Real Estate Agency Contracts in North Carolina

Instructor: Kyle Aken

Kyle is a journalist and marketer that has taught writing to a number of different children and adults after graduating from college with a degree in Journalism. He has a passion for not just the written word, but for finding the universal truths of the world.

This lesson looks at the laws and rules governing real estate agency contracts in North Carolina as outlined by the license law and real estate commission rules. It covers everything in regards to requirements for agency contracts, oral buyer and tenant agency contracts, and first substantial contracts.

North Carolina Agency Contracts

As a real estate broker, Cam is concerned about how the laws and rules in North Carolina will impact the agency contracts he makes with consumers. This lesson will cover the specific laws and rules governing agency contracts. Specifically, looking at the requirements for agency contracts, oral buyer/tenant agency contracts, and first substantial contracts.

Laws and Rules Governing Agency Contracts

In North Carolina, the Real Estate Commission (Commission) protects the interests of the public when dealing with real estate brokers. The Commission has the power to regulate the business activities of both brokerage firms or brokers. This includes disciplining licensees that break the Commission rules or License Law.

Under the License Law G.S. 93A-6(a)(4) and real estate commission rule A.0104 an agent must not have a conflict of interest when representing a party in an agency contract. This includes:

  1. Undisclosed Dual Agency: The License Law prohibits a real estate agent from 'acting on behalf of more than one party in a transaction without the knowledge of all parties.' The real estate commission rule takes this one step further by stating that a brokerage firm or broker cannot represent more than one party without the written authority of both parties.
  2. Self-dealing: An agent cannot make a secret profit from a transaction where he represents a principle, this violates the conflict of interest provision. For example, Cam cannot buy a property from a seller at the listed price and then turn around and sell it for a profit at a later time.

Requirements for Agency Contracts

According to Rule A.0104, all agency contracts must meet the requirements of the Agency Agreements and Disclosure rule. These disclosure requirements are intended to inform consumers about all the choices they have to make an informed decision. However, many licensees fail to meet these requirements, from sheer laziness to lack of understanding. What brokers, like Cam, should understand is that they could be subject to disciplinary action if they fail to meet the requirements in a timely manner.

What many licensees fail to understand is that agency disclosures not only protect the public but the licensees too. When a licensee engages in undisclosed or unauthorized agency, especially dual agency, there could be disciplinary actions taken against the agent, broker-in-charge, and the company as well as monetary damages and civil liability against the company.

Oral Buyer and Tenant Agency Contracts

Under the Agency Agreements and Disclosures section and Rule A.0104(a) are the Commission rules regarding all agency agreements and disclosure. When it comes to agency agreements in brokerage services, both lease and sales transactions must be in writing and signed by all parties, including:

  1. Agency agreements with property owners must be in writing before any services are provided;
  2. Allow for an oral buyer or tenant agency agreement from the very beginning of the relationship. However, this agreement must be put in writing no later than the time at which any party wants to extend an offer.

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