, 2023, meeting.
Mid-Year Real Estate License Examination Results: The Director of Education & Licensing provided a report on the real estate license examination results.
2023 Educators Conference: The Director of Education & Licensing provided a report on the upcoming 2023 Educators Conference. The Educators Conference is planned for Tuesday, March 21, 2023, at the McKimmon Center at North Carolina State University. Registrations will be capped at 300 participants. The cost of the conference as previously set by the Commission is $49 and instructors who attend the conference will receive 6 hours of instructor development credit. Registration will open soon.
January 2023 Education Town Hall: The Director of Education & Licensing provided a report regarding the January 3, 2023, Education Town Hall. There were approximately 100 educators in attendance. Feedback was received on the prelicensing exam, the electronic manual, the nature of BIC focus Groups, postlicensing courses, audits, and staff announced the details of the 2023 Educators Conference.
Remote Proctoring: The Director of Education & Licensing provided a report on PSI’s remote proctoring process. Remote proctoring will be temporarily suspended beginning February 1, 2023 until technical and other issues are resolved.
Report on License Numbers: As of January 1, 2023, there are 125,650 brokers and firms licensed by the Commission, as follows:
Next Commission Meeting: The next Commission meeting will be held at 9:00 a.m., Wednesday February 15, 2023, in the Commission’s office in Raleigh and is open to the public. It also can be viewed via Zoom online video.
BIC Focus Groups
The NCREC has hosted several BIC focus groups over the past month, and the participation and feedback has been wonderful! We so appreciate the candid conversations and excellent ideas and will be working diligently to compile all of the information gained, and use it to develop new or updated education/processes/procedures and rules to address the evolving needs of our licensees.
Fake Seller/ Fake Buyer Scam Alert
The NCREC has been receiving an increasing number of calls that indicate scam listings are on the rise. These scammers pose as sellers of vacant land and usually find listing brokers through lead generation sites. See the following link for a recent NCREC article about these scams: https://bulletins.ncrec.gov/fake-seller-fake-buyer-scam-alerts/
You are invited!
The monthly Real Estate Commission meetings are always open to the public, and you are invited to attend in person or online via Zoom. The January 18th meeting is at the Embassy Suites in Wilmington. A Zoom link will be available on the website at ncrec.gov on the day of the meeting.
Pending Cases: The Commission entered into consent agreements to suspend 3 licenses, left cases pending involving 7 licensees, reprimanded 2 licenses, closed cases without action against 6 licensees, and ordered hearings in cases involving 15 licensees.
License Applications Involving Character Issues: License applicants who have character issues such as prior criminal convictions or disciplinary action by another licensing board are separately considered by the Commission. Decisions are made based upon criminal background checks, information supplied by the applicant, and in-person interviews.
Total candidates considered: 7; total approved: 4.
License Examination Results: A summary of key data relating to persons taking the exam for the first time is provided below:
Individuals Tested for the First Time | ||||
Took prelicense course | Hold license from another state | |||
November 2022 | December 2021 through November 2022 | November 2022 | December 2021 through November 2022 | |
# Tested | 430 | 6289 | 6 | 295 |
% Pass both sections | 50% | 49% | N/A | N/A |
% Pass National section | 76% | 78% | N/A | N/A |
% Pass State section | 54% | 51% | 67% | 34% |
Draft Rule Text: Staff reviewed with the Commission the text for proposed amendments to Commission rules. Staff indicated that rule text would need to be adopted by the Commission by January 18 in order to publish any proposed rule changes for public comment in time for a July 1, 2022 effective date.
Rule Number | Current Rule Name | Action |
21 NCAC 58A .0113 | Reporting Criminal Convictions and Disciplinary Actions | Upon a motion from Ms. O’Connor, the Commission accepted the text changes as presented. Mr. Lawing was not present for the vote. |
21 NCAC 58A .0114 | Residential Property and Owners’ Association Disclosure | The Commission took no action on this rule and ask staff to bring back recommendations for the rule at the January meeting. |
21 NCAC 58A .0120 | Prohibited Acts | The Commission took no action on this rule. |
21 NCAC 58A .0301 | Form | Upon a motion from Mr. Bullard, the Commission accepted the text changes as presented. Mr. Lawing was not present for the vote. |
21 NCAC 58A .0505 | Reinstatement of a License | Upon a motion from Mr. Malarney, the Commission accepted the text changes as presented. Mr. Lawing was not present for the vote. |
21 NCAC 58A .1705 | Attendance and Participation Requirements | Upon a motion from Ms. O’Connor, the Commission accepted the text changes as presented. Mr. Lawing was not present for the vote. |
21 NCAC 58A .1708 | Equivalent Credit | Upon a motion from Ms. Chandler, the Commission accepted the text changes as presented. Mr. Fox and Mr. Lawing were not present for the vote. |
21 NCAC 58A .1711 | Continuing Education Required of Nonresident Brokers | The Commission took no action on this rule and ask staff to bring back recommendations for the rule at the January meeting. |
21 NCAC 58B .0202 | Public Offering Statement Summary | Upon a motion from Mr. Malarney, the Commission accepted the text changes as presented. Mr. Lawing was not present for the vote. |
21 NCAC 58H .0202 | Application for Education Provider Certification | Upon a motion from Ms. Chandler, the Commission accepted the text changes with an additional change to limit the impact of paragraph (f) of the rule toan individual with ownership of 10% or greater in an education provider that has been limited, denied, withdrawn or terminated. Mr. Lawing was not present for the vote. |
21 NCAC 58H .0216 | Limited Education Provider Petition for Reconsideration | Upon a motion from Ms. Chandler, the Commission accepted the text changes as presented. Mr. Lawing was not present for the vote. |
21 NCAC 58H .0302 | Application and Criteria for Instructor Approval | Upon a motion from Mr. Bullard, the Commission accepted the text changes as presented. Mr. Lawing was not present for the vote. |
21 NCAC 58H .0307 | Limited Instructor Petition for Reconsideration | Upon a motion from Ms. Chandler, the Commission accepted the text changes as presented. Mr. Lawing was not present for the vote. |
Petition for Rulemaking: The Director of Regulatory Affairs presented a petition for rulemaking presented to the Commission on behalf of the NRDC (Natural Resources Defense Council), North Carolina Justice Center, the North Carolina Disaster Recovery and Resilience School, Robeson County Church and Community Center, and NC Field Petitioners. The petitioners request that the Commission initiate a rulemaking to amend the Residential Property and Owners’ Association Disclosure Statement to require the disclosure of a property’s flood history and flood risk by adding five additional questions. The Commission asked staff to contact the Petitioners and to make recommendations regarding the Petition and other possible changes at either the January or February Commission meeting.
Unlicensed Practice of Real Estate: In response to an inquiry from the Commission, the Director of Regulatory Affairs reported that the Commission has the authority to investigate the unlicensed practice of real estate brokerage and to seek an injunction in civil court if necessary. Upon receipt of information concerning unlicensed activity, the regulatory staff generally work to assure that the unlicensed person or entity ether obtains a license as required, or agrees to cease and desist the practice of real estate brokerage without a license. In the event these options are unsuccessful, staff will ask the Commission for authority to sue in civil court for injunctive relief in cooperation with the Office of the North Carolina Attorney General. The Commission expressed concerns about unlicensed property management firms or out-of-state firms that do not fall under the Commission’s purview. As to persons whose license to practice has been suspended or revoked by the Commission, the Director of Regulatory Affairs explained that staff follow up when there are indications that the person or firm is engaged in brokerage, and that the Commission can take further action against licensees who fail to abide by the terms of a Commission Order.
Timeshare Exit Company Litigation: The Director of Regulatory Affairs provided information on litigation with timeshare exit companies by the Federal Trade Commission and the Wisconsin Attorney General. They noted that timeshare exit scams remain a problem and that the legislation that the Commission helped put in place last year better protects consumers in North Carolina.
Education Director Video Replaced with New Course: The Director of Education & Licensing provided an update on the project to replace the existing 15-minute Education Director (ED) video with expanded content to include more how-to information. They noted that it was a collaborative effort involving many staff from the Education division. The new course can be used for training new EDs, as a refresher video for seasoned EDs, and as a training tool for Education Provider staff.
Tech Survey Report: The Director of Education & Licensing provided a report on the tech survey completed by licensees. A link to the survey was provided to licensees in the last e-Bulletin. Licensees would like more information from the Commission on law and rule compliance in connection with various tech issues in either the Update course or the eBulletin. They suggested that the Update course and eBulletin include a tech corner in the future.
Larry A. Outlaw Excellence in Education Award: The Director of Education & Licensing reported that the nomination forms have been made available for the Larry A. Outlaw Excellence in Education Award. The due date for nominations is January 15. The Director will send out meeting date and time options to schedule the next Education Task Force meeting to discuss the award nominations.
Report on License Numbers: As of December 1, 2022, there are 124,657 brokers and firms licensed by the Commission, as follows:
Next Commission Meeting: The next Commission meeting will be held at 9:00 a.m., Wednesday January 18, 2023, at the Embassy Suites by Hilton Wilmington Riverfront in Wilmington and is open to the public. It also can be viewed via Zoom online video.