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43 Cards in this Set
- Front
- Back
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South Carolina real estate commission and licensing requirements |
Purpose of the license law is to protect the public's interest when involved in a real estate transaction. Protected by the following:
1. Required pre-license education 2. Testing applicants for knowledge and competence before licensing 3. Required continuing education for sales person and broker license renewal 4. Disciplining violators of the law |
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Legal authority for the license law |
This is a state statute passed by the legislature. The statute is an example of police power, which is a restrictive power |
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South Carolina real estate commission |
Made up of 10 people.
The purpose of the commission is to regulate the real estate industry to protect the public when involved in a real estate transaction in the state of South Carolina.
Under labor, licensing and regulation |
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Powers and duties of the South Carolina real estate commission |
1. Administer and enforce the license law 2. Determine standards for qualifications and eligibility of applicants, schools and instructors for licensing and renewal of licenses 3. Conduct disciplinary hearings and decide disciplinary actions 4. Recommend changes in legislation and publish regulations 5. Establish a fee schedule 6. May NOT be involved in resolving commission disputes between licensees 7. Make periodic inspections of offices of licensees to ensure compliance with the law. 8. It is the responsibility of licensees to provide a physical address where they can be contacted and always keep their contact information on file with the commission. Contact information includes residential address, mailing address, email address, phone number, and any changes updated within 30 days. Penalties include administrative suspension |
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An investigation will be initiated if… |
The director of LLR has reason to believe the law has been broken or a licensee has become unfit OR when a person files a written complaint with the real estate commission or the LLR |
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Power of the commission to decide on the following disciplinary actions |
-Issue a public reprimand – publish name and facts on LLR website -Put the license on suspension/probation/restriction – definite or indefinite time -revoke the license – may or may not be reinstated ALSO -Issue a fine of no less than $500 or more than $5000 Per violation and may also recover the cost of investigation and prosecution
A new license may be reissued after revocation. |
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To be re-licensed after having the license revoked, ex licensee must... |
- wait three years before applying - show proof of trustworthiness and that they have a reputation of honesty - show proof education requirements have been met within five years - pass licensing exam again - meet any new requirements a non-licensee would have to meet |
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Who needs a real estate license? |
Whether one must have a real estate license depends on the activity and whether the person doing the activity expects any type of compensation |
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Activities requiring a license |
Performing activities as a broker, sales person, or property manager for compensation requires a license.
- negotiations involving real estate for – listing, sale, purchase, exchange, or lease - auctioning real estate – also requires and auctioneers license - soliciting referrals to do any activity on this list - offering services as a real estate consultant, counselor or transaction manager - offering to act as a sub agent of a brokerage representing a client in a real estate transaction - advertising to the public that the person does any of the above |
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Transactions exempt from having a real estate license |
1. A property owner handling his/her own transaction of sales, rentals or leases in which the interest in the real estate being sold, rented, or leased is identical to the owners legal interest-- must own it all or only represent the portion owned 2. Attorney at law acting in the scope of his duties in the legal representation of his client/owner 3. Federal or state agencies and their employees acting within the scope of official duties 4. Registered Foresters – selling timber, the land is incidentally included 5. Court appointed receiver's and trustees acting within the scope of their appointment – includes personal representative's in SC appointed by the probate court
In South Carolina, we use the term personal representative other states use: When a person dies without a will – intestate – court appoints - administrator, administratrix When a person dies without a will – testate – will names exactly tour, executrix |
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List the 5 types of licenses issued by the South Carolina real estate commission |
Each come with an office and pocket card.
1. Broker 2. Broker-in-charge 3. Sales person 4. Property manager 5. Property manager-in-charge |
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Broker |
Can do anything a salesperson can do and can become a BIC.
Has taken 150 hours of education, pass broker exams with 75%, and has had sales license for at least 3 years |
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Broker in charge |
The broker who has responsibility for the actions of associated licensees and responsibility for the brokerage firm's real estate trust accounts.
Each office must have a BIC who has an ownership interest in the company or who is actively engaged in managing the company |
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Salesperson |
Must work as an associated licensee of a broker in charge, take the 60 hour fundamentals of real estate course, pass the state sales person exam with 70%, and complete the 30 hour advanced real estate course |
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Property Manager |
Works as an associated licensee of a BIC or PMIC, 30 hour class, no continuing education requirements |
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Property-Manager-in-Charge |
Takes the same class as property manager, additional 7 hour property manager-in-charge course, must have an ownership interest or actively manage the company, and responsible for actions of associated licensees and firm's real estate trust accounts |
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Practicing with no license |
Licensees who allow their license to expire and continue to practice real estate are guilty of breaking the law – a misdemeanor. Conviction and penalties can be up to $500 fine and/or six months in prison.
Allows much stiffer penalties for persons to practice the profession without a license, they are also guilty of a misdemeanor. These penalties are not within the real estate commission's power it takes a court of law to prosecute for practicing without a license |
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Applicant qualifications for licensure |
Minimum age of 18 for salesperson or property manager
High school diploma or equivalent
Minimum age is 21 for broker or broker in charge or property manager in charge
Criminal background check is required for all licenses |
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Qualifying for salesperson's license |
1. Successfully complete a 60 hour unit one course and 30 hour unit 2 course or I have a juris doctorate or have a college degree with major in real estate
2. Pass both national and state parts of the licensing exam. Take anytime within five years of passing the 60 hour unit one course
3. Take unit 2 course - 5 six hour classes. The unit 2 course may be taken any time after you take the unit one course and must be taken within five years of passing the 60 hour unit one course
4. Find an employee in broker and apply for license within one year of passing licensing exam |
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License maintenance |
- take 10 hours of continuing education classes - biennially (every 2 years) - A minimum of four hours must be in mandated topics - complete the renewal form and pay the renewal fee - educators must electronically transmit continuing education course records to the real estate commission
* excess hours, more than 10, may not be carried forward * if hours have not been taken, the licensee must pay the fee and will be immediately placed on an active, the license will be reactivated upon submitting proof of completion of continuing education and payment of fees * failing to renew and continuing to practice is a misdemeanor |
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Exemptions from mandatory continuing education |
1. Sales person who completes broke her course is exempt for the renewal period during which the course was taken 2. Licensees on in active status or exempt until they want to reactivate -- can stay in active for 20 years as long as license is renewed as in active and fees are paid every two years 3. Nonresident license he is who complete the requirements of their home state, with the approval of the real estate commission 4. Brokers and sales persons who have 25 years of licensure may apply to take only the 4 hour core course, however BIC's with 25 years must also take the 4 hour BIC course 5. Property managers do not need continuing education but must pay the renewal fee and complete the renewal form every two years |
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License statuses |
Active: license he can do whatever the license allows Inactive: -A license can be made in active by notifying the commission in writing. It may remain an active indefinitely but must be renewed every two years and the renewal fee paid -Inactive licensees can do nothing that requires a license, including getting paid -Inactive licensees have the same disclosure responsibilities as an active licensee -An inactive license he may apply to reactivate to the same license qualification placed on inactive Expired/lapsed: licenses expire every two years on June 30, a license that is not renewed by the expiration date lapses Cancelled: A lapsed license that is not reinstated within six months is canceled Revoked: revocation of license is the most severe form of discipline |
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Advertising |
A written listing agreement is required to advertise property owned by another, includes signs
Advertising must include the full name of the company in an ad, licensees may not advertise in their name only
An Internet ad may provide a link in the ad that will provide the company name
When operating under a franchise name, the identity of the holder of the franchise must be revealed |
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Broker salesperson relationship - salesperson |
Active broker or salesperson must be licensed under a broker in charge
Active property manager must be licensed under a BIC or property manager in charge
A licensee maybe license under only one South Carolina BIC or PMIC at any one time
A licensee may not conduct real estate businesses under any name or address other than the one for which the license was issued
When a licensee leaves the brokerage, the licensee must notify the commission immediately by completing the proper form and furnishing a new business address. The licensee must submit authorization of the new BIC and proof of notification to the former BIC |
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Broker salesperson relationship - BIC or PMIC |
- Adequately supervise employees or associate licensees to ensure their compliance with license law - review and approve forms used by the brokerage firm - maintain reasonable contact with associated licensees engaged in transactions to prevent licensees from violating any provision of the following laws: SC real estate license law, Interstate land practices act, vacation time sharing plans act - be available to the public during business hours to resolve disputes - establish and maintain a written office policy and make the policy readily accessible to the associated licensees - ensure that all associated licensees have an active real estate license - establish and maintain control of a trust account when taking possession of trust funds - notify the commission of change of office name, address, email, or telephone - instruct associated licensees on the proper handling of trust funds
* if the BIC or the PMIC dies, or becomes medically incapacitated, the LLR may appoint an associated licensee to act as the BIC or PMIC for up to six months |
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Nonresident licensees |
-Will only be recognized if the other jurisdiction recognizes SC active licenses -must pass the state portion of the exam -must file an irrevocable consent to jurisdiction -nonresident licensee must comply with all requirements of the law which means they must have a BIC licensed in SC. The BIC may be a resident or nonresident -The license will be canceled if the relationship with the BIC terminates unless the license is placed on inactive or the licensee gets another SC BIC -residents who become non-residents and nonresidents to become residents must notify the commission within 30 days and comply with all requirements of their new status |
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Commissions and other compensation |
-unlicensed persons may not legally collect commissions or other compensation for any type of real estate transactions -resident licensees may pay a portion of the commission to a licensee from another state if the other licensee doesn't participate in any real estate brokerage service in this state -licensees may not receive compensation for any activity requiring a license from any entity or person except the licensees brokerage -associated licensees may form a business entity to receive commissions from the licensees BIC or PMIC. For this to be legal, all of the entity must be actively licensed -any licensee who pays commission or other compensation for any type of real estate transaction to an unlicensed person, other than a party in the transaction, is in violation of law -it's not illegal to collect commissions from more than one party in a transaction if everyone receives full knowledge and written disclosure |
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Disclosure of licensees interest in real estate transactions |
-licensees must reveal license status and personal transactions at first substance of contact and an advertising or marketing in any media. Further, licensees must reveal their status in bold underlined capital letters on the first page of the contract
-no licensee may buy, directly or indirectly, property listed with own brokerage or property for which she has been approached by the seller or perspective buyer to act as agent without making position known in writing to all parties involved Includes property for: (1). Own account (self) (2). A corporation or other business in which the licensee has an interest (3). Close relative of the licensee – this includes relatives of all licensees in the brokerage
-must have proof for the commission that the licensee complied with this requirement and made true position known in writing -to collect the commission in the above situation, a separate written agreement from the seller is required acknowledging the purchaser as a licensee of the brokerage firm and that the seller has the right not to pay the commission |
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Offers and counteroffers |
1. All offers must be prepared in writing and presented to the seller promptly 2. After getting written acceptance of an offer, the licensee should promptly deliver true, executed copies to all parties 3. Ensure all terms and conditions of the transaction are in the offer 4. Licensee must ensure all changes made during negotiations or in writing and initialed and dated by both parties before proceeding with the transaction |
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Handling documents and recordkeeping |
Required accounting records must be kept a minimum of five years. The BIC or PMIC must furnish copies upon request of the real estate commission
- All trust account records are subject of this requirement - Accounting records also include journals, ledgers, folios, client sub accounts, tenant accounts, canceled checks, deposit slips, bank statements, and more
The following documents must also be kept for a minimum of five years and copies furnished to the commission when requested: - Lease - Contract of sale and any addenda - Listing contract or buyer representation agreement - Transaction broker agreement - Option contract - Property management agreement - Residential property disclosure form |
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Interest on trust funds |
Trust funds which must be deposited in the trust account made to be deposited in an interest-bearing account. Interest earned on these monies maybe retained by the BIC or PMIC in charge if:
- The owner of the funds has been informed of their right to ownership of the interest but relinquishes the right to the interest to the BIC or PMIC by written agreement - if such agreement is part of a preprinted form, the language must be conspicuous
If interest is retained it must be taken out of the trust account as soon as it is earned to avoid commingling |
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License law violations (28 ways to lose your license) |
1. makes a substantial misrepresentation on an application for real estate license 2. A substantial misrepresentation involving a real estate transaction 3. Makes false promises likely to persuade, influence, or induce 4. Continued misrepresentation and/or making false promises through any medium of advertising 5. Practice of real estate the demonstrates bad faith, dishonesty, or incompetence, etc. 6. Licensee represents another BIC or PMIC other than their own 7. Guarantees future profits 8. Dual contracting – giving lender a fake contract with a higher sales price to get a buyer a higher loan or lower down payment. It is a crime – bank fraud 9. Criminal convictions. For example forgery, embezzlement, fair housing violations, etc. 10. Failure to report criminal convictions in writing by certified mail within 10 days of notification of conviction 11. Not timely in accounting for or remitting trust funds in possession belonging to others 12. Pays a commission or compensation to an unlicensed individual for activities requiring a license under this chapter. Notwithstanding the section, a licensee may not pay or offer to pay a referral fee or finders fee to an unlicensed individual that is not a party in the real estate transaction 13. Interferes with the buyers choice of attorney, insurance agent, title insurance agent, or any other service provider to facilitate the buyers real estate transaction 14. Fails to make timely agency disclosure 15. Receives compensation from more than one party without full knowledge of written disclosure to all parties 16. Represents more than one party in a real estate transaction without full written knowledge and consent of all parties 17. Acts as an undisclosed principal in a real estate transaction 18. Excepts deposit money without informing Payor and having Payor acknowledge in writing who will hold the money received by the licensee 19. Issues a check in connection with the real estate business which is returned and marked NSF or account closed 20. Fails to disclose and then material facts 21. Violates any provision of the license law or regulation 22. Violated a rule or order of the commission 23. Knowingly gives false information to an investigator or inspector 24. Engages in practice or takes action inconsistent with agency relationship of other agents 25. Fails to make records available to the commission 26. Fails to promptly submit all offers and counter offers 27. Fails to provide current contact information to the commission 28. Allows or creates a delay in the closing of the transaction due solely to a dispute among licensees regarding the commission split |
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Unlicensed employees |
The unlicensed employee, supervised by the property owner or a licensee, may not:
- discuss, negotiate, or explain a contract, or other real estate document - deviate from the rental price or terms established by the owner - approve applications or leases or arrange the terms of the lease - indicate they have the managerial responsibility of the rental property - conduct or host an open house or manage an on-site sales or leasing office - show real property for sale other than vacant units in a multi family building - answer questions except for information that is otherwise publicly available - be paid solely on the basis of real estate activity - negotiate or agree to compensation or commission on behalf of a licensee - engage in an activity requiring a real estate license |
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Unlicensed employees in residential multiunit rentals |
Can show rental units to prospective tenants |
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Handling of monies and accounting practices |
Trust funds are other peoples money usually earnest money, rent, and security deposits
A trust account is a bank account with the words escrow or trust in the name on the account. Only trust funds--except a certain amount of the brokerages money--are deposited. It must be separate from business or personal accounts and must provide for withdrawal of funds--must be a demand deposit account
The purpose of the trust account is to safeguard funds belonging to parties in real estate transaction. By establishing the separate trust fund account for other people's money those monies are safe from being frozen by the IRS or because of impending litigation against the brokerage firm |
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Commingling |
Violation of the law that occurs when a fiduciary (BIC or PMIC) mixes trust funds with own funds |
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Conversion |
Unauthorized appropriation of trust funds by BIC or PMIC. This is a crime |
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Trust account required |
A trust account is only required when a BIC or PMIC takes possession of trust funds – earnest money, rent, advance rent, security deposit, etc. Some brokerage firms choose not to take possession of trust funds
There are words in the purchase contract or lease that direct the BIC or PMIC to hold the monies in the trust account |
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Trust funds from rental transactions |
Trust funds received by a property manager in charge or broker in charge must be deposited into real estate trust account, the exception is rent received by a licensee who is an employee of the owner of rental property may be placed in an operating account, but otherwise must be properly accounted for
Cash or certified funds must be deposited within 48 hours of receipt, excluding weekends and bank holidays
Checks must be deposited within 48 hours after the lease is signed by all parties excluding same days
All money shall remain in the trust account until the lease or rental transaction expires or is terminated. Afterwards, undisputed fans must be disbursed in accordance with the contract which directs the BIC or PMIC to hold the money, and a full accounting must be made to the landlord or tenant as appropriate
Earned rental proceeds must be disbursed to the landlord within a reasonable time after clearance of the deposit by the bank |
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Trust funds from sales or exchange transactions |
Trust funds received by a BIC in a real estate sales or exchange transaction must be deposited in a separate real estate trust account.
1. Cash or certified funds within 48 hours of receipt 2. Checks within 48 hours after written acceptance of an offer by the parties to the transaction
All money must remain in the trust account until consummation or termination of the contract. Then the undisputed money must be disbursed in accordance with the contract which directs the broker in charge to hold the money and a full accounting must be made to the parties |
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Disputes over earnest money |
If there is a dispute between buyer and seller over the earnest money – and – the dispute is not resolved by reasonable interpretation of the contract by the parties – then – the deposit must be held in the trust account until the dispute is resolved by one of the following:
1. A separate written agreement signed by all parties claiming an interest in the money which directs the disposition of the fence 2. Filing of an interpleader (BIC--A disinterested party from which the others are claiming funds) action in a court of competent jurisdiction 3. Order of a court of competent jurisdiction 4. Voluntary mediation |
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Licensee responsibilities for trust funds |
Trust funds received by a licensee, in connection with a real estate transaction, in which the licensee is engaged for his BIC or PMIC, must be delivered to his BIC or PMIC no later than the following business day |
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Licensee's personal rentals |
Trust funds received in a personal rental transaction must be deposited in the licensees personal trust account may not be deposited in the Brokeridge firms trust account unless the real property is managed by the brokerage firm |
