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Regulatory Reforms

August 27, 2014

One of the most hotly contested items of the session was the issue of regulatory reform. Both chambers included elements of regulatory reform in multiple bills, primarily SB 734, SB 38 and HB 761.

The House adopted SB 734, but the Senate failed to concur. The House adopted SB 38, but the Senate held the bill on the clerk's desk and took no further action. HB 761 was slated for a floor vote in the Senate, but it was sent back to the Committee on Rules and Operations of the Senate (Senate Rules).

Finally, the bodies agreed to a conference report on SB 734 in which NC REALTORS® successfully negotiated for several issues of importance to our members and the industry and against the most egregious provisions that originally were included.

Exemptions from Real Estate Licensing Requirements
When the Senate originally adopted SB 734, the bill included a provision to expand the law that allows certain exemptions from real estate licensure requirements. The bill would have allowed unlicensed employees of LLCs and partnerships to engage in brokerage activities for properties owned by their employers as well as those owned by other closely-held business entities.

NC REALTORS® and the NC Real Estate Commission opposed this provision because of the tremendous potential for harm to consumers. Consumers harmed by unlicensed, untrained employees would have no access to the NCREC Recovery Fund and little to no opportunity for relief in the court system.

The House adopted SB 734 after stripping it of this provision and adding several other reform provisions. The Senate failed to concur in the House changes. The final regulatory reform conference report was agreed upon and passed without this provision. Senator Rick Gunn (Alamance) advocated strongly for our position on this matter and deserves a round of applause!

During the final weeks of the legislative session, the Senate Rules added a slightly altered version of this provision as part of a rewrite of HB 761. However, the bill was referred to Senate Rules, where it remained at the end of session.

Disclosure of Oil, Gas, and Mineral Rights (SB 38, SB 734)
When the House Regulatory Reform Committee rewrote SB 734, it stripped all of the provisions related to environmental laws and placed them within SB 38. The House added one provision that was language from NC REALTORS® and the NC Real Estate Commission (NCREC) to improve the timeliness of property disclosure requirements regarding mineral, oil, and gas rights. Current law requires disclosure of oil and gas rights in the contract, but the new provision would require disclosure in a separate form prior to an offer.

Rep. Mike Hager (Rutherford) included this provision in the regulatory reform process, and it was ultimately in the final version of SB 734 and has an effective date of January 1, 2015. Our Forms Committee is already working with the NCREC to prepare the disclosure form.