North Carolina does NOT recognize which type of agency?
Audio Lesson
Duration: 3:06
Question & Answer
Review the question and all answer choices
Buyer agency
Buyer agency is fully recognized in North Carolina. Licensees can represent buyers with all fiduciary duties including loyalty, confidentiality, obedience, disclosure, accounting, and reasonable care.
Seller agency
Seller agency is a fundamental and fully recognized agency relationship in North Carolina. Listing agents owe traditional fiduciary duties to sellers.
Dual agency
Dual agency is recognized in North Carolina but requires full disclosure and written consent from all parties involved in the transaction.
Transaction brokerage
Why is this correct?
North Carolina specifically eliminated transaction brokerage as a recognized agency type. Licensees must operate as either buyer's agents, seller's agents, or disclosed dual agents. Transaction brokerage is not recognized in NC law, making it the correct answer.
Deep Analysis
AI-powered in-depth explanation of this concept
Agency relationships form the foundation of real estate transactions, defining the legal responsibilities between licensees and their clients. In North Carolina, understanding which agency types are recognized is crucial because it determines the fiduciary duties licensees must uphold. This question specifically tests knowledge of North Carolina's unique approach to agency relationships. The correct answer is D because North Carolina eliminated transaction brokerage as a recognized agency type. To arrive at this answer, one must understand that while most states offer multiple agency options, North Carolina has simplified its framework to buyer agency, seller agency, and dual agency. This question is challenging because many students may be familiar with transaction brokerage from studying other states or may confuse it with dual agency. Understanding this distinction is vital for practice in North Carolina and demonstrates knowledge of state-specific regulations that often appear on exams.
Knowledge Background
Essential context and foundational knowledge
North Carolina's approach to agency relationships was significantly revised when transaction brokerage was eliminated. Most states offer multiple agency options, but North Carolina simplified its framework to protect consumers better. Transaction brokerage was designed to limit the agent's role to facilitating the transaction without representing either party's interests. However, North Carolina determined that this limited representation created confusion and potential liability. Instead, North Carolina requires licensees to choose a clear agency relationship from the beginning of the transaction, ensuring clients understand exactly what fiduciary duties they can expect from their agent.
Think of North Carolina's agency options as a three-way intersection: you can go left (buyer agency), right (seller agency), or straight (dual agency), but transaction brokerage is like a road that doesn't exist on the map.
When encountering questions about North Carolina agency, visualize this three-way intersection to remember the three valid options and that transaction brokerage isn't on the map.
For North Carolina-specific questions about agency, remember the state offers only three options: buyer agency, seller agency, or dual agency. Any other agency type mentioned is likely not recognized in NC.
Real World Application
How this concept applies in actual real estate practice
A buyer and seller are negotiating a property in Charlotte. The buyer's agent, working under buyer agency, discovers the seller is motivated to close quickly. Under transaction brokerage (which isn't recognized in NC), the agent might simply present this information without advocating for either party. However, in North Carolina, the agent must clearly represent either the buyer or seller. In this case, the buyer's agent would use this information to negotiate better terms for their client, fully exercising their fiduciary duty of loyalty, which wouldn't be possible under transaction brokerage.
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