Practice of Real Estate, Disclosures, Fair Housing, and Ethics
Practice of Real Estate
Listing and buyer agreements
Listing types are exclusive right to sell (broker earns a fee no matter who procures the buyer), exclusive agency (seller keeps the right to sell without a fee), and open listing (procuring cause decides). Net listings are prohibited in South Carolina. All commissions are negotiable. Compensation flows from the firm to the licensee; the firm pays the licensee, not the client or another party. Referral fees may be paid only to a licensed firm with broker consent, never to an unlicensed person. Advertising must identify the registered firm name, and team advertising must not obscure the firm.
Trust funds
Earnest money, rents, and security deposits held for others go into a trust account controlled by the broker-in-charge. No commingling with operating funds, prompt deposit, and clear records. When earnest money is in dispute, the broker holds it until the parties sign a written release or a court orders disbursement.
Bad practices that appear on exams
Giving legal advice, drafting contract language, conducting a closing (South Carolina closings are attorney work), failing to disclose the licensee's own interest in a transaction, and using a side agreement to hide compensation.
Traps
- Believing the sign or the showing creates the listing.
- Believing cooperating brokers work for the seller automatically.
- Assuming a licensee may accept a fee directly from a client.
Worked example
A lender offers a licensee a 500 gift card for each referral that closes. Accepting it creates an undisclosed compensation arrangement for the licensee and is improper; the arrangement must run through the firm and be disclosed, and it cannot be kept by the licensee personally.
Disclosures
The seller's statutory statement
South Carolina's residential property disclosure framework requires a seller of residential property within its scope to deliver a completed disclosure statement covering known defects and property owners association information before the transaction closes. The form discloses condition, defects, and association obligations; the seller is not warranting the property, and the buyer still has a duty to inspect. Certain transfers are exempt, such as court-ordered transfers, foreclosures, gifts, and transfers between co-owners. Disclosures must be updated if a material change occurs before closing. A buyer cannot be lulled by an as-is sale into assuming the statutory statement is optional.
Agency and material facts
Licensees deliver the agency disclosure at first substantive contact and put the agency agreement in writing. They must disclose their own interest if they are a party, and must disclose known material adverse facts about the property to all parties even when the seller says not to. Physical facts about the property are disclosed; the seller's motivation and willingness to accept less are not.
Other required items
Lead-based paint disclosure with the EPA pamphlet and a 10-day testing opportunity for pre-1978 housing; flood hazard location; HOA and property owners association fees, dues, and assessments; dual agency consent; and disclosure of compensation arrangements. Holders of agency disclosure obligations also include property managers and leasing agents when a tenant is involved.
Traps
- Confusing material facts, which must be disclosed, with confidential motivation, which must not be.
- Forgetting the lead-based paint rule applies to pre-1978 housing only.
- Assuming a disclosure form replaces the buyer's inspection duty.
Worked example
A seller mentions a repaired foundation crack to the listing agent and asks that it stay quiet. The agent must not repeat the seller's price motivation but must disclose the known material adverse fact of prior water intrusion to a buyer making an offer.
Fair Housing and Ethics
Protected classes and prohibited acts
Federal fair housing law protects race, color, religion, sex, national origin, familial status, and disability. South Carolina enforces substantially parallel protections through the South Carolina Human Affairs Commission, and HUD and the Department of Justice handle federal complaints. Prohibited conduct includes refusing to sell or rent, offering different terms, misrepresenting availability, steering, blockbusting, redlining, discriminatory advertising, harassment, and retaliation.
Disability and familial status
A reasonable accommodation is a change in rules, policies, or procedures, such as allowing a service or assistance animal in a no-pet building with no pet deposit; a reasonable modification is a physical change to the unit, usually at the tenant's expense, while common areas fall on the owner. Familial status protects households with children under 18, pregnant women, and those securing custody; the 55-and-over exemption requires at least 80 percent of units occupied by someone 55 or older.
Advertising and exemptions
Advertising must not express a preference based on a protected class. Words like adults only, no children, or perfect for a couple are violations; describing the property instead of the preferred buyer is the fix. Narrow exemptions exist for certain owner-occupied buildings of up to four units without an agent and without discriminatory advertising, for religious organizations with noncommercial housing, and for private clubs.
Ethics overlay
The REALTOR Code of Ethics imposes duties beyond license law: Article 1 (client interest), Article 2 (avoid misrepresentation), Article 10 (no discrimination, now including sexual orientation and gender identity), Article 15 (no false advertising), Article 16 (exclusive agreements respected). Ethics complaints and license law complaints are separate processes.
Worked example
A tenant with a mobility disability asks to keep an assistance dog. The landlord may verify the need, may not charge a pet fee or pet rent, and may not refuse the accommodation.