Diversity, Equity, and Inclusion Updates

The quickly approaching holiday season is a time of celebrations, togetherness and traditions. However, in today’s diverse environment, it is important to remember that everyone may not celebrate the same festivities and traditions. Considering the wide range of ways people celebrate the holiday season, it is important to foster an environment of inclusivity and belonging for all, avoiding giving the impression that one or some holidays take precedence over others.  Now would be the perfect opportunity to learn more about underrepresented traditions and other cultural celebrations which you may not be familiar with. 

Linked below is a great resource to help keep track of the various holidays and observances with links to learn more about how each is celebrated and the significance or importance of the of the celebration.

2023 Diversity Holidays – The Diversity Movement

Disciplinary Actions

MICHELLE CONGLETON SMITH (RALEIGH) – The Commission accepted the permanent voluntary surrender of the real estate license of Smith, effective October 11, 2023. The Commission dismissed without prejudice allegations that Smith violated provisions of the Real Estate License Law and Commission Rules. Smith neither admitted nor denied misconduct.

PAULA DIANE CARR (WINSTON SALEM) – The Commission accepted the permanent voluntary surrender of the real estate license of Carr, effective October 31, 2023. The Commission dismissed without prejudice allegations that Carr violated provisions of the Real Estate License Law and Commission Rules. Carr neither admitted nor denied misconduct.

AHMED AZIZ MUSTAFA (RALEIGH) – By Consent, the Commission suspended the broker license of Mustafa for a period of 12 months, effective October 1, 2023. The Commission then stayed the suspension in its entirety upon certain conditions. The Commission found that Mustafa advertised the subject property as containing four bedrooms and that “every inch” of the subject property had been updated, including electrical and plumbing; however, Mustafa was unable to locate a septic permit for the subject property and failed to disclose this to the buyers prior to the time of offer. Mustafa failed to discover and disclose that the sellers neither obtained required permits nor did they use a licensed general contractor for renovations when required to do so by law.  

LUCRETIA P PINNOCK (SOUTHERN PINES) – By Consent, the Commission reprimanded Pinnock, effective September 15, 2023. The Commission found that Pinnock represented their buyer-client in the purchase of a property for which the MLS listing disclosed the existence of unpermitted bonus room space and later acted as the listing agent for the sale of the same property but failed to disclose the bonus room was unpermitted space. The potential buyer of the subject property terminated their contract after paying a $3,250 due diligence fee and a $550 home inspection fee.

PINNOCK REAL ESTATE & RELOCATION SERVICES INC (SOUTHERN PINES) – By Consent, the Commission reprimanded the firm, effective September 15, 2023. The Commission found that the firm represented their buyer-client in the purchase of a property for which the MLS listing disclosed the existence of unpermitted bonus room space and later acted as the listing agent for the sale of the same property but failed to disclose the bonus room was unpermitted space. The potential buyer of the subject property terminated their contract after paying a $3,250 due diligence fee and a $550 home inspection fee.

SUSAN HILL HOOPER (WAYNESVILLE) – By Consent, the Commission suspended the broker license of Hooper for a period of 12 months, effective October 1, 2023, but stayed the suspension after 1 month upon certain conditions. The Commission found that Hooper represented the sellers of the subject property and advertised the property as having an oil furnace and an oil tank in use, but failed to disclose the presence of a second abandoned tank.

LAFLECHE LEVERT (FAYETTEVILLE) – By Consent, the Commission suspended the broker license of Levert for a period of 12 months, effective October 1, 2023, but stayed the suspension after 1 month upon certain conditions. The Commission found that Levert acted as listing agent for the subject property in 2021 and advertised it as having a septic system, 3 bedrooms, and 2 bathrooms. The buyers closed but due to a job relocation in 2022, had to sell and learned at that time that the septic system permit is for only 2 bedrooms.  Levert failed to timely respond to letters of inquiry within 14 days or provide copies of requested documents.        

EVAN MCLAURIN PURSER (RALEIGH) – By Consent, the Commission suspended the broker license of Purser for a period of 3 years, effective June 1, 2023, but stayed the suspension after 4 months upon certain conditions. The Commission found that Purser, acting as a listing agent, verbally agreed with his client to painting and other improvements to the property. Purser advised the client that a part of his listing fee included the management of contractors and managing timelines for work performed. Emails indicated the client would pay Purser for the cost of the renovations over an unspecified time period. Purser failed to inform the buyer, buyer agent, or closing attorney that there was a debt owed by seller for improvements to the property. After closing, Purser’s renovation company filed a lien against the property for $16,870 and filed a lawsuit against both his client and the buyer. The buyer’s title insurer paid Purser’s company to remove the lien and settle the lawsuit, then filed a lawsuit against Purser’s client for payment of the debt. As part of the Commission’s order, Purser has refunded the title insurer for its payment.

CHAU MINH NGUYEN (GARNER) – By Consent, the Commission suspended the broker license of Nguyen for a period of 2 years, effective April 19, 2023, but stayed the suspension after 6 months upon certain conditions. The Commission found that Nguyen was licensed by the North Carolina Board of Nursing as a registered nurse.  On September 29, 2022, the North Carolina Board of Nursing suspended the nursing license of Nguyen for one year based on the finding that Nguyen stole fentanyl from a locked refrigerator in a hospital in which he was employed as a nurse.

WENDY THOMAS WHITEHEAD (LIBERTY) – By Consent, the Commission suspended the broker license of Whitehead for a period of 18 months, effective August 1, 2023, but stayed the suspension after 2 months upon certain conditions. The Commission found that Whitehead, acting as the broker-in-charge of Southern Heart Realty LLC, purchased residential property, performed renovations to it, and then listed it for sale through her firm. A licensed electrician was hired to perform some renovation work, while other work was performed by unlicensed persons. One of the renovations consisted of moving the laundry area from one room to another. Whitehead failed to ensure that electrical and plumbing permits were pulled for this work as required by the county. Whitehead failed to occupy the property for 12 months after renovations were completed and failed to disclose the unlicensed contractors or the failure to obtain required permits. 

SOUTHERN HEART REALTY LLC (LIBERTY) – By Consent, the Commission suspended the broker license of the firm for a period of 18 months, effective August 1, 2023. The Commission then stayed the suspension in its entirety. The Commission found that the firm’s broker-in-charge purchased residential property, performed renovations to it, and then listed it for sale through the firm. A licensed electrician was hired to perform some renovation work, while other work was performed by unlicensed persons. One of the renovations consisted of moving the laundry area from one room to another. The firm failed to verify that electrical and plumbing permits were pulled for this work as required by the county and failed to disclose to the buyers that Whitehead had not occupied the property for 12 months after renovations were completed and that unlicensed contractors performed some of the work and required permits were not obtained.   

Staff Appearances

Mel Black, North Carolina Real Estate Commission Member, spoke at High County Association of REALTORS® on October 26.

Len Elder, Director of Education and Licensing, spoke at Fonville Morisey Realty on October 3.

Brian Heath, Consumer Protection Officer, spoke at Raleigh Association of REALTORS® on October 4.

Bruce Rinne, Information Officer, spoke at Keller Williams Realty Fayetteville on October 10.

Miriam Baer, Executive Director,spoke at North Carolina Association of REALTORS® on October 16.

Len Elder, Director of Education and Licensing, and Kizzy Crawford Heath, Legal Education Officer, spoke at RE/MAX Executive on October 23.

Tech Corner: A Guide to Avoiding Pitfalls When Submitting a Firm License Application

Have you created a business entity to conduct brokerage activity? Are you interested in receiving compensation through your business entity?

According to Rule 58A .0502 every business entity other than a sole proprietorship must apply for and obtain from the Commission a firm license before engaging in business as a real estate broker receiving brokerage compensation. To complete a firm license application, the applicant must:

• provide the registered legal and assumed names for the business entity;
• provide the SOSID assigned by the NC Secretary of State (not applicable for partnerships);
• provide physical and mailing addresses for all office locations;
• designate a Qualifying Broker (QB); and
• designate a Broker-in-Charge (BIC) for each office location.

Commission staff has noticed that there are five common mistakes that brokers make while completing the firm license application. These mistakes can lead to a firm license application being marked incomplete or a broker being designated as a BIC of a firm inadvertently.

To assist brokers with avoiding these five common mistakes, Commission staff recommends review of Rules 58A .0110 and 58A .0502 before submitting a firm license application. Doing so will help ensure that brokers do not:

• designate their affiliated brokerage as the new firm’s Qualifying Broker (QB);
  • The firm license application provides an explanation for a Qualifying Broker. A Qualifying Broker must be a principal that holds a broker license on active status in good standing or a licensed business entity if the Qualifying Broker-entity has as its QB a natural person who is a licensed broker. A common mistake is including the broker’s current brokerage as the QB in the application when their affiliated brokerage will not serve as the QB for the new firm.
• designate their current BIC as the new firm’s BIC;
  • According to Rule 58A .0110(c), a licensed real estate firm does not have to designate a BIC if the entity is organized for the sole purpose of receiving compensation, is treated as a pass-through business by the United States Internal Revenue Service, has no principal branch office, and no licensed person associated with it other than its QB. However, applicants are designating their current BIC as the new firm’s BIC. This  can cause their current BIC to be removed as BIC from the current firm.
• affiliate licensed brokers with the legal business entity and not designate a BIC for the new firm;
  • This issues arises due to multiple licensed brokers being associated with the legal business entity. If licensed brokers are associated with the legal business entity, the QB must indicate that there are other licensed brokers affiliated with the firm which will require the QB to designate a BIC for the firm.
  • Remember, a BIC is required for a licensed business entity to conduct brokerage activity or receive compensation if there will be any other licensed individuals affiliated with the firm other than the QB.
• complete the application inaccurately (e.g. include email address in the wrong field, include an incomplete postal address).

Also, the firm license application must include an operating agreement or written description of the rights and duties of the managers, and the name of each manager if the business entity is a limited liability company. If the operating agreement or written description is not included, Commission staff will mark the firm license application as incomplete.

To apply for a firm license, go to www.ncrec.gov and click on Apply for a Firm License. If you have any questions about the firm licensing process, contact the Education and Licensing Division at 919.875.3700.

Current Stats: Monthly Licensee Count as of October 1, 2023

Measuring Square Footage

By Tiffany Ross- Consumer Resource Officer & Bruce Rinne- Information Officer

Brokers are often confused about measuring and square footage requirements, whether or not they can use technology to assist, and whose requirements they are complying with.  This article is designed to provide clarification, answer frequently asked questions and correct misconceptions.

FACT #1 – The North Carolina Real Estate Commission (NCREC) does not require that the square footage of a property be advertised.

• If there is an advertising requirement for square footage, it is likely from a local MLS.  It is important to know the difference between the rules of NCREC, your firm, and every MLS that you choose to join, as they are all separate organizations with separate rules.
• If the square footage is advertised (as well as all other information), the NCREC requires it to be accurate.  Brokers-in-charge are responsible for all advertising, including representations about square footage in the MLS. Individual brokers are also responsible for any representations they make about the property in advertising, the MLS, or otherwise. North Carolina License Law states:

 § 93A-6.  Disciplinary action by Commission.

(a)        The Commission has power to take disciplinary action. Upon its own initiative, or on the complaint of any person, the Commission may investigate the actions of any person or entity licensed under this Chapter, or any other person or entity who shall assume to act in such capacity. If the Commission finds probable cause that a licensee has violated any of the provisions of this Chapter, the Commission may hold a hearing on the allegations of misconduct.

The Commission has power to suspend or revoke at any time a license issued under the provisions of this Chapter, or to reprimand or censure any licensee, if, following a hearing, the Commission adjudges the licensee to be guilty of:

 (1)        Making any willful or negligent misrepresentation or any willful or negligent omission of material fact.

 (3)        Pursuing a course of misrepresentation or making of false promises through agents, advertising or otherwise.

FACT #2 – Last year, the NCREC received approximately 1,500 complaints. 45% of these were about the failure to disclose material facts. Square footage misrepresentations was number 2 among the complaints related to material facts.

• When a listing agent gathers information on a property to prepare to advertise it, they can measure the property themselves or have a qualified person measure it for them such as a competent state-licensed or state-certified appraiser or another agent with greater expertise. When hiring an individual or company, the broker who relies on another’s measurement is expected to recognize an obvious error in the reported square footage and to alert any interested parties.  
• Any individual or company performing the measurement of a residential property on behalf of a broker should follow the Commission’s Residential Square Footage Guidelines (found here https://www.ncrec.gov/Brochures/Measurementbooklet2013.pdf ), those approved by ANSI, or comparable guidelines.
• There are several tools available to measure a property that you can use – a standard tape measure, laser tape measure, or even an app on your cell phone. Bear in mind though, that some technology is more reliable than others, and the technology is only as good as the operators. The NCREC does not endorse any particular technology, but does not discourage the use of technology for the purpose of measuring a property, as long as it is accurate.

FACT #3 – When advertising square footage, heated living area (HLA) is the primary space that is included in the calculation. Keep in mind that there may be other types of square footage that should be excluded entirely or separately calculated and disclosed.

• Whether utilizing technology to perform measurements or a simple tape measure, be sure to observe the unique characteristics of the property that may cause your measurement to be off.  Is there a 2 or 3 story foyer? Interior space that is open from the floor of one level to the ceiling of the next higher level is included in the square footage for the lower level only. Do you have a room with a slanted ceiling? Make sure the ceiling height is 7’ or higher for at least 50% or more of the room and then include only the space that is 5’ or higher.
• Another requirement for HLA is that you must be able to enter one room from another through heated living area. If you have to enter a room through an unheated space it is considered ‘additional square footage’ and should be reported separately.
• Finally, areas such as additions must be permitted, and if the property is on a septic system bedrooms advertised must match those permitted.  Just because the seller is utilizing a space as a bedroom does not mean a broker can advertise it as such.  If a property is on septic, the number of bedrooms permitted is determined by the capacity of the septic system.  Minimum square footage, number of points of egress and regress, and whether a bedroom must have a closet are sometimes local restrictions. 

When property is measured, a broker should be able to ascertain the different type of square footage such as HLA, Additional Square Footage and Unpermitted Square Footage and advertise it correctly. Technology can do an efficient job at measuring. Your job as a broker is to make sure those areas are properly identified on the floorplan of the property. If you hire an expert to measure for you, be sure that you provide them with information about any space that is unpermitted.

In summary, the NCREC does not prohibit the use of technology or a qualified service provider to assist you with measuring a property.  Brokers are liable for their representations and BICs are liable for advertising errors by their brokers.  Technology can be a tremendous tool to provide fast, accurate measurements and dynamic images at affordable prices. The photos, virtual tours, floor plans and 3D modeling can dramatically enhance your marketing program. These enhancements may lead to more showings, more offers and perhaps even higher prices. As good as the technology is, however, there is no substitute for you as the listing agent verifying the type and accuracy of advertised square footage.

Did You Know? Brokers are Requesting Specific Educational Resources

Are you a Broker-in-Charge or Education Director? Do you know what type of educational courses brokers are demanding?

Each license year, the Commission provides a survey to brokers after the completion of their continuing education courses. This survey requests brokers provide suggestions for educational topics they would like incorporated in future continuing education courses. Once Commission staff receives the survey responses, they analyze the suggestions to determine which of the topics can be used to develop Commission courses.

However, sometimes the suggestions fall outside the Commission’s scope of authority or require more time than the Commission’s courses can cover. Therefore, it is a good idea for BICs and Education Providers to review these suggestions to implement training programs or develop courses that meet the educational needs of brokers.

In the Continuing Education Survey for the 2022-2023 license year, brokers are requesting more education in:

• contract review;
• negotiation training;
• the proper handling/negotiating of repair requests;
• the proper use of forms;
• comparative market analysis;
• how/where to search for prelistings;
• lead generation and marketing tips; and
• the do’s and don’ts for brokers investing in real estate.

So, if you are a BIC, consider addressing some of these topics during your brokerage meetings and/or trainings. Also, if you are an Education Provider, you may want to explore writing a course on some of these topics and submitting it to the Commission for approval so that you may offer it as a continuing education elective. Keep in mind that not all topics that are of interest to brokers can be approved for CE credit, such as lead generation and marketing.

If you have any questions or comments regarding continuing education requirements and Commission-approved educational courses, you may contact the Education and Licensing Division at 919-875-3700.

Reminder: Licensee Login

Has your email, business, or personal address changed? Did you know that you can update your contact information on the Commission’s website?

Rule 58A .0103 specifies that every broker shall notify the Commission in writing of each change of personal name, firm name, trade name, residence address, firm address, telephone number, and email address within 10 days of the change. Keeping this information current is crucial to ensure a broker receives communication from the Commission timely.

Brokers can update their contact information utilizing the Licensee Login on the Commission’s website. The Licensee Login can be accessed by:

1. going to www.ncrec.gov;
2. clicking on Licensing;
3. clicking on Licensee Login;
4. entering your License Number and your Password (your password is the last four digits of your social security number if you have not changed it); and
5. clicking on Login.

Once a broker has logged into their record, they can:

• renew their license between May 15-June 30 each license year;
• reprint their renewal receipt, if needed;
• view their Continuing Education (CE) record;
• view their Postlicensing Education record;
• view and update their personal information such as address, telephone number, or email address;
• change their password; and
• view and download their digital pocketcard.

Brokers do not have to contact License Services to change their contact information. For more information about your license record, go to www.ncrec.gov, click Licensing, and select Licensee Login.

If you are having difficulty with your login or have further questions about your license record (e.g. BIC Eligible Status, Continuing Education, etc.), please email Education and Licensing at ls@ncrec.gov.