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Curtis E. Aldendifer has assumed the position of Associate Legal Counsel in the Legal Services Division. He is a graduate of the University of Southern California with a BA in History and received a JD from Southwestern University School of Law.

D. Scott Schiller has assumed the position of Financial Fraud Investigator in the Legal Services Division. He is a graduate of UNC-Chapel Hill with a BS in Business Administration and is a CPA.

This article came from the October 2010-Vol41-2 edition of the bulletin.

Schools and Instructors Outstanding Examination Performance Records July 1, 2009 – June 30, 2010

The performance of first-time real estate license examination candidates by approved schools and instructors is monitored by the North Carolina Real Estate Commission and regularly reported to schools and instructors. School and instructor examination performance records are reviewed annually by the Real Estate Commission to help assure that quality instruction is being provided in prelicensing courses by such schools and instructors. The most recent annual performance record for each school may be found on the Commission’s Web site.

The overall examination performance for all first-time candidates on the real estate examination for the period July 1, 2009 through June 30, 2010 was 74%. The Commission would like to congratulate each of the following schools and instructors (with six or more students tested) for  achieving an outstanding examination performance record of 80% or higher for the year ending June 30, 2010. The Commission recognizes that to have students perform at such a level on the license examination requires a combination of high quality instruction and high course completion standards.

Schools

Allen Tate School of Real Estate, Charlotte/Raleigh; Asheville-Buncombe Community College, Asheville; Brunswick Community College, Supply/Leland; Cape Fear Community College, Castle Hayne; Central Piedmont Community College,Charlotte/Matthews/Huntersville; Cumbie and Trull School of Real Estate, Asheville; Cumbie Institute of Real Estate, Asheville; Durham Tech Community College, Durham/Hillsborough; Free School of Real Estate, Cornelius; Guilford Tech Community Co​llege, Jamestown/High Point/Greensboro; Mingle School of Real Estate, Charlotte/Cornelius; Sea Coast Real Estate Academy, Wilmington; Superior School of Real Estate, Charlotte/Concord/Cornelius/Huntersville; The Outer Banks School of Real Estate, Harbinger

Instructors

Oscar Agurs, Charlotte; William D. Beck, Sr., Bolivia; Pascall S. Camak, Pine Knoll Shores; Deborah B. Carpenter, Raleigh; Ray Cline, Charlotte; Charles L. Dotson, Matthews; Kandyce K. Ellis, Chapel Hill; Joseph Roy Faron, Merritt; Victoria B.Ferneyhough, Raleigh; Frank E. Free, Sr., Stanley; Ernest Gerald Fulghum, Raleigh;William H. Gallagher II, Charlotte; Janice C. Gullick, Clayton; Violet Locke Harrington, Durham; Carolyn C. Lambert, Charlotte;  Nancy Legg, York, SC; Edward George Liptak, Maggie Valley; Saundra Martin, Salisbury; James Richard Mort, Gastonia; Gloria Muir, Greensboro; Glenda Bowen Newell, Wilmington; Laurel A. Pettys, Wilmington; Rashad I. Phillips, Charlotte; Robert H. Potts, Asheville; Dana S. Rhodes, Charlotte; Tim R. Terry, Charlotte; William J.Trull, Jr., Asheville; Elizabeth Whitcraft, Kill Devil Hills; Terry Mitchell Wilson, Huntersville; Ben C. Wirtz, Iron Station.

This article came from the October 2010-Vol41-2 edition of the bulletin.

Numbers

The statistics here generally reflect the activities of the Real Estate Commission during the period from May 1, 2009 to April 30, 2010.

Contact

•     200,656 telephone calls

•     1.5 million+ Web site “hits”

Publications

•    585,000+ publications distributed to brokers, consumers, applicants

Technology

•      8,554 student rosters electronically processed for CE courses and 859 for postlicensing courses

Licensing

•      466,081 license records changed

•     3,382 applications processed for licenses by examination

•     4,281+ license examinations administered

•      2,750 licenses issued by examination, 271 by reciprocity

•     879 firm licenses issued

•     334 expired, surrendered and suspended licenses reinstated

•      2,326 Certificates of License History issued

•     187 license applications reviewed for character issues

•      63 license applicant conferences conducted

Education

•          7 new private real estate school licenses issued and 48 renewed

•     18 real estate instructors approved and 49 renewed (for a total of 225 instructors)

•    56 new continuing education elective courses approved (for a total of 433 courses)

•    25 new continuing education sponsors approved (for a total of 236)

•    16 new continuing education Update Course instructors approved (for a total of 197)

•     40 Broker-in-Charge Course sessions conducted for 1,544 licensees

Audits/Investigations

•     128 field investigations completed

•     172 trust accounts examined

•      386 persons interviewed

•       6 trust account courses conducted for 147 students

•      1,352 students instructed for trust account portion of BIC   course

Legal

•      954 case (complaint) files opened and 1,062 closed

•       15 licensees reprimanded

•     45 licenses suspended

•     45 licenses revoked

•     19 licenses surrendered

•      64 cases with conditional remedies

This article came from the October 2010-Vol41-2 edition of the bulletin.

Malarney, Watts Reappointed

Commission members M. Rick Watts of Fayetteville and Jeffery J. Marlarney of Manteo have been reappointed by Governor Beverly E. Perdue.

Watts, a Commission member since 2002, is a former Chairman. Malarney has been a Commission member since 2008.

This article came from the October 2010-Vol41-2 edition of the bulletin.

Incentive Disclosure Compensation Rule to Remain Unchanged

The Commission has accepted the recommendations of the Incentive Disclosure Implementation Advisory Committee, formed earlier this year to examine the current compensation disclosure requirements in dual agency transactions.

The Committee recommended that:

•   the incentive disclosure rule remain unchanged;

•  the North Carolina Association of REALTORS® recommend to the forms committee that it modify the Exclusive Right to Represent Buyer agreement to incorporate a disclosure of expected firm compensation in dual agency situations; and

• the Commission initiate an educational program to teach instructors, brokers-in-charge and licensees the buyer agent’s disclosure requirements in dual agency transactions.

The current rule relating to agency compensation went into effect October 1, 2008. The primary change was to clarify disclosure requirements relating to third party payments.

In its final report, the Advisory Committee agreed that many licensees may be confused about their duty under the rule and its application in typical situations. Education through the Real Estate Bulletin, Broker-in-Charge Annual Review, and/or Update Course would provide practical scenarios and a review of specialized transactions to describe steps which can be taken to achieve compliance.

Members of the Advisory Committee were George R. Bell, Winston-Salem; Donell Croom, Greensboro; Garth K. Dunklin, Charlotte; Kelly C. Hanley, Wilmington; J. Malcolm McFadyen, Fayetteville; Sheila G. Rudisil, Lincolnton; Monica A.Thibodeau, Duck; Walt Tipper, Raleigh; Grady F. Watkins, Jr., Holden Beach; and Harriet Worley, Raleigh.

Commission Chairman Marsha H. Jordan served in an ex officio capacity.

The Commission thanked the members for their participation in the Advisory Committee.

This article came from the October 2010-Vol41-2 edition of the bulletin.

Dual Agency: When Is It Appropriate?

In brief, dual agency is appropriate in a sales transaction only when it is agreed to – in writing – by fully informed sellers and buyers.

One of three types of agency representation (see box), dual agency arises when a firm is representing both the sellers and buyers in an in-house sale situation.

Practicing dual agency lawfully is challenging because the sellers and buyers must agree to be represented in an adversarial relationship by the same agent. A dual agent who must act with a combination of discretion and fairness that can be difficult to balance.

Although the laws and rules by which dual agency is practiced have not been reviewed to any significant extent by the courts, theoretically a dual agent owes the full range of agency duties to both principals. This creates practical problems for the dual agent regarding such matters as disclosure of material facts (especially confidential information about a client) and advocating for clients.

Thus, a broker’s ability to provide full representation of the client may be compromised to some extent. By entering into dual agency without the full understanding and consent of both clients, a broker may unfairly deprive those clients of the level of service they expect to receive. Additionally, brokers can potentially have more exposure to claims of conflicts of interest when practicing dual agency.

To alleviate the conflicting responsibilities of dual agency, the North Carolina Association of REALTORS® has developed agency contract forms which place limits on the disclosure by a dual agent of information relating to any party’s motivation, possible agreement to price, terms or other conditions, or any information identified as confidential. The contract forms also include an acknowledgment by the client that the agent will not act as an advocate for or exclusive representative of the client. Whether this form or another is used, all brokers are required by the Commission’s rules to reduce their dual agency agreements to writing with the seller from the outset and with the buyer before one of the partiesmakes an offer.

Designated agency (a modified form of dual agency), is defined in rules adopted by the Real Estate Commission. It gives each client exclusive representation from an individual broker, while still allowing the firm to represent all of its clients. Remember, a broker-in-charge should never act as a designated agent in a situation where the other designated agent is a provisional broker under his or her supervision.  The broker-in-charge loses his or her ability to supervise or assist a provisional broker in such a situation.

An agent who lists his or her own property, or property belonging to the firm, should refrain from acting as a dual agent when selling that property, as there are inherent conflicts of interest in offering one’s own personal property for sale and then attempting to represent a buyer in the transaction as well.

What about the case of an unrepresented buyer or seller – can a broker work with him or her while solely representing another party?  Yes, so long as the broker reviews and has the unrepresented party sign the Working With Real Estate Agents brochure, disclosing in writing that the broker will represent only his or her client (buyer or seller) in the transaction. Remember, there is no requirement that both the buyer and seller have broker representation in a transaction. An agent can work with an unrepresented buyer or seller as a customer, and still fully represent his or her client.

What if a previously unrepresented buyer or seller tells the listing broker that he or she would now like representation in an ongoing transaction where the listing broker has already disclosed that he or she represents only the interests of the seller? The broker’s client may object, considering the information that the client has previously given the broker about his personal situation and/or desire for exclusive representation. If the parties do not consent to Dual Agency at that point, the listing broker should refer the unrepresented party to an outside broker/firm for buyer representation.

All parties in the transaction deserve the best representation possible.  Agents should remember to consider the interests of their clients first and determine which form of agency best suits their needs.

 

Agency Refresher

Clients may choose:

•  Exclusive Representation – both the broker and the firm represent only one client in the transaction, to the exclusion of all others;

•  Dual Agency – the firm and its agents may represent both the buyer and seller in a transaction; and

•  Designated Dual Agency – the firm represents both the seller and buyer via one agent designated exclusively as the seller’s agent, and another agent designated exclusively as the buyer’s agent, with each agent representing only the interests of their designated client.

This article came from the October 2010-Vol41-2 edition of the bulletin.

 

Disclosing Criminal Convictions

So you have a speeding ticket or impaired driving charge, an expired registration, or an assault charge. Commission rules require that you disclose certain types of convictions to the Commission, but which ones, how, and within what time period?

1. Before reporting, wait for final adjudication, which occurs following a plea of guilty or a finding of guilt by a judge or jury. Do not file a report before a judgment is entered against you to avoid a file being opened and a permanent record made of your report, which may be unnecessary if you are found not guilty or the matter is dismissed.

2. Non-moving violations, such as expired registrations, expired tags, etc., are not reportable offenses. Likewise, you are not required to report speeding convictions. All misdemeanor and felony convictions, however, must be reported. These include convictions for DWI or reckless driving, assault, larceny, etc. If you have questions about the reporting process, call the Commission’s Legal Services Division.

3. Once you have entered a plea or otherwise have a criminal judgment against you, go to the Commission’s Web site, www.ncrec.gov and, under “Forms,” print the Criminal Conviction / Disciplinary Action Reporting Form. Please read the directions, which require you to provide a narrative in your own words explaining the incident and a CERTIFIED copy of the final order or judgment issued by the court. You have 60 days after conviction to file the form and supporting documentation with the Commission.

Once you have filed your report, the Legal Services Division will review it to determine if further action is necessary. You may be contacted to provide additional information. Just remember to respond quickly, fully and completely, so the matter can be handled in a timely manner.  As with everything, full disclosure is always best.

This article came from the October 2010-Vol41-2 edition of the bulletin.

Commission Reelects Marsha Jordan, Benjamin Cone to Second Terms

Marsha H. Jordan of Lincolnton has been reelected Chairman and Benjamin Cone, III of Charlotte, Vice Chairman, of the North Carolina Real Estate Commission for the 2010-2011 term beginning August 1, it was announced by Miriam J. Baer, Executive Director.

A graduate of the University of Virginia (MWC), Jordan entered the real estate business in 1986. She is owner of Apple Realty in Lincolnton, a Graduate of the REALTOR® Institute and holds the Certified Residential Broker, Certified Residential Specialist, and GREEN designations.

Appointed to the Commission in 1999, Jordan is past president of the North Carolina Real Estate Education Foundation and past president and 2001 REALTOR® of the Year of the Lincoln County Board of REALTORS®. Active in community affairs, she is a former director of the Lincolnton Chamber of Commerce, past president for Downtown Development, and past president of the Lincolnton Rotary Club.

Jordan and her husband, Max, a REALTOR® and contractor, reside in Lincolnton and have one son, Jason, a student at the University of North Carolina at Charlotte and a REALTOR®. 

Cone, a member of the Commission since 2007, is Managing Director of Milestone Partners, LLC, in Charlotte. He has held management positions in the textile and commercial furniture industries.

Cone is a graduate of the University of North Carolina with a Bachelor of Arts in Economics and North Carolina State University with a Bachelor of Science in Textile Management, Magna Cum Laude. He is one of two public members.

This article came from the October 2010-Vol41-2 edition of the bulletin.

Bedrooms at the Beach – Advertising Occupancy

Every year the Commission receives complaints that brokers in the vacation rental business have represented that a cottage or cabin may be occupied by more people than the septic tank permit allows.

Of course, tenants complain when the waste lines back up or the septic system fails. Health officials become concerned when failures create unsanitary conditions and when property limitations allow no room for system expansion or repairs. Agents should be aware of the dangers of advertising occupancy levels for any property served by a septic system without first verifying the system’s legal capacity.

Properties that are not served by municipal sewer systems are typically inspected by local health departments to assess the site’s capacity for on-site sewage disposal (septic systems). An application is submitted for an improvement permit and the county issues a septic permit with a maximum number of bedrooms based on the site’s capacity.

Occupancy levels are determined by the number of bedrooms allowed by the septic permit, with a maximum of two people per legal bedroom. Therefore, the septic permit is the key to identifying the total number of bedrooms and the total number of people that a particular sewage system can serve.

Brokers should understand restrictions on land usage for properties with which he/she is dealing. Brokers who advertise such properties must be careful not to overstate the number of legal bedrooms or the maximum occupancy.

Advertisements which say things like “three bedrooms and foldout sofa,” “sleeps ten,” and “two queens, two doubles, and bunk twins” all make representations about occupancy. Brokers should take care that their advertising does not promote a violation of health codes by directly or indirectly representing that a rental unit may be occupied by more persons than the septic tank permit will allow. An overloaded system can fail and lead to groundwater contamination, costly repairs, and even condemnation.

If a broker’s advertisement of a property served by a septic system includes a maximum occupancy that exceeds the ability of the septic system as provided by the permit, the agent may have misrepresented the true condition of the property.

A broker should check the county records and disclose both the legal number of bedrooms and a maximum occupancy of no greater than the number determined by this method, regardless of the actual number of bedrooms or beds in the house.

Advertising a property as having more bedrooms than permitted, even with a disclosure that the septic permit states fewer bedrooms, may still be misleading and encourage illegal use of the property.

Sometimes the original septic permit for a property cannot be located.  The health department can usually make a determination based on a new inspection.

Licensees should also keep in mind the maximum occupancy must not be overstated as long as the house is serviced by a septic system, even when conversion to public sewer has been scheduled, but not completed.

This article came from the October 2010-Vol41-2 edition of the bulletin.

ARELLO® Honors Phillip T. Fisher

Former Commission Executive Director Phillip T. Fisher has been honored by the Association of Real Estate License Law Officials (ARELLO®) with the Member Emeritus designation. He becomes one of an elite group of ARELLO® Members Emeriti who have been recognized for their extraordinary time, commitment and service.

Fisher was President of ARELLO® in 1992. He retired April 1, 2010, after 34 years with the Commission.

This article came from the October 2010-Vol41-2 edition of the bulletin.