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NORTH CAROLINA REAL ESTATE COMMISSION COMMITMENT TO RACIAL EQUITY

The recent deaths of numerous persons of color in our nation have awakened many of us to racial inequities which have always been present but not widely considered or discussed. The North Carolina Real Estate Commission members and staff remain deeply troubled by these senseless losses and the many inequities faced by persons of color. These ongoing events, and the resulting protests, have affected all of us, have made us think and question our own actions and reactions, and have shown the importance of compassionate and open discussion about issues of racial equity. The Commission welcomes the resulting discussions and changes that have begun and will continue in our community and nation.

Those involved in real estate brokerage are a diverse community. The Commission is committed to the principles of excellence, fairness, and respect for all people. It is our goal to ensure that brokerage activities are conducted in fairness to all, to ensure equal housing opportunities, and to end discrimination in the sale or rental of all real estate. Everyone should feel safe in their communities and should feel and be free from discrimination.

We stand with those who seek equal justice for all and will do our part to encourage and support our community in making necessary changes to make sure racism and disregard for the dignity of people of color become a part of our history and not our present. We vow to listen, learn, and work with others to promote equality, inclusion, and acceptance.

The Commission is committed to examining its rules to ensure that they address discriminatory conduct by licensees in the real estate profession and to being a leader in moving the profession forward. To that end, in the past year, the Commission has

Please continue to help us better understand the experiences you have faced as a real estate broker or consumer around racism or other discrimination in any real estate related activities by contacting us and/or filing a complaint. We cannot stress enough the importance of providing us with this information. Suggest a Rule Change / File a Complaint

BEWARE OF SCAMMERS!!

Have you gotten the calls about your car warranty or computer security? How about receiving an email or text message from someone who appears to be someone you actually know, but in fact is not? We’ve heard about wire fraud and all know at least one story where a client has either potentially or actually sent their funds to a scammer. 

The Commission has learned of a recent scam where the scammer called the licensee pretending to be a law enforcement officer with an arrest warrant for the licensee for failing to appear at a hearing related to the licensee’s client. The caller knew enough about the licensee’s business and personal information to appear legitimate and then strongly encouraged the licensee to pay “bail” online rather than face actual arrest. These scammers may gather information about you, your clients, and your family from various online sources or actual hacking of emails 

When you become a licensee you often begin your quest to find clients. This quest entails putting your contact information out for public access. It’s like going fishing with a big net. You throw out the net hoping to catch all the big, prime fish but when you pull it in it also has boards, boots, tires and jellyfish. Putting your contact info out there invites attention, some of which may be unwanted. Note that the Commission requires licensees to provide an email address to allow the Commission to communicate and deliver important information. The licensee may choose to designate a private email address which is not a public record and is not made available to third parties.

Awareness is your best defense. A caller may appear legitimate. A conman’s job is to gain your trust or to put you in enough of a panic that you do whatever they say. Any unsolicited calls where the caller requests money, confidential information, control of your computer, or access to an account, especially under threat of duress, should always be met with skepticism. Be aware – your net may catch some unwanted attention. Always check out the source of the call to make sure it’s legitimate and don’t be caught off guard. Don’t panic. Take your time, take a breath, and think the situation through before providing what the caller wants. As the Sarge said in Hill Street Blues, “Let’s be careful out there.”

Appearances

Steve Fussell, Chief Consumer Protection Officer, spoke at NARPM Crystal Coast Chapter Meeting on May 18.

Dee Bigelow, Information Officer, spoke at Greenidge Realty’s Various Topics Meeting on May 18.

Fred Moreno, Chief Deputy Legal Counsel, spoke at the Women’s Council of REALTORS Crystal Coast’s Professional Development Series on May 19.

Disciplinary Actions

JERRY CLAYTON VASSEY (CHARLOTTE) – By Consent, the Commission reprimanded Mr. Vassey effective April 15, 2020. The Commission found that Mr. Vassey, as the broker-in-charge of a firm, failed to supervise two Provisional Brokers who acted as co-listing agents where they failed to disclose material facts to subsequent buyers after receiving home inspection reports from two previous buyers who terminated their contracts on the subject property.

Building Permits – A Broker’s Responsibility

The requirements for obtaining building permits for original construction, additions, renovations, and repairs are determined by county and/or municipal building inspection offices. These requirements can be complex, may change over time, and may be different from one county/city to another. Brokers are not expected to know or remember all of the requirements for obtaining building permits. However, brokers have a duty to disclose material facts and part of fulfilling that duty is verifying information – including permitted or non-permitted changes.

When a broker lists a new home for sale, the broker should ask the builder for a copy of the Certificate of Occupancy (aka “CO”) and give a copy of it to the buyer or buyer’s agent. The issuance of a CO confirms that the builder obtained the necessary building permit(s) in advance, that the house/building was fully inspected by the building inspections office during its construction, and that its construction complies with the building code. If a CO is not yet available, then the seller’s agent should disclose this fact to a prospective buyer and ensure that the buyer receives a copy of the CO at or before the closing.

When brokers list properties for sellers, especially properties being flipped, the brokers should inquire about all of the renovations, additions and repairs their seller-clients have made. The brokers should make a good faith effort to obtain copies of vendor invoices from the sellers referencing the work that was done, when, and by whom. The brokers should then contact their local building inspection offices to inquire whether permits and/or occupational licenses were required, whether permits were pulled and, if so, obtain copies of the permits. If a broker discovers that the seller failed to obtain a required permit or failed to hire a licensed professional when a license was required, then this is a material fact that the broker must disclose to all prospective buyers, even if the seller chooses not to disclose it.

This same requirement holds true when brokers renovate, add on to, or repair their own properties as flippers or owner-occupants. The broker must obtain all required permits and hire licensed professionals when it is required. If the broker fails to do so, it is a material fact which the broker-seller must disclose to all prospective buyers (or their agents).

N.C.G.S. §160D-1110 (c) states that no permit is required for any construction, installation, repair, replacement, or alteration performed in accordance with the current edition of the North Carolina State Building Code costing fifteen thousand dollars ($15,000) or less in any single-family residence unless the work involves any of the following: (1) The addition, repair, or replacement of load-bearing structures. (2) The addition or change in the design of plumbing. (3) The addition, replacement, or change in the design of heating, air-conditioning, or electrical wiring, devices, appliances, or equipment, other than like-kind replacement of electrical devices and lighting fixtures.  (4) The addition (excluding replacement) of roofing. A local government shall not require more than one building permit for the complete installation or replacement of any natural gas, propane gas, or electrical appliance on an existing structure when the installation or replacement is performed by a person licensed (otherwise, a permit is required).  The following chart illustrates a few common renovations performed on properties in a small sample of North Carolina counties. A “YES” indicates that a permit is required for that particular renovation. You may be surprised at the types of updates that require permitting, so be careful!

Flipping homes has become a common practice in North Carolina. Flippers sometimes emphasize cosmetic improvements that greatly enhance the appearance of their properties, and unfortunately, saving money on these improvements is often a priority.  If an owner replaced an HVAC system, water heater, wiring, plumbing or other systems, then one or more building permits may have been required and the person who made those replacements was likely required to be licensed in their fields. Flippers sometimes hire unlicensed handymen to perform services that require licenses. Hiring a licensed contractor may raise the cost of the repair or improvement but will also help an owner or flipper navigate permitting requirements and help ensure that the improvements are satisfactory. Brokers should educate themselves, to be alert, and must inquire about improvements to ensure that they discover and disclose material facts.

What Was Old Is New Again!

The old Working With Real Estate Agents brochure published by the Commission for the last 25+ years has been renamed and converted into a Q&A format (“Questions and Answers on: WORKING WITH REAL ESTATE AGENTS”) with additional content. It is available on the Commission’s website (ncrec.gov) under “PUBLICATIONS.” Click on “Publications” and then “Q&A Brochures” under “Paid Purchases” to order a printed copy, or “View Online/Download” to view or print a copy. You may order five (5) brochures at no charge or order in bulk for a small fee.

The Q&A brochure’s new content answers questions commonly asked by buyers and sellers and includes the Commission’s commitment to racial equality and Fair Housing, definitions of agency and agency agreements, descriptions of the services brokers provide, the responsibilities of agents to their clients, how brokers are compensated, explanations regarding the expiration and termination of agency agreements, and agency diagrams illustrating four types of agency relationships.

The Commission recommends that brokers give prospective buyers and sellers copies of (or links to) this new Q&A brochure when reviewing the new Working With Real Estate Agents Disclosure form with them at first substantial contact.

This Q&A brochure will be translated into Spanish in the near future and will be available online and in print in the same manner as the English version.

Employment Opportunities Available

Are you interested in joining the staff of the North Carolina Real Estate Commission? From time to time, employment opportunities become available. They are posted on the Commission’s website under the “About Us” tab. Click here for more information.

Renew Your License Now

Renew your license by June 30, even if you haven’t completed CE. If you don’t renew by 11:59pm on June 30, your license will expire.

How do I renew?

  1. Go the Commission’s homepage, www.ncrec.gov.
  2. Click on Renew My Broker License.
  3. Enter your license number and PIN (password). Your PIN will be the last four digits of your Social Security number unless you have changed it.
  4. Verify your contact information, and update information if needed.
  5. Provide the “Employee Misclassification” disclosure and certification.
  6. If you are a Broker-in-Charge, you will be required to disclose information regarding your trust account(s) and any criminal convictions or disciplinary actions that have occurred within the previous year, if applicable.
  7. Pay the $45 renewal fee by Visa, MasterCard, Discover, American Express, or PayPal.

What if information in my license record needs to be updated?*

During renewal, be sure to verify that the information in your license record is current. You may update your basic contact information (e.g., email address, home address, and telephone number) during step #1 of the renewal process. However, in order to change other information, e.g., name change, firm affiliations, etc., you will need to submit a form to the Commission.

Question: What form do I submit if my name has changed?

Answer: If your name has changed, you must submit Form 1.22, Request BROKER Name Change And/Or Request To Replace BROKER License/Pocket Card.

Question: I am no longer affiliated with the firm listed in my license record. What form do I submit to terminate the affiliation?

Answer: To terminate your affiliation with a firm or sole proprietorship, submit Form 2.22, Request to Terminate Your Affiliation with a Firm or Sole Proprietorship.

Question: I recently affiliated with a new firm. What form do I submit to add the affiliation?

Answer: If you are a provisional broker, your BIC must submit Form 2.08, License Activation and Broker Affiliation. If you are a full broker, your BIC or you may submit Form 2.08.

Questions regarding the renewal process, license record changes, or forms? Contact the Education and Licensing Division at LS@ncrec.gov or 919.875.3700, x772.

*Per Commission Rule 58A .0103(b): 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 said change. A broker notifying the Commission of a change of legal name or firm name shall also provide evidence of a legal name change for either the individual or firm, such as a court order or name change amendment from the Secretary of State’s Office.

Current Stats: Monthly Licensee Count as of May 1, 2021

How Do I Love Thee . . . Send the Love Letters to A Sweetheart, Not A Seller

Today’s market is HOT!  Really HOT.  Like a cheap romance novel HOT.  Sellers are receiving an enormous amount of attention, with multiple buyers wooing them for their homes by offering prices well over list, large due diligence fees, and yes, love letters.

Who is encouraging these love letters designed to pull at the heartstrings of the seller and lull them into accepting a particular buyer’s offer over others?  Usually the buyer agent.  Maybe the buyer has heard the letter is needed from family or friends trying to help out.  The bottom line is such letters can create a problem and are best avoided by all.

The purpose of a “love letter” is simple enough – a buyer wants to be the chosen one, and it seems reasonable enough to attempt to win their dream home by pouring out their hearts to the sellers.  However, these letters can pose serious fair housing risks as they usually contain personal information about the buyers which may result in conscious or unconscious bias in selection by the sellers. 

What does that mean?  Let’s say the buyers include a photograph or two of themselves.  Now the seller is looking at the buyers and can see their race, whether or not they have children (familial status), or whether or not they are heterosexual.    The buyers may refer to how they can’t wait to put up a Christmas tree by the fireplace – an indication of their religious beliefs.  All of these things about the buyers may form the basis of selection by the sellers.  These factors go beyond the price and terms of an offer.  The sellers may make their choice – consciously or unconsciously – based on facts about the buyers’ race, familial status or religion, all of which are protected categories under fair housing laws. 

If you are the listing agent, you should educate your sellers about the pitfalls of love letters – this type of letter opens them up to criticism and possibly to civil liability and they should not look at such letters even if they are sent directly to the sellers from the buyers.  Sellers should only be considering offers based on objective criteria – price and terms.  Your firm may have a policy against the use of such letters – if so, let your clients know that if you receive such a letter with an offer you will not be passing it on to them.   NAR recommends that no such letters be accepted as part of an MLS listing.  Document the reasons your client chose or rejected each offer.

If you are a buyer agent, your firm may also have a policy against the use of such letters.  Never recommend that a buyer prepare a love letter for the seller or tell the buyer to send such a letter directly to the sellers.  Let your buyers know the market is hot, and they should make their highest and best offer if they want to be successful.  Prepare them for the fact that, in an extremely competitive market, they will likely lose a number of properties before they find the home that was meant to be theirs. 

The key here is to protect your clients from possible harm by removing the temptation to go with a contract simply because photographs or letters tug at their hearts and instead have them choose the best offer on the table.  Love may be blind, but unconscious bias is real and sees clearly.  Keep your clients and yourself safe from any potential fair housing issues.