that North Carolina low automatically adds a risk of loss clause to real estate contracts?
Uniform Vendor and Purchaser Risk Act
39-39. Risk of loss. – Any contract hereafter made in this State for the purchase and sale of realty shall be interpreted as including an agreement that the parties shall have the following rights and duties, unless the contract expressly provides otherwise:
(1) If, when neither the legal title nor the possession of the subject matter of the contract has been transferred, all or a material part thereof is destroyed without fault of the purchaser, the vendor cannot enforce the contract, and the purchaser is entitled to recover any portion of the price that he has paid;
(2) If, when either the legal title or the possession of the subject matter of the contract has been transferred, all or any part thereof is de strayed without fault of the vendor, the purchaser is not thereby relieved from a duty to pay the price, nor is he entitled to recover any portion thereof that he has paid.”
This article came from the June 1970 Vol1-2 edition of the bulletin.
The Licensing Board is greatly concerned whenever a complaint is filed against a broker or salesman, particularly disturbing are complaints which involve the improper handling of real estate funds or the failure to furnish buyers and sellers copies of properly prepared purchase agreements or closing statements.
When a client employs a licensed broker to represent him in a real estate transaction, he naturally expects the broker and his salesmen to handle his business with the highest degree of honesty and competency. The real estate licenses which have been issued by the Licensing Board and which are displayed in the broker’s office give this assurance to the client. If the broker or his salesmen fail this obligation, the client has a perfect right to complain to the Licensing Board and expect the Board to take appropriate action to protect him.
Brokers are urged to review in detail the following sections of 93A-6(a) of the Licensing Law with their personnel:
(12) Commingling the money or property of his principals with his own or failure to maintain and deposit in a trust or escrow account in an insured bank oil money received by a real estate broker acting in said capacity, or as escrow agent, or the temporary custodian of the funds of others, in a real estate transaction.
(13) Failure to deliver, within a reasonable time, a completed copy of any purchase agreement or offer to buy and sell real estate to the buyer and to the seller.
(14) Failure by a broker to deliver to the seller in every real estate transaction wherein he acts as a real estate broker, at the time such transaction is consummated, a complete detailed closing statement showing all of the receipts and disbursements handled by such broker for the seller; also failure to deliver to the buyer a complete statement showing all money received in the transaction from such buyer and how and for what the same were disbursed.
This article came from the June 1970 Vol1-2 edition of the bulletin.
Very soon, I will be completing my year as Chairman of the North Carolina Real Estate Licensing Board. I am grateful to the Board for the opportunity to serve as Chairman in-as-much as this year has been a most rewarding one to me. The year has presented many problems some of you will recall, but with the fine spirit of cooperation of the licensees and Board, we have gone about the business of solving them.
At this time, we ore in the process of many changes and during the days forthcoming, you will be more aware of the efforts of your Board to upgrade your chosen profession. Your Board is charged, in the Statute by which it was created, to protect the interest of the citizens of the State of North Carolina and I can assure you that this is being done. You too have on obligation to the people of this State to know what you are doing in the practice of real estate and to be completely aware of the North Carolina Real Estate Licensing Low and the Rules and Regulations of the Board. May I suggest, if you have not reviewed them lately, to order copies from our office.
Best wishes.
A. P. Carlton
This article came from the June 1970 Vol1-2 edition of the bulletin.
QUESTION: May a real estate broker maintain an escrow or trust account in a savings and loan association?
CONCLUSION: No.
OPINION: G. S. 93A-6 provides that a real estate broker’s or salesman’s license may be suspended or revoked for certain acts, among which is:
“(12) Commingling the money or other property of his principals with his own or failure to maintain and deposit in a trust or escrow account in an insured bank all money received by a real estate broker, acting in said capacity, or as escrow agent, or the temporary custodian of the funds of others, in a real estate transaction.” (Bold added.)
The term “bank” has a statutory definition. G. S. 53-1 (1) provides:
“Bank. – The term ‘bank’ shall be construed to mean any corporation, other than building and loan associations, industrial banks, and credit unions, receiving, soliciting, or accepting money or its equivalent on deposit as a business.”
Likewise, the term “savings and loan association” has a statutory definition. G. S. 54-1 provides in part:
“The terms ‘building and loan association’ and ‘savings and loan association,’ as used in this subchapter, shall apply to and include all corporations, companies, societies, or associations organized for the purpose of making loans to their members only, and of enabling their members to acquire real estate, make improvements thereon and remove encumbrances therefrom by the payment of money in periodical installments or principal sums, and for the accumulation of a fund to be returned to members who do not obtain advances for such purposes.”
These two terms are not used interchangeably, the laws relating to banks and savings and loan associations being contained in separate chapter of the General Statutes and the rights, powers and duties of each being different in a myriad of ways. G. S. 93A-6-is clear and unambiguous- in-its-use of the word “bank”.
The Supreme Court of North Carolina has held repeatedly that a statute must be construed as written and that if the language of a statute is clear and unambiguous, there is no room for judicial construction and the courts must give it its plain and definite meaning. See STATE v. WIGGINS, 272 NC 147; STATE v. ROSS, 272 NC 67, and DAVIS v. GRANITE CORPORATION, 259 NC 672. Many other North Carolina cases are cited in 7 N. C. Index 2d, Statutes, sec. 5.
This article came from the June 1970 Vol1-2 edition of the bulletin.
Another annual license renewal period ended on June 30th. Of the 10,485 persons holding licenses on this date, 1,309 did not renew for 1970-71 and their licenses automatically expired. These persons should be aware that if they continue to engage in the real estate business, they will be subject to the penalties prescribed by law for engaging in business without a license.
Brokers should check the licenses of all salesmen in their employ to ascertain whether they have renewed their licenses. By employing unlicensed salesmen, brokers subject themselves to having their own licenses suspended.or revoked.
The Licensing Board and staff thank the many licensees who followed renewal instructions and made it possible to efficiently process their applications.
Expired licenses may be reinstated in accordance with the requirements of General Statute 93A-4(c) which provides as follows:
“All licenses reinstated after the expiration date thereof shall be subject to a late filing fee of-five dollars ($5.00) in addition to the required renewal fee. In the event a licensee fails to obtain a reinstatement of such license within twelve months after the expiration date thereof, the Board may, in its discretion, consider such person as not having been previously licensed, and thereby subject to the provisions of this chapter relating to the issuance of an original license, including the examination requirements set forth herein.”
This article came from the June 1970 Vol1-2 edition of the bulletin.
Congratulations to the members of the Charlotte Board of Realtors on their “Light The Night” campaign against crime.
Based on statistics which prove a direct relationship between a high crime rate and poor lighting, the Charlotte Board’s program is aimed at encouraging homeowners and businessmen to improve the lighting on their premises and to keep lights burning throughout the night. Ac.ding to the Board, similar programs in other cities have had marked success in reducing the crime rate.
This article came from the March 1970-Vol1-1 edition of the bulletin.
The Licensing Board is extremely proud to bring you this first issue of the REAL ESTATE BULLETIN which will be published quarterly.
The BULLETIN replaces the Directory which was discontinued during the post year. The Board feels that the BULLETIN will be of greater value and service to licensees than the Directory which was obsolete by the time it was published. An up-to-date roster is now maintained by computer in the Board office.
The BULLETIN will enable the Board to better communicate with licensees and bring them articles relating to the real estate business and information pertaining to the Licensing Law and Rules and Regulations.
We urge that you have your salesmen read the BULLETIN and then keep it in a permanent binder in your office for future reference.
We hope you like this service.
Best wishes.
A. P. Carlton
This article came from the March 1970-Vol1-1 edition of the bulletin.
Etymologically speaking, the word “brokier” derived from Old North French “Brokeor,” which in turn derived from the verb brokier “to broach”; hence the Old Frerch noun meant, “one who broaches or tops a cask to draw off the liquor.” Broker was first used in English to designate a petty dealer in secondhand goods or a pawn broker. Petty is defined as small in nature, mean and ungenerous, inferior; so a broker could be said to have been a small, mean and ungenerous dealer in secondhand goods. This might get the ethical, professionolly oriented real estate broker of today somewhat perturbed, did he not know that the doctors and the lawyers have some odd ancestors in the earlier history of their respective professions. His concern is not so much what word study shows a broker to have once been as what an analysis of present practices will show the average broker now to be.
—Calif. Real Estate Bulletin
This article came from the March 1970-Vol1-1 edition of the bulletin.
The Federal Trade Commission advises that real estate brokers violate Regulation Z, “Truth- in- Lending” more frequently than any other advertiser This appears due to the fact that they are not familiar with the requirements of advertising under Regulation Z.
The following information has been compiled from information furnished to the Licensing Board by the Federal Trade Commission.
The advertising provisions of Regulation Z (226.10) apply to any advertisement that is intended to promote an extension of consumer credit (that is, credit offered to a natural person in which the money, property or service is primarily for personal, family, household or agricultural purposes and which involves a finance charge or is, by agreement, payable in more than four installments). If the advertisement in question does not involve an offer of consumer credit the advertising provisions of Regulation Z are not applicable.
The term “advertisement” itself is quite broad and covers all forms of commercial messages, including disp~auyi signs in store windows. For example, multiple listing cards, if displayed to the public, would constitute an “advertisement.” On the other hand, literature such as multiple listing cards that is not on public display and is only used in connection with and in response to on individual prospective buyer’s inquiry would not be considered an “advertisement.”
Liability for compliance with the advertising provisions of Regulation Z extends beyond that of the extender or arranger of consumer credit. Once it is determined that the subject of the advertisement is a consumer credit transaction, the provisions of 226.10 apply to any advertiser regardless of his role in the transaction. The test is whether the advertisement is to promote consumer credit, not whether the advertiser is a creditor, consumer creditor, arranger, etc.
When a licensed real estate broker advertises a house owned by his principle is the advertisement covered by Regulation Z?
The answer to this question depends on whether the advertisement is to promote the extension of a customer credit sale. The answer is yes if the sale of the advertised home is one which will trigger the disclosure requirements of Title 11 of Regulation Z. The broker is subject to the advertising provisions of Regulation Z, even though he advertises on behalf of a private seller, so long as the transaction will qualify as an extension or arrangement of “consumer credit” as defined in Regulation Z.
What parts of the advertising provisions of Regulation Z apply to the real estate industry?
Generally only Sections 226.10(a) and (d) will apply to real estate transactions.
226.10(a) sets forth the overriding principal that no advertisement should contain terms (such as monthly payment amounts or downpayment amounts) that are not usually and customarily arranged by the creditor.
Example: An advertisement offering new homes at “$1,000 down” is improper if the seller will not usually accept this amount as a downpayment, even if all of the other required credit terms are disclosed in the advertisement.
Advertising of Real Estate Credit
Advertisements of assumptions generally involve the use of the one credit term that does not trigger the full disclosure required in 226.10(d)(2) – the rate of finance charge. In order to comply, the advertiser may state the rate and nothing else, but it must be expressed as an “Annual Percentage Rote” using that term.
Example: “Assume 7Y2% mortgage” is improper.
“Assume 7Y2% Annual Percentage Rate mortgage” is correct.
Further, the term “Annual Percentage Rate” should be spelled out ]d not reduced to “A. P.R.” or otherwise abbreviated.
Some transactions that are commonly called “assumptions” are not within the disclosure requirements of 226.8(k) (Assumption of an obligation), and are therefore not subject to the advertising provisions of Regulation Z. For the purposes of the disclosure requirements of Regulation Z, an “Assumption” occurs only when, by written agreement entered into between a subsequent customer and the creditor, that subsequent customer is or will be accepted by that creditor as an obligor on an existing evidence. of debt.
Advertisements Involving New Financing
If an advertisement states any of the following specific credit terms it is subject to the full disclosure requirements of 226. 1 0(d)(2):
1 . The amount of the downpayment or that there is “no downpayment” required (this includes statements such as “No closing or other costs until your first monthly payment”);
2. The amount of any installment payment;
3. The dollar amount of any finance charge (this of course would encompass reference in the advertisement to the dollar amount of points, finder’s fee or other charges that will become port of the finance charge);
4. The number of installments or the period of repayment (this includes statements like “Up to 30 year financing available”); or
5. That there is no charge for credit.
If any of the above five categories of statements are used in a consumer credit advertisement of real estate, then the advertisement must disclose all of the following:
1. The cash price of the home;
2. The amount of the downpayment required or that none is required, as applicable;
3. The (a) number, (b) amount and (c) due dates or period of payments scheduled to repay the debt; and
4. The annual percentage rate of finance charge.
There is no need to state the total dollar amount of finance charge in any advertisement and there is no need to state the deferred payment price in the case of the sale of a dwelling or the sum of the payments of a loan secured by a first lien on a dwelling to purchase that dwelling.
A hypothetical may be used to illustrate typical terms when all sales or loans are not made on the some basis. For example:
“Typical VA financing of 30 year loan: Cash price of ‘Hilton’ model $22,040; no downpayment; 360 monthly payments of $204 (including estimated taxes) at 7V2% Annual Percentage Rate.”
A note of caution is in order here. An advertisement that states a “7Y2% Annual Percentage Rate” is improper if it relates to a transaction that, after calculation of points, discount, and other extra charges, turns out to be 7.96% at closing time. The seller usually knows about these additional charges when he places the advertisement and he should not ignore what he knows is common practice when he advertises the property. Further, the term “Annual Percentage Rate” must be printed more conspicuously than other required terminology.
The Use of General Terms
General terms such as “Small Downpayments Accepted,” “FHA or V/A financing available” and “Compare our liberal mortgage rates” are not within the scope of Regulation Z.
The advertising provisions of the Truth in Lending Act are intended to encourage the use of the Annual Percentage Rate by advertisers and to promote full disclosure of specific credit terms or none at all.
This article came from the March 1970-Vol1-1 edition of the bulletin.
The salesman’s license now contains the name and business address of the broker with whom the salesman is associated. Upon termination of the broker-salesman association, the license should immediately be returned to the Licensing Board by the broker. The broker should first endorse the back of the license with the date of termination and his signature.
The salesman may then have the license re-issued and transferred to a new broker by filing a license transfer form with a $1.00 duplicate license fee.
The some procedure should be followed for salesmen operating under the old style licenses.
The Board believes this new procedure for handling salesmen licenses will eliminate many of the problems experienced in the post by the failure of brokers and salesmen to notify the Board of employment transfers or terminations.
Licenses of both brokers and salesmen should continue to be prominently displayed in the broker’s place of business. Licenses which have been lost or damaged may be replaced upon application and payment of the $1.00 duplicate license fee.
This article came from the March 1970-Vol1-1 edition of the bulletin.