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Working With Real Estate Agents Disclosure – Update

– By Stephen Fussell, Chief CPO

The Commission introduced the Working With Real Estate Agents Disclosure (“WWREAD”) in the spring of 2021 and its use became mandatory on July 1, 2021. Based upon consumer complaints investigated by this office, it appears that most agents are using the form properly. This article seeks to remind licensees regarding the key elements of the form.

The two primary purposes of the WWREAD are (1) to caution prospective buyers and sellers not to share confidential information with brokers who do not represent them and (2) to introduce prospective buyers and sellers to the types of agency relationships that are offered by the firm of the broker who is reviewing the WWREAD with them.

Commission Rule A .0104(c) requires licensees to review the WWREAD with prospective buyers and sellers at first substantial contact. Simply sending the form to a prospective buyer or seller and asking them to sign it or even to call you if they have questions does not comply with this rule. Including a link to the form in your email signature is not sufficient to comply with the rule. A broker must review the WWREAD with the prospective buyer or seller.

What is first substantial contact? First substantial contact occurs either (1) at the point that a prospective buyer or seller begins to volunteer confidential information regarding their interest in a sales transaction or (2) when a broker wants to ask a question to obtain confidential information regarding the buyer’s or seller’s interest in a sales transaction. In order to prevent a prospective buyer or seller from revealing confidential information before a broker reviews the WWREAD with them, every broker should develop an introductory statement for a first interaction, such as “Before you share any information that you do not want me to share with others, we need to review an agency disclosure together.”

Both sides of the WWREAD contain an instruction that reads, “Note to Agent: Check all relationship types below that may apply to this seller [or buyer].” A broker should mark each type of agency offered by his or her firm. Marking a type of agency does not mean that a buyer or seller is choosing that type of agency. It simply means that the firm offers that type of agency relationship.  For example, if a broker’s firm only represents either sellers or buyers, but not both, then the broker should only mark one section of the WWREAD – the “Seller’s Agency” section or the “Buyer Agency” section, depending on which the firm represents.   If a broker’s firm represents both sellers and buyers, and offers dual agency, then the broker should mark the first two types of agency on the form. If a broker’s firm offers designated dual agency, then the broker should mark the first three types of agency on the form. If a prospective buyer or seller refuses agency representation, a broker should still review the types of agency offered by the firm and mark the unrepresented buyer/seller type in addition to the other types of agency relationships offered.

After reviewing the WWREAD with a prospective buyer or seller, a broker should ask them to sign the form. Signing the form only demonstrates that they have received the form. It does not create an agency relationship. If a buyer or seller refuses to sign the form, give them a copy of it and make a note in your own records that the buyer or seller refused to sign. Keep in mind that, if the Commission performs a spot audit and finds a significant number of unsigned WWREADs, it may demonstrate a lack of compliance with Rule A .0104(c). Moreover, rule violations can lead to disciplinary action.

After reviewing the WWREAD with a prospective buyer or seller, be sure to ask them if they have any questions. It is important that they have a basic understanding of the types of agency relationships offered by your firm. You can also offer them the Commission’s brochure, “Questions and Answers on: Working With Real Estate Agents.” This publication will answer common questions that arise regarding agency relationships.

In order to assist brokers in reviewing the WWREAD with prospective buyers and sellers, the Commission now has two videos in the “Video Library” section of its website (ncrec.gov) under the “Resources” tab and the “Consumers” tab.

Assumed Business Name Filing Deadline Coming December 1, 2022

On December 1, 2017, the legislature repealed Chapter 66, Article 14 and enacted Article 14A, the “Assumed Business Names Act.” This change modernized the assumed business name process to make it easier to register, find, and maintain assumed name information. The new Act altered the requirements for the assumed business name certificate and created the means by which a single registration in the office of one Register of Deeds can be made effective for multiple counties.

Certificates filed before December 1, 2017 remained valid for a five-year transitional period during which individuals and entities with pre-existing assumed business names could re-file a certificate to preserve the effectiveness of the name designation.  That transitional period is ending and filers have until December 1, 2022 to re-file a certificate for a pre-existing assumed name. Remember also that filers of assumed business names must update the filings within 60 days of the information changing.

Compliant blank certificate forms are available from registers of deeds or may be downloaded from https://edpnc.com/start-or-grow-a-business/start-a-business/business-forms/.

For additional information about when, how and why to file an Assumed Business Name, go to: https://www.sosnc.gov/divisions/business_registration/assumed_business_names.

The Commission Names Tiffany Ross as the First Consumer Resource Officer

The North Carolina Real Estate Commission is excited to welcome Tiffany Ross as the Commission’s first Consumer Resource Officer.

Ross holds a MS from Georgia Institute of Technology, and BS from Florida State University.  She brings to the Commission a wealth of experience in real estate education, brokerage, writing, and compliance. In addition to her education and compliance background, she has been a real estate licensee for over 17 years.

In her new role, Ross will focus on evaluating the Commission’s current consumer resource initiatives and recommending strategies that align with the Commission’s consumer education goals. She will also be responsible for raising awareness about current real estate related issues among licensees and the public, as well as creating resources and implementing initiatives to meet the Commission’s consumer education objectives across the real estate brokerage profession.

Staff Appearances

Brian Heath, Consumer Protection Officer, spoke at the Albemarle Area Association of REALTORS meeting on October 12.

Janet Thoren, Director of Regulatory Affairs, and Len Elder, Director of Education & Licensing, spoke on The State of the Commission at the NC REALTORS Convention on October 17.

Len Elder, Director of Education & Licensing, Janet Thoren, Director of Regulatory Affairs, Michael Gray, Chief Auditor/Investigator, and Cindy Chandler, Commissioner, presented “Doobie Hemp Gets Audited” at the NC REALTORS Convention on October 18.

Brian Heath, Consumer Protection Officer, spoke at the High Country Association of REALTORS meeting on October 19.

Christy Evans, Consumer Protection Officer, spoke at the Realty Executives of Hickory.

Employment Opportunities Available

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

We currently have available the following position:

Auditor – Audits and inspects real estate brokerage trust account records state-wide. Click here for more information.

Current Stats: Monthly Licensee Count as of October 1, 2022

Cybersecurity: Are you Secure?

Are you familiar with the type of cyberattacks used by hackers? Do you have cybersecurity policies and procedures?

The Cybersecurity and Infrastructure Security Agency (CISA) defines cybersecurity as the art of protecting networks, devices, and data from unauthorized access or criminal use and the practice of ensuring confidentiality and integrity, and availability of information.

Cybersecurity attacks are prevalent in brokerage transactions due to the nature of the business. There are various types of cybersecurity attacks; however, some of the most common cybersecurity attacks are:

Business Email Compromise

A Business Email Compromise scam in a real estate transaction may occur when the email account of an individual (e.g. broker, attorney, principal) in the transaction is hacked. After the email is compromised, the hacker monitors the communication to extract relevant details such as the property description and associated closing costs. Once they have this information, the hacker sends a spoofed email (e.g. an email similar to the original account holder) so that future electronic communication is diverted to the hacker. Business Email Compromises are usually used to get unauthorized funds, access personal, confidential information, and/or W-2 forms, according to the Internet Crime Compliant Center.

Cloud Storage Attacks

Cloud storage providers allow brokers and brokerage firms to secure their data, collaborate with others, and access information from a variety of locations. Due to the magnitude of information that is stored in the cloud, hackers may attack the cloud storage provider by retrieving the passwords of users or the security tokens of a computer.

Smishing

Brokers routinely communicate with many different people using their cell phones and tablets. Therefore, they are susceptible to smishing scams. Smishing is similar to phishing. Phishing is defined as a scam that is sent via email to individuals. Similarly, smishing involves hackers sending links or attachments via text to gain access to confidential information. Brokers should be careful when receiving text messages, links, or attachments from unknown sources.

The National Association of Realtors® has created a resource entitled, Cybersecurity Checklist: Best Practices for Real Estate Professionals, to assist brokers with developing cybersecurity policies. Brokers may want to use some of the following best practices referenced in the checklist to proactively prevent a cybersecurity attack such as:

The Cybersecurity Checklist: Best Practices for Real Estate Professionals article can be accessed here if you would like additional information. Also, the Commission published some information about Cybersecurity in the 2020-2021 Update Course. This content can be retrieved here.

If you have any further questions, please contact the Education & Licensing Division at 919.875.3700.

Staff Appearances

Janet Thoren, Director of Regulatory Affairs, spoke at Central Carolina Association of REALTORS yearly membership meeting on September 13.

Fred Moreno, Chief Deputy Legal Counsel, spoke at the Cape Fear REALTOR meeting on September 16.

Christy Evans, Consumer Protection Officer, spoke at the Realty Executives of Hickory meeting on September 21.

Disciplinary Actions

JASON MICHAEL COLEMAN (GREENSBORO) – By Consent, the Commission suspended the broker license of Coleman for a period of 12 months, effective September 23, 2022. The Commission then stayed the suspension in its entirety. The Commission found that Coleman was affiliated with a licensed real estate firm. On October 17, 2019, Coleman formed Jason Coleman Real Estate LLC but did not obtain a firm license for this entity. Coleman also did not, at any time material hereto, designate himself as Broker-in-Charge of this entity. Coleman was paid for brokerage activities in the name of the unlicensed firm. From November 10, 2020, through July 26, 2021, Coleman employed an unlicensed administrative assistant. Coleman allowed the unlicensed assistant to show properties for sale on three separate occasions.

CHRISTOPHER JAMES GOODWIN (MATTHEWS) – By Consent, the Commission suspended the broker license of Goodwin for a period of 2 years, effective September 1, 2021. The Commission found that in June 2016, a buyer contracted to buy residential property for which Goodwin was the listing agent. In July 2016, the Sellers of the subject property informed Goodwin of a class action lawsuit and settlement with CertainTeed where they received compensation for defective siding for which the Sellers had not yet made repairs. Goodwin did not disclose this fact during the transaction and the transaction closed. The buyer discovered the class action lawsuit after closing on the subject property and was barred from payment or remedy from the class action lawsuit. Goodwin has entered into a civil settlement with the buyer.

MAREK KUCHARSKI (RALEIGH) – The Commission accepted the voluntary surrender of the broker license of Kucharski effective September 14, 2022. The Commission dismissed without prejudice allegations that Kucharski violated provisions of the Real Estate License Law and Commission rules. Kucharski neither admitted nor denied misconduct.

SAUL ERNESTO ROMERO LARA (DURHAM) – By Consent, the Commission suspended the broker license of Romero Lara for a period of 12 months, effective September 1, 2022. The Commission found that in July 2021, Romero Lara acted as listing agent for the subject property located in Durham. Romero Lara received several offers from buyers’ agents on behalf of their buyer-clients. While the seller was considering offers, Romero Lara disclosed the terms of one offer to the agent for a buyer who had submitted a competing offer. Romero Lara’s actions created an unfair advantage.

TIFFANY RUSSELL (DURHAM) – The Commission accepted the voluntary surrender of the broker license of Russell effective September 14, 2022. The Commission dismissed without prejudice allegations that Russell violated provisions of the Real Estate License Law and Commission rules. Russell neither admitted nor denied misconduct.

MARTY ANDREW PENNELL (TAYLORSVILLE) – By Consent, the Commission reprimanded Pennell, effective September 23, 2022. The Commission found that in May 2021, Pennell acted as listing agent for the subject property. Pennell had been working with buyer clients since March 2021 in their search for a home. Pennell showed the subject property to his buyer clients before the marketing date specified in the listing agreement and prior to entering the property in the MLS. Pennell’s buyer clients submitted an offer that was accepted by Pennell’s seller clients prior to entering the subject property in to the MLS.

TERENCE LEE THOMAS (KNIGHTDALE) – By Consent, the Commission suspended the broker license of Thomas for a period of 6 months, effective September 20, 2022. The Commission then stayed the suspension in its entirety and placed Thomas on probation for a period of eighteen months. Thomas is also prohibited from engaging in property management for others and from handling entrusted funds or otherwise maintaining a trust account for others. The Commission found that Thomas managed a residential rental property and sent the property owner a rental proceeds check, which was returned by their bank for insufficient funds. Thomas provided inaccurate tax information to his owner clients regarding rental payments received on their behalf and failed to maintain transaction documents in compliance with Commission rules. Thomas also failed to deposit entrusted funds into a trust or escrow account and comingled funds. The Commission notes that Thomas no longer manages properties for others, no longer handles entrusted funds, and has remitted all owed funds to his former property owner client.

BIC STUDY – SUPERVISION AND RESPONSIBILITIES

If you are a BIC or are BIC-Eligible, you should have recently received an email from the Commission asking for your interest in participating in a focus group or survey about BIC responsibilities. The email reads as follows:

“The Real Estate Commission is studying BIC supervision and responsibilities. We are looking at current requirements for BICs and whether or not those requirements are adequate in this day and time. The study may or may not lead to rule changes in the future related to BIC education, experience, and/or duties.  We are inviting those brokers holding the status of BIC or BIC-eligible to join in this study with us, give us your thoughts and ideas on the subject, and be a part of any potential changes moving forward.  We will hold several 1-hour zoom conferences with various panels of BICs, BIC-eligible brokers, and staff to discuss the issues and whether or not changes are needed. The results will be reported back to the Commission members. If you are interested in participating in a panel, please respond to this email with a simple “yes”. Those of you who respond “yes” will receive an invitation to participate in either a Zoom conference or a brief survey, or both. If you do not wish to participate, there is no need to respond. Thank you for considering this – your input is important.”

If you:

find your email, click reply, and respond “Yes.” If you are not interested, no action is necessary and you should not reply.

The email looks like this:

North Carolina Real Estate Commission <bicstudygroup@ncrec.gov>
Sent: Tuesday, September 20, 2022, 4:## PM We look forward to hearing from you.