Legal Quiz

Legal Quiz

A recap of our most popular weekly Q&As.

BY: WILL MARTIN, GENERAL COUNSEL

To learn more about each Q&A listed here, visit ncrealtors.org/resolve-library and search by the Q&A title or browse by category. Both are referenced in the parenthesis at the end of each question.

Q: If a buyer’s agent submits an offer to a listing agent, and that offer is rejected by the seller, are the listing agent and buyer’s agent required to keep a copy of the rejected offer for three years?

A: Yes. North Carolina Real Estate Commission Rule .0108 provides in part that brokers “shall retain records of all sales, rental, and other transactions conducted in such capacity, whether the transaction is pending, completed, or terminated.” Subsection (b) of the same rule specifically says that “offers to purchase” are included within the definition of “records” that should be preserved. (See Do rejected offers need to be retained for three years? 1/10/2019, Real Estate License Law/Rules)

Q: Is a listing agent required to confirm with a buyer’s agent that the buyer’s offer has been presented?

A: Yes, if the buyer’s agent requests confirmation in writing. Effective January 1, 2019, Standard of Practice 1-7 of the REALTOR® Code of Ethics was revised to provide that a listing agent must, upon the written request of a cooperating agent who submits an offer to the listing agent, provide a written affirmation to the cooperating agent stating that the offer has been submitted to the seller (or landlord). (See Is a listing agent obligated to confirm that an offer has been presented? 1/17/2019, Code of Ethics.)

Q: Is it OK for an NC REALTOR® member to provide a blank copy of the Offer to Purchase and Contract to a friend who is selling her unlisted property to an unrepresented buyer?

A: No. Giving a blank standard form to anybody, whether that person is a client, customer or friend, would be a violation of NC REALTORS®’ Forms Policy. Paragraph 4 of the Forms Policy provides that: “[p]ermitted users may use NC REALTORS®’ standard forms in connection with a transaction in which the permitted user is involved as a broker or a principal. Permitted users may not distribute blank NC REALTORS®’ forms to clients, customers or others, either gratuitously or for a fee, except that they may distribute specimen copies of any NC REALTORS® form to their clients or customers for review purposes.” (See Can I give a blank form to one of my friends? released 1/24/2019, Forms/ Miscellaneous.)

Q: If a developer/builder has all its listings placed with Firm A, may an agent with Firm B solicit the company’s future business?

A: Yes, provided that Firm B’s agent solicits listings on projects that the developer/builder may develop/build in the future, and does not solicit listings on any of the properties that the developer/builder currently has listed with Firm A. (See Soliciting future business of another REALTOR®’s client 2/7/2019, Code of Ethics.)

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Q: If an agent dies, may the commissions for his pending transactions be paid to his family or estate if they are not licensed real estate brokers?

A: The commissions may be paid to the deceased agent’s estate. Section 93A-2(c)(1)(4) of the Real Estate License Law waives the ordinary requirement that someone be a licensed real estate broker in order to receive compensation for brokerage activities. The exception applies to anyone “while acting as a receiver, trustee in bankruptcy, guardian, administrator or executor or any person acting under order of any court.” (See Who can receive the commission of a deceased agent? 1/31/2019, Real Estate License Law/Rules)

Q: Can a broker-in-charge (BIC) face discipline for losing track of a provisional broker’s license anniversary date?

A: Yes. North Carolina Real Estate Commission Rule 58A.0110(g)(1) requires that a BIC “assure that each broker employed at the office” has a current and active license. In its Broker-in-Charge Guide, the Commission states that the BIC must verify that the provisional broker has: (1) taken at least one 30-hour post-licensing course during the year prior to their license anniversary date; (2) paid the license fee by June 30; and (3) completed at least eight hours of continuing education credit by July 1. (See Can a BIC face discipline for losing track of a provisional broker’s license anniversary date? 2/21/2019, Real Estate License Law/Rules.)

Q: Is it ethical for a REALTOR® to offer incentives to prospective buyer and seller clients?

A: Yes, provided that, in the words of Standard of Practice 12-3 of the REALTOR® Code of Ethics, “any party interested in receiving or otherwise benefiting from the REALTOR®’s offer will have clear, thorough, advance understanding of all the terms and conditions of the offer.” (See Is it ethical for a REALTOR® to offer incentives to prospective buyer and seller clients? 2/28/2019, Code of Ethics.)

Q: So long as it is disclosed to a prospective buyer that a property they are interested in contains unpermitted improvements, is there anything else the buyer should be aware of?

A: Yes. The buyer should be aware that they could, at a later date, be required by the local governmental authority to obtain approval of the improvements at the buyer’s cost. It is also possible that a taxing authority could reassess and impose increased ad valorem taxes on the buyer for a period of time previous to the buyer’s ownership, if it concludes that the unpermitted improvements increased the property’s value. (See Should a buyer be concerned about unpermitted improvements? 3/14/2019, Disclosure.)

Q: If the parties to a contract need to amend it a second time, should they sign a second Agreement to Amend Contract form or should they just revise the Amendment form they already signed?

A: Either alternative can be used, and both would be equally effective. There are advantages and disadvantages to each method. (See How should I document a second amendment to an Offer to Purchase and Contract? 3/7/2019, Forms/Offer to Purchase and Contract/Miscellaneous.)

Q: May a REALTOR® set up and advertise a program where she would donate a portion of her commission to a charitable organization on behalf of any person who buys or sells a property using her as their real estate agent?

A: Yes, provided that: (1) the advertising, marketing and other representations about the program meet the “true picture” requirements of Article 12 of the REALTOR® Code of Ethics; and (2) the charity does not become involved in any way in referring the REALTOR® business or promoting the program. (See May I set up and advertise a charity donation program? 3/21/2019, Code of Ethics.)

If you’re not doing so already, be sure to read the Q&As that appear in the REALTOR® Rundown every Monday. It’ll help you on the next quiz!

RESOLVE: NC REALTORS® have free, unlimited access to our Legal Hotline and lawyers with more than 35 years of experience. Call 336-294-1415 or email legalhotline@ncrealtors.org with any questions regarding contracts, forms, fair housing, disclosure and more.

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