Key Takeaways
- North Carolina agency law is governed by the Real Estate License Law and Commission Rules (21 NCAC 58)
- A written agency agreement is required to create a buyer or seller agency relationship
- NC brokers must disclose their agency status at first substantial contact with a prospective buyer or seller
- The Working with Real Estate Agents brochure must be provided to all prospective buyers and sellers
- North Carolina recognizes seller agency, buyer agency, dual agency, and designated agency relationships
Agency Relationships in North Carolina
Important: This content covers North Carolina-specific agency law. You should complete the National Real Estate Exam Prep first, as agency concepts are also tested on the national portion.
Agency relationships in North Carolina real estate are governed by the Real Estate License Law and Commission Rules.
Key Agency Definitions
| Term | Definition |
|---|---|
| Agent | A broker representing a party in a transaction |
| Principal | The party being represented (client) |
| Client | Party with written agency agreement |
| Customer | Party NOT represented by the broker |
| Dual Agent | Broker representing both buyer and seller |
| Designated Agent | Specific broker assigned to represent one party exclusively |
Creating Agency Relationships
In North Carolina, a written agency agreement is required to establish:
- Seller agency (listing agreement)
- Buyer agency (buyer agency agreement)
Without a written agreement, no agency relationship exists, and the broker owes limited duties.
Requirements for Written Agency Agreement
| Element | Description |
|---|---|
| In Writing | Must be a written document |
| Signatures | Signed by client and broker |
| Type of Agency | Seller, buyer, or dual |
| Duration | Beginning and ending dates |
| Compensation | How broker will be paid |
| Duties | Services broker will provide |
Exam Tip: Oral agency agreements are NOT enforceable in North Carolina. The relationship must be in writing to create client-level duties.
First Substantial Contact
Brokers must disclose agency status at first substantial contact:
What Constitutes First Substantial Contact
| Activity | Substantial Contact? |
|---|---|
| Discussing specific property features | Yes |
| Discussing buyer's financial qualifications | Yes |
| Showing property to prospective buyer | Yes |
| Providing general information at open house | No |
| Answering basic questions about listing | No |
Working with Real Estate Agents Brochure
North Carolina requires brokers to provide the "Working with Real Estate Agents" brochure published by NCREC.
When to Provide the Brochure
| Situation | When to Provide |
|---|---|
| Prospective Buyer | At first substantial contact |
| Prospective Seller | At first substantial contact |
| Open House Visitors | Before any substantial discussion |
Purpose of the Brochure
The brochure explains:
- Types of agency relationships available
- Duties owed to clients vs. customers
- How brokers are compensated
- Dual agency and its implications
- Consumer rights and options
Critical: Failure to provide the brochure is a license law violation.
Duties to Clients vs. Customers
Duties to Clients (Agency Relationship)
Brokers owe fiduciary duties to clients:
| Duty | Description |
|---|---|
| Loyalty | Put client's interests first |
| Obedience | Follow lawful instructions |
| Disclosure | Reveal all material facts |
| Confidentiality | Protect private information |
| Accounting | Handle funds properly |
| Reasonable Care | Act competently |
Duties to Customers (No Agency)
To parties NOT represented (customers), brokers owe:
- Honesty - Do not misrepresent facts
- Fairness - Treat fairly in dealings
- Disclosure - Reveal material facts about property condition
- Ministerial acts - May perform basic tasks
Material Facts
Brokers must disclose material facts to ALL parties:
- Property defects
- Environmental hazards
- Known issues affecting value
- Facts affecting buyer's decision
Note: Material fact disclosure is owed to everyone, not just clients.
What document must North Carolina brokers provide to prospective buyers and sellers?
When must a North Carolina broker disclose their agency status to a prospective client?