Listed below are the various changes in the North Carolina Real Estate License Law (G.S. 93A) which were recently enacted by the North Carolina General Assembly. Following each item is a brief explanation as to why the Real Estate Licensing Board requested the change.
These changes will become effective September 1, 1983 at which time copies of the revised Real Estate License Law will be available upon request from the Commission Office.
Action regarding other License Law legislation now pending before the General Assembly will be reported in the next issue of the Bulletin.
Summary of Changes
1. The name of the North Carolina Real Estate Licensing Board was changed to the "North Carolina Real Estate Commission."
The trade association for real estate brokers and salesmen in North Carolina is organized into local "Boards of REALTORS." The similarity in the names "Board of REALTORS" and "Real Estate Licensing Board" caused many members of the public to confuse the two organizations, and, as a result, matters which fell within the jurisdiction of the Real Estate Licensing Board were sometimes referred to the local REALTOR Boards for action. In addition, attorneys and judges often confused the two organizations to the extent that the Board felt compelled recently to file an amicus curiae brief to call attention to the distinction between the two organizations.
It was therefore requested that the name of the Real Estate Licensing Board be changed to the "Real Estate Commission" to eliminate this confusion.
2. The reference in the Real Estate License Law to rental locator services was deleted.
In 1976 the North Carolina Court of Appeals ruled that the activities of rental locator services "do not fall within those which the legislature may constitutionally regulate as constituting the practice of real estate brokerage."
Therefore, since rental locator services were effectively removed from the Board's jurisdiction, it was requested that the reference to such locator services be removed from the License Law.
[NOTE: The General Assembly in 1981 added a new Article 23 to Chapter 66 of the General Statutes for the specific purpose of regulating rental referral agencies.]
Persons employed by licensed real estate brokers as apartment managers were exempted from the real estate licensing requirements.
Under the License Law, persons who were employed by real estate brokers as apartment managers were themselves required to be licensed as real estate brokers or salesmen; however, their activities were considered to be primarily ministerial in nature, and therefore not requiring the depth and scope of real estate knowledge required of real estate brokers and salesmen engaged in general real estate practice.
It was therefore requested that these persons be exempted from the licensing requirement, provided their activities are closely supervised by the licensed broker by whom they are employed; such broker will be held strictly accountable for any misconduct on the part of his unlicensed employee(s)
4. The reference in the Real Estate License Law to the specific amounts of reimbursements paid to Board Members was deleted.
The amounts shown in the License Law were incorrect. Since Board Members are, in fact, compensated in accordance with the provisions of G.S. 9313-5, it was therefore requested that the License Law be amended to reflect this.
5. The Board's rule-making authority was clarified.
In 1977 the Real Estate License Law was amended at the request of the Board to provide that the Board could adopt rules and regulations relating only to certain specific areas of activity. It was the prevailing belief that such specificity was necessary to protect the rules from possible legal challenge; however, the Board was later advised that such action was not, in fact, necessary, and moreover, an examination of the license laws of other occupational licensing boards in this State revealed that no other board had similarly restricted its rule-making authority.
It was therefore requested that the Board's rule-making authority be returned to its pre-1977 status, making it consistent with the rule-making authority of other state licensing boards and agencies.
6. The title of the Board's administrator was changed from "Secretary-Treasurer" to "Executive Director," and the License Law was revised to clarify that the Board may hire other than "clerical" employees. Strictly interpreted, the License Law permitted the Board to hire only "clerical" employees; however, other administrative and professional-level employees (attorneys, accountants, etc.) are required in order to properly conduct the Board's business.
It was therefore requested that the License Law be amended to clarify that the Board may employ "professional and clerical staff."
7. The requirement was eliminated that applicants for licenses provide in their applications the name and address of their future supervising brokers.
The Board had found that by requiring applicants for salesman licenses to obtain a supervising broker prior to their sitting for the licensing examination, a hardship was often created on the applicant because some brokers were reluctant to extend an open-ended promise of employment to persons under such conditional circumstances.
In view of this, the Board in 1980 requested and received an Opinion from the North Carolina Attorney General's Office which held that "(A)n applicant for a real estate salesman's license need not include with his initial application the name of a sponsoring broker."
It was therefore requested that this unwarranted restriction on entry into the real estate business be removed from the License Law.
8. The requirement that the Board maintain a record of the place of business of license applicants was eliminated.
Strictly interpreted, the License Law required the Board to maintain a record of the place of business of all persons who applied for real estate licenses (e.g., "Acme Barber Shop"). Since this information had been found by the Board to be of no practical benefit, yet consumed valuable clerical time and effort, the Board in 1980 requested and received an Opinion from the North Carolina Attorney General's Office which held that such information need not be collected and maintained by the Board.
It was therefore requested that this unnecessary recordkeeping requirement be removed from the Real Estate License Law.
9. The License Law was revised to clarify that the Board is not required to hold a hearing on every complaint which makes out a prima facie case of a violation of the License Law.
It had been asserted that based upon the language in the License Law, the Board was required to hold a hearing on virtually every complaint filed against a broker or salesman even though the Board's investigation of the charges clearly showed that the complaint was without merit.
It was therefore requested that the License Law be amended to clarify that a formal hearing would not be required unless the results of the Board's inquiry indicated probable cause of a violation of the License Law or Board Rules.
10. The disciplinary provisions of the License Law were revised to clarify that the making of negligent misrepresentations or the omission of material facts constitutes a violation of the License Law.
Under other general provisions of the License Law, the Board could discipline a licensee who had made negligent misrepresentations or had failed to disclose to a consumer some material fact about which the broker or salesman knew or should reasonably have known. It was requested, however, that the License Law be amended to specifically state that these improper acts are cause for disciplinary action by the Board.
11. The Board was authorized to reprimand and censure licensees who violate the License Law.
This was requested to afford the Board an alternative to the suspension or revocation of licensing privileges in cases involving less serious violations of the License Law and Board Rules.
12. The Board was authorized to send a copy of any order revoking or suspending the license of a real estate broker or salesman to the Clerk of Court of the county in which the licensee operates to be entered by the Clerk on the judgment docket of such county.
This was requested so that notice would be given to members of the public when the licensing privileges of a real estate broker or salesman in their community had been suspended or revoked. [NOTE: This practice is also followed by the State Bar in reporting disciplinary actions against attorneys.]
13. The liability limits of the Real Estate Recovery Fund were more clearly defined for claims against real estate brokers and salesmen doing business as licensed real estate brokerage corporations.
The Board maintains a Recovery Fund for the purpose of compensating consumers who have suffered a monetary loss as a result of certain improper acts by licensed brokers and salesmen. The liability of the Fund is limited to $20,000 per licensee (not to exceed $10,000 per licensee per year) and $5,000 per transaction.
Inasmuch as some brokers operate as licensed real estate brokerage corporations, the question had arisen as to whether the corporation itself should be considered a separate licensee for the purpose of determining the liability of the Fund, in which case the limits of liability would be doubled. Since treating corporations as separate licensees would, in effect, discriminate against consumers who had been injured by non-corporate brokers, it was requested that the License Law be amended to clarify that licensed real estate brokerage corporations will not be considered separate licensees for the purpose of determining the liability of the Real Estate Recovery Fund.
In addition, it was requested that the per transaction limit of the Fund be increased from $5,000 to $10,000 to more accurately reflect the amount of losses likely to be sustained by today's real estate consumers as a result of a broker or salesman's mishandling of their funds.