NEW RULES PROPOSED

The North Carolina Real Estate Commission, pursuant to authority vested in it by the General Statutes of North Carolina, proposes to adopt and amend certain rules contained in Tit1e 21, Chapter 58 of the North Carolina Administrative Code, to be effective July 1, 1988.

The Commission proposes to amend Rule A .0301 regarding the information requested on applications for real estate licenses and to amend Rule A .0506 to emphasize that salesmen may be disciplined by the Commission if they perform acts requiring a license without the active, personal supervision of their Broker-ln-Charge.

The Commission also proposes to amend Section A .0600 regarding the conduct of administrative hearings and Rule B .0501 to clarify the method by which time share project brokers transfer time share trust funds from their custody and to correct a technical error misstating the word "properly" as "property. "

Perhaps of particular interest to real estate licensees is a proposed amendment to Rule A .0107 regarding the handling and accounting of funds and the proposed adoption of Rule A. 0111 concerning drafting legal instruments and Rule A. 0112 regarding offers and sales contracts. Because ~ of their special significance, the proposed rules are reprinted in their entirety.

"A .0107 HANDLING AND ACCOUNTING OF FUNDS

(e) Real estate brokers shall maintain and retain for a period of three years records sufficient to verify the adequacy and proper use of their trust accounts, including, but not limited to

(1) bank statements;
(2) cancelled checks which shall be referenced to the corresponding transaction or owner ledger sheet;
(3) deposit tickets and, if necessary, a supplemental worksheet for each deposit ticket identifying the property and the parties to each transaction for which funds are deposited;
(4) a separate ledger sheet for each sales transaction and for each owner of property managed by the broker identifying the property and the parties to the transaction, the amount, date, running balance and purpose of deposits and from whom received, and the amount, date, balance, check number and purpose of disbursements and to whom paid;
(5) a journal or check stubs identifying each transaction and showing a running balance for all funds in the account;
(6) copies of contracts, leases and management agreements;
(7)' closing statements and property management statements; and
(8) any other documents necessary and sufficient to verify and explain record entries.

All receipts and disbursements of trust monies by a real estate broker shall be reported in such a manner as to create a clear audit trail from deposit tickets, cancelled checks, check stubs, journals and transaction or owner ledgers to bank statements which shall be reconciled to such records on a monthly basis."

"A .0111 DRAFTING LEGAL INSTRUMENTS

A real estate broker or salesman acting as an agent in a real estate transaction shall not draft offers, sales contracts, options, leases, promissory notes, deeds, deeds of trust or other legal instruments for others; however, a broker or salesman may complete preprinted offer, sales contract and lease forms in real estate transactions when authorized or directed to do so by the parties.

A .0112 OFFERS AND SALES CONTRACTS

(a) A broker or salesman acting as an agent in a real estate transaction shall not use a preprinted offer or sales contract form unless the form adequately describes or specifically requires the entry of the following information:

(1) the names of the buyer and seller;
(2) a legal description of the real property sufficient to identify and distinguish it from all other property;
(3) an itemization of any personal property to be included in the transaction;
(4) the purchase price and manner of payment;
(5) any portion of the purchase price that is to be paid by a promissory note, including the amount, interest rate, payment terms, whether or not the note is to be secured, and other material terms;
(6) any portion of the purchase price that is to be paid by the assumption of an existing loan, including.the amount of such loan, costs to be paid by buyer or seller, the interest rate and number of discount points, and a condition that the buyer must be able to qualify for the assumption of the loan, and must make every reasonable effort to qualify for the assumption of the loan;
(7) the amount of earnest money, if any, method of payment, the name of the broker or firm that will serve as escrow agent, an acknowledgement of earnest money receipt by the escrow agent, and the criteria for determining disposition of earnest money, including disputed earnest money, consistent with Commission Rule A .0107;
(8) any loan that must be obtained by the buyer as a condition of the contract, including the amount and type of loan, interest rate and number of discount points, loan term, loan commitment date, and who shall pay loan closing costs, and a condition that the buyer shall make every reasonable effort to obtain the loan;
(9) the buyer's intended use of the property and a condition that such use must be legally permissible;
(10) the amount and purpose of any special assessment to which the property is subject and the responsibility of the parties for any unpaid charges;
(11) the date(s) for closing and Transfer of possession;
(12) the signatures ode buyer and seller;
(13)` the date(s) of offer and acceptance;
(14) a provision that title to the property must be delivered at closing by general warranty deed and must be fee simple marketable title, free of all encumbrances except ad valorem taxes for the current year, utility easements, and any other encumbrances specifically approved by the buyer, or a provision otherwise describing the estate to be conveyed, any encumbrances, and the form of conveyance;
(15) the items to be prorated or adjusted at closing;
(16) who shall pay closing expenses;
(17) the buyer's right to inspect the property prior to closing and who shall pay for repairs and/or improvements, if any; and
(18) a provision that the property shall at closing be in substantially the same condition as on the date of the offer (reasonable wear and tear excepted), or a description of the required property condition at closing.

(b) A broker or salesman acting as an agent in a real estate transaction shall not use a preprinted offer or sales contract form containing the provisions or terms listed below, and shall not insert or cause such provisions or terms to be inserted into any such preprinted form at the time of completion:

(1) any provision concerning the payment of a commission or compensation, including the forfeiture of earnest money, to any broker, salesman or firm; or
(2) any provision that attempts to disclaim the liability of a broker or salesman for their representations in connection with the transaction. "

Public Comment

Any person interested in the Commission's proposals may present oral or written comments at a public rulemaking hearing to be held at 9:00 a.m. on April 14, 1988 at the North Raleigh Hilton, 3415 Wake Forest Road, Raleigh, North Carolina. Written comments not presented at the hearing should be delivered by the hearing date to the Real Estate Commission Office, 1313 Navaho Drive, P.O. Box 17100, Raleigh, North Carolina 27619. Copies of the proposed rules will be available at the hearing or can be obtained by mail from the Commission Office.

This the 1st day of March, 1988.