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 Title 21, Chapter 58 of the North Carolina Administrative Code.
In general, the adopted and amended rules would require real estate brokers and salesmen to disclose their agency relationships to parties to real estate sales transactions on a form prescribed by the Commission, and to establish a program of continuing education for persons with active real estate licenses as mandated by the North Carolina General Assembly.
Anyone 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, 1994, at the Jane S. McKimmon Center, corner of Gorman Street and Western Boulevard, Raleigh, North Carolina. For planning purposes, please notify the Commission at 919/733-9580 prior to the hearing if you plan to attend.
Written comments not presented at the hearing should be delivered by the hearing date to the North Carolina Real Estate Commission, P.O.Box 17100, Raleigh, NC 27619-7100.
This 15th day of March, 1994.
AGENCY CONTRACTS AND DISCLOSURE
Background
In recent years, buyer brokerage has become increasingly popular in the real estate industry and marketplace. This increased popularity has focused more attention on the relationship of real estate brokers and salesmen to buyers and sellers, and whether these buyers and sellers at least generally understand the duties and responsibilities of brokers and salesmen to them.
To better define and explain these broker-client-customer relationships, many state real estate licensing agencies and trade associations have developed disclosure forms for use by real estate agents. The North Carolina Real Estate Commission studied this issue and formed a task force of prominent real estate practitioners and consumers to advise it.
After careful consideration, the task force recommended to the Commission that it adopt rules requiring real estate brokers and salesmen to disclose their relationship to the parties in residential and commercial sales transactions on a form mandated by the Commission. The task force developed a model form and made recommendations on its use, emphasizing that the disclosure form and procedures should be meaningful without creating any unnecessary burdens on brokers and salesmen.
Concurring with the recommendations of the task force, the Commission has developed a "Disclosure to Buyer from Seller's Agent or Subagent" form for use by real estate agents when working with buyers as agents (or subagents) of the seller; and "Description of Agent Duties and Relationships" language which must be incorporated into all listing contracts, buyer agency contracts or other contracts for real estate brokerage services. The Commission has also proposed to amend its rules to establish requirements and procedures for using the form and making disclosures.
If adopted, the effective date of these amendments will be delayed until January 1, 1995, to give licensees adequate time to become familiar with the new requirements and to make the necessary changes to offer to purchase and agency contract forms.
Proposed Amendments
The Commission proposes to amend its Rule A .0104 to require that every listing contract, buyer agency contract or other contract for real estate brokerage services be in writing and include the "Description of Agent Duties" . The contract also must contain a statement, prescribed by the Commission and immediately following the Description, which alerts the parties to any potential for a dual agency relationship. The rule would prohibit brokers and brokerage firms from representing more than one party in a transaction without the express, written authority of each party.
Also under the proposed amendment, when you are acting as agent or subagent of the seller, you must disclose to potential buyers that you are representing the interests of the seller. This disclosure must be made at your first substantial contact with the buyer, using the Commission prescribed "Disclosure to Buyer from Seller's Agent or Subagent" .
Conversely, when you are acting as agent of the buyer, you must disclose (at least verbally) to the seller or seller's agent at the time of your initial contact with them that you are representing the interests of the buyer, and you must disclose that fact in writing no later than the time of delivery of an offer. This written disclosure may be made in the offer to purchase.
The Commission also proposes to amend Rule A .0112 to require that every preprinted offer or sales contract form used by a broker or salesman include a provision identifying each real estate agent and firm involved in the transaction and disclosing whom each represents.
CONTINUING EDUCATION
Basic Requirements
Beginning with license renewals in June 1995, you must complete eight (8) classroom hours of continuing education each year in order to renew your license on active status. The education must be completed during the twelve-month period preceding the expiration date of your license.
Under rules proposed by the Commission, you must obtain four of the eight hours by completing a four-hour Update course to be developed by the Commission. You may obtain the remaining four hours by completing one or more elective courses approved by the Commission. (NOTE: Nonresident licensees will not be required to take the Update course; however, they must complete either eight hours in approved elective courses or eight hours of continuing education approved by the real estate licensing agency in their resident state.)
To renew your license on active status in June 1995, you must have completed all approved continuing education courses between July 1, 1994 and June 10, 1995. No courses will be allowed to be offered between June 11 and June 30 in order to afford the Commission adequate time to renew the many licenses.
Active vs. Inactive
Beginning next year, you must designate whether you are renewing your license on active status or inactive status. Active status is required if you wish to engage in (and receive compensation for) any activity requiring a license. You must satisfy the continuing education requirement in order to renew your license on active status.
If your license is on inactive status, you may retain your license but not engage in (and be compensated for) any activity requiring a real estate license, including referrals. To renew your license on inactive status, you do not have to satisfy the continuing education requirement, but before you can change your license to active status, you must show that you have obtained continuing education specified by the Commission. This could range from 0 to 20 hours, depending on the length of time your license has been inactive, any continuing education you may have completed since the beginning of the preceding license period, and whether such education is creditable toward the continuing education requirement for the current license period.
Update Course
The proposed Update course, to be developed by the Commission, will be the principal component of the new continuing education program. This four-hour course will address recent changes in real estate laws and practices, as well as topics determined by the Commission to be special problem areas. The Commission will introduce new subject matter each year, and will make every effort to choose subjects which will be of interest to the vast majority of licensees.
Update courses will be offered by sponsors approved by the Commission. Instructors must meet stringent qualification requirements regarding their real estate background and must demonstrate their teaching skills through submission of a videotape showing them teaching a real estate topic.
Elective Courses
Elective courses will be available through sponsors whose courses and instructors have been approved by the Commission. Required to be at least two hours in length, courses must directly contribute to the goal of ensuring that licensees possess the knowledge, skill and competence necessary to function in the real estate business in a manner that protects and serves the public interest. Acceptable topics would include real estate aw, agency law, real estate contracts, land use controls, environmental hazards and protection, real estate economics and markets, real estate finance, investment or appraisal, property management, construction, commercial brokerage, and similar topics. Unacceptable topics would include those not directly related to real estate practice (e.g., general business administration or management, personal skills training) and those whose primary focus is on improving the licensee's ability to be financially successful (e.g., sales, motivational or success training, brokerage management).
Earning Credits
As a general rule, you may earn the required eight hours of continuing
education credit only by taking courses approved by the Commission. You will receive four hours of credit for completing the Update course, and a maximum of four hours of credit for any single elective course. You will not receive any credit for taking a prelicensing course.
You will not be required to pass an examination to receive credit for a continuing education course; however, you must attend 90% of the course. Attendance will be strictly monitored by course sponsors and instructors.
If you take more elective courses than are necessary to satisfy your continuing education requirement for the year, you may "carry over" those courses to satisfy your elective requirement for the following year. However, only entire two-hour and four-hour courses may be carried over - not extra hours in a course.
You may request the Commission to evaluate and award continuing education credit for a course not approved by the Commission or for some other real estate education activity (e.g., teaching or developing an approved continuing education course, writing a text or published scholarly article). Unapproved courses and education activities must be found to be equivalent to an approved course. A $50 nonrefundable fee will be required for each request, but instructors of continuing education courses will be exempt from the fee.
Extensions of Time
In cases of extreme hardship, the Commission may grant additional time for you to complete your continuing education. But to receive this additional time, you must show that you were unable to obtain the required continuing education due to an incapacitating illness or other circumstance which existed for a substantial portion of the license year. You must show that satisfying the continuing education requirement prior to license renewal would therefore have caused you severe and verifiable hardship. Business or personal inconvenience and your procrastination in taking courses are not grounds for an extension. The fact that you may be forced to go on inactive status until you have obtained your continuing education will not be considered a hardship.
Sponsor Approval and Fees
Courses and sponsors will be approved annually, with approval expiring on June 30. The Commission proposes to charge sponsors an application fee of $100 for approval to conduct the Update course and each elective course, and $50 to renew the approval. However, no fees of any type will be charged to accredited North Carolina community colleges, junior colleges, colleges and universities which sponsor courses. And no fee will be charged for approval to instruct the Update course. Once approval has been granted, the sponsor may conduct the course as frequently and at as many locations as desired between July I and June 10 of the approval period.
Sponsors must remit to the Commission a $5 fee for each person completing the course to offset the Commission's costs in administering the continuing education program.
All approved continuing education courses must be open to all licensees on a first-come/first-served basis. Sponsors must afford all licensees an equal opportunity to enroll in their courses and may not promote or conduct courses in a manner that would effectively exclude licensees who are not affiliated with the sponsor.
Other
The proposed rules also address other topics such as sponsor eligibility, requirement for advance approval, course administration, reports to the Commission, and denial or withdrawal of approval of a course or sponsor, as well as numerous matters relating to the operation of courses by sponsors and instructors; e.g., scheduling, advertising, classroom facilities, instructor performance, student evaluation of courses, monitoring attendance, student participation standards, solicitation of students by instructors, and cancellation and refund policies.