The Complaint Risk
The North Carolina Real Estate Commission (NCREC) receives over a thousand complaints annually from consumers, other brokers, and its own investigators. Disciplinary action—ranging from reprimand and fines to license suspension or revocation—is a public record that can end a career. What are the most common violations that lead to NCREC discipline for NC brokers?
The most frequent complaints stem from a failure to prioritize compliance over convenience, especially in handling money and disclosures.
The Top 5 NCREC Complaint Categories
- Misrepresentation or Failure to Disclose Material Facts:
- The Violation: Intentionally or negligently failing to discover and disclose any fact that could affect a reasonable person’s decision to buy, sell, or lease. This includes structural defects, unpermitted additions, or adverse zoning changes.
- PB Risk: High. Provisional Brokers (PBs) must conduct a diligent visual inspection and document their findings, regardless of what the seller tells them.
- Trust Account Violations:
- The Violation: Improper handling or accounting of funds belonging to others, such as Earnest Money Deposits (EMD) or Tenant Security Deposits (TSD). This includes improper reconciliation, commingling funds, or conversion (stealing funds).
- BIC Risk: Very high. The Broker-in-Charge (BIC) is ultimately responsible for all trust account activity in the firm. PBs are required to immediately turn over all client funds to their BIC.
- Negligence and Incompetence:
- The Violation: Failing to exercise the skill, care, and diligence required of a licensed broker. This includes incomplete or incorrect paperwork (Form 2-T), missed Due Diligence deadlines, or poor communication with clients or attorneys.
- PB Risk: High. This is often mitigated by the mandatory BIC supervision and a robust brokerage training program.
- Improper Advertising and Unlicensed Activity:
- The Violation: Failing to clearly include the brokerage firm’s name in all advertising (Rule 58A .0105), which results in a prohibited “blind ad.” This also includes allowing an unlicensed assistant to perform brokerage activities.
- PB Risk: High. All PB advertising must clearly be in the name of the firm.
- Breach of Fiduciary Duty:
- The Violation: Failing to prioritize the client’s interests (loyalty, obedience, confidentiality) or entering a transaction where the broker has an undisclosed conflict of interest (e.g., buying a client’s property without proper disclosure).
- NCREC Focus: Dishonest or fraudulent dealing aimed at personal gain is often met with the harshest sanctions, including license revocation.
Key Takeaway
The most common causes of NCREC discipline are failure to disclose Material Facts and Trust Account violations. New Provisional Brokers must focus on meticulous contract detail and strict adherence to BIC supervision to minimize their risk of a career-ending violation.