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Post 303 – NC Law, Rules, and Legal Concepts End-of-Course Examination — Information & Free Practice

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Post 303 – NC Law, Rules, and Legal Concepts End-of-Course Examination

Provider
Commission-certified education providers under NCREC course and instructor approval
Format
Comprehensive, closed-book, proctored end-of-course examination
Passing score
At least 75 percent
Examination outline
  • General North Carolina Licensing Requirements
    • I. Basic NC License Information [93A-1 & 2]
    • A. Activities Requiring a License [NCGS 93A-2a] (LLCR, p. 103)
    • 1. Definition of Broker: Persons or business entities who
    • a. perform brokerage activities
    • b. for compensation or valuable consideration or the promise thereof
    • c. as an agent for others
    • 2. Brokerage Activities
    • a. Listing (or offering to list) real estate for sale or rent
    • i. Any act in connection with obtaining or servicing a listing agreement
    • ii. Includes, but is not limited to, soliciting listings and providing information to a property owner
    • b. Selling or Buying (or offering to sell or buy) real estate
    • i. Any act in connection with assisting others in the selling or buying of real estate
    • ii. Includes, but is not limited to, “showing” listed property to prospective buyers and communicating offers and offer acceptance
    • c. Leasing or Renting (or offering to lease or rent) real estate
    • i. Any act in connection with assisting others in the leasing or renting of real estate
    • ii. Includes, but is not limited to, negotiating lease terms
    • d. Auctioning (or offering to auction) real estate
    • i. Excludes the mere “crier” of sales
    • ii. An active auctioneer’s license is also required to auction real estate
    • e. Negotiating the purchase, sale or exchange of real estate
    • f. Selling, Buying, Leasing, Assigning or Exchanging any interest in real estate, including a leasehold interest, in connection with the sale or purchase of a business
    • g. Referring a party to a real estate licensee for compensation
    • i. Prohibits any arrangement for a licensee to compensate an unlicensed person for finding, introducing, or referring a party to the licensee
    • ii. Prohibits payment of finder’s fee, “bird dog” fee, referral fee, etc. to an unlicensed person
    • B. Licensing Exemptions [NCGS 93A-2c] (LLCR, p. 104)
    • 1. Business Entity selling or leasing entity-owned real property extends to
    • a. Officers and W-2 employees of corporations
    • b. Partners and W-2 employees of partnerships
    • c. Managers and W-2 employees of limited liability companies (LLCs)
    • 2. Attorney-in-fact for contract performance (aka power of attorney)
    • 3. Attorney-at-law performing practice of law
    • 4. Court-appointed Receiver, Trustee in Bankruptcy, Guardian, Administrator, Executor, etc.
    • 5. Trustee
    • a. Acting under a written trust agreement, deed of trust, or will
    • b. Extends to trustee’s regular salaried employees
    • 6. W-2 Employees of Broker working in Property Management [NCGS 93A- 2(c)(6)]
    • a. Allowed activities on behalf of employing broker include
    • i. Showing rental units that are managed by employing broker to prospective tenants
    • ii. Providing lease information to prospective tenants
    • iii. Accepting lease applications
    • iv. Completing and executing preprinted form leases with predetermined terms
    • v. Accepting security deposits and rental payments made payable to landlord or employing broker
    • b. Prohibited from negotiating
    • i. Amount of security deposit or rental payments
    • ii. Leases or terms of any rental agreement on behalf of landlord or employing broker
    • iii. Property management agreements with landlords
    • 7. Individual Property Owner who leases or sells personally owned property
    • 8. Housing Authority organized under Chapter 157 selling or leasing Authority- owned or leased real property via regular salaried employees of the Authority
    • C. License Categories and Statuses [NCGS 93A-2] (RELINC, pp. 3-4; LLCR, p. 102- 103)
    • 1. Individual Broker License
    • a. Provisional Status (PB) [Rules 58A .0504(b); .0506]
    • i. “Entry level” license status
    • ii. Postlicensing Education Requirement [NCGS 93A-4(a1); Rule 58A .1902]
    • iii. Requirements for Active Status [Rule 58A .0506]
    • b. Non-provisional Status (“Full” Broker)
    • i. Requirements for Active Status
    • ii. Options for Brokerage Practice
    • iii. Active Status without BIC Affiliation or Designation as BIC [Rule 58A .0110(b)]
    • c. BIC Eligible Status / BIC Designation [NCGS 93A-2(a1) & 93A-4.2; Rule 58A .0110] (LLCR, pp. 116-118)
    • i. BIC Eligible Status
    • ii. BIC Designation [Rule 58A .0110]
    • iii. BIC Statutory Responsibilities [Rule 58A .0110(g)]
    • 2. Firm License [NCGS 93A-1 & 2; Rule 58A .0502] (Manual, Appendix A, Business Entities, pp. 789-794)
    • a. Business Entities
    • i. Definition of Entity: An organization created by an individual or individuals to conduct business; includes corporations, limited liability companies (LLC), partnerships, associations, joint business ventures
    • ii. Legally create an entity and register with NC Secretary of State (NC SOS)
    • iii. Permissible names of entities and business purpose (Manual, pp.791- 792)
    • b. Firm License Requirements
    • i. Firm License Application (Form REC 1.72)
    • ii. Firm name on application must be identical to entity’s legal or trade name registered with NC SOS
    • iii. All entity principals must satisfy character requirement
    • iv. Qualifying Broker (QB) required [Rule 58A .0502(e)]
    • v. Broker-in-Charge (BIC) appointed for each physical office (LLCR, p. 116)
    • vi. Firm licensure does not extend to any individual within or working for the entity
    • vii. Firm license must be renewed annually between May 15-June 30
    • 3. Limited Nonresident Commercial Broker License (LNCL) [NCGS 93A-9(b); Rule Section 58A .1800] (Manual, Chapter 19, Limited Nonresident Commercial License, Commercial Real Estate Brokerage, p. 677 & Chapter 21, Brokerage Compensation Issues, Limited Non-resident Commercial License,
    • pp. 776; LLCR, p.103) Level 2
    • a. Requirements for Licensure
    • i. Definitions [Rule 58A .1802]
    • ii. Eligibility [Rule 58A .1803]
    • iii. License maintenance [Rules 58A .1804 & .1805]
    • iv. Limitations on NC brokerage activities [Rule 58A .1806]
    • v. Any trust money must be held by supervising NC resident broker [Rule 58A .1808]
    • vi. Advertising must conspicuously identify broker as “Limited Nonresident Commercial Real Estate Broker” [Rule 58A .1809]
    • vii. Payment of fees earned as LNCL must be paid to employing broker in qualifying state [Rule 58A .1810]
    • b. NC Resident Broker(s) [Rules 58A .1807 & .1808]
    • i. LNCL broker may enter into cooperation agreements with multiple resident NC brokers at any time but only one resident NC broker in a single transaction
    • ii. Declaration of Affiliation
    • iii. Brokerage Cooperation Agreement
    • iv. Duties of NC Resident Broker
    • D. Broker License Maintenance [NCGS 93A-4(c); Rules 58A .0503, .0504, .0505]
    • 1. Annual Renewal [Rule 58A .0503]
    • a. Annual Renewal Fee
    • i. $45 at this time
    • ii. If paid between May 15 and June 30 = Current license
    • iii. If unpaid by midnight June 30 = Expired license
    • b. Annual Continuing Education (CE)
    • i. 4 hour CE Update course + 4 hour approved Elective course required by June 10 for active status eligibility
    • ii. Incomplete CE credits by June 10 = Inactive status
    • c. Individual broker shall provide an email address for Commission use
    • d. Designated BICs must disclose where trust accounts are held, if any, and any criminal convictions or occupational license disciplinary action, if any, within previous year
    • 2. Proof of Licensure (Digital Pocket Card) [Rule 58A .0101]
    • 3. Written Notification Requirements
    • a. Name/Address Changes within 10 days [Rule 58A .0103(b)]
    • b. Upon affiliation with broker or brokerage firm [Rules 58A .0504 & .0506]
    • c. Convictions/Disciplinary Actions/Court Martials within 60 days [Rule 58A .0113]
    • 4. Activation Procedures [Rule 58A .0504]
    • 5. Reinstatement Procedures [Rule 58A .0505]
    • a. Reinstatement Fee = 2 times Annual Renewal Fee
    • b. Expired Less than 6 Months
    • i. Submit reinstatement fee
    • ii. Disclose any criminal convictions or disciplinary action incurred while license was expired
    • iii. Comply with CE requirements for reactivation, if any
    • c. Expired 6 months - 2 years or Surrendered/Revoked for no more than 2 years
    • i. Submit a complete reinstatement application
    • ii. Submit reinstatement fee
    • iii. Pass
    • d. Expired, surrendered or revoked for more than 2 years
    • i. Submit a complete original license application
    • ii. Subject to Rules A .0301 & .0302
    • iii. Broker prelicensing course is valid for license qualification for 3 years from date of course completion
    • E. Teams (Provisional Brokers on a Team section of the 2020-2021 BICUP course)
    • 1. Voluntary Team Cooperation; no entity created for team
    • a. Team name may be advertised with firm name
    • b. PBs may be part of the team since there is only 1 BIC
    • c. Agency agreements are only in the name of the brokerage company
    • 2. Licensed Team Entity; All Team Members Dually Affiliated
    • a. Must have a BIC for team firm
    • b. Dually affiliated team members must advertise both firm names
    • c. Agency agreements must list both firm names
    • d. PBs can be part of the team only if team is housed at the exact same location as the primary firm [Rule 58A .0506]
  • Brokerage Compensation Issues
    • I. Compensation for Brokerage Services Requires an Active Real Estate License
    • A. General Prohibition of Compensating Unlicensed Persons for Brokerage Activities [NCGS 93A-6(a)(9) & 93A-8; Rule 58A .0109]
    • B. Exceptions
    • 1. Sharing Compensation with Parties to the Transaction
    • a. Subject to lender approval, if buyer is being paid
    • b. Must appear on settlement statement
    • 2. Payments to Travel Agents for Vacation Rentals [Rule 58A .0109(h)] Level 1
    • II. Compensating Affiliated Licensees [Rule 58A .0504(a)]
    • A. Broker Eligibility for Compensation
    • 1. Current and active license status at the time the brokerage activity was performed
    • 2. Applies to firm and individual broker licenses
    • B. Provisional Brokers Must be Compensated by Supervising BIC [NCGS 93A- 6(a)(5)]
    • C. Affiliated “Full” Brokers must be Compensated by Supervising BIC [Rule 58A .0120(b)]
    • D. Paying Brokers No Longer Affiliated with Brokerage Company
    • E. Miscellaneous Situations
    • 1. Broker Working on a Pending Transaction After Leaving a Company
    • a. PB should not be allowed to continue work once they have left the company
    • b. Full broker could work as dually affiliated until old transaction is complete with consent of all BICs
    • 2. Expired or Inactive Individual Broker’s License
    • a. Broker must cease all brokerage work until their license is reactivated, this includes attending a closing
    • b. A BIC that allows an affiliated agent to continue performing brokerage activities without an active license jeopardizes the company’s compensation and may be subject to disciplinary action
    • 3. Expired or Inactive Firm, QB, or BIC License
    • a. Brokerage activity, even by actively licensed broker-affiliates, cannot be allowed to continue until the firm license is back on active status
    • b. Frequently happens around July 1 but may take months for firm to become aware and correct
    • F. Paying Business Entities Created by Broker Associates solely for Compensation Purposes [Rule 58A .0110(c)]
    • III. Sharing Compensation with Non-Affiliated Brokers or Firms
    • A. Current and Active License Required at time Brokerage Services Performed
    • B. Sharing Brokerage Fees through Cooperative Listing Services (e.g., MLS)
    • C. Sharing Brokerage Fees Outside of Cooperative Listing Services
    • D. Compensation Agreements “Should” be Written
    • E. Listing Company Limitations on Sharing Compensation
    • F. Sharing Compensation with Foreign (Out-of-State) Brokers without NC license
    • 1. Foreign broker must hold an active real estate license in the state from which they are conducting the brokerage activity, such as placing a referral, and
    • 2. Foreign broker does not enter NC any time during the transaction to engage in any activity related to the transaction
    • IV. Third Party Payments to Brokers
    • A. Restrictions on Kickbacks, Rebates, Referral Fees, etc. [Rule 58A .0109 (a)]
    • B. Compensation, Incentives, Bonuses, etc. to Broker from Anyone Other than Broker’s Principal [Rule 58A .0109 (c, d, & e)]
    • 1. Applies to All Residential and Commercial Sales Transactions
    • 2. Full and Timely Disclosure to Principal
    • a. Description of compensation
    • b. Identity of source
    • c. Written confirmation prior to offer
    • 3. Definitions
    • a. Nominal Value: of insignificant, token, or merely symbolic worth
    • b. Timely: in sufficient time to aid a reasonable person’s decision-making, definitely prior to an offer
    • V. Assistants (LLCR, pp. 103-104; Property Management: Permitted vs. Unlawful Activities of Unlicensed Employees section of 2018-19 Update course)
    • A. Who can hire an Assistant may be dictated by Company Policy
    • B. Permitted vs Prohibited Duties (LLCR, pp. 103-104)
    • 1. Licensed vs Unlicensed
    • a. Unlicensed assistants are restricted to clerical and administrative functions
    • b. Actively licensed assistants can legally perform any brokerage activity as long as they are affiliated with and supervised by the BIC
    • 2. Sales vs Lease Transactions
    • C. Compensation
    • 1. Actively licensed assistants must be directly paid for brokerage activities by their supervising BIC
    • 2. Assistants performing clerical/administrative functions
    • a. Can be paid directly by any broker or PB
    • b. Are usually seen as W-2 employees by the IRS; appropriate payroll taxes should be withheld and paid
    • VI. Commercial Real Estate Broker Lien Act [NCGS 44A-24.1-14] (Manual, Chapter 19, Commercial Real Estate Broker Lien, pp.678-679) Level 1
    • A. Purpose: to grant a listing agent in a commercial transaction a right to file a low priority lien against the parcel of commercial real estate being sold or leased to protect the broker’s right to recover a brokerage fee
    • B. Major Features
    • 1. Entitlement applies to Real Estate Brokers licensed in NC, including out-of- state brokers who hold an active NC Limited Non-resident Commercial License
    • 2. Only Commercial Property that is Subject to the Transaction is Subject to Lien
    • 3. Prerequisites for Filing
    • a. Broker must have performed to terms of the written brokerage services agreement
    • b. The written agreement must clearly state the broker’s duties to the owner
    • c. The written agreement for broker services must state the conditions upon which the compensation shall be earned and the amount of the compensation
    • 4. Filing & Enforcement Requirements
    • a. For sales transactions, lien must be filed after broker has performed the terms of the written brokerage services agreement but before conveyance of the property, but no sooner than 30 days prior to closing
    • b. For lease transactions, lien must be filed after broker has performed the terms of the written brokerage services agreement but within 90 days of tenant’s possession of the property
    • c. Broker should consult an attorney to verify timing for filing
    • d. Lien must be enforced within 18 months of filing
    • e. Cost of enforcement proceedings will be paid by non-prevailing party
  • Disciplinary Process
    • pp. 745-754; The NCREC Top Complaints section of 2023-2024 Update course; Handling Complaints section of 2015-2016 BICUP)
    • I. NC Prohibited Acts (LLCR, pp. 105-110)
    • A. Misrepresentation and Omission of Material Facts [NCGS 93A-6(a)(1)]
    • B. Making False Promises [NCGS 93A-6(a)(2)]
    • C. Other Misrepresentations [NCGS 93A-6(a)(3)]
    • D. Conflict of Interest [NCGS 93A-6(a)(4) & (6)]
    • 1. Undisclosed Dual Agency
    • 2. Self-dealing
    • 3. Representing Another Broker Without Consent
    • E. Improper Brokerage Commission [NCGS 93A-6(a)(5) & (9)]
    • F. Failing to Account for Trust Funds [NCGS 93A-6(a)(7)]
    • G. Unworthiness and Incompetence [NCGS 93A-6(a)(8)]
    • H. Improper Dealing [NCGS 93A-6(a)(10)]
    • I. Discriminatory Practices [NCGS 93A-6(a)(10); Rule 58A .1601]
    • J. Practice of Law [NCGS 93A-4(e); 93A-6(a)(11); Rule 58A .0111]
    • K. Commingling of Funds [NCGS 93A-6(a)(12)]
    • L. Failure to Timely Deliver Completed Offers and Sales Contracts [NCGS 93A- 6(a)(13); Rule 58A .0106 & .0108]
    • M. Failure of Responsibility for Closing Statement Accuracy and Delivery [NCGS 93A- 6(a)(14)]
    • 1. Confirm the accuracy of all entries about which the broker has direct knowledge
    • 2. Broker may assume amounts paid by third parties are correct unless there is cause for a reasonable broker to suspect an amount is incorrect
    • 3. As to all debits and credits related to the transaction, whether paid before or at closing, the broker must
    • a. Review and confirm that all charges and credits have been property debited or credited to the seller or buyer and are entered in the correct column
    • b. Review and confirm accuracy of the calculations for all prorated items, escrow reserves, interim interest, excise tax and “bottom line figures”
    • 4. Broker must notify both the settlement agent and the lender of any expenses related to the transaction that were not included on the settlement statement
    • 5. Broker must notify the settlement agent if broker believes there are errors or omissions on the settlement statement
    • N. Violating any Commission Rule [NCGS 93A-6(a)(15)]
    • O. Other Prohibited Acts [NCGS 93A-6(b)]
    • 1. Obtaining a License by False or Fraudulent Representation
    • 2. Conviction in the United States of an Offense involving Moral Turpitude
    • 3. Violation of NCGS 93A-6(a) in Transactions involving Broker’s Own Property
    • 4. Violation of NCGS 93A-6(a) by Broker’s Unlicensed Employee in Property Management
    • 5. Disciplinary Action as a Licensee of another Profession or Occupation involving Fraud, Theft, Misrepresentation, Breach of Trust or Fiduciary Responsibility, or Willful or Negligent Malpractice
    • II. Complaint Process (Rule 58A .0601; The NCREC Top Complaints section of 2023- 2024 Update course) Level 1
    • A. Commission’s Authority [93A-4(d); 93A-6]
    • 1. Take Disciplinary Action
    • 2. Investigate Licensees and Unlicensed Brokerage Activity
    • 3. Issue Subpoenas
    • 4. Impose Sanctions for Licensee Misconduct
    • a. License Revocation
    • b. License Suspension
    • c. Reprimand
    • d. Conditions, Restrictions, Limitations on the License (e.g., ability to serve as BIC)
    • B. Broker’s Obligations & Duties
    • 1. Report to Commission within 60 days of Final Judgement, Order or Disposition of the Case [Rule 58A .0113]
    • a. Any felony or misdemeanor conviction
    • b. Disciplinary action by a government agency in connection with any occupational license
    • c. Military court-martial conviction
    • d. Restriction, suspension, or revocation of a notarial commission
    • 2. File a Written Response to a Letter of Inquiry from the Commission within 14 days of Receipt [Rule 58A .0601(e)]
    • 3. Make Records Available for Inspection and Reproduction by the Commission’s Representative upon Request without Prior Notice [Rules 58A .0108(c) & 58A .0117(h)]
    • 4. BIC Liability/Responsibility for Associated Brokers [Rule 58A .0110(g)]
    • a. Provisional Brokers [Rule 58A .0506(d)]
    • i. BIC is fully accountable for actions of affiliated PBs
    • ii. Supervision should be in a manner that assures that the PBs perform all acts for which a real estate license is required in accordance with License Law and Commission rules
    • iii. If a complaint is filed against a PB, the BIC will also be named in the complaint
    • b. “Full” Brokers
    • i. BIC is accountable for 5 brokerage activities for all affiliated brokers (Agency, Active & Current Licensure, Advertising, Trust Accounts, and Record Retention)
    • ii. If a complaint is filed against a “full” broker, the BIC will also be named in the complaint if the issue(s) addressed within the complaint include any of the 5 named areas or there is indication of BIC knowledge/ involvement
    • iii. BIC may avoid disciplinary action for “rogue” affiliated broker
  • Specialized Types of Real Estate
    • I. Condominiums & Townhouses (Manual, Chapter 1, Common Interest Community Ownership, pp. 15-18; NCREC Brochure, Questions & Answers on: Condos & Townhouses)
    • A. Defining Differences
    • 1. Land Ownership
    • a. A condo owner holds title to airspace within a particular unit but not the exterior walls; it may include additional space such as a balcony or storage unit, but no land
    • b. Individual townhome ownership includes ownership of the exterior of the unit and a deed to at least the land upon which the unit sits; it may include additional land or space such as a balcony, enclosed back yard, or storage unit
    • 2. Ownership of Common Areas
    • a. Individual condo unit owner owns an undivided interest in the common elements (e.g., land, building exterior, amenities) as tenants in common with all condo unit owners without the right to partition
    • b. Individual townhome unit owner has use of common elements (e.g., amenities) that are owned by the homeowners’ association
    • 3. Found in All Use Types (e.g., Residential, Commercial, Industrial, Business)
    • B. Transactional Issues
    • 1. Proper Hazard Insurance Coverage
    • a. Condo insurance (HO6) is a policy that covers the individual unit (“walls-in coverage”) and should also cover personal property plus fixtures, such as cabinets, that are attached to the common area walls
    • b. The Condominium Owners’ Association master insurance policy will usually cover only the common areas or elements
    • 2. Owners’ Association Dues
    • a. Regular Assessments (“Dues”)
    • i. May be due monthly, quarterly, or yearly
    • ii. Should specify what is covered by the assessment
    • iii. May include Reserved Funds for major repairs/capital improvements
    • b. Separate Special Assessments, as needed
    • 3. Possible Transfer Fees and/or Capital Contributions
    • 4. Use Restrictions dictated by Protective Covenants
    • C. Relevant Laws Level 1
    • 1. North Carolina Condominium Act [NCGS 47C; or if complex created prior to 10/1/1986, NCGS 47A]
    • a. Developer must provide a public offering statement to buyer before a purchase contract for a new condo is signed
    • b. Buyer has a 7-day right to cancel a purchase contract for a new condo and receive a refund of all deposited monies
    • c. A condo owner that resells a unit must provide the buyer with a resale certificate that describes expenses and fees payable by unit owners (e.g., NCAR 2A12-T); there is no right to cancel a resale contract
    • 2. Townhouses may be subject to Planned Community Act [NCGS 47F]
    • II. Timeshares [NCGS 93A, Article 4; Rule Subchapter 58B] Level 1
    • A. Definitions
    • 1. Developer: any person or entity which creates a timeshare or a timeshare project or program; purchases a timeshare for the purpose of resale, or is engaged in the business of selling its own timeshares [NCGS 93A-41(9)]
    • 2. Program Broker: a natural person actively licensed as a real estate broker and designated by the developer to supervise brokers at the timeshare project [NCGS 93A-41(24)]
    • 3. Timeshare: to be subject to the Act, the use of a timeshare unit in the initial term or any renewal term for more than 5 years [NCGS 93A-40(c)(2)]
    • 4. Timeshare Estate: the right to occupy a timeshare unit that is not coupled with ownership of a real property interest [NCGS 93A-41(36)]
    • 5. Timeshare Instrument: an instrument transferring a timeshare or any interest, legal or beneficial, in a timeshare to a purchaser [NCGS 93A-41(37)]
    • 6. Timeshare Salesperson: a person who on behalf of a developer sells or offers to sell a timeshare to a purchaser [NCGS 93A-41(44)]
    • 7. Time Share Unit: the real property or real property improvement in a project which is divided into time shares and designate for separate occupancy and use [NCGS 93A-41(47)]
    • 8. Timeshare Use: the right to occupy a timeshare unit coupled with some ownership interest [NCGS 93A-41(48)]
    • B. Program Registration [NCGS 93A-40; 58B Section .0100]
    • 1. A Certificate of Registration must be obtained from the NC Real Estate Commission by the timeshare developer before offering a timeshare for sale in NC
    • 2. Not registering a timeshare program is a Class I felony
    • C. Timeshare salepersons must be actively licensed real estate brokers [NCGS 93A- 40]
    • D. Obligation to Record Timeshare Instruments [NCGS 93A-42; 58B .0401]
    • E. Escrow Requirements [NCGS 93A-42(c) and (d); NCGS 93A-45(c)]
    • F. Public Offering Statement [NCGS 93A-44; NCGS 93A-45(d); 58B Section .0200]
    • 1. Must contain the information dictated by the Act
    • 2. Must contain a 1-page cover containing a summary of the Statement
    • 3. Must be provided to a purchaser prior to the date of the contract of sale
    • 4. A purchaser is entitled to receive an amount equal to 10% of the timeshare sales price if the developer did not properly provide a Public Offering Statement
    • G. Purchaser’s Right to Cancel [NCGS 93A-45; 58B Section .0300]
    • 1. Contract of sale is voidable without penalty by the purchaser for any reason for 5 days after contract execution
    • 2. Right of rescission cannot be waived
    • 3. Cancellation can be hand delivered or mailed to the timeshare developer or the timeshare salesperson
    • 4. Upon delivery of cancellation notice, all previously made payments by the buyer must be refunded immediately [Rule 58B .0202]
    • H. Commission’s Disciplinary Authority [NCGS 93A-54]
    • 1. Power to suspend or revoke a real estate license issued to a timeshare salesperson or program broker
    • 2. Power to suspend or revoke a certificate of registration of a timeshare program
    • 3. Power to reprimand or censure a timeshare salesperson, developer, or program broker
    • 4. Power to fine a developer in the amount to $500 for each violation of this Article
    • I. Penalties [NCGS 93A-56]
    • 1. Violation of most of this Act is a Class 1 misdemeanor
    • 2. Not registering a timeshare program is a Class I felony for the developer
    • 3. Not recording a timeshare instrument as required is a Class I felony for the timeshare registrar
    • J. Requirements for Registrar and Program Broker [NCGS 93A-58]
    • K. Timeshare Sales Operations [Rules Section B .0400]
    • 1. Timeshare developer and timeshare salesperson are both responsible for the retention of all timeshare records for 3 years
    • 2. Timeshare transactions are subject to Agency Agreement and Disclosure requirements
    • L. Handling and Accounting of Funds [Rules Section 58B .0500]
    • M. Program Broker [Rules Section 58B .0600]
    • III. Manufactured and Modular Homes [NCGS 143-143.9] (Manual, Chapter 1, Manufactured Homes, p. 8)
    • A. Characteristics of Factory Built Homes
    • 1. Manufactured Housing (previously called mobile homes)
    • a. Description
    • i. Built to HUD standards; HUD red certification label affixed to the rear exterior corner
    • ii. Titled and regulated by Dept. of Motor Vehicles (DMV)
    • iii. Permanent non-removable steel chassis
    • b. Personal property until converted to real property by [NCGS 47-20.6(b)]
    • i. Attaching home to a permanent foundation on land owned by owner of home;
    • ii. Removing wheels, axle and moving hitch; and
    • iii. Filing affidavit of conversion to cancel DMV title
    • 2. Modular Housing
    • a. Description
    • i. Built to state building code
    • ii. State inspection label with serial number, frequently located under the kitchen sink
    • iii. Assembled by builder on-site
    • b. Becomes real property as soon as assembled on building site
    • B. Financing Issues
    • IV. Commercial Property (Manual, Chapter 19, Commercial Real Estate Brokerage, pp. 669-708, Chapter 19, Like-Kind Exchanges, pp. 712-714) Level 2
    • A. Classifications
    • 1. Office
    • a. Classification as Class A, Class B or Class C
    • b. Factors affecting value and desirability of space
    • i. Size of the space
    • ii. Determination of square footage
    • iii. Property features and amenities
    • iv. Rent
    • v. Location
    • vi. Level of landlord service
    • c. Common office lease provisions
    • i. Rent escalation provisions
    • ii. Pass through provisions
    • 2. Retail
    • a. Classifications
    • i. Shopping centers
    • ii. Stand-alone retail facilities
    • iii. Strip or cluster retail facilities
    • b. Factors affecting value and desirability of space
    • i. Location
    • ii. Accessibility
    • iii. Signage
    • iv. Property features and amenities
    • v. Retail or tenant mix
    • vi. Zoning
    • vii. Utilities
    • viii. Parking
    • c. Common retail lease provisions
    • i. Percentage rent provision
    • ii. Common area maintenance (CAM) charge provision
    • iii. Tenant exclusivity provision
    • 3. Industrial
    • a. Classifications
    • i. Bulk warehouse
    • ii. Office warehouse
    • iii. Large or small manufacturing
    • iv. Multi-tenant industrial
    • v. Research and development
    • vi. Industrial park
    • b. Factors affecting value and desirability of space
    • i. Property features and amenities
    • ii. Location
    • iii. Environmental considerations
    • iv. Business incentives
    • c. Industrial gross vs industrial net leases
    • 4. Land/Specialty
    • a. Highest & Best Use
    • b. Land Use Restrictions
    • c. Acreage and Encumbrances
    • d. Physical Features
    • e. Location
    • f. Site Access
    • B. Special Considerations
    • 1. Commercial Contract Forms
    • a. NC REALTORS® maintains commercial sales and lease forms for use by their members
    • b. Many commercial contracts and associated documentation are drafted by attorneys specifically for a particular transaction
    • c. Many commercial transactions begin with a non-binding letter of intent
    • 2. Transaction Cycle
    • 3. Zoning & Other Land Use Restrictions
    • 4. Financing
    • 5. Market Factor Concepts
    • a. Linkages
    • b. Demographics
    • c. Absorption Rate
    • 6. Like-Kind Exchanges [IRS Code 1031]
    • a. Definition of Like-Kind Exchange: a method of transferring property that defers the tax impact of the transaction until sometime in the future; also called “tax-deferred exchange” or “1031 exchange”
    • b. Both the “relinquished property” and the “replacement property” must be held for productive use in trade, business or for investment (e.g., “like-kind”)
    • c. Delayed deferred exchanges are more common than a direct property swap
    • d. Deadlines are absolute with no grace period
    • C. Commercial Real Estate Broker Lien [NCGS 44A-24.1-14] Level 1
  • Property Management
    • I. Residential Tenant Laws (Manual, Chapter 16, Laws Protecting Residential Tenants,
    • pp. 549-569; 2 NCREC Brochures: Questions & Answers on: Renting Residential Real Estate, Tenant Security Deposits, and NC Military Personnel Residential Lease Termination)
    • A. Residential Rental Agreement Act [NCGS 42-38, Article 5] (Manual, pp. 550-557)
    • 1. Waiver of Act is Prohibited
    • 2. “Mutuality of Obligations”
    • 3. Tenant’s Statutory Duties
    • a. Keep premises clean and safe and cause no unsafe or unsanitary conditions in the common area
    • b. Properly dispose of all waste
    • c. Keep plumbing fixtures clean
    • d. Not destroy, deface, damage, or remove any part of the premises
    • e. Comply with current building and housing codes
    • f. Be responsible for damage to the unit including acts of invitees of the tenant
    • g. Share duties with landlord about operation of smoke detectors and carbon monoxide alarms
    • 4. Landlord’s Statutory Duties under Act
    • a. Comply with current building and housing codes
    • b. Make repairs and keep the property in a fit and habitable condition
    • c. Keep common areas in a safe condition
    • d. Maintain utility systems of the property in good and safe working order
    • e. Provide and maintain operable smoke detectors and carbon monoxide alarms
    • f. Notify tenant if landlord is notified of contaminated water system
    • g. Repair an “imminently dangerous condition” within a reasonable time based on severity of condition
    • 5. Broker’s Duties under Act
    • 6. Allocation of Public Utility Costs
    • 7. Tenant Remedies for Breach by Landlord
    • a. Tenant can bring an action against the landlord for damages, including the recovery of all or part of past rents paid while the unit was uninhabitable
    • b. Common Law Doctrine of Constructive Eviction is possible if premises are uninhabitable and landlord is unable or unwilling to correct the problem
    • 8. Landlord's Liability under the Law of Negligence
    • B. Residential Eviction Procedures (Manual, pp. 561-562, 567-571)
    • 1. Act Prohibiting Retaliatory Eviction [NCGS 42-37, Article 4A]
    • a. Definition of Retaliatory Eviction: the illegal eviction of a tenant in response to the tenant’s use of a “protected activity”
    • b. Protected Activities of Tenants
    • i. Complaining to a government agency
    • ii. Requesting repairs by the landlord
    • iii. Exercising legal rights under the lease
    • iv. Exercising rights under federal or state law
    • v. Becoming involved in a tenants’ rights organization
    • 2. Residential Summary Ejectment (Eviction Procedure)
    • a. Definition of Summary Ejectment: a small claims action in district court to evict a residential tenant
    • b. Possible if tenant breaches lease terms or holds over after lease expiration
    • c. Broker managing the property for the landlord generally has the authority per the property management agreement to initial legal proceedings, such as eviction, on behalf of the landlord
    • d. Self-help Eviction Prohibited (e.g., padlocking or changing the locks on the unit, disconnecting utilities, posting a false notice of eviction on the door)
    • e. Seizure of Tenant’s Personal Property is prohibited
    • f. Expedited Eviction for Criminal Activity possible, but legal advice is recommended first
    • C. Tenant Security Deposit Act [NCGS 42-50, Article 6] (Manual, pp. 562-567)
    • 1. Any owner of residential rental property located in NC must comply with this Act, even if not a licensed broker
    • 2. Basic Requirements
    • a. TSDs must be held either
    • i. In a properly designated escrow/trust account in a federally insured depositor or trust institution authorized to do business in NC, OR
    • ii. By owner-landlord who has furnished a bond in the amount of the deposit from a licensed insurance company authorized to do business in NC
    • b. Tenant must be notified where TSD is being held within 30 days of lease execution and when/if the funds are moved to a different institution
    • 3. Permitted Uses of TSDs
    • a. Nonpayment of rent and cost of utilities provided by landlord
    • b. Damage to the premises, including smoke or carbon monoxide alarms and excluding “ordinary wear and tear”
    • c. Unpaid future rent due per lease terms while landlord makes diligent effort to re-rent unit
    • d. Any unpaid bills that become a lien against the property due to the tenant’s occupancy (e.g., unpaid tenant-ordered utilities)
    • e. Costs of re-renting the premises after breach by the tenant
    • f. Costs of removal and storage of tenants’ property after summary ejection
    • g. Court costs
    • h. Late fees for any rental payments more than 5 days late
    • i. Complaint filing fees or court appearance fees only as permitted by NCGS 42-46.42
    • 4. Accounting to the Tenant
    • a. TSD must remain in the escrow account until the end of the tenancy
    • b. Written accounting to tenant at last known address
    • i. Mailed or delivered to tenant within 30 days of termination of tenancy
    • ii. If final accounting cannot be determined within 30 days, landlord must provide interim accounting at 30 days with final accounting within 60 days
    • iii. Must itemize any deduction for damage
    • iv. Detail any deduction for unpaid rent or other permissible deductions
    • v. Specify the balance of the TSD, if any, to be refunded to the tenant
    • c. Failure of the landlord to comply with accounting requirements voids the landlord’s right to retain any portion of the TSD
    • 5. Security Deposit Limits
    • a. Week-to-week tenancy: two weeks’ rent maximum
    • b. Month-to-month tenancy: one and one-half months’ rent maximum
    • c. Terms greater than month-to-month: two months’ rent maximum
    • 6. Reasonable and Nonrefundable Pet Fees Permitted
    • 7. Limits on Late Payment Fees for payments that are 5 or more days late
    • a. Rent due in monthly installments: fee not to exceed $15 or 5% of monthly rent
    • b. Rent due in weekly installments: fee not to exceed $4 or 5% of weekly rent
    • c. Late fees can only be imposed once for each late rental payment
    • d. Late fees cannot be deducted from a tenant’s next rental payment if it causes that payment to be in default
    • II. NC Vacation Rental Act [NCGS 42A] (Manual, Chapter 16, NC Vacation Rental Act,
    • pp. 579-582; Sales of Vacation Rentals section of the 2015-2016 Update; NCREC Brochure, Owning Vacation Rental Property) Level 2
    • A. Definition of Vacation Rental: the rental of residential property for vacation, leisure, or recreation purposes for fewer than 90 days by a person who has a place of permanent residence to which they intend to return
    • B. Applicability of Act
    • 1. Applies to any person or business entity acting as a landlord or real estate broker engaged in the rental or management of “vacation rental property”
    • 2. Does not apply to hotels, motels, and other businesses regulated under the innkeeper-guest laws
    • C. Requirements for Valid Vacation Rental Agreement
    • 1. Must be in writing
    • 2. Mandatory special “notice” language
    • 3. Must contain information dictated by Act
    • 4. REALTOR® Form 411-T Vacation Rental Agreement for use by NC REALTOR® members and private vacation rental owners
    • D. Handling & Accounting for Funds
    • 1. Must be deposited into a trust/escrow account in a federally insured depository or trust institution authorized to do business in NC within 3 banking days of receipt
    • 2. Posting a bond is not an option, even for an unlicensed landlord
    • 3. The following monies can be disbursed prior to tenancy
    • a. Any administrative fee for the cost of processing the tenant’s reservation
    • b. Fees owed third parties to pay for goods, service, or benefits for the tenant
    • c. Up to 50% of the rents received
    • E. Transfer of Property Subject to Act
    • 1. New owner must honor all vacation rental agreements that end within 180 days of acquiring the property
    • 2. New owner may choose to honor vacation rental agreements that end more than 180 days after transfer of the property; tenants of denied agreements are entitled to a full refund of monies previously paid
    • 3. Seller must transfer to the new owner within 30 days of closing all advance payments for tenancies occurring after transfer of the property
    • F. Expedited Eviction
    • 1. Four (4) hours oral or written notice must be given to the vacation renter to leave the property; notice may be posted on the front door of the property if first method of notice failed
    • 2. If tenant fails to leave voluntarily, a summons and complaint may be filed to initiate legal proceedings
    • 3. Within 12-48 hours after service on the tenant, a hearing may be held before a magistrate in small claims court
    • 4. If magistrate finds in favor of landlord, tenant has 2-8 hours to vacate
    • G. Landlord & Tenant Duties
    • 1. Landlord and tenant duties are similar to those under Residential Rental Agreement Act
    • 2. Landlord must provide the property in “fit and habitable condition” or substitute a reasonably comparable property in such condition or the tenant is owed a full refund of all payments made by the tenant
    • 3. Any language in the vacation rental agreement about an automatic forfeiture of any of the TSD due to a breach by the tenant is prohibited
    • H. Mandatory Evacuation
    • 1. Tenant must comply with a mandatory evacuation order of an area that includes the vacation property
    • 2. Tenant is entitled to a prorated refund from the landlord for each night the tenant is unable to occupy the property due to the mandatory order unless
    • a. Prior to occupancy, tenant refused vacation insurance offered by landlord or broker OR
    • b. Tenant purchased insurance offered by the landlord or broker
    • III. Commercial Leases (Manual, pp. 718-732) Level 2
    • A. Lease Types
    • 1. Fixed Rental (Flat) Lease
    • a. A fixed amount of rent paid at regular intervals during the lease term
    • b. Most common in residential leases but also some smaller commercial leases
    • 2. Percentage Lease
    • a. All or part of the rent is calculated based on a stated percentage of business receipts from the lessee; usually based on gross sales
    • b. Occasionally, a percentage of gross sales may be additional rent for income over a stated minimum amount plus a fixed base rental amount
    • 3. Net Lease
    • a. In addition to paying rent, lessee is responsible for some or all of the expenses and costs related to the property
    • b. Expenses/costs frequently include repairs and maintenance, property taxes, property insurance, etc.
    • c. Frequently used for long term rentals of commercial or industrial buildings
    • 4. Graduated Lease
    • a. Calls for systematic increases in rental rate at regular intervals over the lease term
    • b. Advantage to tenant may be lower rates at the beginning, especially for a new company
    • c. Advantage to landlord may be ability to anticipate inflation on rental rates
    • 5. Index Lease
    • a. Calls for periodic increases or decreases in the rent based on some reliable government or private index, such as the US Consumer Price Index
    • b. Intent is to let rent fluctuate with the economy
    • 6. Full Service Lease
    • a. Landlord provides all utilities, cleaning services, ground maintenance services, and other services related to the tenancy
    • b. Rent is higher because it is all inclusive
    • 7. Leases for Special Circumstances
    • a. Ground Lease
    • i. Tenant leases a vacant parcel of land for an extended period of time,
    • ii. Lessee will build on the property; clearly noting how those improvements will be handled at the end of the lease is critical
    • b. Mineral Lease
    • i. Entitles lessee to explore for minerals and mine them if they are discovered
    • ii. Mineral leases of any length must be in writing
    • c. Oil and Gas Lease
    • i. This lease transfers to the lessee the right to extract oil or gas from the landlord’s property
    • ii. There is an extensive separate body of law that address oil and gas leases; consult an expert before proceeding
    • B. Common Lease Provisions
    • 1. Tenant’s Proposed Use of the Property
    • a. Lessee may make any legal use of the property unless there are use restrictions in the lease
    • b. Lessor might wish to restrict uses that use or create environmental hazards or competing uses for existing businesses in the area
    • c. Lessee might wish to make lease contingent on ability to obtain necessary license to conduct intended business practice
    • 2. Environmental Matters
    • a. Lessor can be held legally responsible for environmental cleanup costs even if the problem was caused by the tenant
    • b. Lessee might consider performing an environmental site assessment prior to signing lease to avoid possible liability for previous environmental contamination cleanup
    • 3. Lessee’s Trade Fixtures
    • a. Definition of Trade Fixture: personal property of the tenant installed on the leased premises by the lessee for use in the lessee’s trade or business
    • b. Removable by lessee at the end of the lease term if no material damage to the lease premises results and the lease does not stipulate otherwise
    • 4. Repairs and Upfitting
    • a. There is no implied promise that the premises are fit or suitable for occupancy, or for the particular use intended, or that the premises are safe for use
    • b. Absent a lease provision, such as in a net lease, the lessee is not obligated to make ordinary repairs to the leased premises
    • c. If leased property is part of a larger area owned by the lessor, the lessor retains control and responsibility for maintaining the common areas
    • d. Definition of Upfitting: providing and paying for improvements to the property by the lessor in preparation for tenant’s use
    • 5. Assignments and Subleases
    • a. Definition of Assignment: a transfer of the lessee’s entire remaining interest in the lease; the new tenant (assignee) replaces the former tenant (assignor) for the remainder of the lease term
    • b. Original tenant can still be held liable for lease terms unless a novation is granted by the lessor that relieves the original lessee of future lease obligation
    • 6. Lease Renewal
    • a. Lessee has no implied right to renew the lease
    • b. An automatic renewal clause can be included in the lease terms
    • 7. Options for Purchase and Preemptive Rights
    • a. Lease provision may give lessee the right to purchase the property via a right of first refusal or a first opportunity to purchase
    • b. The purchase price or a reliable way to determine the price should be included in the lease
    • 8. Lessor has no Right to Enter Premises during Lease Term unless granted in the Lease
    • 9. Lessee’s Implied Covenant of Quiet Enjoyment is a Warranty of Lessee’s Right to Possess and Use per the terms of the Lease
    • 10. Breach of Lease by Lessor or Lessee
    • a. Lessee’s failure to pay rent
    • b. Lessee’s liability for “waste”
    • c. Lessee’s remedies for Lessor’s breach
  • Miscellaneous NC Laws and Legal Concepts
    • I. Unique NC Real Property Ownership (Manual, Chapter 1, Concurrent Ownership,
    • pp. 11-14)
    • A. Tenancy by the Entirety [NCGS 39.7; NCGS 41, Article 5]
    • 1. Concurrent Ownership Reserved for Legally Married Spouses
    • a. Each spouse owns an equal undivided interest in the property
    • b. Each spouse holds an equal right to the control, use, possession and income of the property
    • 2. NC Default Conveyance to Buyers married to each other at time of purchase unless otherwise requested
    • 3. Previously Owned Property not automatically converted at marriage to tenancy by the entirety
    • 4. Mutual Agreement Required to convey or transfer any interest
    • a. Neither spouse can individually transfer their interest or eliminate the other spouse’s right of survivorship
    • b. Neither spouse can seek partition of the property as long as the tenancy by entirety exists
    • 5. Termination
    • a. Mutual Agreement
    • b. Valid Divorce Decree which automatically converts the property ownership to tenancy in common
    • c. Death of One or Both Spouses
    • B. Joint Tenancy in North Carolina [NCGS 41, Article 6]
    • a. Specific Language Required to create Right of Survivorship in NC; not automatic like most states
    • b. Unequal Ownership Interests are Possible in NC
    • II. Disclosure & Caveat Emptor
    • A. Doctrine of Caveat Emptor (Manual, Chapter 8, Responsibilities of Sellers and Purchasers, Doctrine of Caveat Emptor, pp. 173-175)
    • 1. Doctrine of Caveat Emptor: seller has no affirmative obligation to disclose information about the property being sold to the buyer and places the burden on the buyer to investigate the property before contracting to purchase the property
    • 2. Literally means “Let the Buyer Beware”
    • 3. North Carolina seller has no affirmative duty to disclose property information to buyer, but should not engage in any fraudulent acts to induce buyer to forego property inspection
    • B. Residential Property Disclosure Act [NCGS 47E] (Manual, Chapter 8, The Residential Property Disclosure Act, pp. 175-183)
    • 1. Applicability
    • a. Sellers of most Residential 1-4 unit Properties must provide disclosure forms to prospective buyers
    • b. Buyer must receive Disclosure Forms prior to making an offer; buyer must sign to acknowledge receipt
    • c. Buyer’s Right to cancel contract
    • i. Only possible if seller does not provide completed disclosure forms prior to or at time of offer
    • ii. Buyer may cancel in writing by the occurrence of the 1st of the following
    • d. Exempt Transfers
    • i. Involving the first sale of a dwelling never inhabited
    • ii. By lease with option to purchase contracts where the lessee occupies or intends to occupy the dwelling
    • iii. To or from the State, County or City
    • iv. Between co-owners
    • v. Made solely to a spouse, grandparent, parent, or child
    • vi. Between spouses in a divorce
    • vii. Made pursuant to court order
    • viii. Made in connection with a mortgage default or foreclosure
    • ix. By a fiduciary in the course of the administration of a decedent's estate, guardianship, conservatorship, or trust
    • x. In connection with the owner’s failure to pay federal, state, or local taxes
    • xi. Between parties that have agreed to not complete a RPOADS
    • e. Broker’s General Duty
    • i. Inform parties of rights and obligations under Act
    • ii. Listing agent shall provide seller with form copies to complete
    • iii. Assist in delivering completed forms to prospective buyers
    • iv. Retain signed forms in transactional files
    • v. Broker’s duty to disclose material facts unaffected by Act
    • 2. Mandatory Forms to be Completed by Property Owner
    • a. Residential Property & Owners’ Association Disclosure Statement (RPOADS) [Rule 58A .0114]
    • b. Mineral and Oil and Gas Disclosure (MOG) [Rule 58A .0119]
    • i. Seller must answer “yes” or “no” to items about their intent to sever rights
    • ii. Exempt transfers are same as for RPOADS minus the following
    • C. Materiality Laws [NCGS 93A-6(a)(1)] (Manual, Chapter 8, Legal Duties of Real Estate Agents and Principals, pp. 147-151, and Agent’s Duties under Real Estate License Law, pp. 161-173; LLCR, pp. 105-108; Material Facts section of the 2022- 2023, the 2019-2020, and the 2018-2019 Update courses)
    • 1. Broker’s Duty to Discover & Disclose
    • a. Affirmative duty to discover and disclose material facts relating to the transaction to all parties to the transaction regardless of whom the broker represents in the transaction
    • b. Misrepresentation and omission of material facts prohibited
    • 2. Material Fact Categories & Examples
    • a. Facts about Property Itself
    • i. Manufactured Homes vs. Manufactured (Modular) Buildings [NCGS 20- 286(11)(b)(6); NCGS 143, Article 9B] (Manual, Chapter 1, Improve- ments, p.8; Bulletin article, Manufactured Homes: Real or Personal Property?, June 2002)
    • ii. Polybutylene Pipes that have ever leaked (even if repaired)
    • iii. Synthetic Stucco / Exterior Insulating & Finishing System (EIFS)
    • iv. Methamphetamine Lab (Bulletin article, “Meth” Houses, May 2005)
    • v. Radon
    • vi. Unpermitted Additions/Improvements
    • vii. Partial Destruction of Property
    • viii. Gravesites located on the Property
    • b. Matters Relating Directly to the Property
    • i. Zoning
    • ii. Permitting Regulations
    • iii. Flood Zones and Need for Flood Insurance
    • iv. Insurability of the Property
    • c. Matters Relating Directly to the Ability of Agent’s Principal’s to Complete the Transaction
    • i. Foreclosure
    • ii. Short Sale
    • iii. Inability to Obtain Financing
    • d. Matters of Special Importance to a Party
    • 3. Non-Material Fact Considerations
    • a. Death or Serious Illness of Previous Property Occupant [NCGS 39-50 and NCGS 42-14.2]
    • i. Brokers do not have to volunteer this information
    • ii. If buyer asks for this information, a listing agent can either decline to answer or answer honestly
    • iii. Questions about whether the owner or tenant had AIDS cannot be answered since AIDS is a protected “Handicapping Condition” under Fair Housing laws
    • b. Presence of Convicted Sexual Offender [NCGS 14, Article 27A]
    • i. Brokers do not have to volunteer this information
    • ii. If buyer asks for this information, an agent must answer honestly to the best of their knowledge
    • iii. Brokers are advised to direct consumers to the statewide on-line Sex Offender Registry
    • c. Square Footage
    • i. Measurement using NCREC’S Residential Square Footage Guidelines
    • ii. While not a material fact, if broker will advertise heated living square footage, the broker must personally measure or hire an expert to do so
    • III. NC Planned Community Act [NCGS 47F] (Manual, Chapter 7, NC Planned Community Act, pp.126-127) Level 1
    • A. Expands Owner Associations’ Authority and Covenant Enforcement Power
    • B. Requires Explanation to Prospective Buyers of owner association powers, assessments, and enforcement remedies
    • IV. Subdivision Regulations (NCGS 160D, Article 8; Manual, Chapter 7, Subdivision Approval, pp.113-115) Level 2
    • A. Definition of Subdivision [NCGS 160D-802]:
    • 1. Division of Land into 2 or more Lots, Building Sites or other divisions for the Purpose of Sale or Building Development (now or in future) OR
    • 2. Any Division of Land involving Dedication of a New Street or Change in Existing Streets
    • B. Common Exclusions
    • 1. Division of Land into Parcels more than 10 acres each with no street right-of- way dedication OR
    • 2. Division of a tract in single ownership of no greater than 2 acres into no more than 3 lots with no street right-of-way dedication
    • C. Recording Requirement
    • 1. Owner must Record Final Plat with Register of Deeds prior to Conveying Any Portion of the Parcel
    • 2. Streets must be Designated as Private or Public (discussed in next subsection)
    • D. Criminal Penalty for Selling Lots in Unapproved Subdivision [NCGS 160D-807]
    • 1. In Counties or Municipalities that have a Subdivision Ordinance
    • 2. Survey of Proposed Lots not equal to Subdivision Approval
    • 3. Lots cannot be offered for sale or lease or be put under contract until the preliminary subdivision plat approval has been obtained
    • 4. Contract Conditions
    • a. Must include a copy of the preliminary plat
    • b. Cannot close before delivery of the final recorded plat
    • c. Notification that buyer/lessee may terminate the contract without breach if there is any material difference between the preliminary and final plats
    • d. Allows buyer/lessee 5 days to close after delivery of final plat without material differences or 15 days to terminate the contract with full refund after delivery of final plat with material differences
    • E. Broker Responsibilities
    • 1. Verify Approval Status on Plat Map
    • 2. Offer and Contract Possible after Preliminary Plat Approval
    • V. Streets Disclosure Law [NCGS 136-102.6] (Manual, Chapter 7, Subdivision Streets Disclosure Laws, pp.118-119; The 4 S’s” Septic, Streets, Underground Storage Tanks & Square Footage section of the 2016-2017 Update course; Subdivision Street Disclosure section of the 2014-2015 Update course)
    • A. Application
    • 1. If developer plans to dedicate the subdivision streets to public use, street construction must comply with Department of Transportation standards
    • 2. Developer is required to provide prospective buyer with a disclosure statement that clearly states whether streets will be public or private
    • 3. Maintenance responsibility is a material fact
    • B. Public designation does not always equate to governmental acceptance of maintenance and repair responsibility
    • C. Broker’s Responsibility
    • 1. Reasonable Inquiry
    • 2. Responsibility for Adjacent Street Maintenance is Material Fact
    • 3. Disclosure of Street Status on Resale Property
    • VI. Environmental Laws (Manual, Chapter 7, Environmental Laws and Regulations, pp. 117-122 Level 1
    • A. NC Coastal Area Management Act (CAMA) [NCGS 113A, Article 7]: requires a permit prior to engaging in any “development” of an “area of environmental concern”
    • B. NC Mountain Ridge Protection Act [NCGS 113A, Article14]: first state in country to enact comprehensive legislation regulating construction on protected mountain ridges
    • C. Waterway Vegetation Buffer Zones: to minimize adverse effects of pollution, a buffer zone of undisturbed vegetation is required along some river basins and coastal waterways, e.g., 30-50 feet buffer from water’s edge
    • D. Scenic Corridor Zones: limits land use within “scenic corridor zones”
    • E. NC Leaking Petroleum Underground and Storage Tank Cleanup Act [NCGS 143-
    • F. NC Sediment Pollution Control Act [NCGS 113A, Article 4]: regulates land- disturbing acts that alter natural vegetation or topography in a way that creates sediment
    • G. NC Clean Water Acts [NCGS 113-229]: requires a permit to do dredging and filling in wetland areas
    • H. Wastewater Systems: all wastewater must be treated through a septic system or sewage treatment plant; a straight-pipe system is illegal and a material fact
    • VII. NC State Fair Housing Act [NCGS 41A] (Manual, Chapter 18, Fair Housing, pp. 631-648; Chapter 18, State Fair Housing Act, p. 649; Fair Housing section of the 2020-2021 Update course)
    • A. Compared to Federal Fair Housing Act
    • 1. Identical to Federal Fair Housing Act except for Exemptions
    • 2. Exemption Differences from Federal Act
    • a. No exemption for private owners that sell without a broker
    • b. Exemption for rental of 1-4 residential unit if owner or owner’s family member lives in one of the units
    • c. Exemption for rental of rooms in a single-sex dormitory
    • B. Enforced by NC Human Relations Commission
    • C. The More Restrictive Federal or State or Local Act Applies
Examination sources