In the world of real estate, understanding the complexities of regulations and client expectations can be challenging. North Carolina’s real estate agents often face challenges that can lead to complaints filed with the North Carolina Real Estate Commission (NC REC). In this blog post, we will explore some of the most common complaints and how agents can avoid them. With insights from experienced professionals like Matt Kerekes, a licensed real estate agent in North Carolina for 13 years, we aim to provide valuable information for both agents and consumers.
There are three primary complaints that frequently arise in North Carolina real estate: mismanagement of trust accounts, practicing law without a license, and misrepresentation of material facts. Understanding these issues can help agents protect their licenses and maintain trust with their clients.
Trust account compliance is important in real estate, especially for property management companies. A trust account is used to hold funds belonging to clients, such as earnest money deposits. To manage a trust account, agents must be a Broker-in-Charge (BIC), which requires working under a BIC for two years and obtaining full broker status.
Common issues with trust accounts often stem from poor accounting practices. Many agents may not use proper software or may rely on outdated methods, like spreadsheets. It’s essential for agents to ensure accurate record-keeping and reconciliation. Regular audits and involving a CPA who specializes in trust accounting can help rectify potential issues before they escalate.
Interestingly, recent changes in regulations mean that not all brokerages are required to maintain a trust account anymore. Many transactions now allow attorneys to hold earnest money, which can reduce the number of complaints related to trust account mismanagement.
2. Practicing Law Without a License
Another significant complaint involves real estate agents drafting legal documents without the appropriate licensing. In North Carolina, agents have access to standard forms approved by the North Carolina Real Estate Commission, which they can use for transactions. However, creating custom legal documents can lead to serious repercussions.
Agents should always utilize the established forms for listings, buyer agency agreements, and rental properties. If a situation arises that requires a unique document or complex contingencies, it is important to refer clients to an attorney. This not only protects the agent from legal issues but also ensures that clients are getting professional legal advice.
Misrepresentation of material facts is perhaps the most impactful complaint, as it can directly affect the public. This includes providing inaccurate information regarding a property’s condition, square footage, or any other important detail that could influence a buyer’s decision. The NC REC emphasizes the importance of “reasonable reliance,” meaning agents must ensure the accuracy of the information they provide.
One effective way to ensure accuracy is to hire licensed appraisers to verify property details such as square footage. This approach not only protects the agent from complaints but also serves the interests of the buyer and seller. For instance, discrepancies in square footage can significantly impact property values, making accurate measurements vital.
Now that we’ve outlined the common complaints, let’s discuss some best practices that can help agents avoid these pitfalls. Being proactive, staying informed, and maintaining clear communication with clients are essential components in minimizing risks.
For agents managing trust accounts, keeping meticulous records is non-negotiable. This means regularly reconciling accounts and ensuring all transactions are documented accurately. Using reliable accounting software can streamline this process and help prevent errors.
Additionally, agents should familiarize themselves with the NC REC’s guidelines regarding trust accounts. Knowing the rules can empower agents to manage their accounts effectively and avoid potential violations.
Utilize Approved Forms
Verify Property Information
When listing properties, agents must verify all information provided, especially regarding material facts. This includes square footage, property condition, and any other details that could impact a buyer’s decision. Utilizing third-party services, like appraisers or home inspectors, can provide an extra layer of protection against misrepresentation claims.
As always, if you have questions or need further clarification on any of these points, consider reaching out to a legal professional or the North Carolina Real Estate Commission for guidance. Staying informed and proactive is the key to a successful career in real estate.
Need an Experienced Real Estate Agent in North Carolina?
If you’re looking for a knowledgeable and experienced real estate agent in North Carolina, reach out to Matt Kerekes of Bliss Real Estate, powered by LPT Realty. With years of experience in the industry, Matt can help you navigate the real estate market with confidence.
You can find his contact information here:
🔗Matt Kerekes’ Website
Here’s the Residential Square Footage Guidelines Brochure from the North Carolina Real Estate Commission:
📄Download Here
Bonus: Want to know the top 10 most common complaints (from 2011) filed with the NC Real Estate Commission and how to avoid them? Check out this helpful resource:
📌 NC REC Top 10 Complaints
*Nothing in this blog establishes an attorney-client relationship. Nothing in this blog is legal advice. If you have any questions, please check out our other blogs and our Youtube channel. You can also call us at 919-521-8810 with questions.