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WWREA Disclosure Revised Effective January 1, 2022
The Commission’s Working with Real Estate Agents (WWREA) disclosure form and accompanying Q&A brochure have been revised effective January 1, 2022.
The July 2021 Disclosure Form and Brochure stated that a broker must enter into a written buyer agency agreement “before preparing a written offer or communicating an oral offer.” Both the disclosure and brochure have been revised to match the language of Commission Rule A .0104(a) which requires that a broker representing a buyer enter into a written buyer agency agreement no later than the time one of the parties to the transaction makes an offer to purchase.
A broker may continue to use any remaining copies of the July 2021 versions of the disclosure and brochure without penalty.
While the disclosure form and brochure were revised to more accurately reflect the language in the rule, Commission staff advises that the best practice is for a broker to have a signed buyer agency agreement before preparing a written offer. Commission staff have seen cases in which a broker sent both a buyer agency agreement and a written offer to purchase to a buyer at the same time, but only received back the offer signed by the buyer. In a number of these cases, the broker then failed to comply with the rule by submitting the signed offer to the seller without having the signed buyer agency agreement. A broker who does not have a written agency agreement at the time their buyer makes an offer has violated the rule and risks both disciplinary action and not receiving compensation for their services.
Questions about the disclosure form should be directed to Regulatory Affairs at regulatoryaffairs@ncrec.gov or 919-719-9180.
Did You Know? Education providers must publish a Policies and Procedures Disclosure (PPD)
Did you know that private education providers are required to publish a Policies and Procedures Disclosure, or PPD? Are you familiar with your provider’s PPD?
NCGS § 93A-34 and Commission Rule 58H .0204 require certified education providers to publish a PPD that includes:
– identifying data and publication date;
– name(s) of education provider(s) and its full-time officials and faculty;
– education provider’s policies and procedures relating to entrance requirements, registration, grades, student progress, attendance, student conduct and refund of tuition and fees;
– detailed schedule of tuition and fees;
– detailed course outline of all courses offered;
– the name and address of the Commission, along with a statement that any complaints concerning the education provider or its instructors should be directed to the Commission;
– a statement that the education provider shall not discriminate in its admissions policy or practice against any person on the basis of age, sex, race, color, national origin, familial status, handicap status, or religion;
– the education provider’s most recent annual License Examination Performance Record and the Annual Summary Report data as published by the Commission;
– the all-inclusive tuition and fees for each particular course;
– a written course cancellation and refund policy;
– a list of all course and reference materials required;
– the course completion requirements pursuant to Rule .0207 of this Section and 21 NCAC 58A .1705; and
– a signed certification acknowledging the student’s receipt of the Policies and Procedures Disclosure prior to payment of any portion of tuition or registration fee without the right to a full refund.
So why is it important to review a provider’s PPD before taking a class? To be sure you’re aware of all course policies and requirements.
Education providers must adhere to all Commission rules regarding course administration and delivery, but they are permitted to establish policies that are more restrictive than what the Commission requires. For example, the Commission regularly receives calls from brokers inquiring whether an education provider has the authority to require them to remain on camera while taking a course. The answer is yes. Commission rules dictate that education providers are responsible for verifying and recording student attendance in their courses, but the rules do not dictate the method by which education providers address this requirement. Many providers require students to remain on camera during synchronous distance courses as a means of addressing the requirement.
If you have specific questions about your education provider’s policies, contact your education provider.
For more information regarding the Commission’s education programs or rules, contact the Education & Licensing Division at 919.875.3700 or educ@ncrec.gov.
Disciplinary Actions
AMANDA MCRAE CAMPBELL (LUMBERTON) – By Consent, the Commission suspended the broker license of Ms. Campbell for a period of 9 months, effective October 1, 2021. The Commission then stayed the suspension in its entirety. The Commission found that in June, 2020, Ms. Campbell, listed a residential property. The sellers completed the RPOADS in which they answered “no” to every question. A buyer contracted to buy the property but terminated t based on the home inspection. Buyer #1 did not share their inspection report with Ms. Campbell. The sellers obtained their own home inspection, which they shared with Ms. Campbell. The home inspection revealed multiple defects, including an unsupported floor in the bathroom, a drainpipe was discharging into the crawl space, the crawl space had very high moisture level, the house had PB pipes and various plumbing leaks, and water stains on interior ceilings indicative of a possible roof leak. Ms. Campbell failed to revise the MLS or to otherwise disclose any defects. A subsequent buyer contracted to buy the subject property and received the original RPOADS signed by the sellers. The buyer received an inspection report detailing the same defects and also terminated their contract. The property sold to a final buyer without Ms. Campbell disclosing the defects or advising her seller-clients to update the RPOADS.
TAYLOR BRADLEY COALSON (MOUNT AIRY) – By Consent, the Commission reprimanded Mr. Coalson, effective September 30, 2021. The Commission found that in October, 2020, Mr. Coalson, acting as a listing agent, listed a property for $139,900. On October 24, 2020, Mr. Coalson’s BIC submitted an oral offer for $143,000 on behalf of buyer-clients, which the seller’s indicated they would accept. On October 25, 2020, Mr. Coalson’s BIC submitted the written offer of $143,000 on behalf of his buyer-clients, and, the same day, another buyer submitted a written offer of all cash for $145,000 with an earlier closing date. Ms. Coalson did not present the second written offer document but did inform the sellers. Mr. Coalson’s seller-clients signed the lower offer in the belief that they were obligated based on their “verbal acceptance.”
LEONARD JAMES CUSATO (SOUTHERN SHORES) – By Consent, the Commission reprimanded Mr. Cusato, effective September 30, 2021. The Commission found that in 2020, Mr. Cusato, acting as the listing agent, received information that a tiki bar located on the listed property was in violation of the setback regulations and that the screen porch and tiki bar were constructed without permits. Mr. Cusato failed to discover additional information concerning these material facts and failed to disclose that information to the buyers and their agent. The county issued a Notice of Violation and the buyers were required to move the tiki bar out of the setback.
JANET G LAMB (NEW BERN) – By Consent, the Commission suspended the broker license of Ms. Lamb for a period of 6 months, effective October 1, 2021. The Commission then stayed the suspension in its entirety. The Commission found that Ms. Lamb acted as the listing agent for an estate owner of a residential property, which included a boat dock. Prior to listing, one of the property heirs told Ms. Lamb that the boat dock might be shared with a neighbor. Ms. Lamb was aware of the previous MLS listing, by a different firm a few years prior, which stated “DOCK IS OWNED IN COMMON WITH NEIGHBOR TO THE LEFT”. Ms. Lamb pulled the tax card for the subject property as well as the neighboring property, which showed that both properties were being assessed tax for the dock. Ms. Lamb, however, could not find a written agreement for a shared dock with the Register of Deeds Office or taxing authority. Ms. Lamb also discovered that the power and water supply to the dock came from the subject property. Therefore, she believed the subject property had exclusive right to the dock and advertised that the property had a “Boat Dock”. A buyer purchased the subject property without having a survey performed. A subsequent survey verified that the dock sits on both property lines.
WILLIAM EDWARD RAMSEY III (RALEIGH) – By Consent, the Commission suspended the broker license of Mr. Ramsey III for a period of 3 years, effective April 4, 2020. The Commission then stayed the remaining 18 months suspension after 18 months active. The Commission found that in May 2015, Mr. Ramsey III was convicted of one count of maintaining a place for the purpose of manufacturing, distributing, and using marijuana. The offense occurred over an 8 month period from September 2009 to April 2010. Mr. Ramsey III was sentenced to thirteen months in prison followed by three (3) years of supervised probation. Mr. Ramsey III was ordered to pay a $50,000 fine and ordered to forfeit to the United States his interest in the property in which the charges arose. Mr. Ramsey III was released from prison on April 4, 2016. According to Mr. Ramsey III’s probation officer, Mr. Ramsey III has paid the $50,000 fine and his probation was terminated. Mr. Ramsey III did not timely report this conviction to the NCREC.
Case Study: Even the Beautiful Ones Can Be Ugly
Shanna Hardy – Consumer Protection Officer
A broker and his firm listed a property built in 1960, and advertised it as being totally renovated – including all new flooring, roof, HVAC system, kitchen cabinets and countertops, vinyl siding, remodeled bathrooms, windows and doors. On the Residential Property Disclosure, the seller marked “no representation” for all questions. This property had all the beautiful finishes that a newly constructed home would have. A first time homebuyer discovered the beauty and was anxious to place an offer. Her offer was accepted and the property went under contract.
During the due diligence period, the buyer performed all standard inspections. The inspector noted that certain renovations did not appear to have been performed by licensed contractors and that further investigation was recommended. An inquiry was made to the seller about the renovations. In response, the seller stated that all work was cosmetic and only cost $26,250 which, he said, fell under the $30,000 threshold to require permits. Both the listing and selling brokers accepted this answer without question. Closing couldn’t come fast enough for this buyer, who was excited to move into her new home.
After moving into the home, the buyer reported having very serious and costly problems. The first problem occurred when she noticed termites in the bathroom. Then the new HVAC system stopped working. The buyer called a technician who reported that not only had the system overheated and the interior components melted, nearly causing a fire, but the electrical wiring in the crawl space caused burn marks on the floor joist. Next, the vinyl siding began buckling and upon further examination by a general contractor, it was discovered that the newly installed vinyl was nailed on top of old deteriorated wood siding. And, if that wasn’t bad enough, during the night, the new kitchen cabinets detached from the wall and crashed to the floor. The buyer reported over twenty-one claims to her insurance company during the first twelve months of ownership.
Due to the overwhelming amount of insurance claims, the new homeowner’s insurance company conducted its own investigation and discovered that none of the renovations were performed by licensed contractors, nor were any permits pulled for the work, which, contrary to the seller’s assertions, were required for replacement of the HVAC system and remodeling the bathroom. The homeowner’s insurance company cancelled the insurance policy for the property.
The listing broker and his firm failed in their duty to properly discover and disclose material facts about this property before listing. The seller performed significant renovations that included work requiring plumbing, electrical work, mechanical, and building permits. The listing broker failed to confirm that his seller-client obtained the proper permits ensuring the work was performed in a workmanlike manner. The listing broker’s failure to disclose the material fact that the renovations were unpermitted caused financial harm to the buyer of the property. The buyer agent was aware of the significant renovations and failed to confirm whether the renovations were permitted or discuss the issue with the buyer. The listing broker and buyer agent were both disciplined and agreed in a settlement to reimburse the buyer for expenses associated with properly permitting and repairing the property.
Remember to ask questions. $30,000 is the threshold for hiring a General Contractor, not whether any permits are required or whether a licensed contractor is required for a particular project. Permits are often necessary for HVAC changes, electrical improvements, water heater replacement, and changes to internal structures such as removing walls. Additionally, a homeowner may decide that costs can be controlled intentionally to keep a project below that general contractor threshold, regardless of whether the work being done is good quality. When listing a property, you should ask: Who did the repairs and renovations? Do you have invoices or receipts? How much were the repairs? Were permits obtained? Were they required? Asking questions on the front end can save you and your clients lots of headaches later on.
Staff Appearances
Nick Smith, Consumer Protection Officer, spoke at the Lantern Realty and Development office meeting on November 3.
Jean Hobbs, Auditor/Investigator, spoke at the Orange Chatham Association of REALTORS meeting on November 4.
Dee Bigelow, Information Officer, spoke at the Jacksonville Board of REALTORS meeting on November 4.
Steve Fussell, Chief Consumer Protection Officer, spoke at the North Carolina Vacation Rental Managers Association meeting on November 10.
How do CE elective courses get approved?
Do you know who writes CE elective courses? Did you know that CE elective courses must be approved by the Commission before they can be offered by an education provider?
With the exception of the Basic Trust Account Procedures course and the 12-hour Broker-in-Charge Course, elective courses do not originate with nor are they written by Commission staff. In fact, any person may write a CE elective course, but the course must be submitted to the Commission for review and approval through a certified education provider.
What elective course topics can be approved by the Commission?
Rule 58H. 0402 states that elective courses must:
(1) cover subject matter related to real estate brokerage practice,
(2) offer knowledge or skills that will enable brokers to better serve real estate consumers and the public interest,
(3) consist of at least 4 hours of instruction and offer 4 CE credit hours, and
(4) include handout materials for students that provide the information to be presented in the course.
What are examples of topics that “relate to real estate brokerage practice?“
Currently, approved elective course topics include (but are not limited to) agency, appraisal, association management, building styles & designs, construction, contracts, environmental issues, ethics, finance, investment, land use, mortgage fraud, property inspection, property management, and risk management.
What are examples of topics that cannot be approved?
Topics such as business branding, marketing, and MLS data entry cannot be approved, as they are focused only on the broker’s business model, rather than skills or knowledge required by the law and/or needed to effectively represent clients or work with customers.
How do would-be authors determine topics?
Some authors choose real estate topics about which they are passionate. Some survey brokers for ideas and suggestions.
What documentation must be submitted to the Commission for course review and approval?
Commission rule 58H .0401 establishes the application requirements for Prelicensing, Postlicensing, and CE courses. All submissions must include a course guide with:
(1) course objectives,
(2) learning objectives for each topic addressed in the course,
(3) a course syllabus,
(4) instructional methods and aids to be employed, and
(5) all course materials that will be provided to students.
There are additional documentation requirements based on proposed delivery method.
Anyone aspiring to write a CE elective course should take advantage of the resources on the Commission’s website. Become familiar with 21 NCAC 58H .0401 and 21 NCAC 58H .0402, and then read and follow the instructions in the Commission’s Real Estate Education Course Approval Guidelines.
For more information, please contact the Education and Licensing Division at educ@ncrec.gov or 919.875.3700.
My license has expired! How do I reinstate it?
To maintain a current license, brokers must renew their license annually between May 15 and June 30. The license of a broker who fails to renew during that period will expire on June 30, and that broker must cease all brokerage activities immediately.
What steps must a broker take to reinstate an expired license? That answer depends on how long the license has been expired.
To reinstate a license expired for less than 6 months:
- go to the Commission’s homepage (www.ncrec.gov);
- click on Reinstate your License;
- enter your license number and PIN (last 4 of your SSN unless you have changed it);
- answer required questions; and
- pay the $90 reinstatement fee.
NOTE: To regain active status, a License Activation / Affiliation form (REC 2.08) also must be submitted.
To reinstate a license expired for 6 months but no more than 2 years:
- Successfully complete one 30-hour Postlicensing course (the course must be completed within 6 months prior to submitting reinstatement application); and
- Submit a reinstatement application with the $90 application fee and all required documentation, including a criminal background report from the Commission’s provider;
-OR-
- Submit a reinstatement application with the $90 application fee and all required documentation, including a criminal background report from the Commission’s provider; and
- Pass the National and State sections of license exam.
NOTE: To regain active status, a License Activation / Affiliation form (REC 2.08) also must be submitted.
To reinstate a license expired for more than 2 years:
- Successfully complete the 75-hour NC Broker Prelicensing course;
- Submit a license application with the $100 original application fee and all required documentation, including a criminal background report from the Commission’s provider; and
- Pass the National and State sections of license exam.
NOTE: You will be licensed as a provisional broker and be subject to the 90-hour Postlicensing education program. To gain active status, a License Activation / Affiliation form (REC 2.08) also must be submitted.
For more information, review Commission Rule 58A .0505 or visit the “Reinstate your License” page on the Commission’s website. You may also contact the Commission’s Education & Licensing Division at LS@ncrec.gov or 919-875-3700.
Disciplinary Actions
FRANK FRANCIN (HIGH POINT) – The Commission accepted the permanent voluntary surrender of the broker license of Mr. Francin, effective October 13, 2021. The Commission dismissed without prejudice allegations that Mr. Francin violated provisions of the Real Estate License Law and Commission rules. Mr. Francin neither admitted nor denied misconduct.
FRANKLIN HOME STORE INC (FRANKLIN) – By Consent, the Commission reprimanded Franklin Home Store Inc., effective October 15, 2021. The Commission found that Franklin Home Store Inc. was required under the management agreement to maintain a $250 expense fund on behalf of the property owner and failed to do so. When one tenant vacated a property without leaving a forwarding address, Franklin Home Store Inc. sent the security deposit to that tenant’s relative, instead of holding it for six months as required by N.C. Gen. Stat. 42-52. After a property owner gave notice of termination, Franklin Home Store Inc. failed to timely transfer the tenant’s security deposit to the owner or his new management company. Franklin Home Store Inc. failed to disburse earned management fees from the rental trust account each month, which caused commingling.
MARK HENDEL (WAXHAW) – The Commission accepted the permanent voluntary surrender of the broker license of Mr. Hendel, effective October 13, 2021. The Commission dismissed without prejudice allegations that Mr. Hendel violated provisions of the Real Estate License Law and Commission rules. Mr. Hendel neither admitted nor denied misconduct.
APRIL J MOORE (FRANKLIN) – By Consent, the Commission reprimanded Ms. Moore, effective October 15, 2021. The Commission found that Ms. Moore as the qualifying broker and broker-in-charge was required under the management agreement to maintain a $250 expense fund on behalf of the property owner and failed to do so. When one tenant vacated a property without leaving a forwarding address, Ms. Moore sent the security deposit to that tenant’s relative, instead of holding it for six months as required by N.C. Gen. Stat. 42-52. After a property owner gave notice of termination, Ms. Moore failed to timely transfer the tenant’s security deposit to the owner or his new management company. Ms. Moore failed to disburse earned management fees from the rental trust account each month, which caused commingling.
BRADLEY JAMES O’CONNOR (CORNELIUS) – By Consent, the Commission suspended the broker license of Mr. O’Connor for a period of 12 months, effective October 1, 2021. The Commission then stayed the suspension in its entirety. The Commission found that Mr. O’Connor, was qualifying broker/broker-in-charge of a licensed firm which conducted one day lot liquidation sales in or about June, 2020 and October, 2020. The firm’s advertisements failed to disclose that certain lot types were extremely limited. The firm employed approximately 60 unlicensed sales representatives to conduct the lot sales including showing buyers lots, answering questions, writing offers, and receiving sales commissions. The sales reps did not review the “Working with Real Estate Agents” disclosure with any of the buyers who attended the sale. The firm has taken steps to remedy these issues including limiting unlicensed employee duties.
LAMODREZ POWE (SOUTHERN PINES) – The Commission accepted the voluntary surrender of the broker license of Mr. Powe, for a period of 1 year, effective October 13, 2021. The Commission dismissed without prejudice allegations that Mr. Powe violated provisions of the Real Estate License Law and Commission rules. Mr. Powe neither admitted nor denied misconduct.
ALLISON ELIZABETH SCHOEN (BANNER ELK) – By Consent, the Commission suspended the broker license of Ms. Schoen for a period of 12 months, effective October 1, 2021. The Commission then stayed the suspension in its entirety. The Commission found that Ms. Schoen on behalf of her Firm conducted conducted one day lot liquidation sales in or about June, 2020 and October, 2020. The firm’s advertisements failed to disclose that certain lot types were extremely limited. On or about October 4, 2020, Ms. Schoen scheduled an appointment with a prospective buyer to show lots but failed to review the “Working with Real Estate Agents” disclosure at any time. Ms. Schoen provided brokerage services on behalf of her Firm but failed to affiliate with the Firm until reminded twice by Commission staff.
SKYECROFT REALTY GROUP (WAXHAW) – The Commission accepted the permanent voluntary surrender of the broker license of Skyecroft Realty Group, effective October 13, 2021. The Commission dismissed without prejudice allegations that Skyecroft Realty Group violated provisions of the Real Estate License Law and Commission rules. Skyecroft Realty Group neither admitted nor denied misconduct.
WATERFRONT GROUP PLC LLC (CORNELIUS) – By Consent, the Commission suspended the broker license of Waterfront Group PLC LLC for a period of 12 months, effective October 1, 2021. The Commission then stayed the suspension in its entirety and placed Waterfront Group PLC LLC on probation until October 1, 2022. The Commission found that Waterfront Group PLC LLC conducted one day lot liquidation sales in or about June, 2020 and October, 2020. The firm’s advertisements failed to disclose that certain lot types were extremely limited. Waterfront Group PLC LLC employed approximately 60 unlicensed sales representatives to conduct the lot sales including showing buyers lots, answering questions, writing offers, and receiving sales commissions. The sales reps did not review the “Working with Real Estate Agents” disclosure with any of the buyers who attended the sale. Waterfront Group PLC LLC has taken steps to remedy these issues including limiting unlicensed employee duties.