For many years, wood was one of the preferred siding options for homes and buildings. But, as demand for wood increased and supply decreased, alternatives to real wood were developed. Today’s property owners can choose from an array of siding products for their homes and buildings, including many products that look, paint and nail like wood, and that can last for thirty years or more. One of the most prevalent is composite hardboard siding.
Hardboard is a generic term for panels manufactured from wood chips which have been converted to fibers that are bonded together under heat and pressure. It includes products manufactured by Masonite Corporation, Louisiana Pacific (“L-P”) and Georgia Pacific, among many others. Waferboard is a type of hardboard composed of layers of hardwood strands laid at right angles for strength, and bonded together under high pressure.
Hardboard siding comes in a variety of configurations and specifications, colors and textures. For instance, there are eighty different Masonite products alone. And, hardboard products come with a variety of warranties against design and manufacturing defects, including some that have no warranty at all!
In recent years, consumers have filed claims asserting that certain types of hardboard are unable to withstand normal weather conditions. They alleged that the material in the hardboard is poorly bonded, allowing moisture intrusion that leads to cracking, warping and delamination. In fact, there have been several class action lawsuits filed concerning certain types of hardboard, alleging that the siding led to structural damage. However, the results of these suits have been mixed.
It does appear that a factor influencing the durability of hardboard is the method of its installation. When carefully and correctly installed, most hardboard provides ample protection from the elements.
However, installation is not as simple as putting hammer to nail, and improperly installed hardboard can lead to water intrusion, rot and structural damage. Problems resulting from improper installation are typically not covered by the manufacturer’s standard warranty, which protects only against manufacturing defects.
Unfortunately, most consumers are ill-equipped to determine whether the exterior finish on their home or building was installed properly to prevent moisture intrusion: problems are often uncovered after the damage has been done.
So what’s a conscientious real estate professional to do to protect his or her client when faced with a home or building clad with a hardboard product? Act with care, and be careful what you say. The Real Estate Commission does not require its licensees to distinguish between the different types of hardboard products on the market or to know exactly which ones have been or now are the subject of a lawsuit. There are many similar hardboard products on the market, and the services of a professional may be necessary to determine exactly which one clads a particular house or building. (In fact, the National Organization of Exterior Finishing System Inspectors offers specialized training and certification in the identification and inspection of these products.)
However, if you, as a licensee, make a claim or assertion in your listing, advertisement or elsewhere that a property has a particular type of siding on it, you should be right. You are responsible for the accuracy of the representations you make about a property. If you’re not sure, don’t guess. Instead, if working with a buyer, encourage the buyer to get an inspection that covers the siding. If working with a seller, simply note that the siding is “hardboard” without going into any detail, unless you’re sure. And, be especially careful not to confuse hardboard siding with some other type of siding, such as a cement-based product. Cement-based products have a heavier feel than hardboard, and typically come with a longer warranty.
One important caveat must be made regarding Exterior Insulation Finishing Systems (“EIFS”), also called synthetic stucco. These products are applied differently than hardboard, and have had a high failure rate in the Southeastern United States. Remember that a property is or has been clad with synthetic stucco is a material fact and must be disclosed to potential purchasers.
Other Hardboard Choices
Here’s an idea of some of the other products found on the market today which serve as an alternative to wood:
• Fiber cement siding is a combination of cement, ground sand, cellulose fiber, additives and water formed into panels. One commonly known brand is Hardiplank, named for its developer, James Hardie. Manufacturers of this product claim that it will not rot and will withstand termites.
• Vinyl siding is a plastic-based product which is colored and pressed into sheets.
• Aluminum siding is a pressed aluminum product.
This article came from the May 2003-Vol34-1 edition of the bulletin.
The Real Estate Commission has tabled further consideration of a proposal to seek legislation permitting the Commission to require real estate licensees to be covered by errors and omissions insurance (See October 2002 Real Estate Bulletin). The Commission thanks those licensees who contacted it concerning this proposal.
This article came from the May 2003-Vol34-1 edition of the bulletin.
By Larry Outlaw, Director of Education and Licensing
An enthusiastic crowd of 160 instructors, school officials, authors and publisher representatives attended the Real Estate Commission-sponsored 2003 Real Estate Educators Conference held in Raleigh on March 13-14. The number of participants equals the record established in 1994 when the continuing education program was implemented.
A conference highlight was a panel discussion on prelicense course standards and successful teaching methods. The panelists were: Jerry Thomas, Sea Coast Real Estate Academy, Wilmington; Saundra Martin, Central Piedmont Community College, Charlotte; Lois Branning, Rowan-Cabarrus Community College, Kannapolis; and Roy Faron, J.Y. Monk Real Estate Training Center, Charlotte. Participants were very excited about the excellent ideas shared by these outstanding instructors.
In keeping with the conference’s primary emphasis on prelicense course standards and instructor performance, attendees participated in an Examination Item Crafting Workshop conducted by John Morgan of Morgan Testing Services, New London, CT. Mr. Morgan discussed and illustrated standards for examinations and question writing principles to assist instructors in developing effective course examinations.
“Update” sessions on prelicense education, the license examination and continuing education were conducted by Commission Education and Examination Officer Anita Burt, Pamela Rorie, Continuing Education Officer Pamela Rorie, and Director of Education and Licensing Larry Outlaw. These sessions addressed matters of special interest to instructors, such as school and instructor license examination performance, the updated salesperson course syllabus, course examinations, problem topics on the license examinations, planned topics for the 2003-04 CE Update Course, and plans to reduce CE course completion reporting errors. In addition, Legal Education Officer Tricia Moylan conducted a forum on selected frequently misunderstood legal issues.
During the first day’s luncheon, the North Carolina Real Estate Educators Association (NCREEA) held its spring meeting and annual awards program under the capable direction of President Deborah Carpenter of the Fonville-Morisey Center for Real Estate Studies in Raleigh. The Association presented its “Program of the Year” award to Central Piedmont Community College in Charlotte and its “Educator of the Year” award to Anne Rasheed of Boone, who teaches for the J. Y. Monk Real Estate Training Center.
Also during the luncheon, Allan Dameron, Real Estate Commission Chairperson from Holden Beach, presented the first annual Billie J. Mercer Excellence in Education Award to NCREEA’s Educator of the Year, Anne Rasheed. This award was recently established by the Commission in memory of Mrs. Mercer who, as a member and former chairperson of the Commission, was especially dedicated to furthering the education of real estate practitioners and persons entering the real estate business. In a special presentation ceremony honoring Ms. Rasheed and the late Mrs. Mercer, Mr. Dameron and others paid tribute to Mrs. Mercer, who lived and operated her own real estate company in Wilson. Those participating in this special presentation included Connie Corey, President of the North Carolina Association of REALTORS®, who was a close personal friend, and David Cockrell, Immediate Past President of the Wilson Board of REALTORS®. Other special guests in attendance at the presentation included C. H. Mercer (Billie’s husband), Fran Cockrell (close friend and fellow REALTOR®), Commission members Wanda J. Proffitt of Burnsville, Sang Hamilton of Winton and Mona Hill of Pinehurst, and Commission Executive Director Phillip T. Fisher. Mrs. Mercer would have been extremely pleased to see the tremendous attendance at this year’s conference and the level of dedication demonstrated by North Carolina’s real estate educators.
This article came from the May 2003-Vol34-1 edition of the bulletin.
License applicants are required to disclose all criminal convictions, regardless of when they occurred. In addition, since January 1, applicants have been required to submit with their applications a criminal record report provided by a reputable reporting agency. A North Carolina statewide report is required if the applicant has resided in North Carolina during the previous seven years, and a report is also required for each out-of-state county in which the applicant has resided during this period. Applicants undergo a character review only after having fully satisfied all other licensing requirements.
Early results indicate that this requirement is having a significant impact. The number of license applications requiring special review has more than doubled since implementation of the criminal record report requirement. Of the 600-700 applicants eligible for licensure each month, over 100 currently require special review due to matters such as criminal convictions, license disciplinary actions, outstanding judgments, etc. While most of these involve relatively minor issues that do not prevent or significantly delay licensure, many require special review by the Commission. These frequently result in the applicant being offered the opportunity for an informal conference with designated Commission members to discuss their applications. Decisions on some applications are deferred pending a formal hearing before the Commission.
Of special concern to the Commission is the number of broker applicants who, because of the new criminal record report requirement, are found to have had criminal convictions they did not disclose when they applied for a salesperson license or convictions they failed to report to the Commission as required by Commission rule. These applicants run the risk of not only having their broker license application denied, but also having their salesperson license revoked or suspended!
If you or anyone you know is applying for a license, be sure to disclose all criminal convictions, including DWI convictions. Failure to disclose a criminal conviction is frequently viewed by the Commission as being worse than the act that resulted in the conviction. Also remember to report any state in which you have ever held a real estate license and any disciplinary action taken against you because the Commission checks all applicants against information in the Association of Real Estate License Law Officials’ “Disciplinary Data Bank.”
This article came from the May 2003-Vol34-1 edition of the bulletin.
By Patricia A. Moylan, Education Officer
Commission staff is in the process of writing the mandatory continuing education Update course for 2003-2004. All licensees must take the Update course each year in order to renew their licenses on active status, unless they are exempt from the continuing education requirement because their licenses were just issued during that license year.
The two primary subjects on which the 2003-2004 Real Estate Update course will focus are: 1) RESPA (Real Estate Settlement Procedures Act) and 2) common complaints or claims against licensees by consumers or other licensees. Three-quarters of the course will be devoted to exploring these two topics. A related topic, namely, the value of maintaining errors and omissions insurance coverage, also will be discussed.
The RESPA section will address transactions to which RESPA applies, mandatory disclosures, provision of settlement statements (i.e. HUD-1s), prohibited kickbacks, unearned fees and affiliated business arrangements, enforcement provisions, and impending or anticipated revisions to the existing law or rules.
The topic covering complaints and claims will be drawn both from past Commission disciplinary cases as well as claims most frequently encountered by insurance carriers. They include issues of misrepresentation/omissions, drafting language to include in preprinted documents, mishandling of trust account monies, disputed earnest money deposits, conflicts of interest, false or misleading advertising, and discrimination against protected classes, among other issues.
Lastly, as always, a brief segment of the Update course will be devoted to a review of the Real Estate License Law and Commission Rules which either have been revised within the last year or which will change during the 2003-2004 license year, as well as certain administrative issues about which there appears to be ongoing confusion or ignorance. It is recommended that licensees who truly wish to be “on the cutting edge” and have the most current information take the Update course in the Fall of each year, rather than waiting until the Spring rush, when most of the statute and rule changes will already have been in effect for several months.
This article came from the May 2003-Vol34-1 edition of the bulletin.
Make absolutely certain that you provide the course sponsor your correct license number. If you became a broker recently, be sure to use your broker number, not your old salesperson number.
Check your course completion certificate to see that it has your correct and current license number.
Check your continuing education credits online at www.ncrec.state.nc.us to confirm their accuracy.
The CE requirement for each license period is the currently offered Real Estate Update Course plus one approved elective course.
Real estate CE must be completed by June 10. Courses are not available between June 11 and June 30.
DO NOT PROCRASTINATE TOO LONG! If you wait until the last minute, courses may be full and you may have difficulty finding readily available courses.
If you were issued a salesperson or broker license since July 1, 2002, you do not have to complete CE this license period.
This article came from the May 2003-Vol34-1 edition of the bulletin.
MAURICE E. BETHEA (Charlotte) – The Commission revoked the salesperson license of Mr. Bethea effective February 1, 2003. The Commission found that Mr. Bethea misrepresented to a listing agent and seller that he had collected earnest money from a buyer and that it was being held in a trust account. The Commission also found that Mr. Bethea made a false assertion to a listing agent that a buyer was pursuing a loan with another lender, conducted brokerage activities without the knowledge and supervision of his broker-in-charge and accepted commissions from someone other than his broker-in-charge.
JON M. BUTTERFIELD (Charlotte) – By Consent, the Commission suspended the salesperson license of Mr. Butterfield for a period of one year effective May 1, 2003. One month of the suspension is to be active with the remainder stayed for a probationary period of one year. The Commission found that Mr. Butterfield failed to report a misdemeanor conviction as required by Commission rules.
ROBERT E. DRAG, JR. (Cornelius) – By Consent, the Commission reprimanded Mr. Drag effective March 1, 2003. The Commission found that Mr. Drag, as broker-in-charge of a real estate brokerage firm, listed and sold property with advertising describing it as having a “True Water View” and then on his own adjacent property planted trees that would, over time, eliminate the view.
TERRY L. FERGUSON (Waynesville) – By Consent, the Commission suspended the broker license of Mr. Ferguson for a period of one year effective March 1, 2003. Ninety days of the suspension are to be active with the remainder stayed for a probationary period of one year upon certain conditions. The Commission found that Mr. Ferguson sold an incomplete townhouse. As part of the sales contract, he undertook to complete it, but failed to obtain the necessary permits and conveyed the property without a certificate of occupancy. The Commission also found that Mr. Ferguson, in another transaction, failed to establish and disclose an agency relationship with the parties, and drafted a contract securing the rights of the parties to the transaction without a license to practice law.
TINA M. HOWARD (Ocean Isle Beach) – By Consent, the Commission revoked the broker license of Ms. Howard effective March 3, 2003. The Commission found that Ms. Howard, while employed as a financial officer of a resort development and construction company, failed to keep complete and accurate financial records and to produce them for review. The Commission also found that Ms. Howard wrote checks from the company and other accounts for her own benefit and signed the owner’s name without authority.
BRYON N. JOHNSON (Erwin) – By Consent, the Commission suspended the broker license of Mr. Johnson for a period of five years effective May 1, 2003. The Commission found that Mr. Johnson pleaded guilty to and was convicted of the offense of assault with a deadly weapon inflicting serious injury.
KEN WEATHERBY & ASSOCIATES, INC. (Cornelius) – By Consent, the Commission suspended the firm license of Ken Weatherby & Associates for a period of one year effective May 1, 2003. The Commission then stayed the suspension for a probationary period of two years effective May 1, 2003. The Commission found that Ken Weatherby & Associates deposited a check payable to a landlord into its operating account when a portion of the amount of the check was owed to the landlord. The Commission also found that the landlord obtained a judgment for the amount and that judgment has been paid.
LAKE PROPERTIES, LTD (Cornelius) – By Consent, the Commission reprimanded Lake Properties effective March 1, 2003. The Commission found that Lake Properties, a real estate brokerage firm, listed and sold property with advertising describing it as having a “True Water View” and then the firm’s broker-in-charge on adjacent personally owned property planted trees that would, over time, eliminate the view.
JOHN K. MARKS (Greensboro) – By Consent, the Commission suspended the broker license of Mr. Marks for a period of one year effective March 15, 2003. The Commission then stayed the suspension for a probationary period of two years effective March 15, 2003. The Commission found that Mr. Marks unintentionally allowed his real estate license to expire June 30, 1999 while continuing to conduct a real estate brokerage office. The Commission noted that Mr. Marks, upon discovering that his license had expired, ceased his brokerage operations, applied for reinstatement and fully cooperated with the Commission in its investigation.
DOUGLAS J. MILLSAPS (Charlotte) – By Consent, the Commission suspended the broker license of Mr. Millsaps for a period of one year effective May 1, 2003. The Commission then stayed the suspension for a probationary period of two years effective May 1, 2003. The Commission found that Mr. Millsaps failed to create and maintain trust account records as required by Commission rules.
PEELER/LAVECCHIA REAL ESTATE, INC. (Shelby) – By Consent, the Commission suspended the broker license of Peeler/LaVecchia Real Estate for a period of eight months effective January 1, 2002. The Commission then stayed the suspension effective January 1, 2002 for a probationary period of 11 months on certain conditions. The Commission found that Peeler/LaVecchia listed a subdivisionfor sale and continued to advertise it as having lakefront lots with direct access to the lake, state maintained streets and a common area with boat access for interior lots after knowing the developer would not be able to provide the amenities.
MARLENE G. PEELER (Shelby) – By Consent, the Commission suspended the broker license of Ms. Peeler for a period of eight months effective January 1, 2002. The Commission then stayed the suspension for a probationary period of 11 months on certain conditions. The Commission found that Ms. Peeler listed a subdivision for sale and continued to advertise it as having lakefront lots with direct access to the lake, state maintained streets and a common area with boat access for interior lots after she knew the developer would not be able to provide the amenities.
SKYNET REALTY, INC. (Charlotte) – The Commission accepted the voluntary surrender of the firm license of Skynet Realty for a period of one year effective May 1, 2003. The Commission dismissed without prejudice allegations that Skynet Realty violated provisions of the Real Estate License Law and Commission rules. Skynet Realty neither admitted nor denied misconduct.
ELIZABETH J. TURNER (Duck) – By Consent, the Commission suspended the salesperson license of Ms. Turner for a period of one year effective February 15, 2003. Thirty days of the suspension are to be active with the remainder stayed for a probationary period of one year. The Commission found that Ms. Turner failed to properly and timely report 1997 criminal convictions to the Commission until applying for a broker license in 2002. The Commission noted that Ms. Turner cooperated with the Commission in its investigation.
JACK R. WATTS (Fayetteville) – By Consent, the Commission reprimanded Mr. Watts effective April 1, 2003. The Commission found that Mr. Watts, as a real estate broker, negotiated an increase in his commission with a seller, purportedly to provide a bonus for an unlicensed assistant. The Commission also found that Mr. Watts did not pay the assistant any portion of the commission. The Commission noted that Mr. Watts later refunded the seller the difference.
This article came from the May 2003-Vol34-1 edition of the bulletin.
Real Estate Commission member and former Chairman Lanny T. Wilson (Wilmington) has resigned as a member of the Commission.
A member of the State Board of Transportation, Mr. Wilson was also recently appointed by Governor Easley to the newly created North Carolina Turnpike Authority.
The Commission members joined Governor Easley in thanking Mr. Wilson for his leadership and service to North Carolina.
This article came from the February 2003-Vol33-3 edition of the bulletin.
By Pamela V. Millward, Associate Legal Counsel
Before September 1, 2002, the Real Estate License Law and Commission rules forbade real estate licensees from compensating or sharing compensation with unlicensed persons for acts that require licensure by the Commission. However, in September the Commission created a narrow exception to its rules that allowed brokers to pay referral fees to travel agents for procuring a tenant for a vacation rental as defined in the North Carolina Vacation Rental Act.
Under Commission rules, eligible travel agents must be primarily engaged in the business of acting as an intermediary between persons who purchase air, land, and ocean travel services and those who provide these services. They must spend the bulk of their time arranging travel for others. In addition, individuals permitted to sell airline tickets by the Airlines Reporting Corporation (ARC) are also eligible for a referral fee under the rules.
To receive compensation from a real estate broker, a travel agent:
• May only introduce the tenant to the broker and in the regular course of the travel agent’s business.
• May not discuss lease conditions.
• May not negotiate the price of the rental or on behalf of the tenant.
• May not perform any other acts which normally require a real estate license.
• May not engage in brokerage on the pretext of being a travel agent.
• May not seek, or come into possession of, any other monies in connection with the vacation rental.
• May be paid only at the conclusion of the transaction and only by a duly licensed real estate broker. Salespersons may not pay travel agents for referrals.
As for the mechanics of making a referral, before a vacation rental agreement is created between the vacationer and the property manager, the real estate agent must provide the vacationer with a written statement advising him or her to rely only upon the agreement itself and the real estate broker’s statements when deciding whether to undertake the rental agreement.
Finally, real estate brokers must keep accurate records of all payments made to any travel agent for a minimum of three years. This includes the name of the tenant, the property rented and dates of tenancy, name and address of the travel agent, and the amount of the referral.
Brokers implementating this rule change and needing further information may contact the Commission’s legal division.
This article came from the February 2003-Vol33-3 edition of the bulletin.
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DATE
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LICENSE STATUS
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June 30, 2003
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License renewal deadline
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July 1, 2003
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License expiration period begins
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December 31, 2003
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Last day to reinstate expired license with $55 fee only
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January 1, 2004 thru June 30, 2006
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Period to reinstate by exam, completing prelicensing course or possessing other state’s active real estate license
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July 1, 2006
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Reinstate as new licensee by prelicense education and exam or as active licensee in another state
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This article came from the February 2003-Vol33-3 edition of the bulletin.