The following article written by Commission Executive Director Phillip T. Fisher was first published in the North Carolina Association of REALTORS "Tar Heel REALTOR." Because it addresses a problem of special and continuing concern to the Real Estate Commission, it is being reprinted in this "Bulletin. "
In preparing for your real estate licensing examination, you no doubt spent countless hours pouring over the definitions of such legal/technical terms as "eminent domain," "functional obsolescence," "adverse possession," etc. But one term which you probably have not encountered either before or since receiving your license is the term "ghost broker." For the uninformed, it can be defined as follows:
"GHOST BROKER—A licensed real estate broker who serves in name only as broker-in-charge of a real estate firm or time share project but who does not, in fact, perform the duties of a Broker-in-Charge. See also 'Straw Broker'."
With increasing frequency, the Real Estate Commission has discovered incidents involving real estate brokers who have "loaned" their licenses to brokerage companies and time share projects because the owners of the compares did not themselves possess the requisite broker license. The licensed brokers were paid a nominal fee for the use of their licenses, but either unlicensed persons or "under-licensed" persons (i.e., licensed salesmen) controlled every aspect of the operations of the company.
For example, the unlicensed persons controlled the advertising. They controlled all monies received. They controlled I' recordkeeping. And they controlled, failed to control, the actions of their salesmen, often to the detriment of innocent and unsuspecting consumers. Although these functions were legally the responsibility of the licensed Brokers-in-Charge, they failed to exercise their authority and instead stood idly by while their employers directed the operations of the company. And as a result of their failure to properly carry out their duties and responsibilities as Brokers-in-Charge, they were duly disciplined by the Real Estate Commission.
Fortunately, the number of instances of "ghost brokering" in its purest and most extreme form appears to be small. However, it does demonstrate the necessity for Brokers-in-Charge to accept and conscientiously carry out the various duties imposed upon them by the Real Estate Commission's Rules and Regulations; namely, the responsibility for displaying the license certificates and renewal stickers of the brokers and salesmen at their office; notifying the Real Estate Commission of business name/ address changes; overseeing the advertising; maintaining transaction and trust account records; and supervising the daily real estate activities of all licensed salesmen at the office.
These responsibilities cannot be assigned or delegated to others. Consequently, if the Real Estate Commission receives a consumer complaint, and we find that the activities of the company or individuals complained against are not being supervised by the Broker-in-Charge "Who we gonna call? The 'Ghost Broker'."