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North Carolina Real Estate License Law and Commission Rules 1 NORTH CAROLINA REAL ESTATE COMMISSION RULES CHAPTER 93A Statutory Authority: Sections 93A‑3(c), 93A‑4( d), 93A‑33, and 93A‑51 of the North Carolina Real Estate License Law; and the North Carolina Administrative Procedures Act. NORTH CAROLINA ADMINISTRATIVE CODE TITLE 21 OCCUPATIONAL LICENSING BOARDS CHAPTER 58 REAL ESTATE COMMISSION Subchapter 58A Real Estate Brokers Section A.0100 General Brokerage Rule A.0101 Proof of Licensure A.0102 Branch Office (Repealed) A.0103 Licensee Name and Address A.0104 Agency Agreements and Disclosure A.0105 Advertising A.0106 Delivery of Instruments A.0107 Handling and Accounting of Funds A.0108 Retention of Records A.0109 Brokerage Fees and Compensation A.0110 Broker-in-Charge A.0111 Drafting Legal Instruments A.0112 Offers and Sales Contracts A.0113 Reporting Criminal Convictions and Disciplinary Actions A.0114 Residential Property Disclosure Statement A.0115 Disclosure of Offers Prohibited Section A.0200 General Provisions (Repealed) Section A.0300 Application for License Rule A.0301 Form A.0302 Filing and Fees A.0303 Payment of Application Fees A.0304 Experience Qualifications for Applicants Section A.0400 Examinations Rule A.0401 Time and Place for Examinations A.0402 Subject Matter and Passing Scores A.0403 Re-applying for Examination A.0404 Cheating and Related Misconduct A.0405 Confidentiality of Examinations A.0406 Examination Review Section A.0500 Licensing Rule A.0501 Character (Repealed) A.0502 Business Entities A.0503 License Renewal; Penalty for Operating While License Expired A.0504 Active and Inactive License Status A.0505 Reinstatement of Expired License, Revoked, Surrendered or Suspended License A.0506 Provisional Broker to be Supervised by Broker A.0507 Payment of License Fees A.0508 Duplicate License Fee (Repealed) A.0509 Duplicate License Fee Section A.0600 Real Estate Commission Hearings Rule A.0601 Complaints/Inquiries/Motions/Other Pleadings A.0616 Procedures for Requesting Hearings When Applicant’s Character Is In Question Section A.0700 Petitions for Rules Section A.0800 Rule Making Section A.0900 Declaratory Rulings Section A.1000 Schools (Transferred to 21 NCAC 58C .0100)Section A.1100 Real Estate Pre‑Licensing Courses (Transferred/Repealed. Transfers are at 21 NCAC 58C .0300) Section A.1200 Certification of Real Estate Instructors (Repealed) Section A.1300 Private Real Estate Schools (Transferred/Repealed. Transfers are at 21 NCAC 58C .0200) Section A.1400 Real Estate Recovery Fund 2 North Carolina Real Estate License Law and Commission Rules Section A.1500 Forms (Repealed) Section A.1600 Discriminatory Practices Prohibited A.1601 Fair Housing Section A.1700 Mandatory Continuing Education Rule A.1701 Purpose and Applicability A.1702 Continuing Education Requirement A.1703 Continuing Education for License Activation A.1704 No Credit for Pre-Licensing Courses A.1705 Attendance and Participation Requirements A.1706 Repetition of Courses A.1707 Elective Course Carry-Over Credit A.1708 Equivalent Credit A.1709 Extensions of Time to Complete A.1710 Denial or Withdrawal of Continuing Educa-tion Credit A.1711 Continuing Education Required of Nonresi-dent Licensees Section A .1800 Limited Nonresident Commercial Licensing Rule A.1801 General Provisions A.1802 Definitions A.1803 Requirements for Licensure; Application and Fee A.1804 Active Status A.1805 Renewal A.1806 Limitations A.1807 Affiliation with Resident Broker A.1808 Trust Monies A.1809 Advertising A.1810 Payment of Fees Section A .1900 Postlicensing Education Rule A.1901 Purpose and Applicability A.1902 Postlicensing Education Requirement A.1903 Extensions of Time to Complete Postlicensing Education A.1904 Denial or Withdrawal of Postlicensing Education Credit Subchapter 58B Time Shares Section B.0100 Time Share Registration Rule B.0101 Application for Registration B.0102 Registration Fee B.0103 Renewal of Time Share Project Registration B.0104 Amendments to Time Share Project Registration B.0105 Notice of Termination Section B.0200 Public Offering Statement Rule B.0201 General Provisions B.0202 Public Offering Statement Summary B.0203 Receipt for Public Offering Statement Section B.0300 Cancellation Rule B.0301 Proof of Cancellation Section B.0400 Time Share Sales Operations Rule B.0401 Retention of Time Share Records B.0402 Time Share Agency Agreements and Disclo-sure Section B.0500 Handling and Accounting of Funds Rule B.0501 Time Share Trust Funds Section B.0600 Project Broker Rule B.0601 Designation of Project Broker B.0602 Duties of the Project Broker Section B.0700 Time Share Forms Rule B.0701 Forms for Time Share Projects Subchapter 58C Real Estate Prelicensing Education Subchapter 58D Real Estate Appraisers (Repealed) Subchapter 58E Real Estate Continuing Education Subchapter 58F Brokerage Transition Course North Carolina Real Estate License Law and Commission Rules 3 CHAPTER 58 REAL ESTATE COMMISSION Subchapter 58A Real Estate Brokers SECTION A.0100 GENERAL BROKERAGE A.0101 Proof of Licensure (a) The annual license renewal pocket card issued by the Commission to each licensee shall be retained by the licens-ee as evidence of licensure. Each licensee shall carry his or her pocket card on his or her person at all times while engaging in real estate brokerage and shall produce the card as proof of li-censure whenever requested. (b) The qualifying broker of a firm shall retain the firm’s renewal pocket card at the firm and shall produce it upon re-quest as proof of firm licensure as required by Rule .0502. (c) Every licensed real estate business entity or firm shall prominently display its license certificate or facsimile thereof in each office maintained by the entity or firm. A broker-in-charge shall also prominently display his or her license certifi-cate in the office where he or she is broker-in-charge. (d) Every licensee shall include his or her license number in agency contracts and disclosures as provided in Rule .0104 of this subchapter. A.0102 Branch Office (Repealed) A.0103 Licensee Name and Address Upon initial licensure and at all times thereafter, every li-censee shall assure that the Commission has on record the li-censee’s current personal name, firm name, trade name, res-idence address and firm address. Every licensee shall notify the Commission in writing of each change of personal name, firm name, trade name, residence address and firm address within ten days of said change. All addresses shall be suffi-ciently descriptive to enable the Commission to correspond with and locate the licensee. A .0104 Agency Agreements and Disclosure (a) Every agreement for brokerage services in a real es-tate transaction and every agreement for services connected with the management of a property owners association shall be in writing and signed by the parties thereto. Every agree-ment for brokerage services between a broker and an own-er of the property to be the subject of a transaction must be in writing and signed by the parties from the time of its for-mation. Every agreement for brokerage services between a broker and a buyer or tenant shall be express and shall be re-duced to writing and signed by the parties thereto not later than the time one of the parties makes an offer to purchase, sell, rent, lease, or exchange real estate to another. Howev-er, every agreement between a broker and a buyer or tenant which seeks to bind the buyer or tenant for a period of time or to restrict the buyer’s or tenant’s right to work with other agents or without an agent shall be in writing and signed by the parties thereto from its formation. A broker shall not con-tinue to represent a buyer or tenant without a written, signed agreement when such agreement is required by this Rule. Ev-ery written agreement for brokerage services of any kind in a real estate transaction shall provide for its existence for a def-inite period of time, shall include the licensee’s license num-ber, and shall provide for its termination without prior notice at the expiration of that period, except that an agency agree-ment between a landlord and broker to procure tenants or re-ceive rents for the landlord’s property may allow for automat-ic renewal so long as the landlord may terminate with notice at the end of any contract period and any subsequent renew-als. For the purposes of this rule, an agreement between li-censees to cooperate or share compensation shall not be con-sidered an agreement for brokerage services and, except as re-quired by Rule .1807 of this Subchapter, need not be memo-rialized in writing. (b) Every listing agreement, written buyer agency agree-ment or other written agreement for brokerage services in a real estate transaction shall contain the following provision: The broker shall conduct all brokerage activities in regard to this agreement without respect to the race, color, religion, sex, national origin, handicap or familial status of any party or prospective party. The provision shall be set forth in a clear and conspicuous manner which shall distinguish it from oth-er provisions of the agreement. For the purposes of this Rule, the term, familial status, shall be defined as it is in G.S. 41A- 3(1b). (c) In every real estate sales transaction, a broker shall, at first substantial contact directly with a prospective buyer or seller, provide the prospective buyer or seller with a copy of the publication “Working with Real Estate Agents,” set forth the broker’s name and license number thereon, review the publication with the buyer or seller, and determine wheth-er the agent will act as the agent of the buyer or seller in the transaction. If the first substantial contact with a prospec-tive buyer or seller occurs by telephone or other electronic means of communication where it is not practical to provide the “Working with Real Estate Agents” publication, the bro-ker shall at the earliest opportunity thereafter, but in no event later than three days from the date of first substantial contact, mail or otherwise transmit a copy of the publication to the prospective buyer or seller and review it with him or her at the earliest practicable opportunity thereafter. For the purposes 4 North Carolina Real Estate License Law and Commission Rules of this Rule, “first substantial contact” shall include contacts between a broker and a consumer where the consumer or bro-ker begins to act as though an agency relationship exists and the consumer begins to disclose to the broker personal or con-fidential information. (d) A real estate broker representing one party in a trans-action shall not undertake to represent another party in the transaction without the written authority of each party. The written authority must be obtained upon the formation of the relationship except when a buyer or tenant is represented by a broker without a written agreement in conformity with the requirements of Paragraph (a) of this Rule. Under such cir-cumstances, the written authority for dual agency must be re-duced to writing not later than the time that one of the par-ties represented by the broker makes an offer to purchase, sell, rent, lease, or exchange real estate to another party. (e) In every real estate sales transaction, a broker work-ing directly with a prospective buyer as a seller’s agent or sub-agent shall disclose in writing to the prospective buyer at the first substantial contact with the prospective buyer that the broker represents the interests of the seller. The written dis-closure shall include the broker’s license number. If the first substantial contact occurs by telephone or by means of other electronic communication where it is not practical to provide written disclosure, the broker shall immediately disclose by similar means whom he represents and shall immediately mail or otherwise transmit a copy of the written disclosure to the buyer. In no event shall the broker mail or transmit a copy of the written disclosure to the buyer later than three days from the date of first substantial contact with the buyer. (f) In every real estate sales transaction, a broker repre-senting a buyer shall, at the initial contact with the seller or seller’s agent, disclose to the seller or seller’s agent that the bro-ker represents the buyer’s interests. In addition, in every real estate sales transaction other than auctions, the broker shall, no later than the time of delivery of an offer to the seller or seller’s agent, provide the seller or seller’s agent with a written confirmation disclosing that he represents the interests of the buyer. The written confirmation may be made in the buyer’s offer to purchase and shall include the broker’s license num-ber. (g) The provisions of Paragraphs (c), (d) and (e) of this Rule do not apply to real estate licensees representing sellers in auction sales transactions. (h) A broker representing a buyer in an auction sale trans-action shall, no later than the time of execution of a written agreement memorializing the buyer’s contract to purchase, provide the seller or seller’s agent with a written confirmation disclosing that he represents the interests of the buyer. The written confirmation may be made in the written agreement. (i) A firm which represents more than one party in the same real estate transaction is a dual agent and, through the brokers associated with the firm, shall disclose its dual agen-cy to the parties. (j) When a firm represents both the buyer and seller in the same real estate transaction, the firm may, with the prior ex-press approval of its buyer and seller clients, designate one or more individual brokers associated with the firm to represent only the interests of the seller and one or more other individ-ual brokers associated with the firm to represent only the in-terests of the buyer in the transaction. The authority for des-ignated agency must be reduced to writing not later than the time that the parties are required to reduce their dual agen-cy agreement to writing in accordance with Paragraph (d) of this Rule. An individual broker shall not be so designated and shall not undertake to represent only the interests of one par-ty if the broker has actually received confidential information concerning the other party in connection with the transac-tion. A broker-in-charge shall not act as a designated broker for a party in a real estate sales transaction when a provision-al broker under his or her supervision will act as a designated broker for another party with a competing interest. (k) When a firm acting as a dual agent designates an in-dividual broker to represent the seller, the broker so designat-ed shall represent only the interest of the seller and shall not, without the seller’s permission, disclose to the buyer or a bro-ker designated to represent the buyer: (1) that the seller may agree to a price, terms, or any conditions of sale other than those established by the seller; (2) the seller’s motivation for engaging in the trans-action unless disclosure is otherwise required by stat-ute or rule; and (3) any information about the seller which the seller has identified as confidential unless disclosure of the information is otherwise required by statute or rule. (l) When a firm acting as a dual agent designates an indi-vidual broker to represent the buyer, the broker so designat-ed shall represent only the interest of the buyer and shall not, without the buyer’s permission, disclose to the seller or a bro-ker designated to represent the seller: (1) that the buyer may agree to a price, terms, or any conditions of sale other than those established by the seller; (2) the buyer’s motivation for engaging in the trans-action unless disclosure is otherwise required by stat-ute or rule; and (3) any information about the buyer which the buyer has identified as confidential unless disclosure of the information is otherwise required by statute or rule. (m) A broker designated to represent a buyer or seller in accordance with Paragraph (j) of this Rule shall disclose the identity of all of the brokers so designated to both the buyer and the seller. The disclosure shall take place no later than the presentation of the first offer to purchase or sell. (n) When an individual broker represents both the buyer and seller in the same real estate sales transaction pursuant to a written agreement authorizing dual agency, the parties may provide in the written agreement that the broker shall not dis-close the following information about one party to the other North Carolina Real Estate License Law and Commission Rules 5 without permission from the party about whom the informa-tion pertains: (1) that a party may agree to a price, terms or any conditions of sale other than those offered; (2) the motivation of a party for engaging in the transaction, unless disclosure is otherwise required by statute or rule; and (3) any information about a party which that party has identified as confidential, unless disclosure is oth-erwise required by statute or rule. A.0105 Advertising (a) Blind Ads. A licensee shall not advertise the sale, pur-chase, exchange, rent or lease of real estate, for another or others, in a manner indicating the offer to sell, purchase, ex-change, rent, or lease is being made by the licensee’s principal only. Every such advertisement shall conspicuously indicate that it is the advertisement of a broker or brokerage firm and shall not be confined to publication of only a post office box number, telephone number, street address, internet web ad-dress or e-mail address. (b) Registration of Assumed Name. In the event that any licensee shall advertise in any manner using a firm name or an assumed name which does not set forth the surname of the licensee, the licensee shall first file the appropriate certifi-cate with the office of the county register of deeds in compli-ance with G.S. 66-68 and notify the Commission in writing of the use of such a firm name or assumed name. (c) Authority to Advertise. (1) A provisional broker shall not advertise any bro-kerage service or the sale, purchase, exchange, rent or lease of real estate for another or others without the consent of his or her broker-in-charge and without in-cluding in the advertisement the name of the broker or firm with whom the provisional broker is associ-ated. (2) A licensee shall not advertise or display a “for sale” or “for rent” sign on any real estate without the con-sent of the owner or his or her authorized agent. (d) Business names. A licensee shall not include the name of a provisional broker or an unlicensed person in the name of a sole proprietorship, partnership or non-corporate business formed for the purpose of real estate brokerage. (e) A person licensed as a limited nonresident commercial broker shall comply with the provisions of Rule .1809 of this Subchapter in connection with all advertising concerning or relating to his or her status as a North Carolina licensee. A.0106 Delivery of Instruments (a) Except as provided in Paragraph (b) of this Rule, ev-ery broker shall immediately, but in no event later than five days from the date of execution, deliver to the parties there-to copies of any required written agency agreement, contract, offer, lease, or option affecting real property. (b) A broker may be relieved of his or her duty under Paragraph (a) of this Rule to deliver copies of leases or rental agreements to the property owner, if the broker: (1) obtains the express written authority of the prop-erty owner to enter into and retain copies of leases or rental agreements on behalf of the property owner; (2) executes the lease or rental agreement on a pre‑printed form, the material terms of which may not be changed by the broker without prior approv-al by the property owner except as may be required by law; (3) promptly provides a copy of the lease or rent-al agreement to the property owner upon reasonable request; and (4) delivers to the property owner within 45 days following the date of execution of the lease or rental agreement, an accounting which identifies the leased property and which sets forth the names of the ten-ants, the rental rates and rents collected. A.0107 Handling and Accounting of Funds (a) Except as provided herein, all monies received by a li-censee acting in his or her fiduciary capacity shall be deposited in a trust or escrow account maintained by a broker not later than three banking days following receipt of such monies ex-cept that earnest money deposits paid by means other than currency which are received on offers to purchase real estate and tenant security deposits paid by means other than curren-cy which are received in connection with real estate leases shall be deposited in a trust or escrow account not later than three banking days following acceptance of such offer to purchase or lease; the date of acceptance of such offer to purchase or lease shall be set forth in the purchase or lease agreement. All mon-ies received by a provisional broker shall be delivered immedi-ately to the broker by whom he or she is employed, except that all monies received by nonresident commercial licensees shall be delivered as required by Rule .1808 of this Subchapter. A licensee may accept custody of a check or other negotiable in-strument made payable to the seller of real property as option money only for the purpose of delivering the instrument to the optionor-seller. While the instrument is in the custody of the licensee, the licensee shall, according to the instructions of the buyer-optionee, either deliver it to the seller-optionor or return it to the buyer-optionee. The licensee shall safeguard the instru-ment and shall be responsible to the parties on the instrument for its prompt and safe delivery. In no event shall a licensee re-tain such an instrument for more than three business days after the acceptance of the option contract. (b) In the event monies received by a licensee while act-ing in a fiduciary capacity are deposited in a trust or escrow ac-count which bears interest, the licensee having custody over such monies shall first secure from all parties having an in-terest in the monies written authorization for the deposit of the monies in an interest-bearing account. Such authorization shall specify how and to whom the interest will be disbursed, and, if contained in an offer, contract, lease, or other transac- 6 North Carolina Real Estate License Law and Commission Rules tion instrument, such authorization shall be set forth in a con-spicuous manner which shall distinguish it from other provi-sions of the instrument. (c) Closing statements shall be furnished to the buyer and the seller in the transaction not more than five days after closing. (d) Trust or escrow accounts shall be so designated by the bank or savings and loan association in which the account is located, and all deposit tickets and checks drawn on said ac-count as well as the monthly bank statement for the account shall bear the words “Trust Account” or “Escrow Account.” (e) A licensee shall maintain and retain records sufficient to identify the ownership of all funds belonging to others. Such re-cords shall be sufficient to show proper deposit of such funds in a trust or escrow account and to verify the accuracy and prop-er use of the trust or escrow account. The required records shall include: (1) bank statements. (2) canceled checks which shall be referenced to the cor-responding journal entry or check stub entries and to the corresponding sales transaction ledger sheets or for rent-al transactions, the corresponding property or owner led-ger sheets. Checks shall conspicuously identify the pay-ee and shall bear a notation identifying the purpose of the disbursement.When a check is used to disburse funds for more than one sales transaction, owner, or proper-ty, the check shall bear a notation identifying each sales transaction, owner, or property for which disbursement is made, including the amount disbursed for each, and the corresponding sales transaction, property, or owner ledger entries. When necessary, the check notation may refer to the required information recorded on a supple-mental disbursement worksheet which shall be cross-ref-erenced to the corresponding check. In lieu of retaining canceled checks, a licensee may retain digitally imaged copies of the canceled checks or substitute checks provid-ed that such images are legible reproductions of the front and back of such instruments with no smaller images than 1.1875 x 3.0 inches and provided that the licens-ee’s bank retains for a period of at least six years the origi-nal checks, “substitute checks” as described in 12 C.F.R. 229.51 or the capacity to provide substitute checks as de-scribed in 12 C.F.R. 229.51 and makes the original or substitute checks available to the licensee and the Com-mission upon request. (3) deposit tickets. For a sales transaction, the deposit ticket shall identify the purpose and remitter of the funds deposited, the property, the parties involved, and a refer-ence to the corresponding sales transaction ledger entry. For a rental transaction, the deposit ticket shall identify the purpose and remitter of the funds deposited, the ten-ant, and the corresponding property or owner ledger en-try. For deposits of funds belonging to or collected on behalf of a property owner association, the deposit ticket shall identify the property or property interest for which the payment is made, the property or interest owner, the remitter, and the purpose of the payment. When a single deposit ticket is used to deposit funds collected for more than one sales transaction, property owner, or property, the required information shall be recorded on the ticket for each sales transaction, owner, or property, or the tick-et may refer to the same information recorded on a sup-plemental deposit worksheet which shall be cross-refer-enced to the corresponding deposit ticket. (4) a payment record sheet for each property or inter-est for which funds are collected and deposited into a property owner association trust account as required by Subsection (i) of this Rule. Payment record sheets shall identify the amount, date, remitter, and purpose of pay-ments received, the amount and nature of the obligation for which payments are made, and the amount of any balance due or delinquency. (5) a separate ledger sheet for each sales transaction and for each property or owner of property managed by the licensee identifying the property, the parties to the trans-action, the amount, date, and purpose of the deposits and from whom received, the amount, date, check num-ber, and purpose of disbursements and to whom paid, and the running balance of funds on deposit for the par-ticular sales transaction or, in a rental transaction, the particular property or owner of property. Monies held as tenant security deposits in connection with rental trans-actions may be accounted for on a separate tenant secu-rity deposit ledger for each property or owner of proper-ty managed by the licensee. For each security deposit the tenant security deposit ledger shall identify the remitter, the date the deposit was paid, the amount, the tenant, landlord, and subject property. For each disbursement of tenant security deposit monies, the ledger shall identi-fy the check number, amount, payee, date, and purpose of the disbursement. The ledger shall also show a run-ning balance. When tenant security deposit monies are accounted for on a separate ledger as provided herein, deposit tickets, canceled checks and supplemental work-sheets shall reference the corresponding tenant security deposit ledger entries when appropriate. (6) a journal or check stubs identifying in chronological sequence each bank deposit and disbursement of mon-ies to and from the trust or escrow account, including the amount and date of each deposit and a reference to the corresponding deposit ticket and any supplemental de-posit worksheet, and the amount, date, check number, and purpose of disbursements and to whom paid. The journal or check stubs shall also show a running balance for all funds in the account. (7) copies of contracts, leases and management agree-ments. (8) closing statements and property management state-ments. (9) covenants, bylaws, minutes, management agree- North Carolina Real Estate License Law and Commission Rules 7 ments and periodic statements relating to the man-agement of a property owner association. (10) invoices, bills, and contracts paid from the trust account, and any documents not otherwise described herein necessary and sufficient to verify and explain record entries. Records of all receipts and disbursements of trust or escrow monies shall be maintained in such a manner as to create an audit trail from deposit tickets and canceled checks to check stubs or journals and to the ledger sheets. Ledger sheets and journals or check stubs must be reconciled to the trust or es-crow account bank statements on a monthly basis. To be suf-ficient, records of trust or escrow monies must include a work-sheet for each such monthly reconciliation showing the ledger sheets, journals or check stubs, and bank statements to be in agreement and balance. (f) All trust or escrow account records shall be made avail-able for inspection by the Commission or its authorized repre-sentatives in accordance with Rule 58A .0108. (g) In the event of a dispute between the seller and buyer or landlord and tenant over the return or forfeiture of any de-posit other than a residential tenant security deposit held by a licensee, the licensee shall retain said deposit in a trust or es-crow account until the licensee has obtained a written release from the parties consenting to its disposition or until disbursement is ordered by a court of competent jurisdiction. Alterna-tively, the licensee may deposit the disputed monies with the appropriate clerk of court in accordance with the provision of G.S. 93A-12. If it appears to a licensee holding a disputed de-posit that a party has abandoned his or her claim, the licensee may disburse the money to the other claiming parties accord-ing to their written agreement provided that the licensee first makes a reasonable effort to notify the party who has apparent-ly abandoned his or her claim and provides that party with an opportunity to renew his or her claim to the disputed funds. Tenant security deposit monies shall be disposed of in accor-dance with the requirements of N.C.G.S. 42-50 through 56 and N.C.G.S. 42A-18. (h) A licensee may transfer earnest money deposits in his or her possession collected in connection with a sales transaction from his or her trust account to the closing attorney or other settlement agent not more than ten days prior to the anticipated settlement date. A licensee shall not disburse prior to settle-ment any earnest money in his or her possession for any other purpose without the written consent of the parties. (i) The funds of a property owner association, when collect-ed, maintained, disbursed or otherwise controlled by a licens-ee, are trust monies and shall be treated as such in the manner required by this Rule. Such funds must be deposited into and maintained in a trust or escrow account dedicated exclusively for funds belonging to a single property owners association and may not be commingled with funds belonging to other prop-erty owner associations or other persons or parties. A licensee who undertakes to act as manager of a property owner associa-tion or as the custodian of funds belonging to a property own-er association shall provide the association with periodic state-ments which report the balance of association funds in the li-censee’s possession or control and which account for the funds the licensee has received and disbursed on behalf of the associ-ation. Such statements must be made in accordance with the licensee’s agreement with the association, but in no event shall the statements be made less frequently than every 90 days. (j) Every licensee shall safeguard the money or property of others coming into his or her possession in a manner consistent with the requirements of the Real Estate License Law and the rules adopted by the Commission. A licensee shall not convert the money or property of others to his or her own use, apply such money or property to a purpose other than that for which it was paid or entrusted to him or her, or permit or assist any other person in the conversion or misapplication of such mon-ey or property. (k) In addition to the records required by paragraph (e) of this rule, a licensee acting as agent for the landlord of a residen-tial property used for vacation rentals shall create and main-tain a subsidiary ledger sheet for each property or owner of such properties onto which all funds collected and disbursed are identified in categories by purpose. On a monthly basis, the licensee shall reconcile the subsidiary ledger sheets to the corre-sponding property or property owner ledger sheet. (l) In lieu of maintaining a subsidiary ledger sheet, the li-censee may maintain an accounts payable ledger sheet for each owner or property and each vendor to whom trust monies are due for monies collected on behalf of the owner or property identifying the date of receipt of the trust monies, from whom the monies were received, rental dates, and the corresponding property or owner ledger sheet entry including the amount to be disbursed for each and the purpose of the disbursement. The licensee may also maintain an accounts payable ledger sheet in the format described in paragraph (k) above for vaca-tion rental tenant security deposit monies and vacation rental advance payments. A.0108 Retention of Records Licensees shall retain records of all sales, rental, and oth-er transactions conducted in such capacity, whether the trans-action is pending, completed or terminated prior to its suc-cessful conclusion. The licensee shall retain such records for three years after all funds held by the licensee in connection with the transaction have been disbursed to the proper par-ty or parties or until the successful or unsuccessful conclusion of the transaction, whichever occurs later. Such records shall include contracts of sale, written leases, agency contracts, op-tions, offers to purchase, trust or escrow records, earnest mon-ey receipts, disclosure documents, closing statements, broker-age cooperation agreements, declarations of affiliation, and any other records pertaining to real estate transactions. All such records shall be made available for inspection and repro-duction by the Commission or its authorized representatives without prior notice. 8 North Carolina Real Estate License Law and Commission Rules A.0109 Brokerage Fees and Compensation (a) A licensee shall not receive, either directly or indirect-ly, any commission, rebate or other valuable consideration of more than nominal value from a vendor or a supplier of goods and services for an expenditure made on behalf of the licens-ee’s principal in a real estate transaction without the written consent of the licensee’s principal. (b) A licensee shall not receive, either directly or indirect-ly, any commission, rebate, or other valuable consideration of more than nominal value for services which the licensee rec-ommends, procures, or arranges relating to a real estate trans-action for a party, without full and timely disclosure to such party. (c) In a real estate sales transaction, a broker shall not receive any compensation, incentive, bonus, rebate, or other consideration of more than nominal value: (1) from his principal unless the compensation, in-centive, bonus, rebate, or other consideration is pro-vided for in a written agency contract prepared in conformity with the requirements of 21 NCAC 58A .0104. (2) from any other party or person unless the broker provides full and timely disclosure of the incentive, bonus, rebate, or other consideration, or the prom-ise or expectation thereof to the broker’s principal. The disclosure may be made orally, but must be con-firmed in writing before the principal makes or ac-cepts an offer to buy or sell. (d) Full disclosure shall include a description of the com-pensation, incentive, bonus, rebate, or other consideration in-cluding its value and the identity of the person or party by whom it will or may be paid. A disclosure is timely when it is made in sufficient time to aid a reasonable person’s deci-sion- making. (e) Nothing in this rule shall be construed to require a broker to disclose to a person not his principal the compensa-tion the broker expects to receive from his principal or to dis-close to his principal the compensation the broker expects to receive from the broker’s employing broker. For the purpose of this Rule, nominal value means of insignificant, token, or merely symbolic worth. (f) The Commission shall not act as a board of arbitra-tion and shall not compel parties to settle disputes concerning such matters as the rate of commissions, the division of com-missions, pay of brokers, and similar matters. (g) Except as provided in (h) of this rule, a licensee shall not undertake in any manner, any arrangement, contract, plan or other course of conduct, to compensate or share com-pensation with unlicensed persons or entities for any acts per-formed in North Carolina for which licensure by the Com-mission is required. (h) A broker may pay or promise to pay consideration to a travel agent in return for procuring a tenant for a vacation rental as defined by the Vacation Rental Act if: (1) the travel agent only introduces the tenant to the broker, but does not otherwise engage in any activity which would require a real estate license; (2) the introduction by the travel agent is made in the regular course of the travel agent’s business; and (3) the travel agent has not solicited, handled or re-ceived any monies in connection with the vacation rental. For the purpose of this Rule, a travel agent is any person or entity who is primarily engaged in the business of acting as an intermediary between persons who purchase air, land, and ocean travel services and the providers of such services. A travel agent is also any other person or entity who is permit-ted to handle and sell tickets for air travel by the Airlines Re-porting Corporation (ARC). Payments authorized hereunder shall be made only after the conclusion of the vacation rent-al tenancy. Prior to the creation of a binding vacation rent-al agreement, the broker shall provide a tenant introduced by a travel agent a written statement advising him or her to rely only upon the agreement and the broker’s representations about the transaction. The broker shall keep for a period of three years records of a payment made to a travel agent in-cluding records identifying the tenant, the travel agent and their addresses, the property and dates of the tenancy, and the amount paid. (i) Nothing in this Rule shall be construed to permit a li-censee to accept any fee, kickback or other valuable consid-eration that is prohibited by the Real Estate Settlement Pro-cedures Act (12 USC 2601 et. seq.) or any rules and regula-tions promulgated by the United States Department of Hous-ing and Urban Development pursuant to said Act or to fail to make any disclosure required by said Act or rules. A.0110 Broker-in-Charge (a) Every real estate firm shall designate a broker to serve as the broker-in-charge at its principal office and a broker to serve as broker-in-charge at any branch office. No broker shall be broker-in-charge of more than one office at a time. If a firm shares office space with one or more other firms, one bro-ker may serve as broker-in-charge of each firm at that loca-tion. No office or branch office of a firm shall have more than one designated broker-in-charge. A broker who is a sole pro-prietor shall designate himself or herself as a broker-in-charge if the broker engages in any transaction where the broker is re-quired to deposit and maintain monies belonging to others in a trust account, engages in advertising or promoting his or her services as a broker in any manner, or has one or more other brokers affiliated with him or her in the real estate business. Maintenance of a trust or escrow account by a broker solely for holding residential tenant security deposits received by the broker on properties owned by the broker in compliance with N.C.G.S. 42-50 shall not, standing alone, subject the broker to the requirement to designate himself or herself as a broker-in-charge. A broker desiring to be a broker-in-charge shall declare in writing his or her designation as broker-in-charge of an office to the Commission on a form prescribed by North Carolina Real Estate License Law and Commission Rules 9 the Commission within 10 days following the broker’s desig-nation as broker-in-charge of any office. The broker-in-charge shall, in accordance with the requirements of G.S. 93A and the rules adopted by the Commission, assume the responsibil-ity at his or her office for: (1) the retention of current license renewal pocket cards by all brokers employed at the office for which he or she is broker-in-charge; the proper display of li-censes at such office in accordance with Rule .0101 of this Section; and assuring that each licensee employed at the office has complied with Rules .0503, .0504 and .0506 of this Subchapter; (2) the proper notification to the Commission of any change of business address or trade name of the firm and the registration of any assumed business name ad-opted by the firm for its use; (3) the proper conduct of advertising by or in the name of the firm at such office; (4) the proper maintenance at such office of the trust or escrow account of the firm and the records pertain-ing thereto; (5) the proper retention and maintenance of records relating to transactions conducted by or on behalf of the firm at such office, including those required to be retained pursuant to Rule .0108 of this Section; (6) the proper supervision of provisional brokers asso-ciated with or engaged on behalf of the firm at such of-fice in accordance with the requirements of Rule .0506 of this Subchapter; (7) the proper supervision of all licensees employed at the office for which he or she is broker-in-charge with respect to adherence to agency agreement and disclo-sure requirements. (b) When used in this Rule, the term: (1) “Branch Office” means any office in addition to the principal office of a broker which is operated in connection with the broker’s real estate business; and (2) “Office” means any place of business where acts are performed for which a real estate license is required or where monies received by a licensee acting in a fi-duciary capacity are handled or records for such trust monies are maintained. (c) To qualify to become a broker-in-charge, a broker shall: (1) have a license on active status, but not on provi-sional status; (2) possess at least two years of full-time real estate brokerage experience or equivalent part-time real es-tate brokerage experience within the previous five years or real estate education or experience in real es-tate transactions that the Commission finds equiva-lent to such experience; and (3) complete the Commission’s 12 classroom hour broker-in-charge course either within three years pri-or to designation as a broker-in-charge or within 120 days following designation as a broker-in-charge. By submission of a broker-in-charge declaration to the Commission, a broker certifies that he or she possesses the experience required to become a broker-in-charge and upon acknowledgement by the Commission of a completed dec-laration, the broker shall receive his or her broker-in-charge designation and be authorized to act as a broker-in-charge. Upon his or her designation as broker-in-charge and com-pletion of the broker-in-charge course within the time peri-od prescribed in Subparagraph (c)(3) of this Rule, the desig-nated broker-in-charge acquires the eligibility to be re-des-ignated as a broker-in-charge at any time in the future after a period of not actively serving as a broker-in-charge with-out having to again satisfy the qualification requirements for initial designation stated in this Paragraph so long as the broker continuously satisfies the requirements to retain such eligibility described in Paragraph (e) of this Rule. A bro-ker- in-charge designation shall be immediately terminated if a broker-in-charge fails to complete the broker-in-charge course during the required time period or if the Commis-sion finds the broker-in-charge does not possess the required experience. Upon the request of the Commission, a broker shall provide to the Commission evidence that he or she possesses the required experience. A broker who is removed as broker-in-charge for failure to timely complete the Com-mission’s 12 hour broker-in-charge course must first com-plete the 12 hour broker-in-charge course before he or she may again be designated as broker-in-charge. A broker-in-charge, upon written request of the Commission or a broker who has been affiliated with the broker-in-charge within the previous five years, shall provide the Commission or broker an accurate written statement regarding the broker’s work at the office of the broker-in-charge, including the dates of af-filiation, average number of hours worked per week, and the number and type of properties listed, sold, bought, leased, or rented for others by the licensee during his or her affilia-tion with the broker-in-charge. (d) A broker who was the broker-in-charge of a real es-tate office on April 1, 2006, whose broker-in-charge decla-ration was received by the Commission prior to that date, and who completed the Commission’s broker-in-charge course prior to April 1, 2006 or within 120 days follow-ing designation as a broker-in-charge, may continue to serve as a broker-in-charge thereafter until his or her eligibility to serve as a broker-in-charge is terminated as provided in paragraph (f ) of this Rule. (e) Once a broker has been designated as a broker-in-charge and completed the 12 hour broker-in-charge course as prescribed by Paragraph (c) of this Rule, the broker may maintain broker-in-charge eligibility by timely annu-al renewal of his or her broker license, completion each li-cense year of the four hour mandatory continuing educa-tion update course prescribed for all licensees and known as the “Real Estate Update Course,” and completion each license year of the four hour special continuing education 10 North Carolina Real Estate License Law and Commission Rules course prescribed by the Commission only for brokers-in-charge and known as the “Broker-In-Charge Annual Review Course.” The Broker-In-Charge Annual Review Course must be taken initially by a broker-in-charge during the first full license year following the license year in which the bro-ker was designated as a broker-in-charge and must be taken each license year thereafter in order for the broker to main-tain broker-in-charge eligibility. The Broker-In-Charge An-nual Review Course shall satisfy the broker’s general con-tinuing education elective course requirement, but the bro-ker must also take the mandatory continuing education Real Estate Update Course each license year. The Broker- In-Charge Annual Review Course is reserved exclusively for current brokers-in-charge, and brokers who are not current-ly acting as a broker-in-charge but who desire to retain their broker-in-charge eligibility. Only these brokers shall receive continuing education elective credit for taking the course. (f ) A broker’s broker-in-charge eligibility and, if cur-rently designated as a broker-in-charge, his or her broker-in-charge designation shall be terminated upon the occurrence of any of the following events: (1) The broker’s license expires or the broker’s license is suspended, revoked or surrendered; (2) the broker’s license is made inactive for any rea-son, including failure to satisfy the continuing edu-cation requirements described in Rule .1702 of this Subchapter; (3) the broker fails to complete the Broker-In-Charge Annual Review Course described in Paragraph (e) of this Rule; or (4) the broker is found by the Commission to have not possessed the experience required in Paragraph (c) of this Rule at the time of either initial designa-tion as a broker-in-charge or re-designation as a bro-ker- in-charge. When a broker who is a former broker-in-charge desires to be re-designated as a broker-in-charge following termina-tion of his or her broker-in-charge designation or eligibility, he or she must first have a license on active status. The bro-ker then must satisfy the experience requirements for initial designation set forth in Paragraph (c) of this Rule, and the broker must complete the 12 hour broker-in-charge course within 120 days following re-designation, except that if the broker has taken the 12 hour broker-in-charge course with-in the preceding three years, he or she has the option to complete the Broker-In-Charge Annual Review Course for the current license year within 120 days following re-desig-nation as a broker-in-charge in lieu of repeating the 12 hour broker-in-charge course. If a broker who has been re-desig-nated as a broker-in-charge and then removed as broker-in-charge due to failure to satisfy his education requirement within 120 days following re-designation subsequently seeks another re-designation as broker-in-charge, the broker must first complete the 12 hour broker-in-charge course before he or she may again be designated as a broker-in-charge, even if the broker has completed the 12 hour broker-in-charge course within the preceding three years. (g) A broker‑in‑charge shall notify the Commission in writing that he or she no longer is serving as broker‑in-charge of a particular office within 10 days following any such change. (h) A licensed real estate firm is not required to designate a broker-in-charge if it: (1) has been organized for the sole purpose of receiv-ing compensation for brokerage services furnished by its qualifying broker through another firm or broker; (2) is treated for tax purposes as a Subchapter S corpo-ration by the United States Internal Revenue Service; (3) has no principal or branch office; and (4) has no person associated with it other than its qualifying broker. (i) A broker-in-charge residing outside of North Carolina who is the broker-in-charge of a principal or branch office not located in North Carolina is not required to complete the bro-ker- in-charge course or the special continuing education course prescribed for brokers-in-charge under paragraph (e) of this Rule. However, if such broker-in-charge either becomes a resi-dent of North Carolina or becomes broker-in-charge of an of-fice located within North Carolina, then he or she must take the 12 hour broker-in-charge course within 120 days of such change, unless he or she has taken the 12 hour course with-in the preceding three years. Such broker-in-charge shall take the special broker-in-charge continuing education course pre-scribed in paragraph (e) of this Rule during the first full license year following the change and each license year thereafter so long as the broker-in-charge remains a resident of North Car-olina or continues to manage an office located in North Car-olina. (j) A nonresident commercial real estate broker licensed under the provisions of Section .1800 of this Subchapter shall not act as or serve in the capacity of a broker-in-charge of a firm or office in North Carolina. A.0111 Drafting Legal Instruments (a) A broker acting as an agent in a real estate transaction shall not draft offers, sales contracts, options, leases, promis-sory notes, deeds, deeds of trust or other legal instruments by which the rights of others are secured; however, a broker may complete preprinted offer, option contract, sales contract and lease forms in real estate transactions when authorized or di-rected to do so by the parties. (b) A broker may use electronic, computer, or word pro-cessing equipment to store preprinted offer and sales contract forms which comply with Rule .0112, as well as preprinted op-tion and lease forms, and may use such equipment to complete and print offer, contract and lease documents. Provided, how-ever, a broker may not alter the form before it is presented to the parties. If the parties propose to delete or change any word or provision in the form, the form must be marked to indicate the change or deletion made. The language of the form shall North Carolina Real Estate License Law and Commission Rules 11 REC 4.22 REV 7/10 STATE OF NORTH CAROLINA RESIDENTIAL PROPERTY DISCLOSURE STATEMENT Instructions to Property Owners 1. G.S. 47E requires owners of residential real estate (single-family homes and buildings with up to four dwelling units) to furnish purchasers a property disclosure statement. This form is the only one approved for this purpose. A disclosure statement must be furnished in connection with the sale, exchange, option and sale under a lease with option to purchase (unless the tenant is already occupying or intends to occupy the dwelling). A disclosure statement is not required for some transactions, including the first sale of a dwelling which has never been inhabited and transactions of residential property made pursuant to a lease with option to purchase where the lessee occupies or intends to occupy the dwelling. For a complete list of exemptions, see G.S. 47E-2. 2. You must check √ one of the boxes for each of the questions on the reverse side of this form. a. If you check “Yes” for any question, you must explain your answer and either describe any problem or attach a report from an engineer, contractor, pest control operator or other expert or public agency describing it. If you attach a report, you will not be liable for any inaccurate or incomplete information contained in it so long as you were not grossly negligent in obtaining or transmitting the information. b. If you check “No”, you are stating that you have no actual knowledge of any problem. If you check “No” and you know there is a problem, you may be liable for making an intentional misstatement. c. If you check “No Representation”, you have no duty to disclose the conditions or characteristics of the property, even if you should have known of them. * If you check “Yes” or “No” and something happens to the property to make your Statement incorrect or inaccurate (for example, the roof begins to leak), you must promptly give the purchaser a corrected Statement or correct the problem. 3. If you are assisted in the sale of your property by a licensed real estate broker, you are still responsible for completing and delivering the Statement to the purchasers; and the broker must disclose any material facts about your property which they know or reasonably should know, regardless of your responses on the Statement. 4. You must give the completed Statement to the purchaser no later than the time the purchaser makes an offer to purchase your property. If you do not, the purchaser can, under certain conditions, cancel any resulting contract (See “Note to Purchasers” below). You should give the purchaser a copy of the Statement containing your signature and keep a copy signed by the purchaser for your records. Note to Purchasers: If the owner does not give you a Residential Property Disclosure Statement by the time you make your offer to purchase the property, you may under certain conditions cancel any resulting contract and be en‑titled to a refund of any deposit monies you may have paid. To cancel the contract, you must personally deliver or mail written notice of your decision to cancel to the owner or the owner’s agent within three calendar days following your receipt of the Statement, or three calendar days following the date of the contract, whichever occurs first. However, in no event does the Disclosure Act permit you to cancel a contract after settlement of the transaction or (in the case of a sale or exchange) after you have occupied the property, whichever occurs first. 5. In the space below, type or print in ink the address of the property (sufficient to identify it) and your name. Then sign and date. Property Address: Owner’s Name(s): Owner(s) acknowledge having examined this Statement before signing and that all information is true and correct as of the date signed. Owner Signature: Date Owner Signature: Date Purchaser(s) acknowledge receipt of a copy of this disclosure statement; that they have examined it before signing; that they understand that this is not a warranty by owner or owner’s agent; that it is not a substitute for any inspections they may wish to obtain; and that the representations are made by the owner and not the owner’s agent(s) or subagent(s). Purchaser(s) are encouraged to obtain their own inspection from a licensed home inspector or other professional. Purchaser Signature: Date Purchaser Signature: Date (OVER) Page 1 of 2 12 Page 2 of 2 Owner Initials and Date Owner Initials and Date Purchaser Initials and Date Purchaser Initials and Date Property Address/Description: [Note: In this form, “property” refers only to dwelling unit(s) and not sheds, detached garages or other buildings.] Regarding the property identified above, do you know of any problem (malfunction or defect) with any of the following: No Yes* No Representation 1. FOUNDATION, SLAB, FIREPLACES/CHIMNEYS, FLOORS, WINDOWS (INCLUDING STORM WIN-DOWS AND SCREENS), DOORS, CEILINGS, INTERIOR AND EXTERIOR WALLS, ATTACHED GA-RAGE, PATIO, DECK OR OTHER STRUCTURAL COMPONENTS including any modifications to them? a. Siding is □ Masonry □ Wood □ Composition/Hardboard □ Vinyl □ Synthetic Stucco □ Other ________ b. Approximate age of structure? _______________ □ □ □□□ 2. ROOF (leakage or other problem)? a. Approximate age of roof covering? ____________ □ □ □□ 3. WATER SEEPAGE, LEAKAGE, DAMPNESS OR STANDING WATER in the basement, crawl space or slab? □ □ □ 4. ELECTRICAL SYSTEM (outlets, wiring, panel, switches, fixtures etc.)? □ □ □ 5. PLUMBING SYSTEM (pipes, fixtures, water heater, etc.)? □ □ □ 6. HEATING AND/OR AIR CONDITIONING? a. Heat Source is: □ Furnace □ Heat Pump □ Baseboard □ Other__________ b. Cooling Source is: □ Central Forced Air □ Wall/Window Unit(s) □ Other__________ c. Fuel Source is: □ Electricity □ Natural Gas □ Propane □ Oil □ Other ________ □ □ □□□□ 7. WATER SUPPLY (including water quality, quantity and water pressure)? a. Water supply is: □ City/County □ Community System □ Private Well □ Other _______________ b. Water pipes are: □ Copper □ Galvanized □ Plastic □ Other ________ □ Unknown □ □ □□□ 8. SEWER AND/OR SEPTIC SYSTEM? a. Sewage disposal system is: □ Septic Tank □ Septic Tank with Pump □ Community System □ Connected to City/County System □ City/County System available □ Straight pipe (wastewater does not go into a septic or oth-er sewer system [note: use of this type of system violates state law]) □ Other ___________ □ □ □ □ 9. BUILT-IN APPLIANCES (RANGE/OVEN, ATTACHED MICROWAVE, HOOD/FAN, DISHWASHER, DISPOSAL, etc.)? □ □ □ 10. PRESENT INFESTATION, OR DAMAGE FROM PAST INFESTATION OF WOOD DESTROYING IN-SECTS OR ORGANISMS which has not been repaired? □ □ □ 11. DRAINAGE, GRADING OR SOIL STABILITY OF LOT? □ □ □ 12. OTHER SYSTEMS AND FIXTURES: CENTRAL VACUUM, POOL, HOT TUB, SPA, ATTIC FAN, EX-HAUST FAN, CEILING FAN, SUMP PUMP, IRRIGATION SYSTEM, TV CABLE WIRING OR SATELLITE DISH, OR OTHER SYSTEMS? □ □ □ Also regarding the property identified above, including the lot, other improvements, and fixtures located thereon, do you know of any: 13. ROOM ADDITIONS OR OTHER STRUCTURAL CHANGES ? □ □ □ 14. ENVIRONMENTAL HAZARDS (substances, materials or products) including asbestos, formaldehyde, radon gas, methane gas, lead-based paint, underground storage tank, or other hazardous or toxic material (whether buried or cov-ered), contaminated soil or water, or other environmental contamination? □ □ □ 15. COMMERCIAL, INDUSTRIAL, OR MILITARY NOISE, ODOR, SMOKE, ETC. AFFECTING THE PROPERTY? □ □ □ 16. VIOLATIONS OF ZONING ORDINANCES, RESTRICTIVE COVENANTS OR OTHER LAND-USE RESTRICTIONS OR BUILDING CODES INCLUDING THE FAILURE TO OBTAIN PROPER PERMITS FOR ROOM ADDITIONS OR OTHER STRUCTURAL CHANGES? □ □ □ 17. UTILITY OR OTHER EASEMENTS, SHARED DRIVEWAYS, PARTY WALLS OR ENCROACHMENTS FROM OR ON ADJACENT PROPERTY? □ □ □ 18. LAWSUITS, FORECLOSURES, BANKRUPTCY, TENANCIES, JUDGMENTS, TAX LIENS, PROPOSED AS-SESSMENTS, MECHANICS’ LIENS, MATERIALMENS’ LIENS, OR NOTICE FROM ANY GOVERNMEN-TAL AGENCY that could affect title to the property? □ □ □ 19. OWNERS’ ASSOCIATION OR “COMMON AREA” EXPENSES OR ASSESSMENTS? □ □ □ 20. FLOOD HAZARD or that the property is in a FEDERALLY-DESIGNATED FLOOD PLAIN? □ □ □ 21. PRIVATE ROAD(S) OR STREETS adjoining the property? a. If yes, do you know of an existing owners association or maintenance agreement to maintain the road or street? □□ □□ □□ * If you answered “Yes” to any of the above 21 questions, please explain (Attach additional sheets, if necessary): In lieu of providing a written explanation, you may attach a written report to this Disclosure Statement by a public agency, engineer, land surveyor, geologist, pest control operator, contractor, home inspector or other expert, dealing with matters within the scope of that public agency’s functions or the expert’s license or expertise. North Carolina Real Estate License Law and Commission Rules 13 not be modified, rewritten, or changed by the broker or their clerical employees unless directed to do so by the parties. (c) Nothing contained in this rule shall be construed to prohibit a broker from making written notes, memoranda or correspondence recording the negotiations of the parties to a real estate transaction when such notes, memoranda or corre-spondence do not themselves constitute binding agreements or other legal instruments. A.0112 Offers and Sales Contracts (a) A broker acting as an agent in a real estate transaction shall not use a preprinted offer or sales contract form unless the form describes or expressly requires the entry of the fol-lowing 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 in-cluded 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 the 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 rea-sonable effort to quality for the assumption of the loan; (7) the amount of earnest money, if any, the meth-od of payment, the name of the broker or firm that will serve as escrow agent, an acknowledgment of ear-nest money receipt by the escrow agent, and the cri-teria for determining disposition of the earnest mon-ey, including disputed earnest money, consistent with Rule .0107 of this Subchapter; (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, and who shall pay loan closing costs, and a condition that the buyer shall make every reason-able effort to obtain the loan; (9) a general statement of the buyer’s intended use of the property and a condition that such use must not be prohibited by private restriction or governmental regulation; (10) the amount and purpose of any special assess-ment to which the property is subject and the respon-sibility of the parties for any unpaid charges; (11) the date for closing and transfer of possession; (12) the signatures of the buyer and seller; (13) the date of offer and acceptance; (14) a provision that title to the property must be de-livered at closing by general warranty deed and must be fee simple marketable title, free of all encumbranc-es except ad valorem taxes for the current year, utility easements, and any other encumbrances approved by the buyer or a provision otherwise describing the es-tate to be conveyed with 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 improvements, if any; (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 descdrip-tion of the required property condition at closing: and (19) a provision setting forth the identity of each real estate agent and firm involved in the transaction and disclosing the party each agent and firm represents. (b) A broker acting as an agent in a real estate transac-tion shall not use a preprinted offer or sales contract form containing: (1) any provision concerning the payment of a com-mission or compensation, including the forfeiture of earnest money, to any broker or firm; or (2) any provision that attempts to disclaim the liabil-ity of a broker for his or her representations in connec-tion with the transaction. A broker or anyone acting for or at the direction of the bro-ker shall not insert or cause such provisions or terms to be inserted into any such preprinted form, even at the direction of the parties or their attorneys. (c) The provisions of this rule shall apply only to pre-printed offer and sales contract forms which a broker act-ing as an agent in a real estate transaction proposes for use by the buyer and seller. Nothing contained in this Rule shall be construed to prohibit the buyer and seller in a real estate transaction from altering, amending or deleting any provi-sion in a form offer to purchase or contract nor shall this Rule be construed to limit the rights of the buyer and sell-er to draft their own offers or contracts or to have the same drafted by an attorney at law. A.0113 Reporting Criminal Convictions and Disciplinary Actions Any broker who is convicted of any felony or misdemean-or or who is disciplined by any governmental agency in con-nection with any other occupational license, or whose notar-ial commission is restricted, suspended, or revoked, shall file with the Commission a written report of such conviction or action within 60 days of the final judgment, order, or dispo-sition in the case. A form for this report is available from the Commission. 14 North Carolina Real Estate License Law and Commission Rules A.0114 Residential Property Disclosure Statement (a) Every owner of real property subject to a transfer of the type contemplated by Chapter 47E of the General Statutes, shall complete the ... residential property disclosure statement and furnish a copy of the complete statement to a purchas-er in accordance with the requirements of G.S. 47E-4. The form shall bear the seal of the North Carolina Real Estate Commission and shall read as [approved and published by the Commission]. (b) The form described in Paragraph (a) of this Rule may be reproduced, but the form shall not be altered or amend-ed in any way. A.0115 Disclosure of Offers Prohibited A broker shall not disclose the price or other materi-al terms contained in a party’s offer to purchase, sell, lease, rent, or to option real property to a competing party with-out the express authority of the offering party. SECTION A.0200 GENERAL PROVISIONS (Repealed) SECTION A.0300 APPLICATION FOR LICENSE A.0301 Form An individual or business entity who wishes to file an ap-plication for a broker license shall make application on a form prescribed by the Commission and can obtain the required form upon request to the Commission. In general, the ap-plication form for an individual calls for information such as the applicant’s name and address, the applicant’s social securi-ty number, satisfactory proof of the applicant’s identity, plac-es of residence, education, prior real estate licenses, and such other information necessary to identify the applicant and de-termine the applicant’s qualifications and fitness for licensure. The application form for a business entity is described in Rule .0502 of this Section. A.0302 Filing and Fees (a) Applications for a real estate license shall be com-plete and, except as provided by Rule .0403 of this Subchap-ter, shall be submitted to the Commission’s office accompa-nied by the application fee. Examination scheduling of ap-plicants who are required to pass the real estate licensing ex-amination shall be accomplished in accordance with Rule .0401 of this Subchapter. (b) Except for persons applying for licensure under the provisions of Section .1800 of this Subchapter, the license application fee shall be $30.00. In addition to the license ap-plication fee, applicants for licensure who are required to take the license examination must pay the examination fee charged by the Commission’s authorized testing service in the form and manner acceptable to the testing service. Persons applying for licensure under Section .1800 of this Subchap-ter shall pay the application fee set forth in Rule .1803 of this Subchapter. (c) An applicant shall update information provided in connection with an application or submit a newly completed application form without request by the Commission to as-sure that the information provided in the application is cur-rent and accurate. Failure to submit updated information prior to the issuance of a license may result in disciplinary ac-tion against a licensee in accordance with G.S. §93A-6(b)(1). In the event that the Commission requests an applicant to submit updated information or to provide additional infor-mation necessary to complete the application and the appli-cant fails to submit such information within 90 days follow-ing the Commission’s request, the Commission shall cancel the applicant’s application. The license application of an in-dividual found by the Commission to be qualified for the licensing examination shall be immediately canceled if the applicant fails to pass a scheduled licensing examination, fails to appear for and take any examination for which the applicant has been scheduled without having the applicant’s examination postponed or absence excused in accordance with Rule .0401(b) and (c) of this Section, or fails to take and pass the examination within 180 days of filing a com-plete application as described in Rule .0301 of this Section and having the application entered into the Commission’s examination applicant file. Except as permitted otherwise in Rule .0403 of this Subchapter, an applicant whose license application has been canceled and who wishes to obtain a real estate license must start the licensing process over by filing a complete application to the Commission and paying all re-quired fees. A.0303 Payment of Application Fees Payment of application fees shall be made to the Com-mission by bank check, certified check, money order, debit card, or credit card. Once an application has been filed and processed, the application fee may not be refunded. A.0304 Equivalent Experience Qualifications for Applicants Experience obtained by a broker applicant in violation of law or rule may not be recognized by the Commission as fulfilling the requirements for licensure when the appli-cant is requesting the Commission to waive the prescribed education requirement based wholly or in part on equiva-lent experience obtained by the applicant. SECTION A.0400 EXAMINATIONS A.0401 Scheduling Examinations (a) An applicant who is required and qualified to take the licensing examination shall be provided a notice of ex-amination eligibility that shall be valid for a period of 180 North Carolina Real Estate License Law and Commission Rules 15 days and for a single administration of the licensing exami-nation. Upon receipt of the notice of examination eligibil-ity, the applicant shall contact the Commission’s authorized testing service to pay for and schedule the examinations in accordance with procedures established by the testing ser-vice. The testing service will schedule applicants for exami-nation by computer at their choice of one of the testing lo-cations and will notify applicants of the time and place of their examinations. (b) An applicant may postpone a scheduled examina-tion provided the applicant makes the request for postpone-ment directly to the Commission’s authorized testing service in accordance with procedures established by the testing ser-vice. An applicant’s examination shall not be postponed be-yond the 180 day period allowed for taking the examination without first refiling another complete application with the Commission. A request to postpone a scheduled licensing examina-tion without complying with the procedures for re-applying for examination described in Rule .0403 of this Subchap-ter shall be granted only once unless the applicant satisfies the requirements for obtaining an excused absence stated in Paragraph (c) of this Rule. (c) An applicant may be granted an excused absence from a scheduled examination if the applicant provides evi-dence that the absence was the direct result of an emergen-cy situation or condition which was beyond the applicant’s control and which could not have been reasonably foreseen by the applicant. A request for an excused absence must be promptly made in writing and must be supported by docu-mentation verifying the reason for the absence. The request must be submitted directly to the testing ser-vice in accordance with procedures established by the test-ing service. A request for an excused absence from an exam-ination shall be denied if the applicant cannot be resched-uled and examined prior to expiration of the 180 day period allowed for taking the examination without first refiling an-other complete application with the Commission. A.0402 Subject Matter and Passing Scores (a) The real estate licensing examination shall test appli-cants on the following general subject areas: (1) real estate law; (2) real estate brokerage law and practices; (3) the Real Estate License Law, rules of the Com-mission, and the Commission’s trust account guide-lines; (4) real estate finance; (5) real estate valuation (appraisal); (6) real estate mathematics; and (7) related subject areas. (b) In order to pass the real estate licensing examination, an applicant must attain a score at least equal to the passing score established by the Commission in compliance with psy-chometric standards for establishing passing scores for occu-pational licensing examinations as set forth in the “Standards for Educational and Psychological Testing” jointly promul-gated by the American Educational Research Association, the American Psychological Association, and the National Coun-cil on Measurement in Education. Passing applicants will re-ceive only a score of “pass”; however, failing applicants will be informed of their actual score. A passing examination score obtained by a license applicant shall be recognized as valid for a period of one year from the date of examination, during which time the applicant must fully satisfy any remaining re-quirements for licensure that were pending at the time of ex-amination; provided that the running of the one-year peri-od shall be tolled upon mailing the applicant the letter con-templated in 21 NCAC 58A .0616(b) informing the appli-cant that his or her moral character is in question, and shall resume running when the applicant’s application is either ap-proved for license issuance, denied or withdrawn. The appli-cation of an applicant with a passing examination score who fails to satisfy all remaining requirements for licensure within one year shall be canceled and the applicant shall be required to reapply and satisfy all requirements for licensure, including retaking and passing the license examination, in order to be eligible for licensure. A.0403 Re-applying for Examination (a) An individual whose license application has been canceled and whose 180 day examination eligibility period has expired who wishes to be rescheduled for the real es-tate license examination must re-apply to the Commission by filing a complete license application as described in Rule .0301 of this Subchapter and paying the prescribed applica-tion fee. Subsequent examinations shall be scheduled in ac-cordance with Rule .0401 of this Section. (b) An individual whose license application has been canceled who wishes to be rescheduled for the license exam-ination before the expiration of his or her 180 day examina-tion eligibility period may utilize an abbreviated electronic license application and examination rescheduling procedure by directly contacting the Commission’s authorized testing service, paying both the license application fee and the ex-amination fee to the testing service, and following the test-ing service’s established procedures. (c) An applicant who fails the license examination shall not be allowed to retake the examination for at least 10 cal-endar days. A.0404 Cheating and Related Misconduct Applicants shall not cheat or attempt to cheat on an ex-amination by any means, including both giving and receiving assistance, and shall not communicate in any manner for any purpose with any person other than an examination supervi-sor during an examination. Applicants shall not disrupt the quiet and orderly administration of an examination in any manner. Violation of this Rule shall be grounds for dismissal from an examination, invalidation of examination scores, and 16 North Carolina Real Estate License Law and Commission Rules denial of a real estate license, as well as for disciplinary action if the applicant has been issued a license. A.0405 Confidentiality of Examinations Licensing examinations are the exclusive property of the Commission and are confidential. No applicant or licensee shall obtain, attempt to obtain, receive or communicate to oth-er persons examination questions or answers. Violation of this Rule is grounds for denial of a real estate license if the violator is an applicant and disciplinary action if the violator is a licensee or becomes a licensee prior to the discovery of the violation by the Commission. A.0406 Examination Review An applicant who fails the license examination may re-view the examination at the testing center immediately fol-lowing completion of the examination and receipt of the applicant’s examination results but prior to leaving the test-ing center. An applicant who fails the examination and who declines the opportunity to immediately review the exami-nation prior to leaving the testing center will be deemed to have waived the right to review the examination. An appli-cant who is reviewing his or her failed examination may not have any other person present during his or her review, nor may any other person review an examination on behalf of an applicant. An applicant who passes the license examination may not review the examination. SECTION A.0500 LICENSING A.0501 Character (Repealed) A.0502 Business Entities (a) Every business entity other than a sole proprietor-ship shall apply for and obtain from the Commission a firm license prior to engaging in business as a real estate broker. An entity that changes its business form other than by con-version shall submit a new license application immediate-ly upon making the change and obtain a new firm license. An entity which converts to a different business entity in conformity with and pursuant to applicable North Carolina General Statutes is not required to apply for a new license. However, such converted entity shall provide the informa-tion required by this paragraph in writing to the Commis-sion within ten (10) days of said conversion and shall in-clude the applicable fee to have the firm license reissued in the legal name of the converted entity. Incomplete applica-tions shall not be acted upon by the Commission. Appli-cation forms for partnerships, corporations, limited liabil-ity companies, associations and other business entities re-quired to be licensed as brokers shall be available upon re-quest to the Commission and shall require the applicant to set forth: (1) the name of the entity; (2) the name under which the entity will do busi-ness; (3) the type of business entity; (4) the address of its principal office; (5) the entity’s North Carolina Secretary of State Identification Number if required to be reg-istered with the Office of the North Carolina Secre-tary of State; (6) the name, real estate license number and sig-nature of the proposed qualifying broker for the pro-posed firm; (7) the address of and name of the proposed broker-in-charge for each office as defined in Rule .0110(b) of this subchapter, along with a completed broker-in-charge declaration form for each proposed broker-in-charge; (8) any past criminal conviction of and any pending criminal charge against any principal in the company or any proposed broker-in-charge; (9) any past revocation, suspension or denial of a business or professional license of any principal in the company or any proposed broker-in-charge; (10) if a general partnership, a full description of the applicant entity, including a copy of its written partnership agreement or if no written agreement ex-ists, a written description of the rights and duties of the several partners; (11) if a business entity other than a corporation, lim-ited liability company or partnership, a full description of the organization of the applicant entity, including a copy of its organizational documents evidencing its authority to engage in real estate brokerage; (12) if a foreign business entity, a certificate of authority to transact business in North Carolina and an executed consent to service of process and plead-ings; and (13) any other information required by this rule. When the authority of a business entity to engage in the real estate business is unclear in the application or in law, the Commission shall require the applicant to declare in the license application that the applicant’s organizational docu-ments authorize the firm to engage in the real estate business and to submit organizational documents, addresses of affil-iated persons and similar information. For purposes of this Rule, the term principal, when it refers to a person or enti-ty, means any person or entity owning ten percent or more of the business entity, or who is an officer, director, manag-er, member, partner or who holds any other comparable po-sition. (b) After filing a written application with the Commis-sion and upon a showing that at least one principal of the business entity holds a broker license on active status and in good standing and will serve as qualifying broker of the entity, the entity shall be licensed provided it appears that the applicant entity employs and is directed by personnel North Carolina Real Estate License Law and Commission Rules 17 possessed of the requisite truthfulness, honesty, and integri-ty. The qualifying broker of a partnership of any kind must be a general partner of the partnership; the qualifying bro-ker of a limited liability company must be a manager of the company; and the qualifying broker of a corporation must be an officer of the corporation. A licensed business entity may serve as the qualifying broker of another licensed busi-ness entity if the qualifying broker-entity has as its quali-fying broker a natural person who is licensed as a broker. The natural person who is qualifying broker shall assure the performance of the qualifying broker’s duties with regard to both entities. A provisional broker may not serve as a quali-fying broker. (c) The licensing of a business entity shall not be construed to extend to the licensing of its partners, managers, members, directors, officers, employees or other persons acting for the en-tity in their individual capacities regardless of whether they are engaged in furthering the business of the licensed entity. (d) The qualifying broker of a business entity shall as-sume responsibility for: (1) designating and assuring that there is at all times a broker-in-charge for each office and branch office of the entity as office and branch office are defined in Rule .0110(b) of this Subchapter; (2) renewing the real estate broker license of the entity; (3) retaining the firm’s renewal pocket card at the firm and producing it as proof of firm licensure upon request and maintaining a photocopy of the firm license certifi-cate and pocket card at each branch office thereof; (4) notifying the Commission of any change of busi-ness address or trade name of the entity and the reg-istration of any assumed business name adopted by the entity for its use; (5) notifying the Commission in writing of any change of his or her status as qualifying broker with-in ten days following the change; (6) securing and preserving the transaction and trust account records of the firm whenever there is a change of broker-in-charge at the firm or any office thereof and notifying the Commission if the trust ac-count records are out of balance or have not been rec-onciled as required by rule .0107 of this Subchapter; (7) retaining and preserving the transaction and trust account records of the firm upon termination of his or her status as qualifying broker until a new quali-fying broker has been designated with the Commis-sion or, if no new qualifying broker is designated, for the period of time for which said records are required to be retained by Rule .0108 of this Subchapter; and (8) notifying the Commission if, upon the termina-tion of his or her status as qualifying broker, the firm’s transaction and trust account records cannot be re-tained or preserved or if the trust account records are out of balance or have not been reconciled as re-quired by Rule .0107(e) of this Subchapter. (e) Every licensed business entity and every entity ap-plying for licensure shall conform to all the requirements imposed upon it by the North Carolina General Statutes for its continued existence and authority to do business in North Carolina. Failure to conform to such requirements is grounds for disciplinary action or denial of the entity’s ap-plication for licensure. Upon receipt of notice from an enti-ty or agency of this state that a licensed entity has ceased to exist or that its authority to engage in business in this state has been terminated by operation of law, the Commission shall cancel the license of the entity. A.0503 License Renewal; Penalty for Operating While License Expired (a) All real estate licenses issued by the Commission un-der G.S. 93A, Article 1 shall expire on the 30th day of June following issuance. Any licensee desiring renewal of a license shall apply for renewal within 45 days prior to license expira-tion by submitting a renewal application on a form provided by the Commission and submitting with the application the required renewal fee of forty dollars ($40.00). (b) Any person desiring to renew his or her license on ac-tive status shall, upon the second renewal of such license fol-lowing initial licensure, and upon each subsequent renewal, have obtained all continuing education required by G.S. 93A- 4A and Rule .1702 of the Subchapter. (c) A person renewing a license on inactive status shall not be required to have obtained any continuing education in or-der to renew such license; however, in order to subsequently change his or her license from inactive status to active status, the licensee must satisfy the continuing education requirement prescribed in Rule .1703 or Rule .1711 of the Subchapter. (d) Any person or firm which engages in the business of a real estate broker while his, her, or its license is expired is sub-ject to the penalties prescribed in G.S. 93A-6. A.0504 Active and Inactive License Status (a) Except for licenses that have expired or that have been canceled, revoked, suspended or surrendered, all licenses is-sued by the Commission shall be designated as being either on active status or inactive status. The holder of a license on active status may engage in any activity requiring a real es-tate license and may be compensated for the provision of any lawful real estate brokerage service. The holder of a license on inactive status may not engage in any activity requiring a real estate license, including the referral for compensation of a prospective seller, buyer, landlord or tenant to another real estate licensee or any other party. A licensee holding a license on inactive status must renew the license and pay the pre-scribed license renewal fee in order to continue to hold the li-cense. The Commission may take disciplinary action against a licensee holding a license on inactive status for any viola-tion of G.S. 93A or any rule adopted by the Commission, in-cluding the offense of engaging in an activity for which a li-cense is required while a license is on inactive status. 18 North Carolina Real Estate License Law and Commission Rules (b) A license issued to a provisional broker shall, upon initial licensure, be assigned to inactive status, except that a license issued to a provisional broker based on reciprocity with another licensing jurisdiction shall be assigned to ac-tive status. A license issued to a firm or a broker other than a provisional broker shall be assigned to active status. Except for persons licensed under the provisions of Section .1800 of this Subchapter, a broker may change the status of his or her license from active to inactive status by submitting a written request to the Commission. A provisional broker’s license shall be assigned by the Commission to inactive sta-tus when the provisional broker is not under the active, di-rect supervision of a broker-in-charge. A firm’s license shall be assigned by the Commission to inactive status when the firm does not have a qualifying broker with an active license in good standing. Except for persons licensed under the pro-visions of Section .1800 of this Subchapter, a broker shall also be assigned to inactive status if, upon the second renew-al of his or her license following initial licensure, or upon any subsequent renewal, he or she has not satisfied the con-tinuing education requirement described in Rule .1702 of this Subchapter. (c) A provisional broker with an inactive license who de-sires to have the license placed on active status must com-ply with the procedures prescribed in Rule .0506 of this Sec-tion. (d) A broker, other than a provisional broker, with an in-active license who desires to have the license placed on active status shall file with the Commission a request for license ac-tivation on a form provided by the Commission containing identifying information about the broker, a statement that the broker has satisfied the continuing education require-ments provided by Rule .1703 of this Subchapter, the date of the request, and the signature of the broker. Upon the mailing or delivery of this form, the broker may engage in real estate brokerage activities requiring a license; however, if the broker does not receive from the Commission a writ-ten acknowledgment of the license activation within 30 days of the date shown on the form, the broker shall immediate-ly terminate his or her real estate brokerage activities pend-ing receipt of the written acknowledgment from the Com-mission. If the broker is notified that he or she is not eligible for license activation due to a continuing education deficien-cy, the broker must terminate all real estate brokerage activi-ties until such time as the continuing education deficiency is satisfied and a new request for license activation is submitted to the Commission. (e) A firm with an inactive license which desires to have its license placed on active status shall file with the Commis-sion a request for license activation containing identifying in-formation about the firm and its qualifying broker and satisfy the requirements of Rule .0110 of this Subchapter. If the qual-ifying broker has an inactive license, he or she must satisfy the requirements of Paragraph (d) of this Rule. Upon the mail-ing or delivery of the completed form by the qualifying broker, the firm may engage in real estate brokerage activities requir-ing a license; however, if the firm’s qualifying broker does not receive from the Commission a written acknowledgment of the license activation within 30 days of the date shown on the form, the firm shall immediately terminate its real estate bro-kerage activities pending receipt of the written acknowledg-ment from the Commission. If the qualifying broker is noti-fied that the firm is not eligible for license activation due to a continuing education deficiency on the part of the qualifying broker, the firm must terminate all real estate brokerage activi-ties until` such time as the continuing education deficiency is satisfied and a new request for license activation is submitted to the Commission. (f ) A person licensed as a broker under Section .1800 of this Subchapter shall maintain his or her license on ac-tive status at all times as required by Rule .1804 of this Sub-chapter. A.0505 Reinstatement of Expired License, Revoked, Surrendered or Suspended License (a) Licenses expired for not more than six (6) months may be reinstated upon the submission of payment of a fif-ty- five dollar ($55.00) reinstatement fee. In order to rein-state the license on active status, the person requesting rein-statement shall have obtained the continuing education as is required by Rule .1703 of this Subchapter to change an in-active license to active status. A person reinstating a license on inactive status is not required to have obtained any con-tinuing education in order to reinstate the license; however, in order to subsequently change his or her reinstated license from inactive status to active status, the licensee must satis-fy the continuing education requirement prescribed in Rule .1703 of this Subchapter, and be supervised by a broker-in-charge in compliance with the requirements of Rule .0506 of this Section. (b) Reinstatement of licenses expired for more than six months or provisional broker licenses cancelled pursuant to G.S. 93A-4(a) shall be considered upon the submission of a complete and accurate application and payment of a fifty-five dollar ($55.00) fee. Applicants must satisfy the Com-mission that they possess the current knowledge, skills and competence, as well as the truthfulness, honesty and integri-ty, necessary to function in the real estate business in a man-ner that protects and serves the public interest. To demon-strate knowledge, skills and competence, the Commission may require the applicants to complete real estate education or pass the license examination or both. (c) Reinstatement of a revoked license shall be consid-ered upon the submission of a complete and accurate appli-cation and payment of a thirty dollar ($30.00) fee. Appli-cants must satisfy the same requirements as those prescribed in Paragraph (b) of this Rule for reinstatement of licenses expired for more than six (6) months. (d) Reinstatement of a license surrendered under the provisions of G.S. 93A-6(e) shall be considered upon termi- North Carolina Real Estate License Law and Commission Rules 19 nation of the period of surrender specified in the order ap-proving the surrender and upon the submission of a com-plete and accurate application and payment of a thirty dollar ($30.00) fee. Applicants must satisfy the same requirements as those prescribed in Paragraph (b) of this Rule for rein-statement of licenses expired for more than six (6) months. (e) When a license is suspended by the Commission, the suspended license shall be restored at the end of the period of active suspension provided that any applicable license re-newal fees that accrued during the time of the suspension are paid by the licensee within sixty days from the end of the pe-riod of license suspension. In order for the license to be re-stored on active status, the licensee shall be required to dem-onstrate that the licensee has satisfied the continuing educa-tion requirement for license activation prescribed by Rule .1703 of this Subchapter and that the licensee is supervised by a broker-in-charge in compliance with the requirements of Rule .0506 of this Section, if applicable. Failure to pay the accrued license renewal fees within the time set forth in this paragraph shall result in expiration of the license effective the last day of the suspension period. A former licensee whose license expires under this paragraph and who thereafter seeks reinstatement must satisfy the same requirements as those prescribed in Paragraph (b) of this Rule for reinstatement of licenses expired for more than six months. (f ) Whenever a license is reinstated by the Commis-sion following expiration for more than six months, cancel-lation, revocation, or voluntary surrender, the date of licen-sure for the licensee shall be the date of reinstatement and not the date of original licensure. A.0506 Provisional Broker to be Supervised by Broker (a) This Rule shall apply to all real estate provisional bro-kers. (b) A provisional broker may engage in or hold himself or herself out as engaging in activities requiring a real estate license only while his or her license is on active status and he or she is supervised by the broker-in-charge of the real es-tate firm or office where the provisional broker is associated. A provisional broker may be supervised by only one broker-in- charge at a time. (c) Upon a provisional broker’s association with a real estate broker or brokerage firm, the provisional broker and the broker-in-charge of the office where the provisional bro-ker will be engaged in the real estate business shall immedi-ately file with the Commission a provisional broker super-vision notification on a form provided by the Commission containing identifying information about the provision-al broker and the broker-in-charge, a statement from the broker-in-charge certifying that he or she will supervise the provisional broker in the performance of all acts for which a license is required, the date that the broker-in-charge as-sumes responsibility for such supervision, and the signatures of the provisional broker and broker-in-charge. If the pro-visional broker is on inactive status at the time of associating with a broker or brokerage firm, the provisional broker and broker-in-charge shall also file, along with the provisional broker supervision notification, the provisional broker’s re-quest for license activation on a form provided by the Com-mission containing identifying information about the pro-visional broker, the provisional broker’s statement that he or she has satisfied the continuing education requirements prescribed by Rule .1703 of this Subchapter, the provision-al broker’s statement that he or she has satisfied the postli-censing education requirements, if applicable, prescribed by Rule .1902 of this Subchapter, the date of the request, and the signatures of the provisional broker and the provision-al broker’s proposed broker-in-charge. Upon the mailing or delivery of the required form(s), the provisional broker may engage in real estate brokerage activities requiring a li-cense under the supervision of the broker-in-charge; how-ever, if the provisional broker and broker-in-charge do not receive from the Commission a written acknowledgment of the provisional broker supervision notification and, if ap-propriate, the request for license activation, within 30 days of the date shown on the form, the broker-in-charge shall immediately terminate the provisional broker’s real estate brokerage activities pending receipt of the written acknowl-edgment from the Commission. If the provisional broker and broker-in-charge are notified that the provisional broker is not eligible for license activation due to a continuing ed-ucation deficiency, the broker-in-charge shall cause the pro-visional broker to immediately cease all activities requiring a real estate license until such time as the continuing educa-tion deficiency is satisfied and a new provisional broker su-pervision notification and request for license activation is submitted to the Commission. (d) A broker-in-charge who certifies to the Commis-sion that he or she will supervise a provisional broker shall actively and directly supervise the provisional broker in a manner which reasonably assures that the provisional broker performs all acts for which a real estate license is required in accordance with the Real Estate License Law and Commis-sion rules. A supervising broker who fails to supervise a pro-visional broker as prescribed in this Rule may be subject to disciplinary action by the Commission. (e) Upon the termination of the supervisory relation-ship between a provisional broker and his or her broker-in- charge, the provisional broker and the broker-in-charge shall provide written notification of the date of termination to the Commission not later than 10 days following said ter-mination. A.0507 Payment of License Fees Checks, credit cards, and other forms of payment giv-en the Commission for fees due which are returned un-paid shall be considered cause for license denial, suspension, or revocation. 20 North Carolina Real Estate License Law and Commission Rules A.0508 Duplicate License Fee (Repealed) A.0509 Duplicate License Fee A licensee may, by filing a prescribed form and paying a five dollar ($5.00) fee to the Commission, obtain a duplicate real estate license or pocket card to replace an original license or pocket card which has been lost, damaged or destroyed or if the name of the licensee has been lawfully changed. SECTION A.0600 REAL ESTATE COMMISSION HEARINGS A.0601 Complaints/Inquiries/Motions/Other Pleadings (a) There shall be no specific form required for complaints. To be sufficient, a complaint shall be in writing, identify the respondent licensee and shall reasonably apprise the Commis-sion of the facts which form the basis of the complaint. (b) When investigating a complaint, the scope of the Com-mission’s investigation shall not be limited only to matters al-leged in the complaint. In addition, a person making a com-plaint to the Commission may change his or her complaint by submitting the changes to the Commission in writing. (c) When a complaint has not been submitted in con-formity with this rule, the Commission’s legal counsel may initiate an investigation if the available information is suf-ficient to create a reasonable suspicion that any licensee or other person or entity may have committed a violation of the provisions of the Real Estate License Law or the rules ad-opted by the Commission. (d) There shall be no specific forms required for answers, motions, or other pleadings relating to contested cases be-fore the Commission, except they shall be in writing. To be sufficient, the document must reasonably apprise the Com-mission of the matters it alleges or answers. To be consid-ered by the Commission, every answer, motion, request or other pleading must be submitted to the Commission in writing or made during the hearing as a matter of record. (e) During the course of an investigation of a licensee, the Commission, through its legal counsel or other staff, may send the licensee a Letter of Inquiry requesting the li-censee to respond. The Letter of Inquiry, or attachments thereto, shall set forth the subject matter being investigated. Upon receipt of the Letter of Inquiry, the licensee shall re-spond within 14 calendar days. Such response shall include a full and fair disclosure of all information requested. Li-censees shall include with their written response copies of all documents requested in the Letter of Inquiry. (f ) Hearings in contested cases before the Commission shall be conducted according to the provisions of Article 3A of Chapter 150B of the General Statutes of North Carolina. (g) Persons who make complaints are not parties to con-tested cases, but may be witnesses. A.0616 Procedures For Requesting Hearings When Applicant’s Character Is In Question (a) When the moral character of an applicant for licen-sure or approval is in question, the applicant shall not be licensed or approved until the applicant has affirmative-ly demonstrated that the applicant possesses the requisite truthfulness, honesty and integrity. For the purposes of this rule, applicant means any person or entity making applica-tion for licensure as a real estate broker or for licensure or approval as a prelicensing or continuing education instructor, director, coordinator, school, or sponsor. When the applicant is an entity, it shall be directed and controlled by persons who are truthful and honest and who possess integrity. (b) When the character of an applicant is in ques-tion, the Commission shall defer action upon the applica-tion until the applicant is notified by letter. The letter in-forming the applicant that his or her moral character is in question shall be sent by certified mail, return receipt re-quested, to the address shown upon the application. The applicant shall have 60 days from the date of receipt of this letter to request a hearing before the Commission. If the applicant fails to request a hearing within this time or if a properly addressed letter is returned to the Commission un-delivered, applicant’s right to a hearing shall be considered waived and the application shall be deemed denied. If the applicant makes a timely request for a hearing in accordance with the provisions of this rule, the Commission shall pro-vide the applicant with a Notice of Hearing and hearing as required by Article 3A of Chapter 150B of the North Caro-lina General Statutes. (c) Nothing in this Rule shall be interpreted to prevent an unsuccessful applicant from reapplying for licensure or approval if such application is otherwise permitted by law. SECTION A.0700 PETITIONS FOR RULES SECTION A.0800 RULE MAKING SECTION A.0900 DECLARATORY RULINGS SECTION A.1000 SCHOOLS (Transferred to C.0100) SECTION A.1100 REAL ESTATE PRE‑LICENSING COURSES (Transferred/Repealed.Transfers are at C.0300 Prelicensing and Pre-certification Courses) North Carolina Real Estate License Law and Commission Rules 21 SECTION A.1200 CERTIFICATION OF REAL ESTATE INSTRUCTORS (Repealed) SECTION A.1300 PRIVATE REAL ESTATE SCHOOLS (Transferred/Repealed. Transfers are at C.0200) SECTION A.1400 REAL ESTATE RECOVERY FUND SECTION A.1500 FORMS (Repealed) Interested persons may obtain a copy of Sections A.0600 through A.1500 by making written request to the North Carolina Real Estate Commission. SECTION A.1600 DISCRIMINATORY PRACTICES PROHIBITED A.1601 Fair Housing Conduct by a licensee which violates the provisions of the State Fair Housing Act constitutes improper conduct in violation of G.S. 93A‑6(a)(10). SECTION A.1700 MANDATORY CONTINUING EDUCATION A.1701 Purpose and Applicability This Section describes the continuing education require-ment for real estate brokers authorized by G.S. 93A-4A, es-tablishes the continuing education requirement to change a license from inactive status to active status, establishes atten-dance requirements for continuing education courses, estab-lishes the criteria and procedures relating to obtaining an ex-tension of time to complete the continuing education require-ment, establishes the criteria for obtaining continuing educa-tion credit for an unapproved course or related educational ac-tivity, and addresses other similar matters. A.1702 Continuing Education Requirement (a) Except as provided in 21 NCAC 58A.1708 and A.1711, in order to renew a broker license on active status, the person requesting renewal of a license shall, upon the second renewal of such license following initial licensure, and upon each subsequent annual renewal, have complet-ed, within one year preceding license expiration, eight class-room hours of real estate continuing education in cours-es approved by the Commission as provided in Subchap-ter 58E. Four of the required eight classroom hours must be obtained each license period by completing a mandatory update course developed annually by the Commission. The remaining four hours must be obtained by completing one or more Commission-approved elective courses described in Rule .0305 of Subchapter 58E. The licensee bears the re-sponsibility for providing, upon request of the Commission, evidence of continuing education course completion satis-factory to the Commission. (b) No continuing education shall be required to renew a broker license on inactive status; however, to change a li-cense from inactive status to active status, the licensee must satisfy the continuing education requirement described in Rule .1703 of this Section. (c) No continuing education shall be required for a li-censee who is a member of the U. S. Congress or North Car-olina General Assembly in order to renew his or her license on active status. (d) The terms “active status” and “inactive status” are de-fined in Rule .0504 of this Subchapter. For continuing ed-ucation purposes, the term “initial licensure” shall include the first time that a license of a particular type is issued to a person, the reinstatement of a canceled, revoked or sur-rendered license and any license expired for more than six months. The issuance, pursuant to G.S. 93A-4.3, of a bro-ker license on provisional status on April 1, 2006 to licens-ees who held a salesperson license as of that date shall not be considered to constitute initial licensure for continuing ed-ucation purposes. A.1703 Continuing Education for License Activation (a) A broker requesting to change an inactive license to active status on or after the licensee’s second license re-newal following his or her initial licensure shall be required to demonstrate completion of continuing education as de-scribed in Paragraph (b) or (c) of this Rule, whichever is ap-propriate. (b) If the inactive licensee’s license has properly been on active status at any time since the preceding July 1, the li-censee is considered to be current with regard to continu-ing education and no additional continuing education is re-quired to activate the license. (c) If the inactive licensee’s license has not properly been on active status since the preceding July 1 and the licensee has a deficiency in his or her continuing education record for the previous license period, the licensee must make up the deficiency and fully satisfy the continuing education require-ment for the current license period in order to activate the li-cense. Any deficiency may be made up by completing, dur-ing the current license period or previous license period, ap-proved continuing education elective courses; however, such courses will not be credited toward the continuing education requirement for the current license period. When crediting elective courses for purposes of making up a continuing edu-cation deficiency, the maximum number of credit hours that will be awarded for any course is four hours. When evaluat- 22 North Carolina Real Estate License Law and Commission Rules ing the continuing education record of a licensee with a defi-ciency for the previous license period to determine the licens-ee’s eligibility for active status, the licensee shall be deemed eligible for active status if the licensee has fully satisfied the continuing education requirement for the current license pe-riod and has taken any two additional continuing education courses since the beginning of the previous license period, even if the licensee had a continuing education deficiency prior to the beginning of the previous license period. A.1704 No Credit for Prelicensing or Postlicensing Courses No credit toward the continuing education requirement shall be awarded for completing a real estate prelicensing or postlicensing course. A.1705 Attendance and Participation Requirements In order to receive any credit for satisfactorily completing an approved continuing education course, a licensee must attend at least 90 percent of the scheduled classroom hours for the course, regardless of the length of the course, and must comply with student participation standards described in Rule .0511 of Subchapter 58E. No credit shall be award-ed for attending less than 90 percent of the scheduled class-room hours. The 10 percent absence allowance is permit-ted for any reason at any time during the course except that it may not be used to skip the last 10 percent of the course unless the absence is for circumstances beyond the licensee’s control that could not have been reasonably foreseen by the licensee and is approved by the instructor. With regard to the Commission’s 12-hour Broker-In-Charge Course that is taught over two days, a licensee must attend at least 90 per-cent of the scheduled classroom hours on each day of the course and the 10 percent absence allowance cited above shall apply to each day of the course. A.1706 Repetition of Courses A continuing education course may be taken only once for continuing education credit within a single license period. A.1707 Elective Course Carry-Over Credit A maximum of four hours of continuing education cred-it for an approved elective course taken during the current license period may be carried over to satisfy the continu-ing education elective requirement for the next following license period if the licensee receives no continuing educa-tion elective credit for the course toward the elective require-ment for the current license period or the previous license period. However, if a continuing education elective course is used to wholly or partially satisfy the elective requirement for the current or previous license period, then any excess hours completed in such course which are not needed to sat-isfy the four-hour elective requirement for that license peri-od may not be carried forward and applied toward the elec-tive requirement for the next following license period. A.1708 Equivalent Credit (a) A licensee may request that the Commission award continuing education credit for a course taken by the licens-ee that is not approved by the Commission, or for some oth-er real estate education activity, by making such request on a form prescribed by the Commission and submitting a non-refundable evaluation fee of thirty dollars ($30.00) for each request for evaluation of a course or real estate education activity. In order for requests for equivalent credit to be considered and credits to be entered into a licensee’s con-tinuing education record prior to the June 30 license ex-piration date, such requests and all supporting documents must be received by the Commission on or before June 10 preceding expiration of the licensee’s current license, with the exception that requests from instructors desiring equivalent credit for teaching Commission-approved con-tinuing education courses must be received by June 30. Any equivalent continuing education credit awarded un-der this Rule shall be applied first to make up any continu-ing education deficiency for the previous license period and then to satisfy the continuing education requirement for the current license period; however, credit for an un-approved course or educational activity, other than teach-ing an approved elective course, that was completed dur-ing a previous license period may not be applied to a sub-sequent license period. (b) The Commission may award continuing education elective credit for completion of an unapproved course which the Commission finds equivalent to the elective course component of the continuing education require-ment set forth in Section .0300 of Subchapter 58E. Com-pletion of an unapproved course may serve only to satis-fy the elective requirement and cannot be substituted for completion of the mandatory update course. (c) Real estate education activities, other than teaching a Commission-approved course, which may be eligible for credit include, but are not limited to: developing a Com-mission- approved elective continuing education course, authorship of a published real estate textbook; and author-ship of a scholarly article, on a topic acceptable for con-tinuing education purposes, which has been published in a professional journal such as a law journal or professional college or university journal or periodical. The Commis-sion may award continuing education elective credit for activities which the Commission finds equivalent to the elective course component of the continuing education re-quirement set forth in Section .0300 of Subchapter 58E. No activity other than teaching a Commission-developed mandatory update course shall be considered equivalent to completing the mandatory update course. (d) The Commission may award credit for teaching the Commission-developed mandatory update course and for teaching an approved elective course. Credit for teaching an approved elective course shall be award-ed only for teaching a course for the first time. Cred- North Carolina Real Estate License Law and Commission Rules 23 it for teaching a Commission-developed mandatory up-date course may be awarded for each licensing period in which the instructor teaches the course. The amount of credit awarded to the instructor of an approved continu-ing education course shall be the same as the amount of credit earned by a licensee who completes the course. Licensees who are instructors of continuing education courses approved by the Commission shall not be sub-ject to the thirty dollar ($30.00) evaluation fee when ap-plying for continuing education credit for teaching an approved course. No credit toward the continuing edu-cation requirement shall be awarded for teaching a real estate prelicensing or postlicensing course. (e) A licensee completing a real estate appraisal preli-censing, precertification or continuing education course approved by the North Carolina Appraisal Board may ob-tain real estate continuing education elective credit for such course by submitting to the Commission a written request for equivalent continuing education elective credit accompanied by a nonrefundable processing fee of twen-ty dollars ($20.00) and a copy of the certificate of course completion issued by the course sponsor for submission to the North Carolina Appraisal Board. A.1709 Extensions of Time to Complete Continuing Education A licensee on active status may request and be granted an extension of time to satisfy the continuing education requirement for a particular license period if the licensee provides evidence satisfactory to the Commission that he or she was unable to obtain the necessary education due to an incapacitating illness or other circumstance which exist-ed for a substantial portion of the license period and which constituted a severe and verifiable hardship such that to comply with the continuing education requirement would have been impossible or unreasonably burdensome. The Commission shall in no case grant an extension of time to satisfy the continuing education requirement for reasons of business or personal conflicts. The Commission also shall not grant such an extension of time when, in the opinion of the Commission, the principal reason for the licensee’s inability to obtain the required education in a timely man-ner was unreasonable delay on the part of the licensee in obtaining such education. If an extension of time is grant-ed, the licensee shall be permitted to renew his or her li-cense on active status but the license shall be automatically changed to inactive status at the end of the extension peri-od unless the licensee satisfies the continuing education re-quirement prior to that time. If an extension of time is not granted, the licensee may either satisfy the continuing ed-ucation requirement prior to expiration of the license peri-od or renew his or her license on inactive status. The length of any extension of time granted and the determination of the specific courses which shall be accepted by the Com-mission as equivalent to the continuing education the li-censee would have been required to have completed had the licensee not been granted the extension is wholly dis-cretionary on the part of the Commission. The licensee’s request for an extension of time must be submitted on a form prescribed by the Commission. A.1710 Denial or Withdrawal of Continuing Education Credit (a) The Commission may deny continuing education credit claimed by a licensee or reported by a course sponsor for a licens-ee, and may withdraw continuing education credit previously awarded by the Commission to a licensee upon finding that: (1) The licensee or course sponsor provided incorrect or incomplete information to the Commission concerning continuing education completed by the licensee; (2) The licensee failed to comply with either the atten-dance requirement established by Rule .1705 of this Section or the student participation standards set forth in Rule .0511 of Subchapter 58E; or (3) The licensee was mistakenly awarded continuing education credit due to an administrative error. (b) When continuing education credit is denied or with-drawn by the Commission under Paragraph (a) of this Rule, the licensee remains responsible for satisfying the continuing education requirement. However, when an administrative er-ror or an incorrect report by a course sponsor results in the de-nial or withdrawal of continuing education credit for a licens-ee, the Commission may, upon request of the licensee, grant the licensee an extension of time to satisfy the continuing ed-ucation requirement. (c) A licensee who obtains or attempts to obtain continu-ing education credit through misrepresentation of fact, dis-honesty or other improper conduct shall be subject to disci-plinary action pursuant to G.S. 93A-6. A.1711 Continuing Education Required of Nonresident Licensees (a) To be considered a nonresident for continuing education purposes, a real estate broker licensed in North Carolina shall not have a North Carolina business address, mailing address or residence address at the time he or she applies for license renew-al if he or she seeks to renew his or her license on active status. A nonresident North Carolina broker who wishes to renew his or her license on active status may fully satisfy the continuing edu-cation requirement by any one of the following means: (1) A nonresident licensee may, at the time of license renewal, hold a real estate license on active status in another state and certify on a form prescribed by the Commission that the licensee holds such license. (2) A nonresident licensee may, within one year pre-ceding license expiration, complete the Commission-prescribed Update course plus one Commission-ap-proved continuing education elective course, or com-plete two Commission-approved continuing educa-tion elective courses. 24 North Carolina Real Estate License Law and Commission Rules (3) A nonresident licensee may, within one year pre-ceding license expiration, complete eight classroom hours in courses approved for continuing education credit by the real estate licensing agency in the licens-ee’s state of residence or in the state where the course was taken. To obtain credit for a continuing education course completed in another state and not approved by the Commission, the licensee must submit a writ-ten request for continuing education credit accompa-nied by a nonrefundable processing fee of twenty dol-lars ($20.00) per request and evidence satisfactory to the Commission that the course was completed and that the course was approved for continuing education credit by the real estate licensing agency in the licens-ee’s state of residence or in the state where the course was taken. (4) A nonresident licensee may obtain eight hours equivalent credit for a course or courses not approved by the Commission or for related educational activities as provided in Rule .1708 of this Section. The maxi-mum amount of continuing education credit the Com-mission will award a nonresident licensee for an unap-proved course or educational activity is eight hours. (b) When requesting to change an inactive license to ac-tive status, or when applying for reinstatement of a license expired for n
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Title | North Carolina Real Estate Commission rules : chapter 93A |
Other Title | North Carolina Real Estate license law and Commission rules |
Creator | North Carolina Real Estate Commission. |
Subjects |
North Carolina Real Estate Commission Real estate business--Licenses--North Carolina Real estate business--Law and legislation--North Carolina Licenses--North Carolina |
Place | North Carolina, United States |
Description | Caption title from opening screen (viewed on August 22, 2012). |
Publisher | North Carolina Real Estate Commission |
Agency-Current | North Carolina Real Estate Commission |
Rights | State Document see http://digital.ncdcr.gov/u?/p249901coll22,63754 |
Physical Characteristics | 32 p. of electronic text : digital, PDf file. |
Collection | North Carolina State Documents Collection. State Library of North Carolina |
Type | Text |
Language | English |
Format |
Guidelines Laws (documents) |
Digital Characteristics-A | 357 KB; 32 p. |
Series | State of North Carolina administrative code |
Digital Collection | North Carolina Digital State Documents Collection |
Digital Format | application/pdf |
Related Items | http://worldcat.org/oclc/807770403/viewonline |
Audience | All |
Pres File Name-M | pubs_ncrealestatecommission.pdf |
Pres Local File Path-M | \Preservation_content\StatePubs\pubs_borndigital\images_master\ |
Full Text | North Carolina Real Estate License Law and Commission Rules 1 NORTH CAROLINA REAL ESTATE COMMISSION RULES CHAPTER 93A Statutory Authority: Sections 93A‑3(c), 93A‑4( d), 93A‑33, and 93A‑51 of the North Carolina Real Estate License Law; and the North Carolina Administrative Procedures Act. NORTH CAROLINA ADMINISTRATIVE CODE TITLE 21 OCCUPATIONAL LICENSING BOARDS CHAPTER 58 REAL ESTATE COMMISSION Subchapter 58A Real Estate Brokers Section A.0100 General Brokerage Rule A.0101 Proof of Licensure A.0102 Branch Office (Repealed) A.0103 Licensee Name and Address A.0104 Agency Agreements and Disclosure A.0105 Advertising A.0106 Delivery of Instruments A.0107 Handling and Accounting of Funds A.0108 Retention of Records A.0109 Brokerage Fees and Compensation A.0110 Broker-in-Charge A.0111 Drafting Legal Instruments A.0112 Offers and Sales Contracts A.0113 Reporting Criminal Convictions and Disciplinary Actions A.0114 Residential Property Disclosure Statement A.0115 Disclosure of Offers Prohibited Section A.0200 General Provisions (Repealed) Section A.0300 Application for License Rule A.0301 Form A.0302 Filing and Fees A.0303 Payment of Application Fees A.0304 Experience Qualifications for Applicants Section A.0400 Examinations Rule A.0401 Time and Place for Examinations A.0402 Subject Matter and Passing Scores A.0403 Re-applying for Examination A.0404 Cheating and Related Misconduct A.0405 Confidentiality of Examinations A.0406 Examination Review Section A.0500 Licensing Rule A.0501 Character (Repealed) A.0502 Business Entities A.0503 License Renewal; Penalty for Operating While License Expired A.0504 Active and Inactive License Status A.0505 Reinstatement of Expired License, Revoked, Surrendered or Suspended License A.0506 Provisional Broker to be Supervised by Broker A.0507 Payment of License Fees A.0508 Duplicate License Fee (Repealed) A.0509 Duplicate License Fee Section A.0600 Real Estate Commission Hearings Rule A.0601 Complaints/Inquiries/Motions/Other Pleadings A.0616 Procedures for Requesting Hearings When Applicant’s Character Is In Question Section A.0700 Petitions for Rules Section A.0800 Rule Making Section A.0900 Declaratory Rulings Section A.1000 Schools (Transferred to 21 NCAC 58C .0100)Section A.1100 Real Estate Pre‑Licensing Courses (Transferred/Repealed. Transfers are at 21 NCAC 58C .0300) Section A.1200 Certification of Real Estate Instructors (Repealed) Section A.1300 Private Real Estate Schools (Transferred/Repealed. Transfers are at 21 NCAC 58C .0200) Section A.1400 Real Estate Recovery Fund 2 North Carolina Real Estate License Law and Commission Rules Section A.1500 Forms (Repealed) Section A.1600 Discriminatory Practices Prohibited A.1601 Fair Housing Section A.1700 Mandatory Continuing Education Rule A.1701 Purpose and Applicability A.1702 Continuing Education Requirement A.1703 Continuing Education for License Activation A.1704 No Credit for Pre-Licensing Courses A.1705 Attendance and Participation Requirements A.1706 Repetition of Courses A.1707 Elective Course Carry-Over Credit A.1708 Equivalent Credit A.1709 Extensions of Time to Complete A.1710 Denial or Withdrawal of Continuing Educa-tion Credit A.1711 Continuing Education Required of Nonresi-dent Licensees Section A .1800 Limited Nonresident Commercial Licensing Rule A.1801 General Provisions A.1802 Definitions A.1803 Requirements for Licensure; Application and Fee A.1804 Active Status A.1805 Renewal A.1806 Limitations A.1807 Affiliation with Resident Broker A.1808 Trust Monies A.1809 Advertising A.1810 Payment of Fees Section A .1900 Postlicensing Education Rule A.1901 Purpose and Applicability A.1902 Postlicensing Education Requirement A.1903 Extensions of Time to Complete Postlicensing Education A.1904 Denial or Withdrawal of Postlicensing Education Credit Subchapter 58B Time Shares Section B.0100 Time Share Registration Rule B.0101 Application for Registration B.0102 Registration Fee B.0103 Renewal of Time Share Project Registration B.0104 Amendments to Time Share Project Registration B.0105 Notice of Termination Section B.0200 Public Offering Statement Rule B.0201 General Provisions B.0202 Public Offering Statement Summary B.0203 Receipt for Public Offering Statement Section B.0300 Cancellation Rule B.0301 Proof of Cancellation Section B.0400 Time Share Sales Operations Rule B.0401 Retention of Time Share Records B.0402 Time Share Agency Agreements and Disclo-sure Section B.0500 Handling and Accounting of Funds Rule B.0501 Time Share Trust Funds Section B.0600 Project Broker Rule B.0601 Designation of Project Broker B.0602 Duties of the Project Broker Section B.0700 Time Share Forms Rule B.0701 Forms for Time Share Projects Subchapter 58C Real Estate Prelicensing Education Subchapter 58D Real Estate Appraisers (Repealed) Subchapter 58E Real Estate Continuing Education Subchapter 58F Brokerage Transition Course North Carolina Real Estate License Law and Commission Rules 3 CHAPTER 58 REAL ESTATE COMMISSION Subchapter 58A Real Estate Brokers SECTION A.0100 GENERAL BROKERAGE A.0101 Proof of Licensure (a) The annual license renewal pocket card issued by the Commission to each licensee shall be retained by the licens-ee as evidence of licensure. Each licensee shall carry his or her pocket card on his or her person at all times while engaging in real estate brokerage and shall produce the card as proof of li-censure whenever requested. (b) The qualifying broker of a firm shall retain the firm’s renewal pocket card at the firm and shall produce it upon re-quest as proof of firm licensure as required by Rule .0502. (c) Every licensed real estate business entity or firm shall prominently display its license certificate or facsimile thereof in each office maintained by the entity or firm. A broker-in-charge shall also prominently display his or her license certifi-cate in the office where he or she is broker-in-charge. (d) Every licensee shall include his or her license number in agency contracts and disclosures as provided in Rule .0104 of this subchapter. A.0102 Branch Office (Repealed) A.0103 Licensee Name and Address Upon initial licensure and at all times thereafter, every li-censee shall assure that the Commission has on record the li-censee’s current personal name, firm name, trade name, res-idence address and firm address. Every licensee shall notify the Commission in writing of each change of personal name, firm name, trade name, residence address and firm address within ten days of said change. All addresses shall be suffi-ciently descriptive to enable the Commission to correspond with and locate the licensee. A .0104 Agency Agreements and Disclosure (a) Every agreement for brokerage services in a real es-tate transaction and every agreement for services connected with the management of a property owners association shall be in writing and signed by the parties thereto. Every agree-ment for brokerage services between a broker and an own-er of the property to be the subject of a transaction must be in writing and signed by the parties from the time of its for-mation. Every agreement for brokerage services between a broker and a buyer or tenant shall be express and shall be re-duced to writing and signed by the parties thereto not later than the time one of the parties makes an offer to purchase, sell, rent, lease, or exchange real estate to another. Howev-er, every agreement between a broker and a buyer or tenant which seeks to bind the buyer or tenant for a period of time or to restrict the buyer’s or tenant’s right to work with other agents or without an agent shall be in writing and signed by the parties thereto from its formation. A broker shall not con-tinue to represent a buyer or tenant without a written, signed agreement when such agreement is required by this Rule. Ev-ery written agreement for brokerage services of any kind in a real estate transaction shall provide for its existence for a def-inite period of time, shall include the licensee’s license num-ber, and shall provide for its termination without prior notice at the expiration of that period, except that an agency agree-ment between a landlord and broker to procure tenants or re-ceive rents for the landlord’s property may allow for automat-ic renewal so long as the landlord may terminate with notice at the end of any contract period and any subsequent renew-als. For the purposes of this rule, an agreement between li-censees to cooperate or share compensation shall not be con-sidered an agreement for brokerage services and, except as re-quired by Rule .1807 of this Subchapter, need not be memo-rialized in writing. (b) Every listing agreement, written buyer agency agree-ment or other written agreement for brokerage services in a real estate transaction shall contain the following provision: The broker shall conduct all brokerage activities in regard to this agreement without respect to the race, color, religion, sex, national origin, handicap or familial status of any party or prospective party. The provision shall be set forth in a clear and conspicuous manner which shall distinguish it from oth-er provisions of the agreement. For the purposes of this Rule, the term, familial status, shall be defined as it is in G.S. 41A- 3(1b). (c) In every real estate sales transaction, a broker shall, at first substantial contact directly with a prospective buyer or seller, provide the prospective buyer or seller with a copy of the publication “Working with Real Estate Agents,” set forth the broker’s name and license number thereon, review the publication with the buyer or seller, and determine wheth-er the agent will act as the agent of the buyer or seller in the transaction. If the first substantial contact with a prospec-tive buyer or seller occurs by telephone or other electronic means of communication where it is not practical to provide the “Working with Real Estate Agents” publication, the bro-ker shall at the earliest opportunity thereafter, but in no event later than three days from the date of first substantial contact, mail or otherwise transmit a copy of the publication to the prospective buyer or seller and review it with him or her at the earliest practicable opportunity thereafter. For the purposes 4 North Carolina Real Estate License Law and Commission Rules of this Rule, “first substantial contact” shall include contacts between a broker and a consumer where the consumer or bro-ker begins to act as though an agency relationship exists and the consumer begins to disclose to the broker personal or con-fidential information. (d) A real estate broker representing one party in a trans-action shall not undertake to represent another party in the transaction without the written authority of each party. The written authority must be obtained upon the formation of the relationship except when a buyer or tenant is represented by a broker without a written agreement in conformity with the requirements of Paragraph (a) of this Rule. Under such cir-cumstances, the written authority for dual agency must be re-duced to writing not later than the time that one of the par-ties represented by the broker makes an offer to purchase, sell, rent, lease, or exchange real estate to another party. (e) In every real estate sales transaction, a broker work-ing directly with a prospective buyer as a seller’s agent or sub-agent shall disclose in writing to the prospective buyer at the first substantial contact with the prospective buyer that the broker represents the interests of the seller. The written dis-closure shall include the broker’s license number. If the first substantial contact occurs by telephone or by means of other electronic communication where it is not practical to provide written disclosure, the broker shall immediately disclose by similar means whom he represents and shall immediately mail or otherwise transmit a copy of the written disclosure to the buyer. In no event shall the broker mail or transmit a copy of the written disclosure to the buyer later than three days from the date of first substantial contact with the buyer. (f) In every real estate sales transaction, a broker repre-senting a buyer shall, at the initial contact with the seller or seller’s agent, disclose to the seller or seller’s agent that the bro-ker represents the buyer’s interests. In addition, in every real estate sales transaction other than auctions, the broker shall, no later than the time of delivery of an offer to the seller or seller’s agent, provide the seller or seller’s agent with a written confirmation disclosing that he represents the interests of the buyer. The written confirmation may be made in the buyer’s offer to purchase and shall include the broker’s license num-ber. (g) The provisions of Paragraphs (c), (d) and (e) of this Rule do not apply to real estate licensees representing sellers in auction sales transactions. (h) A broker representing a buyer in an auction sale trans-action shall, no later than the time of execution of a written agreement memorializing the buyer’s contract to purchase, provide the seller or seller’s agent with a written confirmation disclosing that he represents the interests of the buyer. The written confirmation may be made in the written agreement. (i) A firm which represents more than one party in the same real estate transaction is a dual agent and, through the brokers associated with the firm, shall disclose its dual agen-cy to the parties. (j) When a firm represents both the buyer and seller in the same real estate transaction, the firm may, with the prior ex-press approval of its buyer and seller clients, designate one or more individual brokers associated with the firm to represent only the interests of the seller and one or more other individ-ual brokers associated with the firm to represent only the in-terests of the buyer in the transaction. The authority for des-ignated agency must be reduced to writing not later than the time that the parties are required to reduce their dual agen-cy agreement to writing in accordance with Paragraph (d) of this Rule. An individual broker shall not be so designated and shall not undertake to represent only the interests of one par-ty if the broker has actually received confidential information concerning the other party in connection with the transac-tion. A broker-in-charge shall not act as a designated broker for a party in a real estate sales transaction when a provision-al broker under his or her supervision will act as a designated broker for another party with a competing interest. (k) When a firm acting as a dual agent designates an in-dividual broker to represent the seller, the broker so designat-ed shall represent only the interest of the seller and shall not, without the seller’s permission, disclose to the buyer or a bro-ker designated to represent the buyer: (1) that the seller may agree to a price, terms, or any conditions of sale other than those established by the seller; (2) the seller’s motivation for engaging in the trans-action unless disclosure is otherwise required by stat-ute or rule; and (3) any information about the seller which the seller has identified as confidential unless disclosure of the information is otherwise required by statute or rule. (l) When a firm acting as a dual agent designates an indi-vidual broker to represent the buyer, the broker so designat-ed shall represent only the interest of the buyer and shall not, without the buyer’s permission, disclose to the seller or a bro-ker designated to represent the seller: (1) that the buyer may agree to a price, terms, or any conditions of sale other than those established by the seller; (2) the buyer’s motivation for engaging in the trans-action unless disclosure is otherwise required by stat-ute or rule; and (3) any information about the buyer which the buyer has identified as confidential unless disclosure of the information is otherwise required by statute or rule. (m) A broker designated to represent a buyer or seller in accordance with Paragraph (j) of this Rule shall disclose the identity of all of the brokers so designated to both the buyer and the seller. The disclosure shall take place no later than the presentation of the first offer to purchase or sell. (n) When an individual broker represents both the buyer and seller in the same real estate sales transaction pursuant to a written agreement authorizing dual agency, the parties may provide in the written agreement that the broker shall not dis-close the following information about one party to the other North Carolina Real Estate License Law and Commission Rules 5 without permission from the party about whom the informa-tion pertains: (1) that a party may agree to a price, terms or any conditions of sale other than those offered; (2) the motivation of a party for engaging in the transaction, unless disclosure is otherwise required by statute or rule; and (3) any information about a party which that party has identified as confidential, unless disclosure is oth-erwise required by statute or rule. A.0105 Advertising (a) Blind Ads. A licensee shall not advertise the sale, pur-chase, exchange, rent or lease of real estate, for another or others, in a manner indicating the offer to sell, purchase, ex-change, rent, or lease is being made by the licensee’s principal only. Every such advertisement shall conspicuously indicate that it is the advertisement of a broker or brokerage firm and shall not be confined to publication of only a post office box number, telephone number, street address, internet web ad-dress or e-mail address. (b) Registration of Assumed Name. In the event that any licensee shall advertise in any manner using a firm name or an assumed name which does not set forth the surname of the licensee, the licensee shall first file the appropriate certifi-cate with the office of the county register of deeds in compli-ance with G.S. 66-68 and notify the Commission in writing of the use of such a firm name or assumed name. (c) Authority to Advertise. (1) A provisional broker shall not advertise any bro-kerage service or the sale, purchase, exchange, rent or lease of real estate for another or others without the consent of his or her broker-in-charge and without in-cluding in the advertisement the name of the broker or firm with whom the provisional broker is associ-ated. (2) A licensee shall not advertise or display a “for sale” or “for rent” sign on any real estate without the con-sent of the owner or his or her authorized agent. (d) Business names. A licensee shall not include the name of a provisional broker or an unlicensed person in the name of a sole proprietorship, partnership or non-corporate business formed for the purpose of real estate brokerage. (e) A person licensed as a limited nonresident commercial broker shall comply with the provisions of Rule .1809 of this Subchapter in connection with all advertising concerning or relating to his or her status as a North Carolina licensee. A.0106 Delivery of Instruments (a) Except as provided in Paragraph (b) of this Rule, ev-ery broker shall immediately, but in no event later than five days from the date of execution, deliver to the parties there-to copies of any required written agency agreement, contract, offer, lease, or option affecting real property. (b) A broker may be relieved of his or her duty under Paragraph (a) of this Rule to deliver copies of leases or rental agreements to the property owner, if the broker: (1) obtains the express written authority of the prop-erty owner to enter into and retain copies of leases or rental agreements on behalf of the property owner; (2) executes the lease or rental agreement on a pre‑printed form, the material terms of which may not be changed by the broker without prior approv-al by the property owner except as may be required by law; (3) promptly provides a copy of the lease or rent-al agreement to the property owner upon reasonable request; and (4) delivers to the property owner within 45 days following the date of execution of the lease or rental agreement, an accounting which identifies the leased property and which sets forth the names of the ten-ants, the rental rates and rents collected. A.0107 Handling and Accounting of Funds (a) Except as provided herein, all monies received by a li-censee acting in his or her fiduciary capacity shall be deposited in a trust or escrow account maintained by a broker not later than three banking days following receipt of such monies ex-cept that earnest money deposits paid by means other than currency which are received on offers to purchase real estate and tenant security deposits paid by means other than curren-cy which are received in connection with real estate leases shall be deposited in a trust or escrow account not later than three banking days following acceptance of such offer to purchase or lease; the date of acceptance of such offer to purchase or lease shall be set forth in the purchase or lease agreement. All mon-ies received by a provisional broker shall be delivered immedi-ately to the broker by whom he or she is employed, except that all monies received by nonresident commercial licensees shall be delivered as required by Rule .1808 of this Subchapter. A licensee may accept custody of a check or other negotiable in-strument made payable to the seller of real property as option money only for the purpose of delivering the instrument to the optionor-seller. While the instrument is in the custody of the licensee, the licensee shall, according to the instructions of the buyer-optionee, either deliver it to the seller-optionor or return it to the buyer-optionee. The licensee shall safeguard the instru-ment and shall be responsible to the parties on the instrument for its prompt and safe delivery. In no event shall a licensee re-tain such an instrument for more than three business days after the acceptance of the option contract. (b) In the event monies received by a licensee while act-ing in a fiduciary capacity are deposited in a trust or escrow ac-count which bears interest, the licensee having custody over such monies shall first secure from all parties having an in-terest in the monies written authorization for the deposit of the monies in an interest-bearing account. Such authorization shall specify how and to whom the interest will be disbursed, and, if contained in an offer, contract, lease, or other transac- 6 North Carolina Real Estate License Law and Commission Rules tion instrument, such authorization shall be set forth in a con-spicuous manner which shall distinguish it from other provi-sions of the instrument. (c) Closing statements shall be furnished to the buyer and the seller in the transaction not more than five days after closing. (d) Trust or escrow accounts shall be so designated by the bank or savings and loan association in which the account is located, and all deposit tickets and checks drawn on said ac-count as well as the monthly bank statement for the account shall bear the words “Trust Account” or “Escrow Account.” (e) A licensee shall maintain and retain records sufficient to identify the ownership of all funds belonging to others. Such re-cords shall be sufficient to show proper deposit of such funds in a trust or escrow account and to verify the accuracy and prop-er use of the trust or escrow account. The required records shall include: (1) bank statements. (2) canceled checks which shall be referenced to the cor-responding journal entry or check stub entries and to the corresponding sales transaction ledger sheets or for rent-al transactions, the corresponding property or owner led-ger sheets. Checks shall conspicuously identify the pay-ee and shall bear a notation identifying the purpose of the disbursement.When a check is used to disburse funds for more than one sales transaction, owner, or proper-ty, the check shall bear a notation identifying each sales transaction, owner, or property for which disbursement is made, including the amount disbursed for each, and the corresponding sales transaction, property, or owner ledger entries. When necessary, the check notation may refer to the required information recorded on a supple-mental disbursement worksheet which shall be cross-ref-erenced to the corresponding check. In lieu of retaining canceled checks, a licensee may retain digitally imaged copies of the canceled checks or substitute checks provid-ed that such images are legible reproductions of the front and back of such instruments with no smaller images than 1.1875 x 3.0 inches and provided that the licens-ee’s bank retains for a period of at least six years the origi-nal checks, “substitute checks” as described in 12 C.F.R. 229.51 or the capacity to provide substitute checks as de-scribed in 12 C.F.R. 229.51 and makes the original or substitute checks available to the licensee and the Com-mission upon request. (3) deposit tickets. For a sales transaction, the deposit ticket shall identify the purpose and remitter of the funds deposited, the property, the parties involved, and a refer-ence to the corresponding sales transaction ledger entry. For a rental transaction, the deposit ticket shall identify the purpose and remitter of the funds deposited, the ten-ant, and the corresponding property or owner ledger en-try. For deposits of funds belonging to or collected on behalf of a property owner association, the deposit ticket shall identify the property or property interest for which the payment is made, the property or interest owner, the remitter, and the purpose of the payment. When a single deposit ticket is used to deposit funds collected for more than one sales transaction, property owner, or property, the required information shall be recorded on the ticket for each sales transaction, owner, or property, or the tick-et may refer to the same information recorded on a sup-plemental deposit worksheet which shall be cross-refer-enced to the corresponding deposit ticket. (4) a payment record sheet for each property or inter-est for which funds are collected and deposited into a property owner association trust account as required by Subsection (i) of this Rule. Payment record sheets shall identify the amount, date, remitter, and purpose of pay-ments received, the amount and nature of the obligation for which payments are made, and the amount of any balance due or delinquency. (5) a separate ledger sheet for each sales transaction and for each property or owner of property managed by the licensee identifying the property, the parties to the trans-action, the amount, date, and purpose of the deposits and from whom received, the amount, date, check num-ber, and purpose of disbursements and to whom paid, and the running balance of funds on deposit for the par-ticular sales transaction or, in a rental transaction, the particular property or owner of property. Monies held as tenant security deposits in connection with rental trans-actions may be accounted for on a separate tenant secu-rity deposit ledger for each property or owner of proper-ty managed by the licensee. For each security deposit the tenant security deposit ledger shall identify the remitter, the date the deposit was paid, the amount, the tenant, landlord, and subject property. For each disbursement of tenant security deposit monies, the ledger shall identi-fy the check number, amount, payee, date, and purpose of the disbursement. The ledger shall also show a run-ning balance. When tenant security deposit monies are accounted for on a separate ledger as provided herein, deposit tickets, canceled checks and supplemental work-sheets shall reference the corresponding tenant security deposit ledger entries when appropriate. (6) a journal or check stubs identifying in chronological sequence each bank deposit and disbursement of mon-ies to and from the trust or escrow account, including the amount and date of each deposit and a reference to the corresponding deposit ticket and any supplemental de-posit worksheet, and the amount, date, check number, and purpose of disbursements and to whom paid. The journal or check stubs shall also show a running balance for all funds in the account. (7) copies of contracts, leases and management agree-ments. (8) closing statements and property management state-ments. (9) covenants, bylaws, minutes, management agree- North Carolina Real Estate License Law and Commission Rules 7 ments and periodic statements relating to the man-agement of a property owner association. (10) invoices, bills, and contracts paid from the trust account, and any documents not otherwise described herein necessary and sufficient to verify and explain record entries. Records of all receipts and disbursements of trust or escrow monies shall be maintained in such a manner as to create an audit trail from deposit tickets and canceled checks to check stubs or journals and to the ledger sheets. Ledger sheets and journals or check stubs must be reconciled to the trust or es-crow account bank statements on a monthly basis. To be suf-ficient, records of trust or escrow monies must include a work-sheet for each such monthly reconciliation showing the ledger sheets, journals or check stubs, and bank statements to be in agreement and balance. (f) All trust or escrow account records shall be made avail-able for inspection by the Commission or its authorized repre-sentatives in accordance with Rule 58A .0108. (g) In the event of a dispute between the seller and buyer or landlord and tenant over the return or forfeiture of any de-posit other than a residential tenant security deposit held by a licensee, the licensee shall retain said deposit in a trust or es-crow account until the licensee has obtained a written release from the parties consenting to its disposition or until disbursement is ordered by a court of competent jurisdiction. Alterna-tively, the licensee may deposit the disputed monies with the appropriate clerk of court in accordance with the provision of G.S. 93A-12. If it appears to a licensee holding a disputed de-posit that a party has abandoned his or her claim, the licensee may disburse the money to the other claiming parties accord-ing to their written agreement provided that the licensee first makes a reasonable effort to notify the party who has apparent-ly abandoned his or her claim and provides that party with an opportunity to renew his or her claim to the disputed funds. Tenant security deposit monies shall be disposed of in accor-dance with the requirements of N.C.G.S. 42-50 through 56 and N.C.G.S. 42A-18. (h) A licensee may transfer earnest money deposits in his or her possession collected in connection with a sales transaction from his or her trust account to the closing attorney or other settlement agent not more than ten days prior to the anticipated settlement date. A licensee shall not disburse prior to settle-ment any earnest money in his or her possession for any other purpose without the written consent of the parties. (i) The funds of a property owner association, when collect-ed, maintained, disbursed or otherwise controlled by a licens-ee, are trust monies and shall be treated as such in the manner required by this Rule. Such funds must be deposited into and maintained in a trust or escrow account dedicated exclusively for funds belonging to a single property owners association and may not be commingled with funds belonging to other prop-erty owner associations or other persons or parties. A licensee who undertakes to act as manager of a property owner associa-tion or as the custodian of funds belonging to a property own-er association shall provide the association with periodic state-ments which report the balance of association funds in the li-censee’s possession or control and which account for the funds the licensee has received and disbursed on behalf of the associ-ation. Such statements must be made in accordance with the licensee’s agreement with the association, but in no event shall the statements be made less frequently than every 90 days. (j) Every licensee shall safeguard the money or property of others coming into his or her possession in a manner consistent with the requirements of the Real Estate License Law and the rules adopted by the Commission. A licensee shall not convert the money or property of others to his or her own use, apply such money or property to a purpose other than that for which it was paid or entrusted to him or her, or permit or assist any other person in the conversion or misapplication of such mon-ey or property. (k) In addition to the records required by paragraph (e) of this rule, a licensee acting as agent for the landlord of a residen-tial property used for vacation rentals shall create and main-tain a subsidiary ledger sheet for each property or owner of such properties onto which all funds collected and disbursed are identified in categories by purpose. On a monthly basis, the licensee shall reconcile the subsidiary ledger sheets to the corre-sponding property or property owner ledger sheet. (l) In lieu of maintaining a subsidiary ledger sheet, the li-censee may maintain an accounts payable ledger sheet for each owner or property and each vendor to whom trust monies are due for monies collected on behalf of the owner or property identifying the date of receipt of the trust monies, from whom the monies were received, rental dates, and the corresponding property or owner ledger sheet entry including the amount to be disbursed for each and the purpose of the disbursement. The licensee may also maintain an accounts payable ledger sheet in the format described in paragraph (k) above for vaca-tion rental tenant security deposit monies and vacation rental advance payments. A.0108 Retention of Records Licensees shall retain records of all sales, rental, and oth-er transactions conducted in such capacity, whether the trans-action is pending, completed or terminated prior to its suc-cessful conclusion. The licensee shall retain such records for three years after all funds held by the licensee in connection with the transaction have been disbursed to the proper par-ty or parties or until the successful or unsuccessful conclusion of the transaction, whichever occurs later. Such records shall include contracts of sale, written leases, agency contracts, op-tions, offers to purchase, trust or escrow records, earnest mon-ey receipts, disclosure documents, closing statements, broker-age cooperation agreements, declarations of affiliation, and any other records pertaining to real estate transactions. All such records shall be made available for inspection and repro-duction by the Commission or its authorized representatives without prior notice. 8 North Carolina Real Estate License Law and Commission Rules A.0109 Brokerage Fees and Compensation (a) A licensee shall not receive, either directly or indirect-ly, any commission, rebate or other valuable consideration of more than nominal value from a vendor or a supplier of goods and services for an expenditure made on behalf of the licens-ee’s principal in a real estate transaction without the written consent of the licensee’s principal. (b) A licensee shall not receive, either directly or indirect-ly, any commission, rebate, or other valuable consideration of more than nominal value for services which the licensee rec-ommends, procures, or arranges relating to a real estate trans-action for a party, without full and timely disclosure to such party. (c) In a real estate sales transaction, a broker shall not receive any compensation, incentive, bonus, rebate, or other consideration of more than nominal value: (1) from his principal unless the compensation, in-centive, bonus, rebate, or other consideration is pro-vided for in a written agency contract prepared in conformity with the requirements of 21 NCAC 58A .0104. (2) from any other party or person unless the broker provides full and timely disclosure of the incentive, bonus, rebate, or other consideration, or the prom-ise or expectation thereof to the broker’s principal. The disclosure may be made orally, but must be con-firmed in writing before the principal makes or ac-cepts an offer to buy or sell. (d) Full disclosure shall include a description of the com-pensation, incentive, bonus, rebate, or other consideration in-cluding its value and the identity of the person or party by whom it will or may be paid. A disclosure is timely when it is made in sufficient time to aid a reasonable person’s deci-sion- making. (e) Nothing in this rule shall be construed to require a broker to disclose to a person not his principal the compensa-tion the broker expects to receive from his principal or to dis-close to his principal the compensation the broker expects to receive from the broker’s employing broker. For the purpose of this Rule, nominal value means of insignificant, token, or merely symbolic worth. (f) The Commission shall not act as a board of arbitra-tion and shall not compel parties to settle disputes concerning such matters as the rate of commissions, the division of com-missions, pay of brokers, and similar matters. (g) Except as provided in (h) of this rule, a licensee shall not undertake in any manner, any arrangement, contract, plan or other course of conduct, to compensate or share com-pensation with unlicensed persons or entities for any acts per-formed in North Carolina for which licensure by the Com-mission is required. (h) A broker may pay or promise to pay consideration to a travel agent in return for procuring a tenant for a vacation rental as defined by the Vacation Rental Act if: (1) the travel agent only introduces the tenant to the broker, but does not otherwise engage in any activity which would require a real estate license; (2) the introduction by the travel agent is made in the regular course of the travel agent’s business; and (3) the travel agent has not solicited, handled or re-ceived any monies in connection with the vacation rental. For the purpose of this Rule, a travel agent is any person or entity who is primarily engaged in the business of acting as an intermediary between persons who purchase air, land, and ocean travel services and the providers of such services. A travel agent is also any other person or entity who is permit-ted to handle and sell tickets for air travel by the Airlines Re-porting Corporation (ARC). Payments authorized hereunder shall be made only after the conclusion of the vacation rent-al tenancy. Prior to the creation of a binding vacation rent-al agreement, the broker shall provide a tenant introduced by a travel agent a written statement advising him or her to rely only upon the agreement and the broker’s representations about the transaction. The broker shall keep for a period of three years records of a payment made to a travel agent in-cluding records identifying the tenant, the travel agent and their addresses, the property and dates of the tenancy, and the amount paid. (i) Nothing in this Rule shall be construed to permit a li-censee to accept any fee, kickback or other valuable consid-eration that is prohibited by the Real Estate Settlement Pro-cedures Act (12 USC 2601 et. seq.) or any rules and regula-tions promulgated by the United States Department of Hous-ing and Urban Development pursuant to said Act or to fail to make any disclosure required by said Act or rules. A.0110 Broker-in-Charge (a) Every real estate firm shall designate a broker to serve as the broker-in-charge at its principal office and a broker to serve as broker-in-charge at any branch office. No broker shall be broker-in-charge of more than one office at a time. If a firm shares office space with one or more other firms, one bro-ker may serve as broker-in-charge of each firm at that loca-tion. No office or branch office of a firm shall have more than one designated broker-in-charge. A broker who is a sole pro-prietor shall designate himself or herself as a broker-in-charge if the broker engages in any transaction where the broker is re-quired to deposit and maintain monies belonging to others in a trust account, engages in advertising or promoting his or her services as a broker in any manner, or has one or more other brokers affiliated with him or her in the real estate business. Maintenance of a trust or escrow account by a broker solely for holding residential tenant security deposits received by the broker on properties owned by the broker in compliance with N.C.G.S. 42-50 shall not, standing alone, subject the broker to the requirement to designate himself or herself as a broker-in-charge. A broker desiring to be a broker-in-charge shall declare in writing his or her designation as broker-in-charge of an office to the Commission on a form prescribed by North Carolina Real Estate License Law and Commission Rules 9 the Commission within 10 days following the broker’s desig-nation as broker-in-charge of any office. The broker-in-charge shall, in accordance with the requirements of G.S. 93A and the rules adopted by the Commission, assume the responsibil-ity at his or her office for: (1) the retention of current license renewal pocket cards by all brokers employed at the office for which he or she is broker-in-charge; the proper display of li-censes at such office in accordance with Rule .0101 of this Section; and assuring that each licensee employed at the office has complied with Rules .0503, .0504 and .0506 of this Subchapter; (2) the proper notification to the Commission of any change of business address or trade name of the firm and the registration of any assumed business name ad-opted by the firm for its use; (3) the proper conduct of advertising by or in the name of the firm at such office; (4) the proper maintenance at such office of the trust or escrow account of the firm and the records pertain-ing thereto; (5) the proper retention and maintenance of records relating to transactions conducted by or on behalf of the firm at such office, including those required to be retained pursuant to Rule .0108 of this Section; (6) the proper supervision of provisional brokers asso-ciated with or engaged on behalf of the firm at such of-fice in accordance with the requirements of Rule .0506 of this Subchapter; (7) the proper supervision of all licensees employed at the office for which he or she is broker-in-charge with respect to adherence to agency agreement and disclo-sure requirements. (b) When used in this Rule, the term: (1) “Branch Office” means any office in addition to the principal office of a broker which is operated in connection with the broker’s real estate business; and (2) “Office” means any place of business where acts are performed for which a real estate license is required or where monies received by a licensee acting in a fi-duciary capacity are handled or records for such trust monies are maintained. (c) To qualify to become a broker-in-charge, a broker shall: (1) have a license on active status, but not on provi-sional status; (2) possess at least two years of full-time real estate brokerage experience or equivalent part-time real es-tate brokerage experience within the previous five years or real estate education or experience in real es-tate transactions that the Commission finds equiva-lent to such experience; and (3) complete the Commission’s 12 classroom hour broker-in-charge course either within three years pri-or to designation as a broker-in-charge or within 120 days following designation as a broker-in-charge. By submission of a broker-in-charge declaration to the Commission, a broker certifies that he or she possesses the experience required to become a broker-in-charge and upon acknowledgement by the Commission of a completed dec-laration, the broker shall receive his or her broker-in-charge designation and be authorized to act as a broker-in-charge. Upon his or her designation as broker-in-charge and com-pletion of the broker-in-charge course within the time peri-od prescribed in Subparagraph (c)(3) of this Rule, the desig-nated broker-in-charge acquires the eligibility to be re-des-ignated as a broker-in-charge at any time in the future after a period of not actively serving as a broker-in-charge with-out having to again satisfy the qualification requirements for initial designation stated in this Paragraph so long as the broker continuously satisfies the requirements to retain such eligibility described in Paragraph (e) of this Rule. A bro-ker- in-charge designation shall be immediately terminated if a broker-in-charge fails to complete the broker-in-charge course during the required time period or if the Commis-sion finds the broker-in-charge does not possess the required experience. Upon the request of the Commission, a broker shall provide to the Commission evidence that he or she possesses the required experience. A broker who is removed as broker-in-charge for failure to timely complete the Com-mission’s 12 hour broker-in-charge course must first com-plete the 12 hour broker-in-charge course before he or she may again be designated as broker-in-charge. A broker-in-charge, upon written request of the Commission or a broker who has been affiliated with the broker-in-charge within the previous five years, shall provide the Commission or broker an accurate written statement regarding the broker’s work at the office of the broker-in-charge, including the dates of af-filiation, average number of hours worked per week, and the number and type of properties listed, sold, bought, leased, or rented for others by the licensee during his or her affilia-tion with the broker-in-charge. (d) A broker who was the broker-in-charge of a real es-tate office on April 1, 2006, whose broker-in-charge decla-ration was received by the Commission prior to that date, and who completed the Commission’s broker-in-charge course prior to April 1, 2006 or within 120 days follow-ing designation as a broker-in-charge, may continue to serve as a broker-in-charge thereafter until his or her eligibility to serve as a broker-in-charge is terminated as provided in paragraph (f ) of this Rule. (e) Once a broker has been designated as a broker-in-charge and completed the 12 hour broker-in-charge course as prescribed by Paragraph (c) of this Rule, the broker may maintain broker-in-charge eligibility by timely annu-al renewal of his or her broker license, completion each li-cense year of the four hour mandatory continuing educa-tion update course prescribed for all licensees and known as the “Real Estate Update Course,” and completion each license year of the four hour special continuing education 10 North Carolina Real Estate License Law and Commission Rules course prescribed by the Commission only for brokers-in-charge and known as the “Broker-In-Charge Annual Review Course.” The Broker-In-Charge Annual Review Course must be taken initially by a broker-in-charge during the first full license year following the license year in which the bro-ker was designated as a broker-in-charge and must be taken each license year thereafter in order for the broker to main-tain broker-in-charge eligibility. The Broker-In-Charge An-nual Review Course shall satisfy the broker’s general con-tinuing education elective course requirement, but the bro-ker must also take the mandatory continuing education Real Estate Update Course each license year. The Broker- In-Charge Annual Review Course is reserved exclusively for current brokers-in-charge, and brokers who are not current-ly acting as a broker-in-charge but who desire to retain their broker-in-charge eligibility. Only these brokers shall receive continuing education elective credit for taking the course. (f ) A broker’s broker-in-charge eligibility and, if cur-rently designated as a broker-in-charge, his or her broker-in-charge designation shall be terminated upon the occurrence of any of the following events: (1) The broker’s license expires or the broker’s license is suspended, revoked or surrendered; (2) the broker’s license is made inactive for any rea-son, including failure to satisfy the continuing edu-cation requirements described in Rule .1702 of this Subchapter; (3) the broker fails to complete the Broker-In-Charge Annual Review Course described in Paragraph (e) of this Rule; or (4) the broker is found by the Commission to have not possessed the experience required in Paragraph (c) of this Rule at the time of either initial designa-tion as a broker-in-charge or re-designation as a bro-ker- in-charge. When a broker who is a former broker-in-charge desires to be re-designated as a broker-in-charge following termina-tion of his or her broker-in-charge designation or eligibility, he or she must first have a license on active status. The bro-ker then must satisfy the experience requirements for initial designation set forth in Paragraph (c) of this Rule, and the broker must complete the 12 hour broker-in-charge course within 120 days following re-designation, except that if the broker has taken the 12 hour broker-in-charge course with-in the preceding three years, he or she has the option to complete the Broker-In-Charge Annual Review Course for the current license year within 120 days following re-desig-nation as a broker-in-charge in lieu of repeating the 12 hour broker-in-charge course. If a broker who has been re-desig-nated as a broker-in-charge and then removed as broker-in-charge due to failure to satisfy his education requirement within 120 days following re-designation subsequently seeks another re-designation as broker-in-charge, the broker must first complete the 12 hour broker-in-charge course before he or she may again be designated as a broker-in-charge, even if the broker has completed the 12 hour broker-in-charge course within the preceding three years. (g) A broker‑in‑charge shall notify the Commission in writing that he or she no longer is serving as broker‑in-charge of a particular office within 10 days following any such change. (h) A licensed real estate firm is not required to designate a broker-in-charge if it: (1) has been organized for the sole purpose of receiv-ing compensation for brokerage services furnished by its qualifying broker through another firm or broker; (2) is treated for tax purposes as a Subchapter S corpo-ration by the United States Internal Revenue Service; (3) has no principal or branch office; and (4) has no person associated with it other than its qualifying broker. (i) A broker-in-charge residing outside of North Carolina who is the broker-in-charge of a principal or branch office not located in North Carolina is not required to complete the bro-ker- in-charge course or the special continuing education course prescribed for brokers-in-charge under paragraph (e) of this Rule. However, if such broker-in-charge either becomes a resi-dent of North Carolina or becomes broker-in-charge of an of-fice located within North Carolina, then he or she must take the 12 hour broker-in-charge course within 120 days of such change, unless he or she has taken the 12 hour course with-in the preceding three years. Such broker-in-charge shall take the special broker-in-charge continuing education course pre-scribed in paragraph (e) of this Rule during the first full license year following the change and each license year thereafter so long as the broker-in-charge remains a resident of North Car-olina or continues to manage an office located in North Car-olina. (j) A nonresident commercial real estate broker licensed under the provisions of Section .1800 of this Subchapter shall not act as or serve in the capacity of a broker-in-charge of a firm or office in North Carolina. A.0111 Drafting Legal Instruments (a) A broker acting as an agent in a real estate transaction shall not draft offers, sales contracts, options, leases, promis-sory notes, deeds, deeds of trust or other legal instruments by which the rights of others are secured; however, a broker may complete preprinted offer, option contract, sales contract and lease forms in real estate transactions when authorized or di-rected to do so by the parties. (b) A broker may use electronic, computer, or word pro-cessing equipment to store preprinted offer and sales contract forms which comply with Rule .0112, as well as preprinted op-tion and lease forms, and may use such equipment to complete and print offer, contract and lease documents. Provided, how-ever, a broker may not alter the form before it is presented to the parties. If the parties propose to delete or change any word or provision in the form, the form must be marked to indicate the change or deletion made. The language of the form shall North Carolina Real Estate License Law and Commission Rules 11 REC 4.22 REV 7/10 STATE OF NORTH CAROLINA RESIDENTIAL PROPERTY DISCLOSURE STATEMENT Instructions to Property Owners 1. G.S. 47E requires owners of residential real estate (single-family homes and buildings with up to four dwelling units) to furnish purchasers a property disclosure statement. This form is the only one approved for this purpose. A disclosure statement must be furnished in connection with the sale, exchange, option and sale under a lease with option to purchase (unless the tenant is already occupying or intends to occupy the dwelling). A disclosure statement is not required for some transactions, including the first sale of a dwelling which has never been inhabited and transactions of residential property made pursuant to a lease with option to purchase where the lessee occupies or intends to occupy the dwelling. For a complete list of exemptions, see G.S. 47E-2. 2. You must check √ one of the boxes for each of the questions on the reverse side of this form. a. If you check “Yes” for any question, you must explain your answer and either describe any problem or attach a report from an engineer, contractor, pest control operator or other expert or public agency describing it. If you attach a report, you will not be liable for any inaccurate or incomplete information contained in it so long as you were not grossly negligent in obtaining or transmitting the information. b. If you check “No”, you are stating that you have no actual knowledge of any problem. If you check “No” and you know there is a problem, you may be liable for making an intentional misstatement. c. If you check “No Representation”, you have no duty to disclose the conditions or characteristics of the property, even if you should have known of them. * If you check “Yes” or “No” and something happens to the property to make your Statement incorrect or inaccurate (for example, the roof begins to leak), you must promptly give the purchaser a corrected Statement or correct the problem. 3. If you are assisted in the sale of your property by a licensed real estate broker, you are still responsible for completing and delivering the Statement to the purchasers; and the broker must disclose any material facts about your property which they know or reasonably should know, regardless of your responses on the Statement. 4. You must give the completed Statement to the purchaser no later than the time the purchaser makes an offer to purchase your property. If you do not, the purchaser can, under certain conditions, cancel any resulting contract (See “Note to Purchasers” below). You should give the purchaser a copy of the Statement containing your signature and keep a copy signed by the purchaser for your records. Note to Purchasers: If the owner does not give you a Residential Property Disclosure Statement by the time you make your offer to purchase the property, you may under certain conditions cancel any resulting contract and be en‑titled to a refund of any deposit monies you may have paid. To cancel the contract, you must personally deliver or mail written notice of your decision to cancel to the owner or the owner’s agent within three calendar days following your receipt of the Statement, or three calendar days following the date of the contract, whichever occurs first. However, in no event does the Disclosure Act permit you to cancel a contract after settlement of the transaction or (in the case of a sale or exchange) after you have occupied the property, whichever occurs first. 5. In the space below, type or print in ink the address of the property (sufficient to identify it) and your name. Then sign and date. Property Address: Owner’s Name(s): Owner(s) acknowledge having examined this Statement before signing and that all information is true and correct as of the date signed. Owner Signature: Date Owner Signature: Date Purchaser(s) acknowledge receipt of a copy of this disclosure statement; that they have examined it before signing; that they understand that this is not a warranty by owner or owner’s agent; that it is not a substitute for any inspections they may wish to obtain; and that the representations are made by the owner and not the owner’s agent(s) or subagent(s). Purchaser(s) are encouraged to obtain their own inspection from a licensed home inspector or other professional. Purchaser Signature: Date Purchaser Signature: Date (OVER) Page 1 of 2 12 Page 2 of 2 Owner Initials and Date Owner Initials and Date Purchaser Initials and Date Purchaser Initials and Date Property Address/Description: [Note: In this form, “property” refers only to dwelling unit(s) and not sheds, detached garages or other buildings.] Regarding the property identified above, do you know of any problem (malfunction or defect) with any of the following: No Yes* No Representation 1. FOUNDATION, SLAB, FIREPLACES/CHIMNEYS, FLOORS, WINDOWS (INCLUDING STORM WIN-DOWS AND SCREENS), DOORS, CEILINGS, INTERIOR AND EXTERIOR WALLS, ATTACHED GA-RAGE, PATIO, DECK OR OTHER STRUCTURAL COMPONENTS including any modifications to them? a. Siding is □ Masonry □ Wood □ Composition/Hardboard □ Vinyl □ Synthetic Stucco □ Other ________ b. Approximate age of structure? _______________ □ □ □□□ 2. ROOF (leakage or other problem)? a. Approximate age of roof covering? ____________ □ □ □□ 3. WATER SEEPAGE, LEAKAGE, DAMPNESS OR STANDING WATER in the basement, crawl space or slab? □ □ □ 4. ELECTRICAL SYSTEM (outlets, wiring, panel, switches, fixtures etc.)? □ □ □ 5. PLUMBING SYSTEM (pipes, fixtures, water heater, etc.)? □ □ □ 6. HEATING AND/OR AIR CONDITIONING? a. Heat Source is: □ Furnace □ Heat Pump □ Baseboard □ Other__________ b. Cooling Source is: □ Central Forced Air □ Wall/Window Unit(s) □ Other__________ c. Fuel Source is: □ Electricity □ Natural Gas □ Propane □ Oil □ Other ________ □ □ □□□□ 7. WATER SUPPLY (including water quality, quantity and water pressure)? a. Water supply is: □ City/County □ Community System □ Private Well □ Other _______________ b. Water pipes are: □ Copper □ Galvanized □ Plastic □ Other ________ □ Unknown □ □ □□□ 8. SEWER AND/OR SEPTIC SYSTEM? a. Sewage disposal system is: □ Septic Tank □ Septic Tank with Pump □ Community System □ Connected to City/County System □ City/County System available □ Straight pipe (wastewater does not go into a septic or oth-er sewer system [note: use of this type of system violates state law]) □ Other ___________ □ □ □ □ 9. BUILT-IN APPLIANCES (RANGE/OVEN, ATTACHED MICROWAVE, HOOD/FAN, DISHWASHER, DISPOSAL, etc.)? □ □ □ 10. PRESENT INFESTATION, OR DAMAGE FROM PAST INFESTATION OF WOOD DESTROYING IN-SECTS OR ORGANISMS which has not been repaired? □ □ □ 11. DRAINAGE, GRADING OR SOIL STABILITY OF LOT? □ □ □ 12. OTHER SYSTEMS AND FIXTURES: CENTRAL VACUUM, POOL, HOT TUB, SPA, ATTIC FAN, EX-HAUST FAN, CEILING FAN, SUMP PUMP, IRRIGATION SYSTEM, TV CABLE WIRING OR SATELLITE DISH, OR OTHER SYSTEMS? □ □ □ Also regarding the property identified above, including the lot, other improvements, and fixtures located thereon, do you know of any: 13. ROOM ADDITIONS OR OTHER STRUCTURAL CHANGES ? □ □ □ 14. ENVIRONMENTAL HAZARDS (substances, materials or products) including asbestos, formaldehyde, radon gas, methane gas, lead-based paint, underground storage tank, or other hazardous or toxic material (whether buried or cov-ered), contaminated soil or water, or other environmental contamination? □ □ □ 15. COMMERCIAL, INDUSTRIAL, OR MILITARY NOISE, ODOR, SMOKE, ETC. AFFECTING THE PROPERTY? □ □ □ 16. VIOLATIONS OF ZONING ORDINANCES, RESTRICTIVE COVENANTS OR OTHER LAND-USE RESTRICTIONS OR BUILDING CODES INCLUDING THE FAILURE TO OBTAIN PROPER PERMITS FOR ROOM ADDITIONS OR OTHER STRUCTURAL CHANGES? □ □ □ 17. UTILITY OR OTHER EASEMENTS, SHARED DRIVEWAYS, PARTY WALLS OR ENCROACHMENTS FROM OR ON ADJACENT PROPERTY? □ □ □ 18. LAWSUITS, FORECLOSURES, BANKRUPTCY, TENANCIES, JUDGMENTS, TAX LIENS, PROPOSED AS-SESSMENTS, MECHANICS’ LIENS, MATERIALMENS’ LIENS, OR NOTICE FROM ANY GOVERNMEN-TAL AGENCY that could affect title to the property? □ □ □ 19. OWNERS’ ASSOCIATION OR “COMMON AREA” EXPENSES OR ASSESSMENTS? □ □ □ 20. FLOOD HAZARD or that the property is in a FEDERALLY-DESIGNATED FLOOD PLAIN? □ □ □ 21. PRIVATE ROAD(S) OR STREETS adjoining the property? a. If yes, do you know of an existing owners association or maintenance agreement to maintain the road or street? □□ □□ □□ * If you answered “Yes” to any of the above 21 questions, please explain (Attach additional sheets, if necessary): In lieu of providing a written explanation, you may attach a written report to this Disclosure Statement by a public agency, engineer, land surveyor, geologist, pest control operator, contractor, home inspector or other expert, dealing with matters within the scope of that public agency’s functions or the expert’s license or expertise. North Carolina Real Estate License Law and Commission Rules 13 not be modified, rewritten, or changed by the broker or their clerical employees unless directed to do so by the parties. (c) Nothing contained in this rule shall be construed to prohibit a broker from making written notes, memoranda or correspondence recording the negotiations of the parties to a real estate transaction when such notes, memoranda or corre-spondence do not themselves constitute binding agreements or other legal instruments. A.0112 Offers and Sales Contracts (a) A broker acting as an agent in a real estate transaction shall not use a preprinted offer or sales contract form unless the form describes or expressly requires the entry of the fol-lowing 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 in-cluded 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 the 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 rea-sonable effort to quality for the assumption of the loan; (7) the amount of earnest money, if any, the meth-od of payment, the name of the broker or firm that will serve as escrow agent, an acknowledgment of ear-nest money receipt by the escrow agent, and the cri-teria for determining disposition of the earnest mon-ey, including disputed earnest money, consistent with Rule .0107 of this Subchapter; (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, and who shall pay loan closing costs, and a condition that the buyer shall make every reason-able effort to obtain the loan; (9) a general statement of the buyer’s intended use of the property and a condition that such use must not be prohibited by private restriction or governmental regulation; (10) the amount and purpose of any special assess-ment to which the property is subject and the respon-sibility of the parties for any unpaid charges; (11) the date for closing and transfer of possession; (12) the signatures of the buyer and seller; (13) the date of offer and acceptance; (14) a provision that title to the property must be de-livered at closing by general warranty deed and must be fee simple marketable title, free of all encumbranc-es except ad valorem taxes for the current year, utility easements, and any other encumbrances approved by the buyer or a provision otherwise describing the es-tate to be conveyed with 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 improvements, if any; (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 descdrip-tion of the required property condition at closing: and (19) a provision setting forth the identity of each real estate agent and firm involved in the transaction and disclosing the party each agent and firm represents. (b) A broker acting as an agent in a real estate transac-tion shall not use a preprinted offer or sales contract form containing: (1) any provision concerning the payment of a com-mission or compensation, including the forfeiture of earnest money, to any broker or firm; or (2) any provision that attempts to disclaim the liabil-ity of a broker for his or her representations in connec-tion with the transaction. A broker or anyone acting for or at the direction of the bro-ker shall not insert or cause such provisions or terms to be inserted into any such preprinted form, even at the direction of the parties or their attorneys. (c) The provisions of this rule shall apply only to pre-printed offer and sales contract forms which a broker act-ing as an agent in a real estate transaction proposes for use by the buyer and seller. Nothing contained in this Rule shall be construed to prohibit the buyer and seller in a real estate transaction from altering, amending or deleting any provi-sion in a form offer to purchase or contract nor shall this Rule be construed to limit the rights of the buyer and sell-er to draft their own offers or contracts or to have the same drafted by an attorney at law. A.0113 Reporting Criminal Convictions and Disciplinary Actions Any broker who is convicted of any felony or misdemean-or or who is disciplined by any governmental agency in con-nection with any other occupational license, or whose notar-ial commission is restricted, suspended, or revoked, shall file with the Commission a written report of such conviction or action within 60 days of the final judgment, order, or dispo-sition in the case. A form for this report is available from the Commission. 14 North Carolina Real Estate License Law and Commission Rules A.0114 Residential Property Disclosure Statement (a) Every owner of real property subject to a transfer of the type contemplated by Chapter 47E of the General Statutes, shall complete the ... residential property disclosure statement and furnish a copy of the complete statement to a purchas-er in accordance with the requirements of G.S. 47E-4. The form shall bear the seal of the North Carolina Real Estate Commission and shall read as [approved and published by the Commission]. (b) The form described in Paragraph (a) of this Rule may be reproduced, but the form shall not be altered or amend-ed in any way. A.0115 Disclosure of Offers Prohibited A broker shall not disclose the price or other materi-al terms contained in a party’s offer to purchase, sell, lease, rent, or to option real property to a competing party with-out the express authority of the offering party. SECTION A.0200 GENERAL PROVISIONS (Repealed) SECTION A.0300 APPLICATION FOR LICENSE A.0301 Form An individual or business entity who wishes to file an ap-plication for a broker license shall make application on a form prescribed by the Commission and can obtain the required form upon request to the Commission. In general, the ap-plication form for an individual calls for information such as the applicant’s name and address, the applicant’s social securi-ty number, satisfactory proof of the applicant’s identity, plac-es of residence, education, prior real estate licenses, and such other information necessary to identify the applicant and de-termine the applicant’s qualifications and fitness for licensure. The application form for a business entity is described in Rule .0502 of this Section. A.0302 Filing and Fees (a) Applications for a real estate license shall be com-plete and, except as provided by Rule .0403 of this Subchap-ter, shall be submitted to the Commission’s office accompa-nied by the application fee. Examination scheduling of ap-plicants who are required to pass the real estate licensing ex-amination shall be accomplished in accordance with Rule .0401 of this Subchapter. (b) Except for persons applying for licensure under the provisions of Section .1800 of this Subchapter, the license application fee shall be $30.00. In addition to the license ap-plication fee, applicants for licensure who are required to take the license examination must pay the examination fee charged by the Commission’s authorized testing service in the form and manner acceptable to the testing service. Persons applying for licensure under Section .1800 of this Subchap-ter shall pay the application fee set forth in Rule .1803 of this Subchapter. (c) An applicant shall update information provided in connection with an application or submit a newly completed application form without request by the Commission to as-sure that the information provided in the application is cur-rent and accurate. Failure to submit updated information prior to the issuance of a license may result in disciplinary ac-tion against a licensee in accordance with G.S. §93A-6(b)(1). In the event that the Commission requests an applicant to submit updated information or to provide additional infor-mation necessary to complete the application and the appli-cant fails to submit such information within 90 days follow-ing the Commission’s request, the Commission shall cancel the applicant’s application. The license application of an in-dividual found by the Commission to be qualified for the licensing examination shall be immediately canceled if the applicant fails to pass a scheduled licensing examination, fails to appear for and take any examination for which the applicant has been scheduled without having the applicant’s examination postponed or absence excused in accordance with Rule .0401(b) and (c) of this Section, or fails to take and pass the examination within 180 days of filing a com-plete application as described in Rule .0301 of this Section and having the application entered into the Commission’s examination applicant file. Except as permitted otherwise in Rule .0403 of this Subchapter, an applicant whose license application has been canceled and who wishes to obtain a real estate license must start the licensing process over by filing a complete application to the Commission and paying all re-quired fees. A.0303 Payment of Application Fees Payment of application fees shall be made to the Com-mission by bank check, certified check, money order, debit card, or credit card. Once an application has been filed and processed, the application fee may not be refunded. A.0304 Equivalent Experience Qualifications for Applicants Experience obtained by a broker applicant in violation of law or rule may not be recognized by the Commission as fulfilling the requirements for licensure when the appli-cant is requesting the Commission to waive the prescribed education requirement based wholly or in part on equiva-lent experience obtained by the applicant. SECTION A.0400 EXAMINATIONS A.0401 Scheduling Examinations (a) An applicant who is required and qualified to take the licensing examination shall be provided a notice of ex-amination eligibility that shall be valid for a period of 180 North Carolina Real Estate License Law and Commission Rules 15 days and for a single administration of the licensing exami-nation. Upon receipt of the notice of examination eligibil-ity, the applicant shall contact the Commission’s authorized testing service to pay for and schedule the examinations in accordance with procedures established by the testing ser-vice. The testing service will schedule applicants for exami-nation by computer at their choice of one of the testing lo-cations and will notify applicants of the time and place of their examinations. (b) An applicant may postpone a scheduled examina-tion provided the applicant makes the request for postpone-ment directly to the Commission’s authorized testing service in accordance with procedures established by the testing ser-vice. An applicant’s examination shall not be postponed be-yond the 180 day period allowed for taking the examination without first refiling another complete application with the Commission. A request to postpone a scheduled licensing examina-tion without complying with the procedures for re-applying for examination described in Rule .0403 of this Subchap-ter shall be granted only once unless the applicant satisfies the requirements for obtaining an excused absence stated in Paragraph (c) of this Rule. (c) An applicant may be granted an excused absence from a scheduled examination if the applicant provides evi-dence that the absence was the direct result of an emergen-cy situation or condition which was beyond the applicant’s control and which could not have been reasonably foreseen by the applicant. A request for an excused absence must be promptly made in writing and must be supported by docu-mentation verifying the reason for the absence. The request must be submitted directly to the testing ser-vice in accordance with procedures established by the test-ing service. A request for an excused absence from an exam-ination shall be denied if the applicant cannot be resched-uled and examined prior to expiration of the 180 day period allowed for taking the examination without first refiling an-other complete application with the Commission. A.0402 Subject Matter and Passing Scores (a) The real estate licensing examination shall test appli-cants on the following general subject areas: (1) real estate law; (2) real estate brokerage law and practices; (3) the Real Estate License Law, rules of the Com-mission, and the Commission’s trust account guide-lines; (4) real estate finance; (5) real estate valuation (appraisal); (6) real estate mathematics; and (7) related subject areas. (b) In order to pass the real estate licensing examination, an applicant must attain a score at least equal to the passing score established by the Commission in compliance with psy-chometric standards for establishing passing scores for occu-pational licensing examinations as set forth in the “Standards for Educational and Psychological Testing” jointly promul-gated by the American Educational Research Association, the American Psychological Association, and the National Coun-cil on Measurement in Education. Passing applicants will re-ceive only a score of “pass”; however, failing applicants will be informed of their actual score. A passing examination score obtained by a license applicant shall be recognized as valid for a period of one year from the date of examination, during which time the applicant must fully satisfy any remaining re-quirements for licensure that were pending at the time of ex-amination; provided that the running of the one-year peri-od shall be tolled upon mailing the applicant the letter con-templated in 21 NCAC 58A .0616(b) informing the appli-cant that his or her moral character is in question, and shall resume running when the applicant’s application is either ap-proved for license issuance, denied or withdrawn. The appli-cation of an applicant with a passing examination score who fails to satisfy all remaining requirements for licensure within one year shall be canceled and the applicant shall be required to reapply and satisfy all requirements for licensure, including retaking and passing the license examination, in order to be eligible for licensure. A.0403 Re-applying for Examination (a) An individual whose license application has been canceled and whose 180 day examination eligibility period has expired who wishes to be rescheduled for the real es-tate license examination must re-apply to the Commission by filing a complete license application as described in Rule .0301 of this Subchapter and paying the prescribed applica-tion fee. Subsequent examinations shall be scheduled in ac-cordance with Rule .0401 of this Section. (b) An individual whose license application has been canceled who wishes to be rescheduled for the license exam-ination before the expiration of his or her 180 day examina-tion eligibility period may utilize an abbreviated electronic license application and examination rescheduling procedure by directly contacting the Commission’s authorized testing service, paying both the license application fee and the ex-amination fee to the testing service, and following the test-ing service’s established procedures. (c) An applicant who fails the license examination shall not be allowed to retake the examination for at least 10 cal-endar days. A.0404 Cheating and Related Misconduct Applicants shall not cheat or attempt to cheat on an ex-amination by any means, including both giving and receiving assistance, and shall not communicate in any manner for any purpose with any person other than an examination supervi-sor during an examination. Applicants shall not disrupt the quiet and orderly administration of an examination in any manner. Violation of this Rule shall be grounds for dismissal from an examination, invalidation of examination scores, and 16 North Carolina Real Estate License Law and Commission Rules denial of a real estate license, as well as for disciplinary action if the applicant has been issued a license. A.0405 Confidentiality of Examinations Licensing examinations are the exclusive property of the Commission and are confidential. No applicant or licensee shall obtain, attempt to obtain, receive or communicate to oth-er persons examination questions or answers. Violation of this Rule is grounds for denial of a real estate license if the violator is an applicant and disciplinary action if the violator is a licensee or becomes a licensee prior to the discovery of the violation by the Commission. A.0406 Examination Review An applicant who fails the license examination may re-view the examination at the testing center immediately fol-lowing completion of the examination and receipt of the applicant’s examination results but prior to leaving the test-ing center. An applicant who fails the examination and who declines the opportunity to immediately review the exami-nation prior to leaving the testing center will be deemed to have waived the right to review the examination. An appli-cant who is reviewing his or her failed examination may not have any other person present during his or her review, nor may any other person review an examination on behalf of an applicant. An applicant who passes the license examination may not review the examination. SECTION A.0500 LICENSING A.0501 Character (Repealed) A.0502 Business Entities (a) Every business entity other than a sole proprietor-ship shall apply for and obtain from the Commission a firm license prior to engaging in business as a real estate broker. An entity that changes its business form other than by con-version shall submit a new license application immediate-ly upon making the change and obtain a new firm license. An entity which converts to a different business entity in conformity with and pursuant to applicable North Carolina General Statutes is not required to apply for a new license. However, such converted entity shall provide the informa-tion required by this paragraph in writing to the Commis-sion within ten (10) days of said conversion and shall in-clude the applicable fee to have the firm license reissued in the legal name of the converted entity. Incomplete applica-tions shall not be acted upon by the Commission. Appli-cation forms for partnerships, corporations, limited liabil-ity companies, associations and other business entities re-quired to be licensed as brokers shall be available upon re-quest to the Commission and shall require the applicant to set forth: (1) the name of the entity; (2) the name under which the entity will do busi-ness; (3) the type of business entity; (4) the address of its principal office; (5) the entity’s North Carolina Secretary of State Identification Number if required to be reg-istered with the Office of the North Carolina Secre-tary of State; (6) the name, real estate license number and sig-nature of the proposed qualifying broker for the pro-posed firm; (7) the address of and name of the proposed broker-in-charge for each office as defined in Rule .0110(b) of this subchapter, along with a completed broker-in-charge declaration form for each proposed broker-in-charge; (8) any past criminal conviction of and any pending criminal charge against any principal in the company or any proposed broker-in-charge; (9) any past revocation, suspension or denial of a business or professional license of any principal in the company or any proposed broker-in-charge; (10) if a general partnership, a full description of the applicant entity, including a copy of its written partnership agreement or if no written agreement ex-ists, a written description of the rights and duties of the several partners; (11) if a business entity other than a corporation, lim-ited liability company or partnership, a full description of the organization of the applicant entity, including a copy of its organizational documents evidencing its authority to engage in real estate brokerage; (12) if a foreign business entity, a certificate of authority to transact business in North Carolina and an executed consent to service of process and plead-ings; and (13) any other information required by this rule. When the authority of a business entity to engage in the real estate business is unclear in the application or in law, the Commission shall require the applicant to declare in the license application that the applicant’s organizational docu-ments authorize the firm to engage in the real estate business and to submit organizational documents, addresses of affil-iated persons and similar information. For purposes of this Rule, the term principal, when it refers to a person or enti-ty, means any person or entity owning ten percent or more of the business entity, or who is an officer, director, manag-er, member, partner or who holds any other comparable po-sition. (b) After filing a written application with the Commis-sion and upon a showing that at least one principal of the business entity holds a broker license on active status and in good standing and will serve as qualifying broker of the entity, the entity shall be licensed provided it appears that the applicant entity employs and is directed by personnel North Carolina Real Estate License Law and Commission Rules 17 possessed of the requisite truthfulness, honesty, and integri-ty. The qualifying broker of a partnership of any kind must be a general partner of the partnership; the qualifying bro-ker of a limited liability company must be a manager of the company; and the qualifying broker of a corporation must be an officer of the corporation. A licensed business entity may serve as the qualifying broker of another licensed busi-ness entity if the qualifying broker-entity has as its quali-fying broker a natural person who is licensed as a broker. The natural person who is qualifying broker shall assure the performance of the qualifying broker’s duties with regard to both entities. A provisional broker may not serve as a quali-fying broker. (c) The licensing of a business entity shall not be construed to extend to the licensing of its partners, managers, members, directors, officers, employees or other persons acting for the en-tity in their individual capacities regardless of whether they are engaged in furthering the business of the licensed entity. (d) The qualifying broker of a business entity shall as-sume responsibility for: (1) designating and assuring that there is at all times a broker-in-charge for each office and branch office of the entity as office and branch office are defined in Rule .0110(b) of this Subchapter; (2) renewing the real estate broker license of the entity; (3) retaining the firm’s renewal pocket card at the firm and producing it as proof of firm licensure upon request and maintaining a photocopy of the firm license certifi-cate and pocket card at each branch office thereof; (4) notifying the Commission of any change of busi-ness address or trade name of the entity and the reg-istration of any assumed business name adopted by the entity for its use; (5) notifying the Commission in writing of any change of his or her status as qualifying broker with-in ten days following the change; (6) securing and preserving the transaction and trust account records of the firm whenever there is a change of broker-in-charge at the firm or any office thereof and notifying the Commission if the trust ac-count records are out of balance or have not been rec-onciled as required by rule .0107 of this Subchapter; (7) retaining and preserving the transaction and trust account records of the firm upon termination of his or her status as qualifying broker until a new quali-fying broker has been designated with the Commis-sion or, if no new qualifying broker is designated, for the period of time for which said records are required to be retained by Rule .0108 of this Subchapter; and (8) notifying the Commission if, upon the termina-tion of his or her status as qualifying broker, the firm’s transaction and trust account records cannot be re-tained or preserved or if the trust account records are out of balance or have not been reconciled as re-quired by Rule .0107(e) of this Subchapter. (e) Every licensed business entity and every entity ap-plying for licensure shall conform to all the requirements imposed upon it by the North Carolina General Statutes for its continued existence and authority to do business in North Carolina. Failure to conform to such requirements is grounds for disciplinary action or denial of the entity’s ap-plication for licensure. Upon receipt of notice from an enti-ty or agency of this state that a licensed entity has ceased to exist or that its authority to engage in business in this state has been terminated by operation of law, the Commission shall cancel the license of the entity. A.0503 License Renewal; Penalty for Operating While License Expired (a) All real estate licenses issued by the Commission un-der G.S. 93A, Article 1 shall expire on the 30th day of June following issuance. Any licensee desiring renewal of a license shall apply for renewal within 45 days prior to license expira-tion by submitting a renewal application on a form provided by the Commission and submitting with the application the required renewal fee of forty dollars ($40.00). (b) Any person desiring to renew his or her license on ac-tive status shall, upon the second renewal of such license fol-lowing initial licensure, and upon each subsequent renewal, have obtained all continuing education required by G.S. 93A- 4A and Rule .1702 of the Subchapter. (c) A person renewing a license on inactive status shall not be required to have obtained any continuing education in or-der to renew such license; however, in order to subsequently change his or her license from inactive status to active status, the licensee must satisfy the continuing education requirement prescribed in Rule .1703 or Rule .1711 of the Subchapter. (d) Any person or firm which engages in the business of a real estate broker while his, her, or its license is expired is sub-ject to the penalties prescribed in G.S. 93A-6. A.0504 Active and Inactive License Status (a) Except for licenses that have expired or that have been canceled, revoked, suspended or surrendered, all licenses is-sued by the Commission shall be designated as being either on active status or inactive status. The holder of a license on active status may engage in any activity requiring a real es-tate license and may be compensated for the provision of any lawful real estate brokerage service. The holder of a license on inactive status may not engage in any activity requiring a real estate license, including the referral for compensation of a prospective seller, buyer, landlord or tenant to another real estate licensee or any other party. A licensee holding a license on inactive status must renew the license and pay the pre-scribed license renewal fee in order to continue to hold the li-cense. The Commission may take disciplinary action against a licensee holding a license on inactive status for any viola-tion of G.S. 93A or any rule adopted by the Commission, in-cluding the offense of engaging in an activity for which a li-cense is required while a license is on inactive status. 18 North Carolina Real Estate License Law and Commission Rules (b) A license issued to a provisional broker shall, upon initial licensure, be assigned to inactive status, except that a license issued to a provisional broker based on reciprocity with another licensing jurisdiction shall be assigned to ac-tive status. A license issued to a firm or a broker other than a provisional broker shall be assigned to active status. Except for persons licensed under the provisions of Section .1800 of this Subchapter, a broker may change the status of his or her license from active to inactive status by submitting a written request to the Commission. A provisional broker’s license shall be assigned by the Commission to inactive sta-tus when the provisional broker is not under the active, di-rect supervision of a broker-in-charge. A firm’s license shall be assigned by the Commission to inactive status when the firm does not have a qualifying broker with an active license in good standing. Except for persons licensed under the pro-visions of Section .1800 of this Subchapter, a broker shall also be assigned to inactive status if, upon the second renew-al of his or her license following initial licensure, or upon any subsequent renewal, he or she has not satisfied the con-tinuing education requirement described in Rule .1702 of this Subchapter. (c) A provisional broker with an inactive license who de-sires to have the license placed on active status must com-ply with the procedures prescribed in Rule .0506 of this Sec-tion. (d) A broker, other than a provisional broker, with an in-active license who desires to have the license placed on active status shall file with the Commission a request for license ac-tivation on a form provided by the Commission containing identifying information about the broker, a statement that the broker has satisfied the continuing education require-ments provided by Rule .1703 of this Subchapter, the date of the request, and the signature of the broker. Upon the mailing or delivery of this form, the broker may engage in real estate brokerage activities requiring a license; however, if the broker does not receive from the Commission a writ-ten acknowledgment of the license activation within 30 days of the date shown on the form, the broker shall immediate-ly terminate his or her real estate brokerage activities pend-ing receipt of the written acknowledgment from the Com-mission. If the broker is notified that he or she is not eligible for license activation due to a continuing education deficien-cy, the broker must terminate all real estate brokerage activi-ties until such time as the continuing education deficiency is satisfied and a new request for license activation is submitted to the Commission. (e) A firm with an inactive license which desires to have its license placed on active status shall file with the Commis-sion a request for license activation containing identifying in-formation about the firm and its qualifying broker and satisfy the requirements of Rule .0110 of this Subchapter. If the qual-ifying broker has an inactive license, he or she must satisfy the requirements of Paragraph (d) of this Rule. Upon the mail-ing or delivery of the completed form by the qualifying broker, the firm may engage in real estate brokerage activities requir-ing a license; however, if the firm’s qualifying broker does not receive from the Commission a written acknowledgment of the license activation within 30 days of the date shown on the form, the firm shall immediately terminate its real estate bro-kerage activities pending receipt of the written acknowledg-ment from the Commission. If the qualifying broker is noti-fied that the firm is not eligible for license activation due to a continuing education deficiency on the part of the qualifying broker, the firm must terminate all real estate brokerage activi-ties until` such time as the continuing education deficiency is satisfied and a new request for license activation is submitted to the Commission. (f ) A person licensed as a broker under Section .1800 of this Subchapter shall maintain his or her license on ac-tive status at all times as required by Rule .1804 of this Sub-chapter. A.0505 Reinstatement of Expired License, Revoked, Surrendered or Suspended License (a) Licenses expired for not more than six (6) months may be reinstated upon the submission of payment of a fif-ty- five dollar ($55.00) reinstatement fee. In order to rein-state the license on active status, the person requesting rein-statement shall have obtained the continuing education as is required by Rule .1703 of this Subchapter to change an in-active license to active status. A person reinstating a license on inactive status is not required to have obtained any con-tinuing education in order to reinstate the license; however, in order to subsequently change his or her reinstated license from inactive status to active status, the licensee must satis-fy the continuing education requirement prescribed in Rule .1703 of this Subchapter, and be supervised by a broker-in-charge in compliance with the requirements of Rule .0506 of this Section. (b) Reinstatement of licenses expired for more than six months or provisional broker licenses cancelled pursuant to G.S. 93A-4(a) shall be considered upon the submission of a complete and accurate application and payment of a fifty-five dollar ($55.00) fee. Applicants must satisfy the Com-mission that they possess the current knowledge, skills and competence, as well as the truthfulness, honesty and integri-ty, necessary to function in the real estate business in a man-ner that protects and serves the public interest. To demon-strate knowledge, skills and competence, the Commission may require the applicants to complete real estate education or pass the license examination or both. (c) Reinstatement of a revoked license shall be consid-ered upon the submission of a complete and accurate appli-cation and payment of a thirty dollar ($30.00) fee. Appli-cants must satisfy the same requirements as those prescribed in Paragraph (b) of this Rule for reinstatement of licenses expired for more than six (6) months. (d) Reinstatement of a license surrendered under the provisions of G.S. 93A-6(e) shall be considered upon termi- North Carolina Real Estate License Law and Commission Rules 19 nation of the period of surrender specified in the order ap-proving the surrender and upon the submission of a com-plete and accurate application and payment of a thirty dollar ($30.00) fee. Applicants must satisfy the same requirements as those prescribed in Paragraph (b) of this Rule for rein-statement of licenses expired for more than six (6) months. (e) When a license is suspended by the Commission, the suspended license shall be restored at the end of the period of active suspension provided that any applicable license re-newal fees that accrued during the time of the suspension are paid by the licensee within sixty days from the end of the pe-riod of license suspension. In order for the license to be re-stored on active status, the licensee shall be required to dem-onstrate that the licensee has satisfied the continuing educa-tion requirement for license activation prescribed by Rule .1703 of this Subchapter and that the licensee is supervised by a broker-in-charge in compliance with the requirements of Rule .0506 of this Section, if applicable. Failure to pay the accrued license renewal fees within the time set forth in this paragraph shall result in expiration of the license effective the last day of the suspension period. A former licensee whose license expires under this paragraph and who thereafter seeks reinstatement must satisfy the same requirements as those prescribed in Paragraph (b) of this Rule for reinstatement of licenses expired for more than six months. (f ) Whenever a license is reinstated by the Commis-sion following expiration for more than six months, cancel-lation, revocation, or voluntary surrender, the date of licen-sure for the licensee shall be the date of reinstatement and not the date of original licensure. A.0506 Provisional Broker to be Supervised by Broker (a) This Rule shall apply to all real estate provisional bro-kers. (b) A provisional broker may engage in or hold himself or herself out as engaging in activities requiring a real estate license only while his or her license is on active status and he or she is supervised by the broker-in-charge of the real es-tate firm or office where the provisional broker is associated. A provisional broker may be supervised by only one broker-in- charge at a time. (c) Upon a provisional broker’s association with a real estate broker or brokerage firm, the provisional broker and the broker-in-charge of the office where the provisional bro-ker will be engaged in the real estate business shall immedi-ately file with the Commission a provisional broker super-vision notification on a form provided by the Commission containing identifying information about the provision-al broker and the broker-in-charge, a statement from the broker-in-charge certifying that he or she will supervise the provisional broker in the performance of all acts for which a license is required, the date that the broker-in-charge as-sumes responsibility for such supervision, and the signatures of the provisional broker and broker-in-charge. If the pro-visional broker is on inactive status at the time of associating with a broker or brokerage firm, the provisional broker and broker-in-charge shall also file, along with the provisional broker supervision notification, the provisional broker’s re-quest for license activation on a form provided by the Com-mission containing identifying information about the pro-visional broker, the provisional broker’s statement that he or she has satisfied the continuing education requirements prescribed by Rule .1703 of this Subchapter, the provision-al broker’s statement that he or she has satisfied the postli-censing education requirements, if applicable, prescribed by Rule .1902 of this Subchapter, the date of the request, and the signatures of the provisional broker and the provision-al broker’s proposed broker-in-charge. Upon the mailing or delivery of the required form(s), the provisional broker may engage in real estate brokerage activities requiring a li-cense under the supervision of the broker-in-charge; how-ever, if the provisional broker and broker-in-charge do not receive from the Commission a written acknowledgment of the provisional broker supervision notification and, if ap-propriate, the request for license activation, within 30 days of the date shown on the form, the broker-in-charge shall immediately terminate the provisional broker’s real estate brokerage activities pending receipt of the written acknowl-edgment from the Commission. If the provisional broker and broker-in-charge are notified that the provisional broker is not eligible for license activation due to a continuing ed-ucation deficiency, the broker-in-charge shall cause the pro-visional broker to immediately cease all activities requiring a real estate license until such time as the continuing educa-tion deficiency is satisfied and a new provisional broker su-pervision notification and request for license activation is submitted to the Commission. (d) A broker-in-charge who certifies to the Commis-sion that he or she will supervise a provisional broker shall actively and directly supervise the provisional broker in a manner which reasonably assures that the provisional broker performs all acts for which a real estate license is required in accordance with the Real Estate License Law and Commis-sion rules. A supervising broker who fails to supervise a pro-visional broker as prescribed in this Rule may be subject to disciplinary action by the Commission. (e) Upon the termination of the supervisory relation-ship between a provisional broker and his or her broker-in- charge, the provisional broker and the broker-in-charge shall provide written notification of the date of termination to the Commission not later than 10 days following said ter-mination. A.0507 Payment of License Fees Checks, credit cards, and other forms of payment giv-en the Commission for fees due which are returned un-paid shall be considered cause for license denial, suspension, or revocation. 20 North Carolina Real Estate License Law and Commission Rules A.0508 Duplicate License Fee (Repealed) A.0509 Duplicate License Fee A licensee may, by filing a prescribed form and paying a five dollar ($5.00) fee to the Commission, obtain a duplicate real estate license or pocket card to replace an original license or pocket card which has been lost, damaged or destroyed or if the name of the licensee has been lawfully changed. SECTION A.0600 REAL ESTATE COMMISSION HEARINGS A.0601 Complaints/Inquiries/Motions/Other Pleadings (a) There shall be no specific form required for complaints. To be sufficient, a complaint shall be in writing, identify the respondent licensee and shall reasonably apprise the Commis-sion of the facts which form the basis of the complaint. (b) When investigating a complaint, the scope of the Com-mission’s investigation shall not be limited only to matters al-leged in the complaint. In addition, a person making a com-plaint to the Commission may change his or her complaint by submitting the changes to the Commission in writing. (c) When a complaint has not been submitted in con-formity with this rule, the Commission’s legal counsel may initiate an investigation if the available information is suf-ficient to create a reasonable suspicion that any licensee or other person or entity may have committed a violation of the provisions of the Real Estate License Law or the rules ad-opted by the Commission. (d) There shall be no specific forms required for answers, motions, or other pleadings relating to contested cases be-fore the Commission, except they shall be in writing. To be sufficient, the document must reasonably apprise the Com-mission of the matters it alleges or answers. To be consid-ered by the Commission, every answer, motion, request or other pleading must be submitted to the Commission in writing or made during the hearing as a matter of record. (e) During the course of an investigation of a licensee, the Commission, through its legal counsel or other staff, may send the licensee a Letter of Inquiry requesting the li-censee to respond. The Letter of Inquiry, or attachments thereto, shall set forth the subject matter being investigated. Upon receipt of the Letter of Inquiry, the licensee shall re-spond within 14 calendar days. Such response shall include a full and fair disclosure of all information requested. Li-censees shall include with their written response copies of all documents requested in the Letter of Inquiry. (f ) Hearings in contested cases before the Commission shall be conducted according to the provisions of Article 3A of Chapter 150B of the General Statutes of North Carolina. (g) Persons who make complaints are not parties to con-tested cases, but may be witnesses. A.0616 Procedures For Requesting Hearings When Applicant’s Character Is In Question (a) When the moral character of an applicant for licen-sure or approval is in question, the applicant shall not be licensed or approved until the applicant has affirmative-ly demonstrated that the applicant possesses the requisite truthfulness, honesty and integrity. For the purposes of this rule, applicant means any person or entity making applica-tion for licensure as a real estate broker or for licensure or approval as a prelicensing or continuing education instructor, director, coordinator, school, or sponsor. When the applicant is an entity, it shall be directed and controlled by persons who are truthful and honest and who possess integrity. (b) When the character of an applicant is in ques-tion, the Commission shall defer action upon the applica-tion until the applicant is notified by letter. The letter in-forming the applicant that his or her moral character is in question shall be sent by certified mail, return receipt re-quested, to the address shown upon the application. The applicant shall have 60 days from the date of receipt of this letter to request a hearing before the Commission. If the applicant fails to request a hearing within this time or if a properly addressed letter is returned to the Commission un-delivered, applicant’s right to a hearing shall be considered waived and the application shall be deemed denied. If the applicant makes a timely request for a hearing in accordance with the provisions of this rule, the Commission shall pro-vide the applicant with a Notice of Hearing and hearing as required by Article 3A of Chapter 150B of the North Caro-lina General Statutes. (c) Nothing in this Rule shall be interpreted to prevent an unsuccessful applicant from reapplying for licensure or approval if such application is otherwise permitted by law. SECTION A.0700 PETITIONS FOR RULES SECTION A.0800 RULE MAKING SECTION A.0900 DECLARATORY RULINGS SECTION A.1000 SCHOOLS (Transferred to C.0100) SECTION A.1100 REAL ESTATE PRE‑LICENSING COURSES (Transferred/Repealed.Transfers are at C.0300 Prelicensing and Pre-certification Courses) North Carolina Real Estate License Law and Commission Rules 21 SECTION A.1200 CERTIFICATION OF REAL ESTATE INSTRUCTORS (Repealed) SECTION A.1300 PRIVATE REAL ESTATE SCHOOLS (Transferred/Repealed. Transfers are at C.0200) SECTION A.1400 REAL ESTATE RECOVERY FUND SECTION A.1500 FORMS (Repealed) Interested persons may obtain a copy of Sections A.0600 through A.1500 by making written request to the North Carolina Real Estate Commission. SECTION A.1600 DISCRIMINATORY PRACTICES PROHIBITED A.1601 Fair Housing Conduct by a licensee which violates the provisions of the State Fair Housing Act constitutes improper conduct in violation of G.S. 93A‑6(a)(10). SECTION A.1700 MANDATORY CONTINUING EDUCATION A.1701 Purpose and Applicability This Section describes the continuing education require-ment for real estate brokers authorized by G.S. 93A-4A, es-tablishes the continuing education requirement to change a license from inactive status to active status, establishes atten-dance requirements for continuing education courses, estab-lishes the criteria and procedures relating to obtaining an ex-tension of time to complete the continuing education require-ment, establishes the criteria for obtaining continuing educa-tion credit for an unapproved course or related educational ac-tivity, and addresses other similar matters. A.1702 Continuing Education Requirement (a) Except as provided in 21 NCAC 58A.1708 and A.1711, in order to renew a broker license on active status, the person requesting renewal of a license shall, upon the second renewal of such license following initial licensure, and upon each subsequent annual renewal, have complet-ed, within one year preceding license expiration, eight class-room hours of real estate continuing education in cours-es approved by the Commission as provided in Subchap-ter 58E. Four of the required eight classroom hours must be obtained each license period by completing a mandatory update course developed annually by the Commission. The remaining four hours must be obtained by completing one or more Commission-approved elective courses described in Rule .0305 of Subchapter 58E. The licensee bears the re-sponsibility for providing, upon request of the Commission, evidence of continuing education course completion satis-factory to the Commission. (b) No continuing education shall be required to renew a broker license on inactive status; however, to change a li-cense from inactive status to active status, the licensee must satisfy the continuing education requirement described in Rule .1703 of this Section. (c) No continuing education shall be required for a li-censee who is a member of the U. S. Congress or North Car-olina General Assembly in order to renew his or her license on active status. (d) The terms “active status” and “inactive status” are de-fined in Rule .0504 of this Subchapter. For continuing ed-ucation purposes, the term “initial licensure” shall include the first time that a license of a particular type is issued to a person, the reinstatement of a canceled, revoked or sur-rendered license and any license expired for more than six months. The issuance, pursuant to G.S. 93A-4.3, of a bro-ker license on provisional status on April 1, 2006 to licens-ees who held a salesperson license as of that date shall not be considered to constitute initial licensure for continuing ed-ucation purposes. A.1703 Continuing Education for License Activation (a) A broker requesting to change an inactive license to active status on or after the licensee’s second license re-newal following his or her initial licensure shall be required to demonstrate completion of continuing education as de-scribed in Paragraph (b) or (c) of this Rule, whichever is ap-propriate. (b) If the inactive licensee’s license has properly been on active status at any time since the preceding July 1, the li-censee is considered to be current with regard to continu-ing education and no additional continuing education is re-quired to activate the license. (c) If the inactive licensee’s license has not properly been on active status since the preceding July 1 and the licensee has a deficiency in his or her continuing education record for the previous license period, the licensee must make up the deficiency and fully satisfy the continuing education require-ment for the current license period in order to activate the li-cense. Any deficiency may be made up by completing, dur-ing the current license period or previous license period, ap-proved continuing education elective courses; however, such courses will not be credited toward the continuing education requirement for the current license period. When crediting elective courses for purposes of making up a continuing edu-cation deficiency, the maximum number of credit hours that will be awarded for any course is four hours. When evaluat- 22 North Carolina Real Estate License Law and Commission Rules ing the continuing education record of a licensee with a defi-ciency for the previous license period to determine the licens-ee’s eligibility for active status, the licensee shall be deemed eligible for active status if the licensee has fully satisfied the continuing education requirement for the current license pe-riod and has taken any two additional continuing education courses since the beginning of the previous license period, even if the licensee had a continuing education deficiency prior to the beginning of the previous license period. A.1704 No Credit for Prelicensing or Postlicensing Courses No credit toward the continuing education requirement shall be awarded for completing a real estate prelicensing or postlicensing course. A.1705 Attendance and Participation Requirements In order to receive any credit for satisfactorily completing an approved continuing education course, a licensee must attend at least 90 percent of the scheduled classroom hours for the course, regardless of the length of the course, and must comply with student participation standards described in Rule .0511 of Subchapter 58E. No credit shall be award-ed for attending less than 90 percent of the scheduled class-room hours. The 10 percent absence allowance is permit-ted for any reason at any time during the course except that it may not be used to skip the last 10 percent of the course unless the absence is for circumstances beyond the licensee’s control that could not have been reasonably foreseen by the licensee and is approved by the instructor. With regard to the Commission’s 12-hour Broker-In-Charge Course that is taught over two days, a licensee must attend at least 90 per-cent of the scheduled classroom hours on each day of the course and the 10 percent absence allowance cited above shall apply to each day of the course. A.1706 Repetition of Courses A continuing education course may be taken only once for continuing education credit within a single license period. A.1707 Elective Course Carry-Over Credit A maximum of four hours of continuing education cred-it for an approved elective course taken during the current license period may be carried over to satisfy the continu-ing education elective requirement for the next following license period if the licensee receives no continuing educa-tion elective credit for the course toward the elective require-ment for the current license period or the previous license period. However, if a continuing education elective course is used to wholly or partially satisfy the elective requirement for the current or previous license period, then any excess hours completed in such course which are not needed to sat-isfy the four-hour elective requirement for that license peri-od may not be carried forward and applied toward the elec-tive requirement for the next following license period. A.1708 Equivalent Credit (a) A licensee may request that the Commission award continuing education credit for a course taken by the licens-ee that is not approved by the Commission, or for some oth-er real estate education activity, by making such request on a form prescribed by the Commission and submitting a non-refundable evaluation fee of thirty dollars ($30.00) for each request for evaluation of a course or real estate education activity. In order for requests for equivalent credit to be considered and credits to be entered into a licensee’s con-tinuing education record prior to the June 30 license ex-piration date, such requests and all supporting documents must be received by the Commission on or before June 10 preceding expiration of the licensee’s current license, with the exception that requests from instructors desiring equivalent credit for teaching Commission-approved con-tinuing education courses must be received by June 30. Any equivalent continuing education credit awarded un-der this Rule shall be applied first to make up any continu-ing education deficiency for the previous license period and then to satisfy the continuing education requirement for the current license period; however, credit for an un-approved course or educational activity, other than teach-ing an approved elective course, that was completed dur-ing a previous license period may not be applied to a sub-sequent license period. (b) The Commission may award continuing education elective credit for completion of an unapproved course which the Commission finds equivalent to the elective course component of the continuing education require-ment set forth in Section .0300 of Subchapter 58E. Com-pletion of an unapproved course may serve only to satis-fy the elective requirement and cannot be substituted for completion of the mandatory update course. (c) Real estate education activities, other than teaching a Commission-approved course, which may be eligible for credit include, but are not limited to: developing a Com-mission- approved elective continuing education course, authorship of a published real estate textbook; and author-ship of a scholarly article, on a topic acceptable for con-tinuing education purposes, which has been published in a professional journal such as a law journal or professional college or university journal or periodical. The Commis-sion may award continuing education elective credit for activities which the Commission finds equivalent to the elective course component of the continuing education re-quirement set forth in Section .0300 of Subchapter 58E. No activity other than teaching a Commission-developed mandatory update course shall be considered equivalent to completing the mandatory update course. (d) The Commission may award credit for teaching the Commission-developed mandatory update course and for teaching an approved elective course. Credit for teaching an approved elective course shall be award-ed only for teaching a course for the first time. Cred- North Carolina Real Estate License Law and Commission Rules 23 it for teaching a Commission-developed mandatory up-date course may be awarded for each licensing period in which the instructor teaches the course. The amount of credit awarded to the instructor of an approved continu-ing education course shall be the same as the amount of credit earned by a licensee who completes the course. Licensees who are instructors of continuing education courses approved by the Commission shall not be sub-ject to the thirty dollar ($30.00) evaluation fee when ap-plying for continuing education credit for teaching an approved course. No credit toward the continuing edu-cation requirement shall be awarded for teaching a real estate prelicensing or postlicensing course. (e) A licensee completing a real estate appraisal preli-censing, precertification or continuing education course approved by the North Carolina Appraisal Board may ob-tain real estate continuing education elective credit for such course by submitting to the Commission a written request for equivalent continuing education elective credit accompanied by a nonrefundable processing fee of twen-ty dollars ($20.00) and a copy of the certificate of course completion issued by the course sponsor for submission to the North Carolina Appraisal Board. A.1709 Extensions of Time to Complete Continuing Education A licensee on active status may request and be granted an extension of time to satisfy the continuing education requirement for a particular license period if the licensee provides evidence satisfactory to the Commission that he or she was unable to obtain the necessary education due to an incapacitating illness or other circumstance which exist-ed for a substantial portion of the license period and which constituted a severe and verifiable hardship such that to comply with the continuing education requirement would have been impossible or unreasonably burdensome. The Commission shall in no case grant an extension of time to satisfy the continuing education requirement for reasons of business or personal conflicts. The Commission also shall not grant such an extension of time when, in the opinion of the Commission, the principal reason for the licensee’s inability to obtain the required education in a timely man-ner was unreasonable delay on the part of the licensee in obtaining such education. If an extension of time is grant-ed, the licensee shall be permitted to renew his or her li-cense on active status but the license shall be automatically changed to inactive status at the end of the extension peri-od unless the licensee satisfies the continuing education re-quirement prior to that time. If an extension of time is not granted, the licensee may either satisfy the continuing ed-ucation requirement prior to expiration of the license peri-od or renew his or her license on inactive status. The length of any extension of time granted and the determination of the specific courses which shall be accepted by the Com-mission as equivalent to the continuing education the li-censee would have been required to have completed had the licensee not been granted the extension is wholly dis-cretionary on the part of the Commission. The licensee’s request for an extension of time must be submitted on a form prescribed by the Commission. A.1710 Denial or Withdrawal of Continuing Education Credit (a) The Commission may deny continuing education credit claimed by a licensee or reported by a course sponsor for a licens-ee, and may withdraw continuing education credit previously awarded by the Commission to a licensee upon finding that: (1) The licensee or course sponsor provided incorrect or incomplete information to the Commission concerning continuing education completed by the licensee; (2) The licensee failed to comply with either the atten-dance requirement established by Rule .1705 of this Section or the student participation standards set forth in Rule .0511 of Subchapter 58E; or (3) The licensee was mistakenly awarded continuing education credit due to an administrative error. (b) When continuing education credit is denied or with-drawn by the Commission under Paragraph (a) of this Rule, the licensee remains responsible for satisfying the continuing education requirement. However, when an administrative er-ror or an incorrect report by a course sponsor results in the de-nial or withdrawal of continuing education credit for a licens-ee, the Commission may, upon request of the licensee, grant the licensee an extension of time to satisfy the continuing ed-ucation requirement. (c) A licensee who obtains or attempts to obtain continu-ing education credit through misrepresentation of fact, dis-honesty or other improper conduct shall be subject to disci-plinary action pursuant to G.S. 93A-6. A.1711 Continuing Education Required of Nonresident Licensees (a) To be considered a nonresident for continuing education purposes, a real estate broker licensed in North Carolina shall not have a North Carolina business address, mailing address or residence address at the time he or she applies for license renew-al if he or she seeks to renew his or her license on active status. A nonresident North Carolina broker who wishes to renew his or her license on active status may fully satisfy the continuing edu-cation requirement by any one of the following means: (1) A nonresident licensee may, at the time of license renewal, hold a real estate license on active status in another state and certify on a form prescribed by the Commission that the licensee holds such license. (2) A nonresident licensee may, within one year pre-ceding license expiration, complete the Commission-prescribed Update course plus one Commission-ap-proved continuing education elective course, or com-plete two Commission-approved continuing educa-tion elective courses. 24 North Carolina Real Estate License Law and Commission Rules (3) A nonresident licensee may, within one year pre-ceding license expiration, complete eight classroom hours in courses approved for continuing education credit by the real estate licensing agency in the licens-ee’s state of residence or in the state where the course was taken. To obtain credit for a continuing education course completed in another state and not approved by the Commission, the licensee must submit a writ-ten request for continuing education credit accompa-nied by a nonrefundable processing fee of twenty dol-lars ($20.00) per request and evidence satisfactory to the Commission that the course was completed and that the course was approved for continuing education credit by the real estate licensing agency in the licens-ee’s state of residence or in the state where the course was taken. (4) A nonresident licensee may obtain eight hours equivalent credit for a course or courses not approved by the Commission or for related educational activities as provided in Rule .1708 of this Section. The maxi-mum amount of continuing education credit the Com-mission will award a nonresident licensee for an unap-proved course or educational activity is eight hours. (b) When requesting to change an inactive license to ac-tive status, or when applying for reinstatement of a license expired for n |
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