Real Estate License Law & Commission Rules Flashcards
Real Estate Education and Recovery Fund is for what
This account was created to protect consumers. In the event that a customer or client wins a suit against a licensee but can’t collect the damages they’re owed, they can receive their compensation from this account.
Of the following, which rules apply to the members of NCREC?
(Select All That Apply)
There are nine members.
Seven members are appointed by the governor.
Two members are appointed by the General Assembly.
There must be at least two members of the public who are not involved (either directly or indirectly) in real estate brokerage or appraisal.
All least three members are licensed real estate brokers.
Each member serves in five-year terms.
At least four are members of the public who are not involved with real estate or real estate appraisal.
Members serve three-year terms, not five-year terms. At least two (not four) are members of the public who are not involved with real estate or real estate appraisal. The other rules are correct.
The aggrieved party must file a notice with the Commission within ________ of the commencement of the lawsuit. They must apply for payment from the Fund within _______ after judicial proceedings have concluded.
60 days
1 year
Maximum Payout for a Single Transaction:
If a consumer applies to the Fund for help with a problem related to a single purchase or transaction, the most they can receive is $50,000, no matter how many people were involved in that transaction.
Maximum Payout to a Licensee in One Year:
If a business or service provider (a licensee) has multiple complaints filed against them by different consumers in one calendar year, the most the Fund will pay out to cover all those complaints is $25,000. It doesn’t matter how many consumers or transactions are involved; $25,000 is the maximum.
Maximum Payout to a Licensee in Their Lifetime:
If a licensee repeatedly faces complaints from different consumers over time, the maximum amount the Fund will ever pay out for all those complaints is $75,000.
Agents can get paid for preparing a _____ when they get paid a commission
cma
Finally, a real estate licensee is not automatically a ______. A licensee is only a Realtor if they belong to the National Association of Realtors. So, while ______ can be used to generally refer to all licensees, ______ cannot.
realtor
agent
realtor
limited nonresident commercial broker license (LCB).
This license entitles a broker or salesperson living in a state other than North Carolina to engage in commercial real estate transactions in North Carolina.
Licensee Lulu has changed her brokerage affiliation. When must she notify the Commission?
10 days
Mandy received her provisional broker’s license on January 15. When does it expire?
June 30th
Post-licensing Waivers
Most provisional brokers must take all the post-licensing courses to terminate their provisional license status. However, it is possible for some provisional brokers with equivalent education and/or substantial brokerage experience to obtain a waiver of one or more of the post-licensing courses.
qualifying broker is
the licensed, representative of a real estate firm who will work in the firm. they’re are requirements as to what specific position this qualifying broker must be in in the company.
If the entity is a partnership, the qualifying broker must be a general partner.
If the entity is a corporation, the qualifying broker must be an officer of the corporation.
If the entity is a limited liability company (LLC), the qualifying broker must be a manager of the company.
If the entity is a limited liability company (LLC), the qualifying broker must be
the manager of the compnay
if the entity is a corporation, the qualifying broker must be:
the officer of the corp
if the entity is a partnership, the qualifying broker must be:
the partner
what is REAL SLOB stand for?
the compensated duties of an agent:
Refer (giving out of state agents the name of a client)
Exchange (bringing buyer and seller together)
Auction
Listing (property)
Seller (agent)
Lease
Offer (to negotiate)
Buyer (agent)
if you manage a property and are not on the deed to the property/own the property yourself, you need a ____
license
what is “consideration”
any kind of payment, not necessarily dollar bills
what does STAPLES stand for
things you don’t need a licence for:
sale by owner
trustees
attorney (no commission)
power of attorney
legal corporations (slaried employee acting on behalf of the compnay)
executor (of somebody’s will/estate)
salaried employees
Licensees must satisfy the continuing education requirement by
june 10
Generally, the continuing education requirement is eight hours per annual license period. For provisional and non-BIC brokers, this includes:
The General Update Course (four hours), also known as GENUP.
A Commission-approved elective course (four hours)
Kristine is a broker in North Carolina. What is her CE requirement?
eight hours, every year
Expired for Less than Six Months
Pay the reinstatement fee (currently $90, which is the current application fee plus the late fee).
Disclose any criminal convictions or discipline incurred.
No education or exam is required.
Expired for Six months to Two Years
Pay the reinstatement fee.
Submit the reinstatement application and criminal background check.
Option 1: Complete one post-licensing course. The course must be completed within six months prior to submitting a reinstatement application.
Option 2: Pass the national and state sections of North Carolina’s license exam.
Expired for More Than Two Years
Complete the 75-hour North Carolina Broker Pre-licensing Course AND pass national and state sections of North Carolina’s license exam.
Pay a new license application fee.
Submit the reinstatement application and criminal background check.
Brokers: A former broker’s license will be reinstated as an inactive provisional broker’s license. Basically, the former broker becomes a new licensee!
What if a broker falls into one of the above categories, and they haven’t satisfied their continuing education requirements? Generally, an applicant must make up their CE deficiency before re-activation. The exact requirements depend on how long they have been inactive:
Inactive less than two years:
Inactive more than two years:
Inactive less than two years: Pay a renewal fee, take the current year’s CE requirements (eight hours), make up any CE deficiencies from the previous year, and affiliate with a BIC (if provisional). The maximum number of CE hours is 16, total.
Inactive more than two years: Pay a renewal fee, take the current year’s CE requirements (eight hours), take 60 hours of post-licensing, and affiliate with a BIC (if provisional). There is a maximum of 68 hours, total.
you do not need to take CE until your…
first year is over
A brokerage office employs over 75 provisional brokers and brokers who all work at one large office. how many bic’s?
one designated broker-in-charge.
A licensed real estate firm doesn’t need a BIC (Broker-in-Charge) if it meets these conditions:
A licensed real estate firm doesn’t need a BIC (Broker-in-Charge) if it meets these conditions:
- It exists solely to get paid for services provided by its qualifying broker through another firm. In other words, it’s like a middleman that gets paid for the work done by its broker through a different real estate company.
- It’s treated as a Subchapter S corporation for tax purposes by the IRS.
- It doesn’t have any main or branch offices.
- It has only its qualifying broker and no other licensed or unlicensed people associated with it.
a broker who will be operating independently in most cases must also designate themselves as a _____
BIC
To maintain BIC Eligible status, a broker must:
take both the BICUP and one elective CE course by June 10
Pothik is a broker-in-charge. Of the below, what would result in the termination of his BIC status?
(Select All That Apply)
He fails to renew his license on time.
The license of one of the provisional brokers he supervises is suspended.
His firm’s license is suspended.
He fails to complete his CE on time.
A broker’s BIC Eligible status will be terminated if the broker: makes any false statements or presented any false, incomplete, or incorrect information in connection with an application; fails to complete the 12-hour Broker-in-Charge Course on time; fails to renew their broker license on time; fails to complete their continuing education on time; or has their individual license or the firm’s license suspended, revoked, or surrendered.
So, a nonresident company engaging in brokerage in North Carolina must have a
broker-in-charge of the company who holds an active North Carolina broker license, although the office need not be physically located in North Carolina.
Once the BIC submits the License Activation and Broker Affiliation form to the Commission, a provisional broker may engage in real estate brokerage activities. However, if the provisional broker and broker-in-charge do not receive a written acknowledgment of the above form from the Commission within ____ days, the provisional broker must cease all real estate brokerage activities pending receipt of the written acknowledgment from the Commission.
30
Blind Ads
A blind ad is an ad in which a license holder attempts to promote or solicit real estate activity without disclosing the fact that they are a license holder. Blind ads are illegal in North Carolina and in many other states, as well.
An agent must deliver any required, written transaction document to their client(s) or customer(s) within ______ days of the broker’s receipt of the executed document.
3
A prospective buyer who signs an offer must immediately be provided a ____ of the offer.
copy
Elmer is a broker. He is using the standard contract form used by his brokerage for a sales contract. He goes over it with his client, Lisa. Lisa asks that Elmer change one part of the contract so that it states that the washing machine and the dryer will stay with the home. (The contract currently stated just the washing machine would stay with the home.) Elmer writes in the change.
Evaluate Elmer’s behavior.
If the parties want any changes, the broker or party can mark the form with the change. Therefore, Elmer has acted properly and in accordance with state regulations.
Interest-bearing Trust Accounts Rules
must have consent of all parties in writing and must decide how the interest is to be disbursed
Under North Carolina regulations, a trust account MUST be physically located in North Carolina.
t or f
f
all funds held in escrow are insured as long as nobodies’ interest exceeds ____
250,000
must have seperate trust accounts each for
Homeowner and Property Owner Association Funds
commingling exception
personal fund ledger to pay the bank fees. record this in writing.
conversion is: (2)
using trust fund mmoney for youurself, and chanigng real property to personal property (stealing)
doing reconciliation on a ___ basis is required in NC
monthly
agents must make subsidiary ledger for
vvacation rentals
Licensee Lulu receives a $3,000 earnest money deposit from her client in the form of a check. Under North Carolina regulations, she must deposit the money:
Earnest money received with offers to purchase must be deposited in a trust account no later than three banking days following acceptance of the offer unless the deposit is tendered in cash. If the deposit is in cash, it must be deposited within three banking days following receipt. Since this is a check, three banking days after acceptance of the offer is the rule.
A broker-in-charge may transfer an earnest money deposit from their trust account to the closing attorney or other settlement agent not more than _____ days prior to the anticipated settlement date.
10
what level of brokerage doesn’t hande earnest money themselves?
provinsional broker. they immedietly give the money to the broker incharge
BIC Carla is going to disburse money from a trust account to the closing agent of a transaction. When may she do this?
A broker-in-charge may transfer an earnest money deposit from their trust account to the closing attorney or other settlement agent not more than ten days prior to the anticipated settlement date.
cash must always be deposited within _______ banking days of receipt. no exceptions
3
which form of misrepresentation must you be most careful not to do
negligent misrepresentation
Of the below, what does NCREC have the power to do?
Sue Kendra, who continues to violate license law.
Ensure that all brokerages have the same commission structures.
File criminal charges against Ed, who stole a client’s money.
Obtain an injunction against Melissa, an unlicensed assistant who keeps presenting herself as a licensed broker.
The Commission has the power to seek injunctive relief in superior court to prevent any person (licensees and others) from violating the license law or Commission rules.
timeshare
refers to a right to occupy a unit, or any of several units, during five or more separated time periods over a period of at least five years.
timeshares are considered _____ property
real
timeshare estate means
the timeshare has been purchased and possessed
The developer must obtain a _________ from the Commission for every timeshare project before they begin marketing or selling it.
a certificate of registration
All timeshare registrations expire on _______ unless renewed before then. Registrations must be renewed every year for as long as the developer is actively selling timeshares for that project.
June 30
who is responisble for getting the certificate of registration for the timeshare
the developer
If a developer fails to provide a purchaser with the public offering statement as required, the purchaser, in addition to any rights to damages or other relief, is entitled to receive from the developer an amount equal to
10% of the sales price of the timeshare, not to exceed $3,000. Only the developer can be fined, not the salesperson.
developers are reequired to have license. t or f
f
timeshare must be recorded in the ____________ to protect that interest.
Register of Deeds Office
In North Carolina, any funds received by a timeshare developer or salesperson must be placed in a trust account. These funds must remain in the account for:
must be deposited into a trust or escrow account not later than three banking days following receipt. They must remain in such account for ten days from the date of sale or until cancellation by the purchaser, whichever first occurs.
why trust funds must be kept in the escrow account for 10 days –
how long is the rescission period
to allow for receipt of the rescission notice. which is 5 days.
the refund to a right of rescission must be given before
30 days
Who is responsible for supervising brokers selling timeshares for a timeshare project?
The project broker will act as supervising broker for all timeshare salespersons at the project.
Can the Commission ever fine anyone for violating license law?
The Commission has the power to fine timeshare developers in the amount of $500 for each violation.
Who ensures that a timeshare project complies with all laws and that liens are released in a timely fashion?
The registrar is basically the project’s compliance officer. They are responsible for recording instruments, releasing liens in a timely fashion, and enforcing all timeshare rules and regulations.
Timeshare Developer Dani wants to do everything correctly in her timeshare project. How can she avoid committing a Class I felony?
(Select All That Apply)
designate a registrar before offering to sell
register the timeshare project before offering to sell
designate a project broker
give the public offering statement to any purchaser before the sale
If someone acts as a timeshare developer without getting the necessary registration, or if they let timeshares be sold without appointing a timeshare registrar, they can be charged with a Class I felony.
difference between ncrec and nc association of realtors
ncrec = state government body
realtors = trade association
The North Carolina Real Estate Commission does not get involved in
commission disputes
refering a buyer/seller if done for ocmpensation requires a
license and disclosure to buyers/sellers
explain all you know about limited nonresident commercial real estate lciense
This license entitles a broker or salesperson living in a state other than North Carolina to engage in commercial real estate transactions in North Carolina.
The nonresident limited broker will stay affiliated with their out-of-state brokerage. They will not have a North Carolina broker-in-charge.
However, they will need to sign a “notification of brokerage affiliation” and a “brokerage cooperation agreement” with a resident North Carolina broker. This broker cannot be provisional, and they must supervise the nonresident limited broker when the nonresident limited broker performs those commercial real estate transactions.
In the course of their North Carolina brokerage transactions, a nonresident commercial broker acting as real estate broker in North Carolina must deliver all trust monies to the North Carolina resident broker with whom they are affiliated.
The following are exempt from North Carolina licensing law. (8)
Owners transacting their own property: Abby is allowed to sell her own home.
Attorneys-at-law: Richard, a lawyer, assists a client in a breach-of-contract lawsuit for the sale of a condo.
Attorneys-at-fact: Under the power of attorney, Marcus finishes the sale of his father’s home since his father is recuperating from a stroke.
Court Appointees: Beth is the executor of a will. Acting under a court order, she can seel property as directed in the will.
Trustees: Trustee Tim sells a foreclosed-upon home.
Business Entities in course of business: Ace Realty, LLC, owns the building that houses its offices. They sell the building when they move to a different location.
Property manager employees: Fran shows apartments to prospects but does not negotiate leases.
Housing authorities: The Raleigh Housing Authority leases apartments to low-income residents.
what is a housing authority
A housing authority is an organization that helps provide affordable housing to people who need it, often by managing and overseeing public housing programs or subsidies.
unlicensed assistants need to be paid on a _____
salary (not a commission)
If you hold a real estate license equivalent to a provisional broker’s or full broker’s license in another state and have been active within the last _____ years, you have several choices:
3
Choice 1: Submit an application, pass the state portion of the license exam, and obtain a provisional or full broker license.
Choice 2: Similar to Choice 1 but without taking the state exam. However, you won’t get a waiver for post-licensing education.
credit for post licensing courses are valid for only ____ years
2
Gladys finished her three post-licensing courses. Yay! How does she become a non-provisional broker?
Upon completion of all three post-licensing courses, the provisional status of the broker license will be automatically terminated by the Commission. The education providers of the post-licensing coursework (all of whom must be certified by the Commission) will report course completion to the Commission, so licensees should not attempt to report course completion or request termination of provisional status.
if the entity changes its form after getting a real etsate license, it must _______
get a new licens.e the other will be automaticallly terminatewd
Licensees should renew their licenses online through the Commission’s website between ______ and ______ (in other words, in the 45 days before license expiration). Currently, the annual license renewal fee is $45.
may 15
june 30
If the license of the broker-in-charge is suspended, revoked, etc., the provisional brokers under that broker-in-charge will have their licenses automatically placed on
inactive
Licensees must satisfy the Continuing Education requirement by
june 10
Generally, the continuing education requirement is eight hours per annual license period. For provisional and non-BIC brokers, this includes:
The General Update Course (four hours), also known as GENUP.
A Commission-approved elective course (four hours)
A BIC or a BIC-eligible broker (that is, they are applying to become a BIC) also has an eight-hour requirement. They need to take:
by when?
A BIC or a BIC-eligible broker (that is, they are applying to become a BIC) also has an eight-hour requirement. They need to take:
Let’s say you are a newly licensed broker (that is, a provisional broker). You do NOT need to take any continuing education (CE) during your initial license year. Instead, you must satisfy the eight-hour annual CE requirement prior to
your second license renewal
There are two options for a nonresident licensee on active status to satisfy North Carolina’s CE requirement:
Option 1: Certify active status in another state: Basically, the nonresident (who has an active real estate license in another state) certifies that they hold this active license during the North Carolina license renewal process.
Option 2: Take North Carolina’s CE courses: The nonresident may choose to do either the GenUp course and a Commission-approved elective course, OR two elective courses. Either way, it’s eight hours altogether.
if someone doesn’t want to activate their license, but keep it renewed, they can…
pay the fee without taking CE
If your license has expired, it means that you failed to renew your license in a timely manner, and you no longer have a license. If you wish to practice brokerage, you must apply for
reinstatement
you request anytime for you license to be _____ if you do not want to use it
inactive
Inactive for Less than Six months
Pay reinstatement fee (currently $90).
Disclose any criminal convictions or discipline incurred.
No education or exam is required.
Inactive for Six months to Two years
Pay a reinstatement fee.
Submit reinstatement application and criminal background check.
Option 1: Complete one post-licensing course. The course must be completed within six months prior to submitting a reinstatement application.
Option 2: Pass national and state sections of North Carolina’s license exam.
Inactive for More Than Two Years
Complete the 75-hour North Carolina Broker Pre-licensing Course AND pass national and state sections of North Carolina’s license exam.
Pay a new license application fee.
Submit reinstatement application and criminal background check.
Brokers: A former broker’s license will be reinstated as an inactive provisional broker’s license. Basically, the former broker becomes a new licensee all over again!
two forms for a BIC
bic designation and bic eligibility. can be submitted at the same time
work how long as broker for bic eligibilty
2 year full time/4 years part time
Complete the Commission’s Basic Trust Account Procedures Course. This must be done within _______days of assuming responsibility for a trust account in accordance. The BIC is not required to complete the course more than once in _______ years.
120
3
ultimately responsible for all records and trust funds
the bic
Advertising
Let’s go over these very important rules. (4)
Get Written Consent of Owner
A broker must get the written consent of the owner or the owner’s authorized agent before advertising or displaying a “for sale” or “for rent” sign on a property.
Get Consent of BIC
A broker may not advertise any brokerage service or the sale, purchase, exchange, rent, or lease of real estate for another without the consent of their broker-in-charge.
Include Brokerage Name
In all advertisements, a broker must include the name of the firm or sole proprietorship with which they are affiliated.
Blind ads are illegal in North Carolina and in many other states, as well.
Closing disclosures to buyers must be completed ______ days before closing. For sellers, it’s the _____ closing.
3
day of
An agent must deliver any required, written transaction document to their client(s) or customer(s) within ____ days of the broker’s receipt of the executed document.
3
An individual broker must provide a copy of records (including written agency disclosures, agency agreements, and contracts) to the firm or sole proprietorship with which they are affiliated within _____ days of the broker’s receipt of such documents for the BIC/firm to keep for _____ years
3
3
Real estate agents must tell clients if they’re getting money for suggesting services to anyone involved in a real estate deal. They need to do this for _______
all parties, not just clients
Before getting any gifts or money from a company for expenses on behalf of a client, a real estate agent must ask the client’s ______
permission in writing
Agents can’t take extra money from their main client unless they have a ________
written agreement
North Carolina agents can share money with agents from other states as long as those out-of-state __________ in North Carolina.
don’t physically work
Agents can keep notes about the negotiations between parties in a real estate transaction. However, these notes shouldn’t act as _____ on their own.
binding agreements or legal documents
A broker who leases residential property that they own to tenants may be required to maintain a ______ under §42-50 NC Residential Landlord Tenant law.
trust account
License law and Commission Rules permit a broker to deposit trust money into an interest-bearing trust account so long as the broker first obtains+_________ having an interest in the monies being held.
written authorization from all parties
Only One Required
Typically, a broker holding trust money is only required to have one trust account. All earnest money deposits, tenant security deposits, rents, and other trust monies may be deposited into this one common trust account.
Exception:
Brokers who manage homeowner or property owner association funds need to have a separate account for each association.
Ownership Interest Prohibition:
Brokers who have ownership stakes in a property cannot deposit money related to that property (e.g., earnest money, rent, security deposits) into their brokerage trust account. This is to prevent mixing personal funds with client fundsTo prevent commingling, brokers often send client’s checks to a title company for safekeeping.
Trust accounts may have service charges like regular checking accounts. Brokers should try to arrange for the bank to bill them for these expenses or charge them to their personal or business account.
If these arrangements can’t be made, brokers can deposit a limited amount of their own money, like $____, in the trust account to cover service charges….
Brokers who put their own money in the trust account must keep ______ to identify these personal funds.
100
clear records
A broker-in-charge may transfer an earnest money deposit from their trust account to the closing attorney or other settlement agent not more than ___ days prior to the anticipated settlement date.
ten
gotta get _____ from ______ before escrow disbursement
written consent
both parties
Regardless of which party in a transaction the agent represents, the agent must disclose the material facts described above to both their principal and to
to third parties the agent deals with on the principal’s behalf.
While it is important that an agent guards their client’s financial information, it is appropriate to disclose whether
a buyer or seller has the ability to complete the transaction.
Injunction is basically a fancy word for
a court order that requires a person to do or cease doing a specific action.
Every developer must designate a ______ for each of its registered projects. The registrar is basically the project’s compliance officer.
The developer must designate a _______ for each of its registered projects.
registrar
project broker
