Part II — North Carolina State Law & Practice

The State section at a glance

The State section is written by the North Carolina Real Estate Commission and carries 60 scored items — 43% of the 140 scored items on the whole exam. It is scored on its own, and you must pass it on its own. The candidate booklet (Pearson VUE, April 2026, p. 17) lists eight categories:

Agency (16), Brokerage Practice (12) and Other NC Laws (11) are 39 of the 60 items. Budget your study time the same way.

Where these rules come from. North Carolina real estate licensing is governed by the Real Estate License Law, NCGS Chapter 93A, and the Commission's rules in Title 21, Chapter 58 of the North Carolina Administrative Code (21 NCAC 58A). Other chapters of the General Statutes supply the disclosure, landlord–tenant, tax and fair housing rules. Every rule below names its source. Statutes were read on ncleg.gov and Commission rules on the Office of Administrative Hearings' NCAC site on 2026-09-23; the exam figures come from the April 2026 candidate booklet.

1. Licensure (3 items)

1.1 The Commission

The North Carolina Real Estate Commission (NCREC) is the state agency that licenses and regulates real estate brokers. It licenses individuals and firms, certifies education providers, writes the Chapter 58 rules, investigates complaints, disciplines licensees, and administers the Real Estate Education and Recovery Fund. The Commission protects the public, not the industry.

What the Commission does not do is decide money disputes. It "shall not act as a board of arbitration" over commission rates, commission splits or broker pay (21 NCAC 58A .0109(f)), and it cannot award a consumer damages. A consumer who wants money sues in court. The Commission's power runs to the license: it can reprimand, censure, suspend or revoke (NCGS 93A-6(a)).

1.2 One license: the broker license

North Carolina issues one individual license — the broker license. The statute keeps the word "salesperson" only for people licensed as salespersons before April 1, 2006 (NCGS 93A-2(b)). What changes over a career is the license's status:

• Provisional broker (PB). Every new licensee who qualifies by exam is a provisional broker. A PB "must be supervised by a broker-in-charge when performing any act for which a real estate license is required" (NCGS 93A-2(a2)). The booklet notes that most new licenses are issued on inactive, provisional status; the license goes active when the PB affiliates with a broker-in-charge.
• Broker (non-provisional). A PB who finishes postlicensing education becomes a full broker. A full broker may work under a broker-in-charge or independently — but an independent sole proprietor must be a broker-in-charge to do most brokerage (booklet p. 3).
• BIC Eligible / Broker-in-charge (BIC). A broker who meets the experience and course requirements (Section 3) may be designated BIC of an office.

Separately, every license is active or inactive. Only an active license may be used for brokerage. A license that is not renewed by June 30 expires, which is different from inactive; an expired licensee must apply for reinstatement.

A firm license is issued to a business entity (corporation, LLC, partnership and so on). The firm must have a qualifying broker who holds an active broker license. A limited nonresident commercial license lets a broker licensed in another state, with no North Carolina address, do commercial transactions only, under a brokerage cooperation agreement with a North Carolina resident broker.

1.3 Who needs a license

A real estate broker is anyone who, for compensation or the promise of it, lists, sells, buys, auctions, negotiates, leases, rents, or offers to do any of these for others (NCGS 93A-2(a)). Timeshare sales are included. Doing so without a license is a criminal offense.

Common exemptions (NCGS 93A-2(c)) include owners dealing with their own property (and W-2 employees of an owner business entity acting in that capacity), an attorney-in-fact under a power of attorney completing a specific contract, a North Carolina attorney acting within the practice of law, and a person acting under a court order. Unlicensed assistants may do clerical work but may not do acts that require a license.

1.4 Qualifying for the license

The booklet (pp. 5–7) lists the requirements:

• At least 18 years old, lawful presence and work authorization, and a Social Security number.
• The North Carolina Broker Prelicensing Course — at least 75 instructional hours with an end-of-course exam — completed within three years before applying. (Waivers exist for a real estate or law degree, for equivalent prelicensing in another state, and for licensees of other states, who may take only the State section.)
• A complete application with the $105 fee and a criminal record report. A criminal record is reviewed for "character"; it is not an automatic bar, but it must be disclosed honestly. Failing to disclose is itself a character problem.
• Passing both sections of the exam within the 180-day eligibility period (see "How the North Carolina Exam Works").

1.5 Staying licensed: postlicensing, CE and renewal

These three are tested because candidates confuse them.

Details that turn into questions:

• A provisional broker who misses the 18-month postlicensing deadline has the license placed on inactive status (NCGS 93A-4(a1)). It is not revoked. Provisional status is removed automatically when the education provider reports completion of all three courses.
• A broker newly licensed by exam has no CE requirement in the first license year; the 8 hours are due before the second renewal.
• CE is required to renew on active status. A broker may renew without CE and simply be inactive.
• Licensees must notify the Commission within 10 days of any change in business or residence address or in employment status, including a change of BIC.

2. Agency (16 items)

Agency is the largest State category. North Carolina's rules on agency agreements and disclosure are in 21 NCAC 58A .0104 (read 2026-09-23), and almost every agency question turns on one of its paragraphs.

2.1 "Working with Real Estate Agents" at first substantial contact

In every real estate sales transaction, a broker must, at first substantial contact with a prospective buyer or seller:

1. give the consumer a copy of the Commission's publication "Working with Real Estate Agents",
2. put the broker's name and license number on it,
3. review it with the consumer, and
4. determine whether the broker will act as the buyer's or the seller's agent (.0104(c)).

First substantial contact is not the first phone call. The rule defines it to include contacts where "the consumer or broker begins to act as though an agency relationship exists and the consumer begins to disclose to the broker personal or confidential information." Chatting at an open house about the neighborhood is not it; the moment a buyer starts explaining how much they can really pay, it is.

If first substantial contact happens by telephone or electronically and handing over the brochure is impractical, the broker must send it at the earliest opportunity and no later than three days after that contact, then review it at the earliest practicable opportunity.

The publication is a disclosure, not a contract. It explains the options; it does not create representation. It is required in sales transactions — not in rentals — and the paragraph does not apply to brokers representing sellers at auction (.0104(g)).

2.2 Agency agreements must be written — with one narrow exception

Paragraph .0104(a) sets the writing rules. Learn them as three rules and one exception:

• Seller (listing) agreements must be in writing and signed at the time the relationship is formed. A broker may not market a property on an oral listing.
• Buyer and tenant agreements must be express and must be in writing and signed no later than the time any party makes an offer to buy, sell, rent, lease or exchange.
• But a buyer or tenant agreement that binds the buyer for a period of time or restricts the buyer's right to work with other agents (an exclusive agreement) must be written and signed from its formation. So the only agreement that may exist orally, for a while, is an express, non-exclusive buyer or tenant agency of no fixed term — and it must be put in writing before the first offer.
• Every written brokerage agreement must be for a definite period, include the broker's license number, and terminate without prior notice at the end of that period. No automatic renewals — except that a landlord's agreement with a broker to find tenants or collect rent may renew automatically if the landlord can terminate at the end of any period.
• An early-termination penalty must be clear and conspicuous.
• Every listing, buyer agency or other written brokerage agreement must contain the Commission's nondiscrimination clause: "The broker shall conduct all brokerage activities in regard to this agreement without respect to the race, color, religion, sex, national origin, handicap, or familial status of any party or prospective party" (.0104(b)).
• A broker cannot sue for a commission without a written agreement signed by the party to be charged (NCGS 93A-13). This is a separate, statutory reason to get the agreement in writing.
• A cooperation agreement between brokers (for example, to share compensation) is not an agreement for brokerage services and need not be written, except for the limited nonresident commercial broker case.

The Commission's May 2024 bulletin on buyer agency agreements (bulletins.ncrec.gov) restates the core rule: buyer agency agreements "must be in writing and signed by the broker and client no later than the time of making an offer."

2.3 Telling the other side whom you represent

• A seller's agent or subagent working directly with a prospective buyer must disclose in writing, at first substantial contact with the buyer, that the broker represents the seller, with the broker's license number. By phone, disclose immediately by the same means and transmit the written disclosure within three days (.0104(e)).
• A buyer's agent must disclose to the seller or seller's agent at the initial contact that the broker represents the buyer, and must confirm it in writing no later than delivery of the offer (the offer itself may contain the confirmation) (.0104(f)).

2.4 Dual agency and designated agency

• A broker representing one party may not also represent another party in the same transaction without the written authority of each party (.0104(d)). The authority must be obtained when the relationship forms — unless the buyer is being represented under an oral agreement, in which case the written dual agency authority is due no later than the time of an offer.
• A firm that represents more than one party in the same transaction is a dual agent, and its brokers must disclose that (.0104(i)). This is the usual case: the firm lists the house and another broker in the same firm has the buyer.
• Designated agency (.0104(j)–(m)): when the firm is a dual agent, it may — with the prior express approval of its buyer and seller clients — designate one or more of its brokers to represent only the seller and one or more others to represent only the buyer. The designation must be in writing no later than the dual agency authority is required to be.
• A broker who has actually received confidential information about the other party in the transaction may not be designated for this party.
• A BIC may not be a designated broker for one party when a provisional broker he or she supervises is the designated broker for a competing party.
• The designated brokers must disclose all designated brokers' identities to both buyer and seller no later than presentation of the first offer.
• A designated broker may not disclose, without the client's permission, that the client would accept a different price or terms, the client's motivation, or information the client has identified as confidential (unless a statute or rule requires disclosure).
• An individual broker who is a dual agent may, by the written agreement authorizing dual agency, be barred from disclosing the same three kinds of information about either party (.0104(n)).

A dual agent cannot advocate for either client against the other. Designated agency gives each client back an advocate.

2.5 When the broker owns the property, or wants to buy it

• A broker selling property the broker owns may not represent a buyer of that property — except in commercial transactions where the broker owns less than 25% and the buyer consents after full written disclosure (.0104(o)). The broker's firm may represent the buyer if the individual broker representing the buyer has no ownership interest and the buyer consents after written disclosure.
• A listing broker or firm that wants to buy its own listing must first disclose in writing to the seller the possible conflict of interest and that the seller may want independent advice. Before an individual listing broker contracts to buy, the listing must be terminated or transferred to another broker in the firm (.0104(p)).

2.6 Duties: to clients, and to everyone

An agent owes a client the fiduciary duties of obedience, loyalty, disclosure, confidentiality, accounting and reasonable care (Chapter 5). North Carolina adds a statutory duty owed to every party, client or not:

• The Commission may discipline a broker for "making any willful or negligent misrepresentation or any willful or negligent omission of material fact" (NCGS 93A-6(a)(1)). Negligence is enough; the broker did not have to intend to deceive.
• A broker representing either the owner or the buyer "shall disclose to the purchaser any material facts the broker knows or reasonably should know about the property," and the owner's disclosure statement "does not obviate the broker's duty to disclose" (21 NCAC 58A .0114(c)). "Reasonably should know" means a broker cannot hide behind a seller's "No Representation" answer.
• A material fact is one "a reasonable person would recognize as relevant to a purchaser in deciding to purchase the property the suppression of which could reasonably result in a different decision" (.0114(c)). It can be about the property (a leaking roof), the surroundings (a planned highway through the back yard), or the parties' ability to perform (a seller facing foreclosure who cannot deliver clear title).
• What is not a material fact by statute: that a prior occupant died or had a serious illness in the property, or that a registered sex offender lives or lived in or near it — though no seller may knowingly make a false statement about these facts (NCGS 39-50).

Other discipline grounds that are really agency questions: acting for more than one party without the knowledge of all of them (93A-6(a)(4)), false promises likely to induce (93A-6(a)(2)), and any improper, fraudulent or dishonest dealing (93A-6(a)(10)).

2.7 How agency ends

An agency ends when its purpose is completed, its term expires, the parties agree, or by operation of law (death, incapacity, bankruptcy, destruction of the property). The duty of confidentiality survives the end of the relationship.