DARRYL COOK (DELRAY BEACH, FL) – Following a hearing, the Commission revoked the broker license of Cook effective April 30, 2024. The Commission found that Cook acted as Broker-in-Charge and Qualifying Broker of the licensed firm MV Realty, which solicited homeowners to sign Homeowner Benefit Agreements binding the owners and their heirs to a forty-year term to list their property with MV and also barred the transfer or refinancing of their property without MV Realty’s authorization. The Commission found that Cook, as Broker-in-Charge, failed to supervise affiliated brokers such that the brokers, and Cook individually as a broker, failed to provide and review the Working with Agency Disclosure with prospective sellers; made false promises, misrepresentations, and omissions to prospective sellers regarding Homeowner Benefit Agreements and listing agreements; failed to timely deliver documents and agreements to consumers; engaged in improper, fraudulent, and dishonest dealing in the offering of Homeowner Benefit Agreements; and acted in an incompetent or unworthy manner when acting as listing agent in real estate transactions.
DORIS SIERRA SANCHEZ (HUNTERSVILLE) – By Consent, the Commission suspended the broker license of Sanchez for a period of 12 months, effective March 15, 2024. The Commission then stayed the suspension following a 3-month active period upon certain conditions. The Commission found that Sanchez was engaged in real estate brokerage services and failed to present the WWREA Disclosure prior to first substantial contact or enter into a buyer agency agreement prior to the time of offer. Additionally, Sanchez backdated multiple documents to appear in compliance and gave lockbox codes to unlicensed family members to conduct showings on her behalf.
JOHN ANTHONY MARINACCIO (RALEIGH) – By Consent, the Commission suspended the broker license of Marinaccio for a period of 24 months, effective December 15, 2023. The Commission then stayed the suspension following a 4-month active period upon certain conditions. The Commission found that Marinaccio, acting as a listing agent, advertised a lot for sale and did not disclose that the seller did not yet own the property. Marinaccio had received a survey indicating that two easements made the lot unbuildable but advertised the property as “perfect for your dream home.” After learning of the easements and title issues, the buyer terminated the contract and lost their $3,000 due diligence fee. In a separate transaction, Marinaccio listed a property serviced by a long private driveway, which separated it from the nearest road. Marinaccio falsely indicated on the Working with Real Estate Agents Disclosure to the seller that the firm only practiced Dual Agency, falsely advertised that the subject property had road frontage and failed to disclose that the property did not have a written easement agreement for use of the private driveway. After discovering the lack of an easement for a driveway, the buyer terminated the contract and lost their $1,000 due diligence fee in addition to $2,800 for the survey and soil test. The Commission noted that Marinaccio contributed payments to repay the buyers in full for the lost funds.
ZACHARY KYLE BUTTS (MOORESVILLE) – By Consent, the Commission suspended the broker license of Butts for a period of 2 years, however, the suspension was fully stayed effective April 1, 2024. The Commission found that Butts timely reported July 27, 2023, convictions for Misdemeanor Drunk & Disruptive and Misdemeanor Domestic Violence Protective Order Violation. Following a hearing, Butts was found to have violated a Domestic Violence Protective Order by entering a bar where the person who obtained the Order was present and refusing to leave until the police removed him. Pursuant to the conviction, Butts was sentenced to 12 months unsupervised probation.
JENNIFER C WELDON (DENVER) – By Consent, the Commission suspended the broker license of Weldon for a period of 12 months, effective April 1, 2024. The Commission then stayed the suspension in its entirety upon certain conditions. The Commission found that Weldon, acting as a broker-in-charge of Carolina Homes Connection LLC, failed to obtain and review a listing agreement and related documents for two lots advertised for sale by an affiliated broker. The affiliated broker advertised the lots as proposed new construction builds without obtaining authorization from the seller.
CAROLINA HOMES CONNECTION LLC (DENVER) – By Consent, the Commission suspended the firm license for a period of 12 months, effective April 1, 2024. The Commission then stayed the suspension in its entirety upon certain conditions. The Commission found that the firm failed to obtain and review a listing agreement and related documents for the advertised lots for sale by an affiliated broker. The affiliated broker advertised two lots for sale as proposed new construction builds without obtaining authorization from the seller.
JAYNE H LAND (SALISBURY) – By Consent, the Commission suspended the broker license of Land for a period of 6 months, effective April 1, 2024. The Commission then stayed the suspension in its entirety upon certain conditions. The Commission found that Land, acting as the listing agent, failed to disclose prior to the time of offer, the pump flow test results for the well that served the subject property..
AUDREY H WALLACE (CHARLOTTE) – By Consent, the Commission reprimanded Wallace, effective April 1, 2024. The Commission found that Wallace failed to timely provide an accounting to a tenant for the disposition of the tenant security deposit. Wallace, acting as the broker-in-charge of Superior Choice Properties Inc., maintained two bank accounts that contained trust funds related to property management. An audit of the trust accounts revealed a number of deficiencies, including the failure to designate the accounts as either “trust” or “escrow,” failure to maintain records to create a proper audit trail, and failing to perform complaint three-way reconciliations.
SUPERIOR CHOICE PROPERTIES INC (CHARLOTTE) – By Consent, the Commission reprimanded the firm effective April 1, 2024. The Commission found that the firm failed to timely provide an accounting to a tenant for the disposition of the tenant security deposit. The firm maintained two bank accounts that contained trust funds related to property management. An audit of the trust accounts revealed a number of deficiencies, including the failure to designate the accounts as either “trust” or “escrow,” failure to maintain records to create a proper audit trail, and failing to perform complaint three-way reconciliations.
JEFFREY CHARLES LYNCH (HUNTERSVILLE) – By Consent, the Commission suspended the broker license of Lynch for a period of 6 months, effective April 1, 2024. The Commission then stayed the suspension in its entirety upon certain conditions. The Commission found that Lynch represented the buyer of the subject property, advertised as a “private lot home.” Lynch failed to verify, prior to offer, the existence of any proposed development of the 10+ acres of vacant land adjacent to the subject property. A preliminary plan for a 124-single family home subdivision had been proposed and noticed by the locality. Buyer closed on the subject property and shortly thereafter, the adjacent land was sold, development of the subdivision received approval, and construction began.
HOLLI D SANDBERG (SILER CITY) – By Consent, the Commission reprimanded Sandberg, effective April 1, 2024. The Commission found that Sandberg acted as a buyer’s agent for the buyer of a property which was advertised as having both septic and a renovation with city sewer connection. Sandberg was aware her buyer-clients were considering converting the entire property to city sewer in the future, but failed to advise the buyer to obtain information about the availability and cost to do so. Following the purchase, the buyers discovered the property was entirely on septic.
WILLIAM S BOURKE (ASHEVILLE) – By Consent, the Commission suspended the broker license of Bourke for a period of 24 months, effective April 15, 2024. The Commission then stayed the suspension following a 45-day active period upon certain conditions. The Commission found that Bourke was qualifying broker of a licensed firm which failed to timely renew its license. After the firm renewed its license, Bourke failed to re-designate a Broker-in-Charge. Thereafter, Bourke sold the firm to an unlicensed employee without informing any property owners or tenants of the change in ownership. Bourke failed to retain firm records after the sale, and could not provide trust account records for inspection when requested by Commission staff.
JASON JAIRUS MCCULLUM (DURHAM) – The Commission accepted the voluntary surrender of the real estate license of McCullum, effective April 25, 2024. The Commission dismissed without prejudice allegations that McCullum violated provisions of the Real Estate License Law and Commission Rules. McCullum neither admitted nor denied misconduct.
STEPHANIE KATHLEEN MCANUFF (MINT HILL) – The Commission accepted the voluntary surrender of the real estate license of McAnuff, effective April 25, 2024. The Commission dismissed without prejudice allegations that McAnuff violated provisions of the Real Estate License Law and Commission Rules. McAnuff neither admitted nor denied misconduct.
IDI PROPERTIES INC (MINT HILL) – The Commission accepted the voluntary surrender of the real estate firm license, effective April 25, 2024. The Commission dismissed without prejudice allegations that the firm violated provisions of the Real Estate License Law and Commission Rules. The firm neither admitted nor denied misconduct.
APRIL DANIELLE WELLS (WINSTON SALEM) – The Commission accepted the voluntary surrender of the real estate license of Wells, effective April 25, 2024. The Commission dismissed without prejudice allegations that Wells violated provisions of the Real Estate License Law and Commission Rules. Wells neither admitted nor denied misconduct.
SORNG BUNTOUM (KNIGHTDALE) – The Commission accepted the voluntary surrender of the real estate license of Buntoum, effective April 25, 2024. The Commission dismissed without prejudice allegations that Buntoum violated provisions of the Real Estate License Law and Commission Rules. Buntoum neither admitted nor denied misconduct.
KRYSTAL MARIE PARMENTER (NEW BERN) – The Commission accepted the permanent voluntary surrender of the real estate license of Parmenter, effective April 25, 2024. The Commission dismissed without prejudice allegations that Parmenter violated provisions of the Real Estate License Law and Commission Rules. Parmenter neither admitted nor denied misconduct.
NEW BERN PROPERTY SERVICES LLC (NEW BERN) – The Commission accepted the permanent voluntary surrender of the real estate firm license, effective April 25, 2024. The Commission dismissed without prejudice allegations that the firm violated provisions of the Real Estate License Law and Commission Rules. The firm neither admitted nor denied misconduct.
KAREN MONK STEWART (SANFORD) – The Commission accepted the permanent voluntary surrender of the real estate license of Stewart, effective April 25, 2024. The Commission dismissed without prejudice allegations that Stewart violated provisions of the Real Estate License Law and Commission Rules. Stewart neither admitted nor denied misconduct.
CHARLES CORNWELL (WARRENTON, VA) – The Commission accepted the permanent voluntary surrender of the real estate license of Cornwell, effective April 25, 2024. The Commission dismissed without prejudice allegations that Cornwell violated provisions of the Real Estate License Law and Commission Rules. Cornwell neither admitted nor denied misconduct.
SHIRLEY FEUERSTEIN (CARY) – The Commission accepted the permanent voluntary surrender of the real estate license of Feuerstein, effective April 25, 2024. The Commission dismissed without prejudice allegations that Feuerstein violated provisions of the Real Estate License Law and Commission Rules. Feuerstein neither admitted nor denied misconduct.
Just as qualifying brokers are required to renew their firm licenses, education directors are required to renew their education provider’s certification. However, the certification is just the first part of the renewal process as education providers potentially have several locations and course approvals that must also be renewed.
Starting on May 15th, education directors will first need to complete the Education Director Course as part of the annual education requirement to renew their provider’s certification. Next, they will want to review their Policies & Procedures Disclosure (PPD) to ensure the information contained in it is up-to-date and still accurately reflects the types of education they offer. With these two steps completed, the education director can now login to the EP Dashboard to renew their provider’s certification and attach their updated PPD to the renewal form.
After the certification has been renewed, the next step is to renew any additional branch locations. Then the education director will need to go through and renew each education type their provider offers, whether it is Prelicensing, Postlicensing, and/or Continuing Education. In addition to renewing the type of education, the education director will need to renew each delivery method of each course the provider is approved to offer within that education type, if the education director still wants to offer it.
The biggest difference for the education provider renewal process from other renewals is the lack of a reinstatement period. Failing to renew an education provider’s certification will result in the expiration of that certification, approved locations, and all course approvals. Since there is no reinstatement period, an education director will be required to start over with a new education provider application and then submit course applications for all course approvals to begin offering courses again.
If you have any questions regarding the requirements to renew your education provider’s certification, please visit www.ncrec.gov.
Failure to disclose material facts continues to be the most common complaint from consumers. In an effort to reduce the number of complaints, this article provides information about how brokers can discover material facts.
Let’s start with the basics. A material fact is any fact that could affect a reasonable person’s decision to buy, sell, or lease real property. All brokers have a duty to discover and disclose material facts, as mandated by General Statute 93A-6(a)(1) and by Commission Rule 58A .0114(c). These legal requirements create an affirmative duty, meaning brokers cannot simply say I didn’t know about this fact. All brokers, whether a buyer agent or a listing agent, must take action to discover and disclose.
When you are listing a property for sale or rent, or representing a buyer or tenant, consider using the following four categories as a checklist for discovering material facts.
1. Facts About the Property Itself
This category includes issues or defects about the property and its improvements, such as structural defects, malfunctioning systems, etc. The Commission recommends that brokers conduct a visual inspection of properties prior to listing or advising buyers on offers. During a visual inspection, a broker should be looking for material facts and red flags.
A red flag is the presence of any fact or issue that should make a reasonably prudent broker working with a buyer or seller suspect a defect, concern, or question exists that requires further investigation or review, or that indicates. that the information provided by another party may be incorrect or incomplete. Some questions that brokers may want to check during a visual inspection include some of the following:
Performing your own visual inspection and gaining familiarity with your local permitting offices will assist you in your duty to discover and disclose material facts.
2. Facts that Relate Directly to the Property
This category includes factors that are external to the property, or outside the property lines, that affect the use, desirability, or value. Some factors that affect the use of the property are zoning and restrictive covenants.
Zoning will ultimately affect how a property can be used by the owner. For instance, zoning affects whether or not a property can be used for residential, commercial, mixed use, etc. Restrictive covenants can also limit a property’s use or impose special requirements. If a broker has promised a buyer that the broker will find a property for the buyer’s intended use (operating a business out of the home, raising chickens, parking an RV), brokers should research the zoning and restrictions on the use of the property to determine whether or not the property can be used for the buyer’s purpose.
There are many other factors that can also affect desirability or value, including the status of nearby roads for maintenance or construction, proximity to a landfill or airport, and school assignments.
Brokers can discover these and other facts that relate directly to the property by driving around the neighborhood, asking the seller or listing agent, conducting online research, being familiar with local government offices that handle zoning and permitting, and being knowledgeable about the geographical area in which they work.
3. Facts Directly Affecting the Principal’s Ability to Complete the Transaction
This category includes any fact that might adversely affect the ability of a principal to consummate the transaction, such as a:
These facts are not as easily determined as others, but brokers should make reasonable inquiries of the parties.
4. Facts That are Known to be of Special Importance to a Party
This category includes facts of special interest or importance to a party. For example, a buyer may not wish to purchase a home that:
When a buyer has special needs for the property the broker must take extra steps to assure that the property fulfills the buyers’ purpose, or, clearly articulate to the buyers that they must make their own investigation of these issues.
On March 15, 2024, the National Association of Realtors® (NAR) proposed a settlement to end landmark antitrust lawsuits. In the proposal, NAR agreed to pay damages and to mandate that its members enter into written buyer-broker agreements. Additionally, the settlement would prohibit REALTORS® from making compensation offers on multiple listing services (MLS). The settlement received preliminary approval by the court; a final decision from the court is expected later this year. The NAR rules are planned to be effective in mid-July.
As a reminder, the North Carolina Real Estate Commission (NCREC) is an independent state governmental agency and should not be confused with NAR or its local boards. The NCREC’s primary function is to license and regulate real estate brokers and its mission is to protect consumers. North Carolina has 100,000 plus real estate brokers with many, but not all, also being members of NAR. NAR is a voluntary trade organization whose members are known as REALTORS®. In North Carolina, NC REALTORS® is a state level REALTOR® association and, as part of its services, creates various standard form documents for use by its members and their clients in transactions. In cooperation with the NC Bar Association, NC REALTORS® also creates standard form Offers to Purchase and Contract and other transaction documents.
The NCREC is following developments with the settlement proposal as they occur. However, it is important to recognize that any changes in NAR rules apply specifically to NAR members and do not alter the Real Estate License Law and Commission rules. Moreover, the currently proposed NAR changes are in no way contradictory to the existing License Law and rules.
The following is a reminder of NCREC rules relating to broker transparency, agency agreements, and commissions.
Commission Rule 58A. 0104(c) states: In every real estate sales transaction, a broker shall, at first substantial contact with a prospective buyer or seller, provide the buyer or seller with a copy of the publication “Working With Real Estate Agents” …(WWREA).
In 2021, the NCREC revised the WWREA Disclosure to be one page, double-sided, with one side for sellers and one side for buyers. The new WWREA Disclosure was designed to be quicker and simpler for brokers to use and easier for buyers and sellers to understand. Additionally, the original brochure was updated and expanded to be available for use in conjunction with the required WWREA Disclosure. The WWREA Disclosure and brochure explain the various types of agency relationships in a clear concise manner, educating the consumer and defining expectations. The WWREA Disclosure is a broker’s opportunity to discuss and clarify what their agency role may be in the transaction and to start the conversation concerning the contemplated agency status, payment, and future options.
Commission Rule 58A .0104(a) has long required brokers to enter into written agency agreements. Listing agreements must be in writing and signed by the broker and client at the time their agency relationship is formed. Buyer agency agreements must be in writing and signed by the broker and client no later than the time of making an offer. Note that the rule does not prohibit a broker from entering into a written buyer agency agreement earlier than the time of offer submission. Accordingly, the proposed rule change for REALTORS® does not conflict with the Commission’s rule.
Additionally, NCGS § 93A-13 prohibits a broker from filing suit for recovery of brokerage compensation unless the agreement is in writing. Therefore, brokers need to be in compliance with NCREC rules in order to avoid disciplinary action and in order to recover a commission through the civil court if the client fails to pay.
The Commission does not have jurisdiction regarding the setting or advertising of commissions. Commission Rule 58A .0109(f) specifically notes that the NCREC will not act as a board of arbitration and shall not compel parties to settle disputes concerning such matters as the rate of commissions, the division of commissions, pay of brokers, and similar matters. The NCREC reminds all of its licensees that brokerage commissions remain a negotiable term between the broker/firm and client.
Finally, it is important to remember that Commission Rule 58A .0112(b)(1) bars a broker from using a preprinted offer or sales contract form containing any provision concerning the payment of a commission or compensation to a broker or firm. While a client may consider the amount of commission when considering making or accepting an offer, the broker/firm should not be made a third party in a form purchase contract between the buyer and seller. The current standard form residential contract includes a provision allowing the seller to pay an agreed amount toward any of buyer’s expenses.
The NCREC understands that the real estate industry is always evolving, and our role is to ensure whenever possible that these changes benefit consumers and to assist NC brokers in understanding their duties. The NCREC remains dedicated to fostering a market that prioritizes consumer interests, fair competition, and transparency. We also remain available to answer questions about the application of the License Law and Commission rules to help brokers and consumers better navigate their transactions.
This article was printed in the February, March, and April eBulletin’s.
Pursuant to Rule 58A. 1702, North Carolina brokers must complete eight credit hours of real estate continuing education each license year. The eight hours consist of:
All brokers without BIC-Eligible status and provisional brokers must attend the General Update Course and all Brokers-in Charge and BIC Eligible Brokers must attend the Broker-in-Charge Update Course. A broker is required to complete eight credit hours of continuing education by June 10th at 11:59 PM EST. This requirement begins upon the second renewal following initial licensure and upon each subsequent annual renewal.
In the past, Rule 58A .1708 permitted brokers to request equivalent credit for a course that was not approved by the North Carolina Real Estate Commission by submitting a $50 fee, course outline and completion certificate. On July 1, 2023, the availability of equivalent credit was removed for all brokers, except an instructor who either authored or taught a course. Therefore, there is no equivalent credit offered for a course that is not currently approved by NCREC. A broker who previously submitted courses for equivalent continuing education credit should take the required Update course and an approved North Carolina elective prior to the June 10th deadline.
Rule 58A .1708 was changed to ensure that all North Carolina brokers are required to take North Carolina approved courses. The change also eliminates the need for brokers to pay additional fees, especially when courses were not approved for equivalent credit.
Rule 58A .1711 previously exempted brokers who were licensed in another state from the continuing education requirements in North Carolina. On July 1, 2023, the Commission repealed that rule. All brokers licensed in North Carolina must meet the same eight hour continuing education requirement. The prevalence of online courses means that this is no longer an unreasonable burden for licensees living outside North Carolina.
These rule changes were intended to make things simpler for brokers and to assure that all brokers in North Carolina obtain the same education regarding North Carolina rules, statutes and information to ensure the competence of brokers practicing in the state. If you have questions about the status of your continuing education, you can login and check your continuing education record on the Commission’s website.
You do not have to complete your annual CE course requirements before you renew your NC broker license. The annual 45-day license renewal period begins on May 15, 2024, and ends on June 30, 2024, at 11:59PM EST. Individual broker and firm licenses can easily be renewed online by confirming some information and paying the renewal fee EVEN if continuing education has not yet been completed. Don’t delay in your renewal! And…do take your CE by June 10th if you wish for your renewed license to be on active status.
Did you know that the Commission uses electronic communication to correspond with licensees? Is the correct email address listed in your license record?
Pursuant to Rule 58A .0103(a),
Upon initial licensure, every broker shall notify the Commission of the broker’s current personal name…and email address.
Subsection (b) of Rule 58A .0103 specifies:
Every broker shall notify the Commission in writing of each change of personal name…and email address within 10 days of said change.
Brokers must ensure that the Commission always has the correct email address in their license record. A current email address is imperative because the Commission sends the following correspondence electronically:
Brokers may log-in to their license record at any time to update their information to adhere to Rule 58A .0103.
FACTS: A broker had been managing a vacation rental property in the mountains for a client for several months.
The client decided to sell the vacation property and asked the broker to assist. The broker traditionally works only in property management but had prior experience in sales. The broker felt that since they knew the property intimately, they would represent the seller’s property better than another broker.
The broker discussed agency, terms, pricing, marketing, and other aspects of the property with the seller-client. The seller-client signed the Working with Real Estate Agents Disclosure (WWREA) form and completed the Residential Property and Owner’s Association Disclosure (RPOADS). The broker then advertised the property on their website as being for sale.
After receiving a couple of offers on the property, the seller wished to accept a lower offer because it was a cash offer with a quick closing date. The seller asked their broker to provide an estimated net to seller with the proposed terms. In this estimate, the broker charged a 5.5% commission. The seller questioned this charge as they understood the commission would be 4.5% because of the property management relationship with the broker.
The broker was unable to produce a signed listing agreement.
ISSUE: Did the broker comply with 21 NCAC 58A .0104(a)?
ANALYSIS: No. Commission Rule 58A .0104(a) requires that every agreement for broker services between a broker and an owner of the subject property be in writing and signed by the parties at the time of its formation. In this scenario, the broker listed the property for sale on their website without a written and signed agreement.
The North Carolina Real Estate Commission has long made clear the implications regarding listings. No broker may undertake to provide any brokerage services to a seller without a written listing agreement. A broker who engages in advertising, holding open houses, or acting on behalf of a seller in the absence of a written express agreement with the owner of the property operates in violation of Rule 58A .0104.
In addition, to violating Commission Rule 58A .0104(a), the broker potentially violated N.C.G.S. § 93A-6(a)(8):
“Being unworthy or incompetent to act as a real estate broker in a manner as to endanger the interest of the public.”
The Commission determines whether or not a broker acted competently by analyzing documents and reviewing written correspondence. The Commission uses the Reasonableness Standard to evaluate a broker’s expected competency. A broker must exercise that degree of skill, care, and diligence that a reasonably prudent real estate broker would exercise under similar circumstances.
In this scenario, the broker acted outside of their normal expertise and failed to adhere to Commission Rule 58. 0104(a) by not having a signed agreement before listing the property. The broker did not act like a reasonably prudent broker because they failed to provide the necessary skill, care, and diligence their client required.
N.C.G.S. § 93A-6(a)(15) states that 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 violating any rule adopted by the Commission.
As a result of the broker advertising the property without a listing agreement pursuant to Rule 58A .0104 and the broker’s failure to adhere to N.C.G.S. § 93A-6(a)(15), the broker may be subject to disciplinary action by the Commission.
RESOURCES:
N.C.G.S. § 93A-6(a)(15), 93A-6(a)(8), and 93A-6(a)(10)
License Law and Commission Rules: Rule 58A .0104
Articles: Getting Agency Representation Right…