Spring Educators Conference was a great success!
This year the North Carolina Real Estate Commission hosted its 2024 Spring Educators Conference at the McKimmon Center on March 19,, 2024. The theme of the conference was NCREC Education Superhero Comicon. The attendees learned how to use AI in real estate education, information regarding the exam transition, and handling disruptions in the classroom. For a sample of how to use AI to create a PowerPoint view this video. Congratulations to our 2024 Larry A. Outlaw Excellence in Education Award winner, Bill Gallagher!
Exam Provider Transition Complete
The transition from PSI to PearsonVUE has been implemented successfully. Along with the change in exam providers, there are updates to several resources, and the following new videos are available:
1 – Updated RELINC: https://www.ncrec.gov/Pdfs/Licensing/General.pdf
2 – Updated Syllabus: https://www.ncrec.gov/Forms/Education/Prelicense_Course_Syllabus.pdf
3 – Four new videos on our YouTube Channel about the licensing and examination process: https://www.youtube.com/NCREC/videos
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 on April 24th at the Commission building, 1313 Navaho Drive, Raleigh, NC 27609. A Zoom link will be available at ncrec.gov on the day of the meeting.
NAR Settlement
On March 15, 2024, the National Association of Realtors® (NAR) proposed a settlement to end landmark antitrust lawsuits. In the proposal, NAR agreed to pay damages and to mandate that its members enter into written buyer-broker agreements. Additionally, the settlement would prohibit REALTORS® from making compensation offers on multiple listing services (MLS). The settlement has not been approved by the court; a decision from the court is expected later this year. Even so, the NAR rules are planned to be effective in mid-July.
As a reminder, the North Carolina Real Estate Commission (NCREC) is an independent state governmental agency and should not be confused with NAR or its local boards. The NCREC’s primary function is to license and regulate real estate brokers and its mission is to protect consumers. North Carolina has 100,000 plus real estate brokers with many, but not all, also being members of NAR. NAR is a voluntary trade organization whose members are known as REALTORS®. In North Carolina, NC REALTORS® is a state level REALTOR® association and, as part of its services, creates various standard form documents for use by its members and their clients in transactions. In cooperation with the NC Bar Association, NC REALTORS® also creates standard form Offers to Purchase and Contract and other transaction documents.
The NCREC is following developments with the settlement proposal as they occur. However, it is important to recognize that any changes in NAR rules apply specifically to NAR members and do not alter the Real Estate License Law and Commission rules. Moreover, the currently proposed NAR changes are in no way contradictory to the existing License Law and rules.
The following is a reminder of NCREC rules relating to broker transparency, agency agreements, and commissions.
Working With Real Estate Agents Disclosure:
Commission Rule 58A. 0104(c) states: In every real estate sales transaction, a broker shall, at first substantial contact with a prospective buyer or seller, provide the buyer or seller with a copy of the publication “Working With Real Estate Agents” …(WWREA).
In 2021, the NCREC revised the WWREA Disclosure to be one page, double-sided, with one side for sellers and one side for buyers. The new WWREA Disclosure was designed to be quicker and simpler for brokers to use and easier for buyers and sellers to understand. Additionally, the original brochure was updated and expanded to be available for use in conjunction with the required WWREA Disclosure. The WWREA Disclosure and brochure explain the various types of agency relationships in a clear concise manner, educating the consumer and defining expectations. The WWREA Disclosure is a broker’s opportunity to discuss and clarify what their agency role may be in the transaction and to start the conversation concerning the contemplated agency status, payment, and future options.
Buyer Agency Agreements:
Commission Rule 58A .0104(a) has long required brokers to enter into written agency agreements. Listing agreements must be in writing and signed by the broker and client at the time their agency relationship is formed. Buyer agency agreements must be in writing and signed by the broker and client no later than the time of making an offer. Note that the rule does not prohibit a broker from entering into a written buyer agency agreement earlier than the time of offer submission. Accordingly, the proposed rule change for REALTORS® does not conflict with the Commission’s rule.
Additionally, NCGS § 93A-13 prohibits a broker from filing suit for recovery of brokerage compensation unless the agreement is in writing. Therefore, brokers need to be in compliance with NCREC rules in order to avoid disciplinary action and in order to recover a commission through the civil court if the client fails to pay.
The Commission does not have jurisdiction regarding the setting or advertising of commissions. Commission Rule 58A .0109(f) specifically notes that the NCREC will not act as a board of arbitration and shall not compel parties to settle disputes concerning such matters as the rate of commissions, the division of commissions, pay of brokers, and similar matters. The NCREC reminds all of its licensees that brokerage commissions remain a negotiable term between the broker/firm and client.
Finally, it is important to remember that Commission Rule 58A .0112(b)(1) bars a broker from using a preprinted offer or sales contract form containing any provision concerning the payment of a commission or compensation to a broker or firm. While a client may consider the amount of commission when considering making or accepting an offer, the broker/firm should not be made a third party in a form purchase contract between the buyer and seller. The current standard form residential contract includes a provision allowing the seller to pay an agreed amount toward any of buyer’s expenses.
The NCREC understands that the real estate industry is always evolving, and our role is to ensure whenever possible that these changes benefit consumers and to assist NC brokers in understanding their duties. The NCREC remains dedicated to fostering a market that prioritizes consumer interests, fair competition, and transparency. We also remain available to answer questions about the application of the License Law and Commission rules to help brokers and consumers better navigate their transactions.
Due Diligence Fee Concerns
Recently there have been several questions and cases involving Due Diligence Fee concerns. The common questions are: “When is the Due Diligence Fee due?” and “What happens if the buyer changes their mind and terminates the contract without paying the Due Diligence Fee to the seller?” It is important to note that if the buyer entered into a contract to purchase a home, the due diligence fee is due immediately upon contract formation. If the buyer changes their mind and terminates later, the seller may be still entitled to the due diligence fee and other fees that may be awarded by the courts, such as attorney fees. The Commission’s, Questions & Answers on Due Diligence Fees is a great resource to review.
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 February 14th at the Carolina Hotel (South Room) 80 Carolina Vista Drive, Pinehurst, NC 28374. A Zoom link will be available at ncrec.gov on the day of the meeting. If you plan to attend in person, please RSVP to exec@ncrec.gov on or before February 7, 2014.
Technology and NCREC
Technology is ever evolving, and new tools are being used to assist with the ongoing demand for information. NCREC has been exploring the use of AI and has found it useful for idea generation and content creation. While it is a useful tool and a time-saver, be aware that careful and thorough review of any created content is necessary to ensure accuracy.
Vacation Rental Fraud – Spring Break Scams
Each year, as Spring Break approaches, we see an increase in vacation rental property owners who are the victims of fraudulent activity. For instance, if a consumer books a vacation rental property for an underage child (typically, a teenager and their friends) for Spring Break, and allows the child to use the unit unsupervised, it could be considered fraud. Parents, relatives or others who may be tempted to gift their teenagers a beach vacation should be aware that intentionally renting a property for unsupervised use by an underage child is a violation of most rental agreements. Consequences that could follow include the property owners and management companies calling the police and/or terminating the vacation rental tenancy without refunding any monies or deposits to the tenant.
Participation in fraudulent activity can be a crime. The article, “Vacation Rental Fraud Scam Alert” provides examples on other vacation rental fraud scenarios and how to avoid them.
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 January 17th here at the Commission building. A Zoom link will be available at ncrec.gov on the day of the meeting.
Newest Instructor Development Workshop Released
Last month, NCREC released our latest Instructor Development Workshop (IDW) for approved instructors to learn more about how to write exam items that accurately test student knowledge. Writing Effective Exams is now available on the Commission’s education website learn.ncrec.gov.
Warning to Brokers and Consumers to Beware of Unlicensed Activity in NC
NCREC would like the public to be aware of types of unlicensed activity taking place in North Carolina that could result in legal action and possibly criminal charges. In NC, it is illegal to manage properties that belong to others for compensation without a license. Paying ‘referral’ or ‘finders’ fees to people who do not have a real estate license is also illegal in NC. Another common category of unlicensed activity includes brokerage services provided by inactive or expired brokers. For more details on types of unlicensed activity to watch out for and possible legal actions, read this month’s eBulletin article: Brokers & Consumers Should Beware of Unlicensed Activity in North Carolina.
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 week is December 13th here at the Commission building. A Zoom link will be available at ncrec.gov on the day of the meeting.
NCREEA Fall Conference
NCREC recently attended the 2023 North Carolina Real Estate Educators Association (NCREEA) Fall Conference in Winston-Salem, and presented Commission and Legal Updates. The Conference was well attended and offered education opportunities for instructors to improve their technology and gamification in the classroom, a parade of ideas from experienced instructors, and sessions on creating elective courses, making a difference and more. Congratulations to Matt Davies who was installed as President of NCREEA, and award winners Cheryl Sain – 2023 Program of the Year, and Melea Lemon – 2023 Instructor of the Year.
Is due diligence refundable?
NCREC often receives questions about due diligence fees and if they are refundable. Standard form 2-T Paragraph 1(i) states the Due Diligence Fee shall be non-refundable except in certain specific events. These are material breach of the contract by the seller under Paragraph 8 (“Seller Obligations”) or Paragraph 12 (“Delay in Settlement/Closing”), damage or destruction to the property under Paragraph 11 (“Condition of Property/Risk of Loss”), or in accordance with any addendum attached to the contract. A buyer and broker should closely examine the specific contract they are considering using to understand their rights and remedies related to due diligence fees.
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 next meeting is tomorrow, November 8th here at the Commission building. A Zoom link will be available at ncrec.gov on the day of the meeting.
Tech Study Group
The North Carolina Real Estate Commission has formed a Tech Study Group consisting of both Commission members and staff. The purpose of the Tech Study Group is to identify technology issues which can improve the function and efficiency of the Real Estate Commission and also to identify technology issues that impact the delivery of brokerage services and better educate and assist brokers in dealing with those issues. Among the many things that are being considered and discussed by the Tech Study group are ADA compliance, the impact of AI models including ChatGPT, the implementation and use of chat bots, cybersecurity, smart contracts and block chain technology. In the coming year watch for future developments, insights and information as a result of the Tech Study Group’s efforts.
Do Emotional Support Animals Require Pet Fees at Vacation Rentals?
Emotional support or therapy animals that qualify as assistance animals are not pets, and the Fair Housing Act (FHA) makes it unlawful for a housing provider to refuse to make a reasonable accommodation. You may view this January 2020 Notice for details. Vacation rentals are not excluded by law, and property owners and managers must follow the guidelines to determine if emotional support animals qualify for the exemption or not. See Part II of the Notice linked above (pg. 7), for a recommended process for determining if an emotional support animal qualifies as an assistance animal. If the animal qualifies as an assistance animal by FHA guidelines, then it is not a pet and reasonable accommodations must be made, including waiver of ‘pet fees’.
If an animal does not qualify as an assistance animal, detailed records of the determination process should be kept to support the decision. These animals would be considered pets and subject to pet fees. It is important to note that a reasonable accommodation can be requested at any time, including after the animal has been introduced into the property.
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 November 8th here at the Commission building. A Zoom link will be available at ncrec.gov on the day of the meeting.
ARELLO National Conference
NCREC experienced a record year at the ARELLO conference in Montreal last month! We received 3 Awards:
In addition to receiving these 3 awards, our Executive Director Miriam Baer received the President’s Service Award, our Director of Regulatory Affairs Janet Thoren was sworn in as President-Elect, and our Director of Education and Licensing Len Elder was elected as an alternate to the Board of Directors. What an exceptional year for NCREC and congratulations to all of our leadership, and every staff member that made these awards possible!
Rulemaking Process
Brokers and consumers consistently contact NCREC to suggest rule changes and inquire about the process for rulemaking. Therefore, this year’s Update course includes a section about the rulemaking process, which may take several months each license year. A brief synopsis of the rulemaking process is included below:
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 week is October 11th in Asheville, at the Kimpton Hotel Arras. A Zoom link will be available at ncrec.gov on the day of the meeting.
NCRealtors® Leadership Academy attended August Commission meeting
Each year the North Carolina Real Estate Commission welcomes the members of the NCRealtors® Leadership Academy to attend a Commission meeting and receive an explanation of the process as they observe the course of business. As these possible future leaders in the real estate industry become acquainted with the regulatory side of the business, it is our hope that this educational experience will add understanding and depth to their practice, and that they will share what they learn with others.
Do you know about the recovery fund?
Consumers whose funds have been converted by a licensed NC broker may be able to qualify for some financial relief through the NCREC Education and Recovery Fund. View this video and the following Commission Rules for more details:
For more information on the process for qualifying and applying for a payment from the recovery fund, and the Fund limits, view Article 2 of the Real Estate License Law.
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 September 13th here at the Commission building. A Zoom link will be available at ncrec.gov on the day of the meeting.
Staff Appreciation and Achievements
During the August Commission meeting, a staff appreciation luncheon was held to thank the staff for their enthusiastic service to NCREC and the public. Several service awards were given in gratitude for 5, 10 and 15 years of dedicated service. Special congratulations to Janet Thoren, who was awarded the 25 year service award, and Miriam Baer who received the 35 year service award. Sincere thanks to all of our valued staff, you are appreciated.
Is No Due Diligence Period Allowed In a Contract?
As a result of a very competitive real estate market, buyers have been coming up with new strategies to attract the seller to their offer over others. One such strategy that has recently evolved in NC is a no due diligence period offer, in which the buyer offers a substantial due diligence fee and earnest money deposit, but does not require a period of time to investigate the property to change their mind and get their earnest money back. Calls have come in asking if this is allowed. Buyers and sellers can agree to any legal terms that they wish in a contract. It is recommended to consult an attorney about the risks of this type of offer, and to understand the potential losses of both the due diligence fee and earnest money if the buyer later changes their mind.
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 September 13th here at the Commission building. A Zoom link will be available at ncrec.gov on the day of the meeting.