Do Not Act Without Authorization!

Agency agreements authorize a real estate firm and its associates to act on behalf of their clients — to market a seller-client’s property, to search for and assist a buyer-client with purchasing a suitable property or to manage an owner’s rental property. All agency agreements authorize agents to perform certain duties, but they do not give the agents unlimited authority to act on behalf of clients or to make decisions for their clients or customers. The following is a partial list of services for which agents must obtain authorization.

1 A listing agent may not advertise a seller’s property or perform any service on behalf of a seller-client without first entering into a written listing agreement with the seller.

2 A listing agent should not advertise a seller’s property at any price other than the price selected by the seller.

3 A listing agent must not decide on his or her own whether an offer is acceptable. The agent must deliver the offer to the seller to enable the seller to decide whether the offer is acceptable. [Note: Even when an offer is negotiated via telephone, the listing agent must send or deliver any written offer to the seller for review.]

4 A listing agent or buyer agent should refrain from giving a buyer or prospective buyer keys or possession of a seller’s property without first obtaining the seller’s express permission. If a closing occurs so late on a Friday afternoon that the new deed will not be recorded until the following Monday or later, then the agents must obtain the seller’s permission before giving keys to the buyer and should recommend that the parties enter into a written agreement to permit the buyer’s possession before closing. (Remember, the standard form Offer to Purchase and Contract defines “closing” as the date and time the deed is recorded.)

5 A listing agent or buyer agent should avoid signing closing statements or other documents on behalf of a client without first obtaining written authority, preferably in the form of a power of attorney. Agents should avoid signing anything for customers.

6 A listing agent or buyer agent should not contract for services (e.g. repair services, inspections, closing attorneys, surveys, termite treatments, etc.) on behalf of a client or customer without first obtaining authorization from the client or customer. Otherwise, the agent may be held responsible for paying for the services rendered.

7 A listing agent or buyer agent should refrain from advising clients and customers that a contract has been formed or that they have a “done deal” until all parties have signed the offer, initialed all changes made to it and communicated to all parties that the offer has been signed and initialed by all parties. Until then, agents must refrain from using the term, “verbal contract,” as it falsely implies that a valid, binding agreement has been formed.

8 A property manager must refrain from entering into a lease containing terms not authorized by the owner including the lease rate and lease term.

9 A property manager may not permit a tenant to use a property for any purpose other than that which is authorized by the owner, by restrictive covenants and by zoning restrictions.

10 A property manager may not permit a tenant to have pets or to exceed the occupancy limit set by the owner without first obtaining the owner’s permission.

Real estate agents must act in the best interests of their clients at all times and should avoid taking any action for which they have not received express authority from their clients and customers. A real estate agent’s duty is to communicate information to the parties involved so that they can make informed decisions rather than the agent making them alone. Complaints received by the Commission alleging any of the ten items listed above may result in disciplinary action. Therefore, to protect your license, obtain authorization before acting on behalf of someone else.

This article came from the February 2002-Vol32-4 edition of the bulletin.

Commission Initiates Commercial Broker Education Proposals

The Real Estate Commission has accepted and begun to implement the recommendations of an advisory committee to work with interested education sponsors to improve educational opportunities in the field of commercial real estate brokerage and to enhance licensees’ awareness of the need for greater education in this and other specialty areas of practice.

The Commission’s Commercial Brokerage Education Advisory Committee (CBEAC) recently reviewed commercial brokerage educational opportunities and specifically proposed that the Commission:

• Make the materials comprising the chapter on “Commercial Real Estate Brokerage” in the Commission’s North Carolina Real Estate Manual available for education sponsors to use in providing a six-hour “Introduction to Commercial Real Estate Brokerage” continuing education elective course, provided that proposed instructors meet special qualification requirements established by the Commission.
• Provide education sponsors of CE elective courses on commercial brokerage with suggestions for possible subject matter for courses that licensees could take after completing the introductory course.
• Through the Real Estate Bulletin and mandatory CE update course, address the issue of licensee competence necessary to engage in commercial brokerage and property management, and make licensees aware of educational opportunities in these fields.

The CBEAC was formed in 2001 to assist the Commission in developing a plan for a commercial brokerage education certificate program designed to make available basic instruction to licensees, especially those with occasional commercial transactions.

The development and operation by the Commission of such a program had been recommended by the Commission’s Specialty Licensing Advisory Committee that studied the issue of possible separate licensure or certification of commercial brokerage and property management practitioners. The Commission agreed with the committee’s recommendation After considerable deliberation, the CBEAC recommended that the Commission reconsider its tentative plans to develop and administer a basic commercial brokerage education certificate program.

Several factors contributed to the CBEAC’s conclusion. A primary concern was that issuance of a program certificate by the Commission would imply to licensees and consumers that certificate holders are especially competent to practice commercial brokerage.

The fact is, however, that the amount of information that could be conveyed in even a high quality introductory-level program of some 30 classroom hours would be completely inadequate to achieve the necessary level of competence. The committee also had other concerns about the likelihood of program participation by the primary target audience, competition with an existing similar program in Charlotte and the high cost of development.

The CBEAC members were Peter T. Chenery, Raleigh, Richard D. Whitney, Asheville, and William C. Maus, Wilmington, Commercial Brokers; Ernest D. Wilkinson III, Atlantic Beach, Dewey L. Brantley, Jr., Wilson, and Roy H. Harvel, Southern Pines, General Practitioners; Cindy S. Chandler, Charlotte, Educator and Commercial Broker; William C. Lackey, Jr., Charlotte, General Practitioner and Commission Member; and Chris Rhodes, Director of Professional Development, NC Association of REALTORS®, Ex Officio Member. Commission staff advisors for the committee were Larry Outlaw, Director of Education and Licensing, and Pamela Rorie, Continuing Education Officer.

The Commission appreciates the contributions of the CBEAC members who willingly devoted their valuable time to assist the Commission in this matter.

This article came from the February 2002-Vol32-4 edition of the bulletin.

Caveats About VA Foreclosures

When the Veterans Administration is forced to foreclose on a real estate loan which it has guaranteed, it typically arranges with a local real estate broker to act as its “property manager” to get the property ready to re-sell. It then posts the property on its website for any licensed real estate broker to sell.

Selling VA-foreclosure properties can be rewarding, but agents should be aware that:

The VA will not list its property with any individual agent or company. Therefore,

You cannot give a “broker price opinion” (BPO) on the property, even if you are the “property manager.” Real estate brokers and salespersons can perform BPO’s only if they expect to obtain a listing on the property (which they cannot) or if they are licensed appraisers.

You cannot act as a seller’s agent or subagent. To act as agent for the seller, you must have a signed listing agreement (which you cannot have). You can only act as a buyer’s agent. And, if you act as both the buyer’s agent and the VA’s “property manager”, you should disclose to the VA and the buyer what your relationship is to each of them.

You must not imply in your advertisements that the VA foreclosure property is listed with your firm or that you have the exclusive right to market it. By including “this is not a company listing” or “inventory available on VA website” in your advertising, you can dispel this impression.

The VA sells its property “as is” and does not require an attorney to close the transaction. Therefore,

You should encourage your buyer-client to have the property inspected by a licensed home inspector, get a pest inspection, a survey, etc., and to retain an attorney to protect the buyer’s legal interests. [Document in your files that you made these recommendations to the buyer.]

This article came from the February 2002-Vol32-4 edition of the bulletin.

Bulletin Changes

Changes have been made in the Bulletin beginning with this issue:

• Paper stock – a coated stock for better reproduction
• Color photography (a first in the Bulletin’s history) and full color throughout each issue.
• Text Type – graphically more interesting and more readable.
• Publication frequency – three times a year rather than four, with expansion as needed.

This article came from the February 2002-Vol32-4 edition of the bulletin.

Commission Member Billie J. Mercer

The Real Estate Commission regrets to announce the passing of Commission Member and former Chairman Billie J. Mercer. During her six years’ service on the Commission, Billie was a tireless and dedicated worker, committed to improving and elevating real estate practice in our state. The members and staff of the Commission extend their sincere sympathy to her family and many friends.

This article came from the February 2002-Vol32-4 edition of the bulletin.

Auditor’s Corner

By Emmet R. Wood, Director, Audits and Investigations

The Commission is in the process of evaluating computer software for compliance with the Real Estate License Law, Commission rules and Trust Account Guidelines. In order to comply, the software must have the capability to generate a trust account journal, supplemental deposit and disbursement worksheets, ledger sheets, bank reconciliation and ledger reconciliation worksheet as required by Commission Rule A.0107 and as illustrated in the Trust Account Guidelines.

Once the Commission determines that the computer reports submitted by a vendor comply, the software is put on the Commission’s Compliant Software List. This list will be published in the Real Estate Bulletin and on the Commission’s web site at www.ncrec.state.nc.us. Users should be certain that they are using the current updated version of a compliant software.

Not all computer software programs are evaluated. For example, Quick Books would not be evaluated because the software is not set up or programmed to account for the handling of trust funds. This would not preclude a licensee from using that software to account for trust funds. However, someone using Quick Books would have to possess a good working knowledge of not only accounting but also the Commission’s reporting requirements and they would then have to set up the software to generate the appropriate compliant reports.

When a licensee does elect to use software on the Commission’s Compliant Software List, then the licensee should evaluate the software for its usefulness and utility to the real estate company. For example, if a licensee is in the long term rental management business, then the licensee may want the software to print a list of the tenants who are delinquent with their rent or a list of the rental units that are vacant.

Keep in mind that the reports generated by Commission compliant software are only as good as the data entered by the computer user who should have competence in accounting and possess a good working knowledge of the Commission’s rules and guidelines.

This article came from the February 2002-Vol32-4 edition of the bulletin.

Disciplinary Actions – Feb 2002-V32-4

SELBY G. BENTON (Warrenton) – The Commission accepted the voluntary surrender of Mr. Benton’s broker license for a period of one year effective March 1, 2001. The Commission dismissed without prejudice allegations that Mr. Benton violated provisions of the Real Estate License Law and Commission rules. Mr. Benton neither admitted nor denied any misconduct.

DOUGLAS R. BRINDLEY (Corolla) – By Consent, the Commission suspended the broker license of Mr. Brindley for a period of two years effective December 1, 2001. Three months of the suspension are to be active and remainder stayed for a probationary term ending December 1, 2004. The Commission found that Mr. Brindley, as broker-in-charge, failed for two years to conduct the monthly trust account reconciliation required by Commission rules and thus failed to properly account for funds held for others. The Commission noted that Mr. Brindley promptly undertook steps to remedy this situation.

CALLIHAN TEAL SKELLEY & ASSOCIATES, t/a ERA CALLIHAN, TEAL, SKELLEY (Calabash) – By Consent, the Commission revoked the firm broker license of Callihan Teal Skelley & Associates effective December 3, 2001. The Commission found that the firm continued to operate and renew its firm license every year despite the revocation of its Certificate of Authority in September 1993 by the Secretary of State’s office for failure to file annual reports. The Commission also found that the firm failed to perform monthly trust account reconciliation, failed to maintain property ledgers, engaged in commingling of funds and failed to properly account for the funds of others.

CENTURY 21 DOROTHY ESSEY & ASSOCIATES, INC. (Long Beach) – By Consent, the Commission reprimanded the firm of Century 21 Dorothy Essey & Associates effective December 1, 2001. The Commission found that Century 21 Dorothy Essey & Associates disbursed a $5,000 earnest money deposit without either a court order or written release by all parties to a failed contract to purchase property listed by the firm, even though the deposit was in dispute between the owner and prospective buyers. The firm reimbursed $2,500 to the owner under the terms of the listing agreement.

ALAN B. CONNER (Monroe) – By Consent, the Commission suspended the salesperson license of Mr. Conner for a period of two years effective January 1, 2002. Six months of the suspension are to be active and the remainder stayed for a probationary term ending July 1, 2004. The Commission found that Mr. Conner, without authority, signed an earnest money release form for the parties to a sales transaction. The Commission also found that Mr. Conner, upon receiving the disbursement check, endorsed and cashed the check without the authorization of the parties. Mr. Conner subsequently reimbursed the parties.

CROSSMAN COMMUNITIES OF NC, INC. (Calabash) – By Consent, the Commission reprimanded the firm of Crossman Communities effective December 1, 2001. The Commission found that Crossman Communities failed to perform monthly trust account reconciliations, failed to maintain property ledgers, engaged in commingling of funds and failed to properly account for the funds of others. These problems occurred in the Calabash office, which has since been closed.

ELMER DAVIS (Mebane) – By Consent, the Commission suspended the salesperson license of Mr. Davis for a period of one year effective October 1, 2001. Three months of the suspension are to be active and the remaining period stayed for a probationary term of one year. The Commission found that Mr. Davis, in brokering a sale of real property in which he had an ownership interest, failed to include upon the closing statement a note received for a portion of the purchase price and closing expenses.

TERESA ELLISON (Leicester) – By Consent, the Commission suspended the salesperson license of Ms. Ellison for a period of two years effective January 1, 2002. The Commission found that Ms. Ellison failed to disclose 1985 and 1987 convictions to the Commission on her license application and failed to notify the Commission of name and address changes.

DOROTHY H. ESSEY (Long Beach) – By Consent, the Commission reprimanded Dorothy Essey effective December 1, 2001. The Commission found that Dorothy Essey disbursed an earnest money deposit without either a court order or written release by all parties to a failed contract to purchase property listed by the firm, even though the deposit was in dispute between the owner and prospective buyers. Ms. Essey reimbursed $2,500 to the owner under the terms of the listing agreement.

LONNIE W. GLASPIE, JR. (Clinton) – By Consent, the Commission reprimanded Mr. Glaspie effective October 3, 2001. The Commission found that Mr. Glaspie, when purchasing property for his own account, concealed his acquisition of title from a lender in order to avoid enforcement of the due-on-sale clause in a deed of trust on the property.

JOHN MARK HANCOCK (Raleigh) – The Commission accepted the voluntary surrender of Mr. Hancock’s broker license for a period of one year effective October 15, 2001. The Commission dismissed without prejudice allegations that Mr. Hancock violated provisions of the Real Estate License Law and Commission rules. Mr. Hancock neither admitted nor denied any misconduct.

JW CONCEPTS LLC (Cary) – By Consent, the Commission revoked the firm broker license of JW Concepts effective January 1, 2002. The Commission found that JW Concepts failed to have its trust account records created and maintained in the manner required by Commission rules. Funds were expended from the account when not held for the purpose for which spent and were commingled with the funds held for others by the firm. The Commission noted that JW Concepts acted promptly to end commingling practices, rectify improper expenditures and implement the necessary record keeping system for the funds of others. J. W. Concepts neither admitted nor denied any misconduct.

PATRICIA A. KEYES (South Brunswick) – By Consent, the Commission reprimanded Ms. Keyes effective December 1, 2001. The Commission found that Ms. Keyes, acting as bookkeeper for the real estate firm where she also held a salesperson license, handled all of the rental business herself without the supervision of her broker-in-charge. The Commission also found that the firm’s books and records were not kept in compliance with the Real Estate License Law and the Commission rules.

THOMAS R. T. MCINTOSH (Durham) – By Consent, the Commission suspended the broker license of Mr. McIntosh for one year effective December 1, 2001, then stayed the suspension upon Mr. McIntosh’s satisfactory completion of certain coursework and placed him on probation until December 1, 2003. The Commission found that Mr. McIntosh in 1992 answered “no” to the broker license application question concerning prior convictions of any criminal offense when, in fact, he had been convicted in 1988 in Guilford Country, NC, of Driving While Impaired. The Commission also found that Mr. McIntosh sent the Commission checks to renew his license in 1995 and 2000, which were initially returned for insufficient funds. The Commission further found that in July 1999 the Appraiser Board suspended Mr. McIntosh’s appraiser license for three months for paying a course sponsor for a continuing education course with a check that was returned for insufficient funds.

NORTH CAROLINA REAL ESTATE SERVICES, CORP. (Clinton) – By Consent, the Commission reprimanded North Carolina Real Estate Services, Corp., effective October 3, 2001. The Commission found that the firm, while managing property owned by its principal shareholder, concealed from a lender having a deed of trust on the property the transfer of title to real property of the owner of the firm in violation of a due-on-sale clause contained in the lender’s deed of trust.

MICHAEL G. SCHRIBER (Pinehurst) – By Consent, the Commission reprimanded Mr. Schriber effective December 1, 2001. Also, effective December 1, 2001, the Commission withdrew for 90 days its approval of Mr. Schriber as a pre-licensing and continuing education update course instructor. The Commission then stayed the withdrawal for a probationary period of one year. The Commission found that Mr. Schriber made certain remarks in a Commission-approved broker pre-licensing course that were unnecessary to the course subject matter and offended the sensibilities of students.

JEANNETTE SILVERTHORNE (Greensboro) – By Consent, the Commission suspended Ms. Silverthorne’s broker license for ninety days effective October 1, 2001. Thirty days of the suspension were active and the remaining period stayed for a probationary period of one year. The Commission found that Ms. Silverthorne, as a broker in the sale of a house and lot, failed to disclose to the closing attorney or the lender providing a loan secured by the property a loan of $2,000 from the seller to the buyer to use as part of the purchase price. The transaction closed and the closing attorney’s office failed to properly record the loan payment on the closing statement provided to the parties and the lender.

ELIZABETH E. TAYLOR (Kitty Hawk) – By Consent, the Commission revoked Ms. Taylor’s broker license effective October 1, 2001. The Commission found that Ms. Taylor, while engaged in rental management with a real estate company, purchased a computer for more than $1,500 using a company credit card and made a false statement that the computer was intended as an amenity for a client’s property. The Commission also found that Ms. Taylor failed to report convictions for driving while impaired and misdemeanor larceny as required by Commission rules. Ms. Taylor neither admitted nor denied the Commission findings, but did consent to the revocation of her license based upon the Commission making those findings.

LYNN R. WARREN (Henderson) – The Commission accepted the voluntary surrender of Ms. Warren’s salesperson license for a period of one year effective November 1, 2001. The Commission dismissed without prejudice allegations that Ms. Warren violated the Real Estate License Law. Ms. Warren neither admitted nor denied any misconduct.

CASEY M. YORK (Greenville) – By Consent, the Commission suspended the salesperson license of Ms. York for a period of two years effective January 10, 2001. The Commission found that Ms. York failed to amend an offer to purchase and to disclose that an earnest money deposit received for the purchase of Ms. York’s residence had been withdrawn from the firm trust account. The Commission also found that Ms. York, who received the money for repairs, signed a false settlement statement indicating that the earnest money was on deposit when it was not.

This article came from the February 2002-Vol32-4 edition of the bulletin.

Commission Education Program Wins Top ARELLO Award

The Association of Real Estate License Law Officials (ARELLO) presented its top education recognition award to the North Carolina Real Estate Commission for its “Total Education Program.”

This award honors a jurisdiction’s real estate licensing agency for operating an overall education program that is judged to be particularly outstanding based on awards criteria such as program design, program standards, innovation, resources devoted to the program and benefits of the program.

Specific aspects of the Commission’s education program that contributed to the Commission’s selection for this honor include:

Education Award – Lanny Wilson, Commission Chairman, (r) receives ARELLO award from Larry Outlaw, Director, Education and Licensing. Commission members (l. to r.) are Marsha lordan, Raymond Bass Wanda Proffitt, William Lackey, Sang Hamilton, Allan Dameron and Mona Hill.

New Broker Prelicensing Course —The emphasis on practical application of laws, rules and concepts, inclusion of a major section on “Introduction to Commercial Real Estate Brokerage,” and provision by the Commission of high quality course final examinations for use by instructors are particularly noteworthy.

Standards for Prelicensing and CE Update Course Instructors — Prospective CE update course instructors have long been required to demonstrate by videotape that they possess minimally acceptable basic teaching skills. Prelicensing instructors are now subject to this requirement and new instructors must attend a Commission-sponsored New Instructor Seminar. In addition, prelicensing instructors must obtain instructor continuing education to renew their approval.

CE Update Course — The Commission-developed mandatory update course, featuring entirely different subject matter each year, is highly regarded for the quality of information and instruction.

CE Elective Course Standards — The Commission utilizes very strict elective course approval standards in an effort to assure that approved courses serve the public interest and meet minimum quality standards regarding the information to be provided, course design, materials and similar matters.

Instructor Training — The Commission sponsors a two-day Real Estate Educators Conference each year for the benefit of approved instructors and other real estate educators. The Commission also conducts two six-hour training sessions for CE update course instructors each year to help prepare them to teach the update course for that year.

Broker-in-Charge Course — Since October 2000, all newly designated brokers-in-charge must take this Commission-developed course within 90 days of being designated. The 4 1/2-hour, PowerPoint®-based course focuses on the legal and practical responsibilities of brokers-in-charge and is conducted by the Commission 4-5 times a month at various locations across the state.

Trust Account Course — The Commission conducts both a Basic Trust Account Course and a Resort Property Managers Trust Account Course for licensees. The basic course is taught once a month in Raleigh and both are taught each spring in several locations across the state. The courses utilize a PowerPoint®-based instructional program.

North Carolina Real Estate Manual— The Commission publishes biennially this text on North Carolina real estate law and brokerage practices. It is used in the broker prelicensing course and also serves as a reference book for practitioners. The 718-page Manual features detailed coverage and many practical examples not found elsewhere.

Information Publications for Licensees and Consumers — The Commission publishes a licensee newsletter, the Real Estate Bulletin, a Working with Real Estate Agents brochure (which licensees must provide to prospective sellers and buyers), and aResidential Square Footage Guidelines booklet. In addition, the Commission publishes free of charge to licensees and consumers a series of Question and Answer brochures on *Fair Housing, *Renting Residential Real Estate, *Tenant Security Deposits, Condos and Townhouses, Residential Subdivisions and Planned Communities, Home Inspections, and Purchasing Coastal Real Estate in North Carolina (* available in a Spanish language edition).

The Commission is very proud to have received the ARELLO award recognizing its achievements in the education area. [ARELLO is an international organization of real estate licensing agencies and individuals involved with regulation of the real estate industry.]

This article came from the February 2002-Vol32-4 edition of the bulletin.

FORMAT CHANGED

We have received a number of inquiries as to whether the Bulletin is published monthly or quarterly. To avoid any further confusion, we have decided to change the heading on the Bulletin to show the quarter instead of the month of publication. This issue is designated “Fall Quarter 1970.” Succeeding issues will be published for the Winter, Spring, and Summer Quarters.

This article came from the Fall 1970 Vol1-3 edition of the bulletin.

CHAIRMAN’S COMMENTS

Your Board has now completed its move to expanded quarters at 813 Branch Banking and Trust Building in Raleigh. You are cordially invited to visit the office at any time you -ire in the Capital city. The Board id entire staff welcome you.

With over 10,000 licensees in the state, the North Carolina Real Estate Licensing Board has found it necessary to enlarge its staff as well as its quarters. We are fortunate to have added Mr. Blanton Little, who will serve as assistant to the Secretary-Treasurer. Blanton is a native of Stanly County and a long time resident of Raleigh. He is well qualified for his new position. He is a Davidson graduate and has over twenty years experience in the fields of appraising and lending on residential, farm, and commercial properties.

Each member of the North Carolina Real Estate Licensing Board and staff dedicates himself to the protection of the interest of the public. We will continue to work for the strengthening of the profession by fair and impartial administration of the legislation and rules and regulations under which we operate.

Best wishes,

J. W. Olive

This article came from the Fall 1970 Vol1-3 edition of the bulletin.