Today’s blog is for North Carolina real estate professionals who are licensed by the Real Estate Commission. One of the things I’ve seen multiple times is property management issues. These are a couple of things. Typically, with property management, if you’re representing the owner of the property and doing the property management on essentially the quite landlord side, sometimes it becomes a little bit of friction. So, you’ve got to watch out for that. You’ve got to make sure you have a good relationship because that’s where a lot of the complaints regarding property management will stem from. That’s first and foremost — ensure you have a good relationship with your client and prevent things from deteriorating. Sometimes that might be out of your control but do the best that you can.
The main thing that I have seen in regard to property management issues with real estate agents is not having a BIC (Broker-in-Charge) license and/or not having a trust account when you’re supposed to. And two things: if you’re handling money for a client and it’s beyond taking a check down the street or something like that — especially if you’re going to be holding the money in your bank account or something similar — it’s got to be a trust account and you have to keep track of all the money coming in, the time it came in, every single cent, to whom it goes out, the manner, the date, and down to the penny goes out to whom. So, you’ve got to pay particular attention to that. If you’re holding any money for a client, many times that comes with property management.
Now, to have a trust account as an agent, you must be a BIC. You cannot have a trust account as a real estate agent or licensed real estate professional in North Carolina unless you are a broker-in-charge. You cannot be a broker-in-charge unless you’ve worked under a broker-in-charge and been supervised by that broker-in-charge for at least two years. After applying to the Real Estate Commission for the broker-in-charge license and once that license is issued, you’re a BIC, and you can open a trust account and engage in property management that requires holding funds for a client. Typically, if you’re doing vacation rentals specifically, you might not need to hold any money for a client, which is great. If you don’t have to hold any money, then you don’t need a trust account or to be a BIC. However, to hold money for a client beyond running a check to somebody, you’ll need a trust account. You can get into some trouble with the Real Estate Commission. They do look out for stuff like this. Pay particular attention to this. If you think, “Hey, I might want to do property management down the road,” and you work under a BIC for a couple of years and feel qualified to be a broker-in-charge yourself, then go ahead and apply. Obtain the broker in charge license. This way, if you get the opportunity to do property management — something you want to do — you feel like you might be in a position where you’re going to have to hold a client’s money, then you’ll be able to open a trust account because you’d have the BIC license and then you’d be in compliance there, and you wouldn’t get in any trouble with the Real Estate Commission as long as that trust account is done properly and proper records are kept and reconciliations are done and things like that.