Reminder notices to renew your real estate license will arrive by email, if you receive your Real Estate Bulletin by email, or in your postal mailbox, if you receive the printed edition. Either way, you must renew your license between May 15 and June 30 to avoid notification in early July that you no longer have a license, as it is expired.
This year, the law requires that you renew online through the Commission’s website, www.ncrec.gov. (A broker who does not have the ability to renew online may renew by calling the Commission’s office between 8:30 a.m. and 5:00 p.m., Monday through Friday (919/875-3700)).
Log in to your personal record using your personal identification number (PIN) on or after May 15 to complete the process. Your PIN will be the last four digits of your Social Security number unless you have changed it.
The license renewal fee is $45. When paying online, you may use Visa, MasterCard, or Discover Card. A confirmation of renewal to print will appear on your screen when the process is completed.
Review your email address or addresses while logged in. Real Estate License Law allows you to designate your email address in one of two ways: (1) PRIVATE, meaning it will not be disseminated to anyone and will be used exclusively for communication from the Commission to you; or (2) PUBLIC, meaning it will be provided upon request to the public, including CE course sponsors and others. You may provide both a private and/or public email address upon logging into your record.
All broker license records are updated on July 1 to reflect license status as of that date. If your renewal fee has not reached the Commission by June 30, your license will be expired as of July 1. (Because of the records updating procedure and annual maintenance, the Commission’s website typically is down on July 1 and 2.)
To reinstate an expired license, you must pay a $55 fee between July 1 and December 31. Failure to reinstate the former license by December 31 will result in your having to file a new application and fee, and obtain a criminal background report. You will also be required to take additional education and/or pass the state license examination.
Even if you miss your continuing education, you may still renew and thus keep your license. The deadline for CE is June 10; if incomplete after that date, your license will be renewed on “inactive” status so long as the renewal fee is timely paid.
Brokers who are brokers-in-charge or brokers-in-charge eligible must take the Broker-in-Charge Update Course and one elective by June 10. Failure to take the correct CE or timely renew the license will result in loss of your BIC eligibility. Brokers-in-charge who lose BIC status or eligibility must (1) return the license to active status; (2) meet the experience requirements for designation; (3) take the 12-hour Broker-in-Charge Course before re-designation; and (4) send the Commission the BIC Declaration Form. Do NOT take the 12-hour BIC Course before your license is on active status!
Brokers-in-charge are also responsible for ensuring that licensees under their supervision have renewed their licenses and completed their continuing education and postlicensing education, if applicable, to maintain an active license, i.e., one they may use.
This article came from the May 2015-Vol46-1 edition of the bulletin.
WILLIAM IRWIN BELK (Charlotte) – Following a hearing, the Commission reprimanded Mr. Belk effective March 3, 2015. The Commission found that Mr. Belk’s North Carolina law license was suspended by the North Carolina State Bar (NCSB) for three years effective November 1, 2013; that Mr. Belk had been reprimanded by the NCSB in July 2012; and that Mr. Belk failed to report either disciplinary action by the NCSB within 60 days as required by Commission rules.
CATHERINE L. BLUM (Wilmington) – By Consent, the Commission suspended the broker license of Ms. Blum for a period of one month effective April 1, 2015. The Commission found from October 28, 2013, to May 2014, Ms. Blum, as a provisional broker, conducted brokerage activities outside of the supervision of a broker-in-charge; and that from March 10, 2014, to March 31, 2014, Ms. Blum’s license was designated as inactive and Ms. Blum continued to practice real estate brokerage with an inactive license.
BROWNING REALTY, INC. (Garner) – By Consent, the Commission reprimanded Browning Realty effective March 1, 2015. The Commission found that Browning Realty, acting as a listing firm, failed to disclose that a major highway expansion would affect the firm’s listed property; that the buyer attended a public hearing after closing on the listed property and was informed that, depending upon the chosen route, the buyer’s property would either be taken by the State of North Carolina or be within 0.5 mile of the highway. The firm refunded its commission to the buyer.
MARTHA ELIZABETH CONAWAY (Iron Station) – By Consent, the Commission reprimanded Ms. Conaway effective June 1, 2015. The Commission found that in October 2014, Ms. Conaway self-reported two criminal convictions for the sale of a schedule III controlled substance that occurred in 2011; that Ms. Conaway was ordered to pay a fine of $1,220, was given a suspended jail sentence of five to 15 months and put on 18 months of supervised probation, which can be commuted to unsupervised probation after 6 months.
CHRISTOPHER BRIAN CORBETT (Greenville) – By Consent, the Commission suspended the broker license of Mr. Corbett for a period of 12 months effective March 1, 2015. Four months of the suspension is active with the remainder stayed for a probationary period ending March 1, 2016. The Commission found that Mr. Corbett, acting as qualifying broker and broker-in-charge of a property management firm, charged fees and marked up the cost of repair work without disclosing these charges to property owners; that Mr. Corbett paid referral fees directly to provisional brokers; that Mr. Corbett failed to keep trust account records in accordance with Commission Rules and did not properly maintain the firm’s rental trust accounts resulting in shortfalls of as great as $19,988.09; and that, in 2013 and 2014, the firm’s rental trust account was charged insufficient fund fees and other bank fees totaling $750, which were not reimbursed.
COX INVESTMENTS, INC. (Holden Beach) – By Consent, the Commission suspended the firm license of Cox Investments, Inc., for a period of two years effective February 1, 2015. The Commission then stayed the suspension for a probationary period ending February 1, 2017. The Commission found that Cox Investments’ broker-in-charge failed to properly supervise its bookkeeper; that due to the failure to properly supervise the bookkeeper, Cox Investments’ rental trust accounts had a possible short fall of $12,999.14; that Cox Investments co-mingled rental income from properties it owned with funds held in trust for clients and customers; that Cox Investments’ vacation rental agreements included improper fees, improper terms for forfeiture of tenant security deposits, and failed to include a description of rights and responsibilities in the event of a mandatory evacuation; that Cox Investments’ property management agreements did not conspicuously disclose that trust funds would be deposited in an interest-bearing account and failed to include the license number of the broker signing on behalf of Cox Investments. The Commission noted that Cox Investments has since replaced its Qualifying Broker and Broker-in-Charge.
STEVEN C. COX (Holden Beach) – By Consent, the Commission suspended the broker license of Mr. Cox for a period of two years effective February 1, 2015. Nine months are active with the remainder stayed for a probationary period ending February 1, 2017. The Commission found that Mr. Cox, acting as broker-in-charge of a real estate brokerage firm, failed to properly supervise its bookkeeper; that due to Mr. Cox’s failure to properly supervise the bookkeeper, the firm’s rental trust accounts had a possible short fall of $12,999.14; that Mr. Cox co-mingled rental income from properties owned by the firm with funds held in trust for clients and customers; that Mr. Cox included improper fees, improper terms for forfeiture of tenant security deposits, and failed to include a description of rights and responsibilities in the event of a mandatory evacuation in the firm’s vacation rental agreements; that Mr. Cox failed to ensure that the Firm’s property management agreements both conspicuously disclosed that trust funds would be deposited in an interest bearing account and included the license number of the broker signing the agreement.
JOSEPH J. CURRIN, III (Fayetteville) – By Consent, the Commission reprimanded Mr. Currin effective June 1, 2015. The Commission found that Mr. Currin, acting as broker-in-charge of a real estate brokerage firm, failed to properly oversee tenant security deposit accounts, which allowed an unlicensed employee to embezzle approximately $3,542 of client monies within one year. The Commission noted that upon discovering the embezzlement, Mr. Currin notified the county sheriff’s office and the Commission and replaced all client monies immediately.
JAMES H. ENGLISH (New Bern) – By Consent, the Commission suspended the broker license of Mr. English for a period of six months effective May 1, 2015. The Commission then stayed the suspension for a probationary period through and including November 1, 2015. The Commission found that Mr. English, acting as listing agent for a commercial property, was told by his client, the owner of the property for 10 years, that the water and sewer service were connected to a public source; that Mr. English, relying on the information communicated by his client, prepared the listing description for the MLS, indicating that the property was connected to city water and sewer, and did not independently verify this information; that Mr. English then represented a buyer of the property as a dual agent and executed all of the proper disclosures regarding representation; and that after closing, the buyer learned that the property is not connected to city water or sewer, but rather to a septic system.
FLAGSHIP PROPERTY MANAGEMENT LLC (Greenville) – By Consent, the Commission suspended the firm license of Flagship Property Management LLC for a period of 18 months effective March 1, 2015. The Commission then stayed the suspension for a probationary period ending September 1, 2016. The Commission found that Flagship Property Management, from June 2008 until December 2010, conducted business without a designated broker-in-charge; that from June 2009 until July 2009, and again from June 2010 to July 2010, Flagship Property Management operated with an expired broker license; that from July 2009 until December 2010, Flagship Property Management operated with an inactive broker license; that Flagship Property Management charged fees and marked up the cost of repair work without first disclosing these charges to property owners; that Flagship Property Management paid referral fees directly to provisional brokers; that Flagship Property Management failed to keep trust account records in accordance with Commission Rules and did not properly maintain its rental trust accounts resulting in possible shortfalls of as great as $19,988.09; and that in 2013 and 2014, the rental trust account was charged insufficient fund fees and other bank fees totaling $750, which were not reimbursed.
DEBRA J. HEPFER (Statesville) – By Consent, the Commission reprimanded Ms. Hepfer effective April 1, 2015. The Commission found that Ms. Hepfer discussed the purchase of real estate properties with a potential buyer and, after learning that the buyer would not qualify for a loan, introduced the buyer to a real estate investor who would purchase the property and, in turn, finance the sale of it to the buyer; that Ms. Hepfer acted as buyer agent for the investor in the purchase of the property while keeping in communication with the buyer about the closing process; that Ms. Hepfer never delivered or discussed a Working With Real Estate Agents brochure with the buyer, making it unclear to the buyer exactly who Ms. Hepfer was representing; that the buyer had agreed to pay the $1,000 Earnest Money Deposit, $450 appraisal fee, and other repairs on the property; that Ms. Hepfer collected the funds in cash from the buyer and delivered them to the investor without placing the money in an account designated as trust or escrow; and that after the investor purchased the property, the oral agreement to finance the purchase of the property fell apart, and the investor has refused to refund monies paid by the buyer.
ERNEST FILMORE HILL III (Henderson) – By Consent, the Commission reprimanded Mr. Hill effective March 18, 2015. The Commission found that Mr. Hill, on January 30, 2014, pleaded guilty to misdemeanor first degree trespassing and was sentenced to 30 days incarceration which was fully suspended, 18 months supervised probation, and ordered to pay $1,144.50; that Mr. Hill reported the plea and sentence to the Commission within 60 days, but failed to provide a narrative regarding the incident or a certified copy of the judgment against him; and that Mr. Hill failed to respond to three letters of inquiry from the Commission requesting the missing information.
MARY LYNNE JONES (Banner Elk) – The Commission accepted the voluntary surrender of the broker license of Ms. Jones for a period of five years effective March 18, 2015. The Commission dismissed without prejudice allegations that Ms. Jones violated provisions of the Real Estate License Law and Commission rules. Ms. Jones neither admitted nor denied misconduct.
STANLEY BERNARD JONES (Raleigh) – By Consent, the Commission suspended the broker license of Mr. Jones for a period of 21 months effective January 1, 2015. Ten months of the suspension were active with the remainder stayed for a probationary period ending October 1, 2016. The Commission found that, following a hearing on August 8, 2013, the Commission issued Findings of Fact and an Order in which Mr. Jones received two years suspension with three months active suspension and the remainder stayed if Mr. Jones met specified criteria by June 1, 2014; that the Order included a condition that if Mr. Jones violated the Real Estate License Law or Commission rules within the active stayed suspension period, the remaining term of the stayed suspension would become active; and that on and around October 11, 2013, Mr. Jones knowingly engaged in brokerage activities while his license was actively suspended.
LAKE GASTON RENTAL HOMES LLC (Littleton) – The Commission accepted the permanent voluntary surrender of the firm license of Lake Gaston Rental Homes effective March 1, 2015. The Commission dismissed without prejudice allegations that Lake Gaston Rental Homes violated provisions of the Real Estate License Law and Commission rules. Lake Gaston Rental Homes neither admitted nor denied misconduct.
CONAN R. MCCLAIN (Raleigh) – By Consent, the Commission suspended the broker license of Mr. McClain for a period of 12 months effective April 1, 2015. The Commission then stayed the suspension for a probationary period of 12 months. The Commission found that Mr. McClain, currently the Broker-in-charge of a sole proprietorship, performed development, management, and leasing services on commercial units located at a development from 2006-2012; that Mr. McClain could not produce a copy of a signed Development and Services Agreement executed with the owner of the property; that, despite having an exclusive leasing agreement with owner, Mr. McClain became a majority owner in one of the leased units by investing his personal money in that business and failed to receive written consent from the owner or execute a dual agency agreement; that in 2008, Mr. McClain entered into a Development and Services Agreement for the development, leasing, and management of multi-building warehouse/office projects; and that this agreement lacks Mr. McClain’s broker license number, does not set a definitive expiration period, does not give the landlord the ability to terminate at the end of a contract period or subsequent renewals, and does not contain the fair housing provision.
JAMES M. MCCLURE (Raleigh) – The Commission accepted the permanent voluntary surrender of the broker license of Mr. McClure effective March 18, 2015. The Commission dismissed without prejudice allegations that Mr. McClure violated provisions of the Real Estate License Law and Commission rules. Mr. McClure neither admitted nor denied misconduct.
CECIL A. PARKER, JR. (Smithfield) – By Consent, the Commission suspended the broker license of Mr. Parker for a period of 18 months effective March 1, 2015. The Commission then stayed the suspension for a probationary period of 18 months. The Commission found that Mr. Parker, acting as a listing broker, failed to disclose that a major highway expansion would affect his listed property; that a buyer attended a public hearing after closing on Mr. Parker’s listed property at which the buyer was informed that, depending upon the chosen route, the buyer’s property would either be taken by the State of North Carolina or be within 0.5 mile of the highway.
RANDALL E. ROBINSON (Littleton) – By Consent, the Commission suspended the broker license of Mr. Robinson for a period of 18 months effective February 19, 2015. One month of the suspension was active with the remainder stayed for a probationary period ending September 19, 2016. The Commission found that Mr. Robinson, until February 2014, was broker-in-charge for a real estate brokerage firm; that while Mr. Robinson was broker-in-charge of the firm, it managed no more than 10 properties at any one time; that Mr. Robinson relied on assurances from the firm’s qualifying broker, a Certified Public Accountant, that trust account records were being maintained in accordance with the Commission rules, but failed to personally supervise and maintain trust account records; that an audit of the firm’s trust accounts revealed improper record keeping, shortfalls, and commingling of trust account funds with operating funds; that Mr. Robinson relied on assurances from the qualifying broker that the firm’s management and vacation rental agreements were reviewed by an attorney, but failed to personally ensure that rental management agreements complied with Commission Rules and that vacation rental agreements complied with the NC Vacation Rental Act, the NC Tenant Security Deposit Act, and Commission Rules; that Mr. Robinson allowed the firm to manage rental properties under expired management agreements and, in some cases, without management agreements; and that Mr. Robinson failed to properly review advertising agreements made by provisional brokers on behalf of the firm.
JOAN ELLEN RUSSELL (Hendersonville) – By Consent, the Commission reprimanded Ms. Russell effective March 1, 2015. The Commission found that Ms. Russell, as qualifying broker and broker-in-charge of a real estate brokerage firm, was responsible for a trust account that contained an overage of $1,112.49 in the tenant security deposit account and an overage of $328.82 in the rental trust account, and that Ms. Russell failed to maintain accurate records in accordance with Commission trust account rules.
RUSSELL PROPERTIES OF NC, INC. (Hendersonville) – By Consent, the Commission reprimanded Russell Properties effective March 1, 2015. The Commission found that Russell Properties, a real estate brokerage firm, held trust accounts that contained an overage of $1,112.49 in the tenant security deposit account and an overage of $328.82 in the rental trust account, and that Russell Properties failed to maintain accurate records in accordance with Commission trust account rules.
JAY C. SNOVER (Charlotte) – By Consent, the Commission reprimanded Mr. Snover effective March 1, 2015. The Commission found that Mr. Snover advertised commercial property by placing signage on it and showed this property to a potential renter/buyer in May of 2012; that Mr. Snover represented to the potential renter/buyer that he was also the owner of the property and the potential renter/buyer signed a lease agreement and gave checks for the Earnest Money Deposit and first month’s rent to Mr. Snover; that Mr. Snover did not sign the agreement and held, but did not deposit, the two checks; that after weeks of communications between Mr. Snover and the renter/buyer regarding access to the property and transfer of keys, Mr. Snover returned the checks. The Commission noted that Mr. Snover’s company was the winning bidder on the property through a foreclosure sale, which was set aside in April 2012 by the court, but Mr. Snover was later successful in purchasing the 1st lien on the property in July 2012.
ROBERT W. STEELE II (Jacksonville) – By Consent, the Commission reprimanded Mr. Steele effective April 1, 2015. The Commission found that Mr. Steele, in 2008, purchased a lot in a residential subdivision; that at the time of the purchase the street providing access to the property had been dedicated to public use, but had not been accepted by the State for maintenance; that Mr. Steele sold the property in May 2009; and that at no time did Mr. Steele disclose to the potential buyers that the street providing access to the property was a private street.
UNITED MANAGEMENT, INC. (Fayetteville) – By Consent, the Commission reprimanded United Management effective June 1, 2015. The Commission found that the broker-in-charge of United Management in and around 2013 failed to properly oversee tenant security deposit accounts which allowed an unlicensed employee to embezzle approximately $3,542 of client monies within one year; and that upon discovering the embezzlement, United Management notified the county Sheriff’s Office and the Real Estate Commission and replaced all client monies immediately.
TIFFANY MELISSA WARREN (Lake Junaluska) – The Commission accepted the voluntary surrender of the broker license of Ms. Warren for a period of three years effective February 11, 2015. The Commission dismissed without prejudice allegations that Ms. Warren had violated provisions of the Real Estate License Law and Commission rules. Ms. Warren neither admitted nor denied misconduct.
This article came from the May 2015-Vol46-1 edition of the bulletin.
Automated valuation models (AVMs) have become a recent topic of interest for some in both the real estate brokerage and appraisal communities.
An AVM is a computer software program that analyzes data from various sources and uses automated processes to produce a value or range of values for a particular property.
To assist you in learning more about AVMs, click on http://www.ncrec.gov/pdfs/avm.pdf and read the Commission’s article on the subject. If you have any questions or need more information, please contact the Regulatory Affairs Division at 919/875-3700.
This article came from the February 2015-Vol45-3 edition of the bulletin.
One of the primary duties of a property manager is to procure qualified tenants for properties under management. Determining whether a tenant is “qualified” generally involves more than looking at a prospective tenant’s income. It often involves looking at things like a prospective tenant’s credit history, credit score, employment history, rental history, criminal record and more. Each of these factors can be important in making a decision to rent a property.
The Federal Trade Commission’s BCP Business Center (www.business.ftc.gov) has published the following articles which contain useful information on this topic for property managers: “Using Consumer Reports: What Landlords Need to Know,” “A basic ‘tenant’ of credit reporting,” and Disposing of Consumer Report Information? Rule Tells How.”
More and more property managers are turning to consumer reporting agencies (CRAs) to obtain information about prospective tenants. Common types of CRAs include credit bureaus, tenant-screening services and reference-checking services. CRAs must comply with the Fair Credit Reporting Act (FCRA). Established in 1970, the FCRA is designed to ensure the confidentiality and accuracy of consumer credit information.
CRAs have a duty to inquire about the intended use of consumer information before actually providing the information. Use of consumer information for tenant-screening purposes is permissible. Using the information to spy on competitors, neighbors, and former spouses is prohibited.
If a property manager refuses to rent to a prospective tenant or changes the rental terms (e.g. increasing the rent, increasing the security deposit, requiring a co-signor, etc.) based even partially upon information in a consumer report, then the property manager must give the prospective tenant an “adverse action notice.” Although giving an oral notice is permitted, written notice is recommended, because it provides evidence of compliance with the FCRA.
According to the FTC, an adverse action notice “… must include the name, address and telephone number of the CRA that supplied the consumer report, including a toll-free telephone number for CRAs that maintain files nationwide; a statement that the CRA that supplied the report did not make the decision to take adverse action and cannot give the specific reasons for it; and a notice of the individual’s right to dispute the accuracy or completeness of any information the CRA furnished, and the consumer’s right to a free report from the CRA upon request within 60 days.”
Property managers and landlords who fail to comply with the FCRA can be sued in federal court. If a broker or landlord loses such a case, then he or she may have to pay court costs, the plaintiff’s reasonable legal fees and punitive damages. For more information on the FCRA or for a copy of the Act, you may call 1-877-382-4357 or go online at www.ftc.gov/os/statutes/fcrajump.shtm.
Commission Rule A.0108 requires brokers to retain records of rental transactions for three years. If a tenant’s rental application is rejected, then the broker should retain the tenant background information for three years from the rejection date. If a tenant’s rental application is approved and the tenant enters into a lease, then the broker should retain the background information for three years following the termination of the tenant’s lease.
When disposing of the information obtained from CRAs, landlords and property managers who acquired the information for business purposes must comply with the Disposal Rule which is enforced by the Federal Trade Commission. While the standard for proper disposal is flexible, property managers must take reasonable measures to ensure that all consumer information is disposed of in a manner that would prevent an unauthorized person from acquiring and using the information. For paper documents, shredding (so that they cannot be read or reconstructed) and burning are two methods of disposal that would satisfy the requirements for proper disposal. For digital information, destroying or erasing electronic files so that the information cannot be read is also acceptable.
While property managers may use CRAs as a tool for screening prospective tenants, they must exercise care to protect the information they obtain and to dispose of it in a manner that will prevent its use by unauthorized persons or for unauthorized purposes.
This article came from the February 2015-Vol45-3 edition of the bulletin.
The Commission regularly receives inquiries and complaints about the measuring of square footage in properties listed or being listed for sale. Accuracy in measuring is critical because the amount of space in a structure has a bearing on value and functionality and is a material fact. Thus, the task of assessing square footage should be one of the most important in the process of market evaluation.
Following are questions typically asked of Commission staff. Read these and the answers that follow to test and review your knowledge of this topic.
Q. Have there been changes to Commission rules on the reporting of square footage?
A. The Commission has no specific rules on this topic. However, it does have rules about misrepresentation which can result from inaccurate measuring. It also has educational information in the form of the Residential Square Footage Guidelines – a booklet which provides instruction in measuring different types of floor plans in residential properties – and content in postlicensing courses on the topic. All of this is available on the Commission’s website, www.ncrec.gov.And, if questions still arise, you can call the Commission.
Q. I am the listing agent. Am I required to report the square footage?
A. The Commission doesn’t require it, but if you decide to report the square footage, it must be correct. Furthermore, your MLS may require it. To avoid problems, obtain the correct square footage yourself or obtain the services of a licensed appraiser.
Q. Is it okay to use tax records of square footage as a source?
A. No. Review the tax records, but never rely on them for this information. If you find that the square footage of the property differs from the information on the tax records, there may be a permit or other issue to be resolved.
Q. If I do not measure the property myself, must I get an appraiser to do it?
A. No, but appraisers are generally a very good source because they are typically trained and experienced in measuring. The Commission will normally allow a broker to rely on a licensed appraiser’s current measurement as long as that reliance is reasonable and there was no red flag to alert the broker to a problem. Regardless of who does the measuring, the broker should keep the measurements on file in the event of questions or problems arising.
Q. Is it okay to use an old appraisal?
A. No. Do not use an old appraisal or an old MLS listing description since there may have been changes to the property at a later date.
Q. What happens if I make a mistake in measuring, or report the wrong square footage for any reason?
A. According to NC General Statute 93A-6, the Commission has the authority to take disciplinary action against a licensee who makes any willful or negligent misrepresentation or pursues a course of misrepresentation through advertising or otherwise. Therefore, if the square footage is wrong, the listing agent and firm may be held responsible. In addition, the broker-in-charge is responsible for all advertising, so he or she may also be the subject of disciplinary action. The Commission looks at many facts when assessing these types of cases.
• Why was the square footage wrong?
• Who measured, and was he/she qualified?
• Can the measurements/sketch be reproduced by the broker?
• How much harm was done to the consumer?
• How far off were the measurements; was it a significant amount or negligible?
• Was the property unusually difficult to measure?
• Did the listing agent rely on square footage from tax records?
• Should the buyer’s agent have recognized a significant difference and checked the measurements?
• When/why was the mistake made and was it corrected?
The bottom line, though, is that the listing broker, firm and broker-in-charge, and maybe even the buyer agent could be at risk of disciplinary action by the Commission for misrepresenting square footage.
Q. Assuming I do discover an un-permitted section of the house, is it okay to include it in the overall square footage?
A. Include it separately and make the parties aware of it. As a listing agent, be sure not to misrepresent the property and/or mislead the buyer. The buyer needs to be made aware of the un-permitted section’s size and location in the dwelling. It’s best to provide written disclosure and maintain a copy in the file. The un-permitted section must be separately identified. Document your disclosures for future reference.
This article came from the February 2015-Vol45-3 edition of the bulletin.
The Regulatory Affairs Division of the Commission sees many of the same compliance issues while investigating complaints or conducting audits. The following list of compliance issues (and the Rule to which they relate) are common to most types of brokerage, but appear to be a particular concern for commercial brokers.
The Working with Real Estate Agents disclosure [Rule A.0104(c)]. Commercial agents can be sporadic with their use of this required disclosure; here are the basics:
Written agency agreement [Rule A.0104(a)]. The need for a written agency agreement is overlooked more often in commercial brokerage. The minimum requirements to adhere to:
○ Provide for its existence for a definite period of time,
○ Include the agent’s license number,
○ Include the nondiscrimination language prescribed in Rule A.0104(b).
Timely disclosure of representation [Rule A.0104(d-j)]. Most brokers are careful to inform the parties to a transaction who the broker represents, but commercial brokers often neglect to put this in writing. Always remember to:
Timely disclosure of material facts [N.C.G.S §93A-6(1)]. Commercial brokers tend to see the discovery of material facts to be the job of the buyer/tenant and/or their agent. However, all brokers have a duty to make objective inquiries to discover material facts, and to verify information provided by the broker’s client when it is reasonable to do so. Some of the basics to remember regarding disclosure of material facts:
Disclosure of compensation to the agent’s principal [Rule A.0109(c)(d)]. There is generally no duty for a broker to disclose his or her compensation to a party whom the broker does not represent. However, the total compensation a broker (or the firm) expects or receives is a material fact to that broker’s client. Remember the following:
Deposit of trust money into a trust account (Rule A.0116(a)(b)). Commercial brokers acting as couriers of rent or other trust monies is a common issue.With the exception of option and due diligence fees, brokers are required to deposit all funds received in their fiduciary capacity into a trust account. The timing of such deposits are as follows:
Representing a buyer in the purchase of property in which the broker has ownership interest [Rule A.0104(o)]. This has always been a conflict of interest, but now it is specifically prohibited by rule as of July 1, 2014. Another broker with the firm may represent the buyer so long as that broker does not have an ownership interest and the buyer consents after full disclosure.
Broker purchasing his/her own listing [Rule A.0104(p)]. Another potential conflict of interest is specifically addressed by a new rule. A broker must disclose the inherent conflict of interest in writing to the seller and suggest the seller seek independent counsel. Prior to entering into an agreement to purchase, the broker must terminate the listing agreement or transfer to another broker affiliated with the firm who will not have an interest in the purchase.
Co-brokering with out-of-state brokers [Rule A.0109(g), A.1810]. Commercial brokers frequently work with out-of-state brokers representing buyers or tenants in N.C. transactions. N.C. brokers may pay a commission or fee to brokers licensed in other states so long as the foreign broker does not enter N.C. Foreign brokers practicing commercial real estate have two options for licensure in N.C.:
Record retention [Rule A.0108]. The Commission tends to see inconsistent record retention among commercial brokers with greater frequency. Rule A.0108 lists many of the documents that must be retained, but it is not exclusive. Brokers should retain all documents related to both failed and successful real estate transactions including offers, contracts, disclosure documents, agency and commission agreements and correspondence such as emails or texts. Remember the following:
The foregoing is only a basic treatment of these topics. If you have questions or concerns regarding compliance issues or wish to discuss a particular scenario with someone in the Regulatory Affairs Division, call the Commission at 919-875-3700 and ask to speak to an Information Officer or email us at regulatoryaffairs@ncrec.gov.
This article came from the February 2015-Vol45-3 edition of the bulletin.
The 2015-2016 edition of the North Carolina Real Estate Manual has just been published. Serving as the textbook for postlicensing education and as a reference work for individuals involved with the real estate industry, the Manual is available in printed and electronic formats.
Printed copies of the 893-page Manual, CD-ROM’s, or online subscriptions may be ordered online at the Commission website, www.ncrec.gov, or by using the order form on page 8 in this issue of the Real Estate Bulletin.
This article came from the February 2015-Vol45-3 edition of the bulletin.
Change is on the way. The standard HUD-1 closing statement that has been used for decades is scheduled to be replaced with two new “Closing Disclosure” forms effective August 1, 2015.
The Dodd-Frank Act consolidated multiple agencies’ consumer protection responsibilities in the Consumer Financial Protection Bureau (CFPB) and gave the CFPB broad authority to develop and implement rules.
In the past, lenders of “federally related mortgage loans” have been required to provide borrowers with:
(1) A Good Faith Estimate (GFE) and early Truth-in-Lending (TIL) disclosure, and
(2) A final Truth-in-Lending disclosure and HUD-1 at closing.
One of the direct charges to the CFPB under Dodd-Frank was to consolidate these disclosures to ease compliance burdens on lenders.
The CFPB studied the disclosure requirements, conducted surveys, drafted proposed rules and invited public comment for more than two years, before announcing its new “Know Before You Owe” program in November 2013. Under this new program, effective August 1, 2015, lenders must instead use the new “Loan Estimate” disclosure that combines the former GFE and TIL disclosures, and lenders/settlement agents must start using the new “Closing Disclosure” forms in lieu of the current HUD-1.
There are two Closing Disclosure forms: one is a two-page form containing a transaction summary reflecting only seller-paid expenses and amounts due to and from the seller, while the second Closing Disclosure is five pages and contains information about the loan terms, borrower expenses, by whom those items are paid, and a summary of monies due to and from both the buyer and the seller.
Brokers engaged in residential sales should become familiar with the new Closing Disclosures. One major issue that may prove to be problematic for brokers, at least initially, may be lender compliance. Lenders are required to provide the Closing Disclosure to the buyer at least three business days prior to settlement. Failure to comply requires postponement of the settlement date, so it is important for brokers to know these deadlines and warn clients of potential pitfalls with missed deadlines at the beginning of the agency relationship, and repeat those warnings throughout the transaction.
The new Loan Estimate and Closing Disclosure forms, the rules governing each, a broker’s responsibilities as to each form and how the new forms may affect closing procedures will be one of the primary topics of the 2015-2016 General Update course.
This article came from the February 2015-Vol45-3 edition of the bulletin.
ALBEMARLE-RICH INC. D/B/A NAGS HEAD REALTY (Nags Head) – By Consent, the Commission permanently revoked the firm license of Albemarle-Rich, Inc., effective November 12, 2014. The Commission found that Albemarle-Rich Inc., acting as a vacation rental management firm, had a duty to place tenants in properties it managed for its landlord clients, collect tenant security deposits when required, collect rent, and to hold these monies in trust on behalf of its landlord clients; that Albemarle-Rich, Inc. failed to maintain the money received from tenants on behalf of its landlord clients in a trust account; and that, instead, its broker-in-charge converted the money for personal use.
ARCH WAY REAL ESTATE INC. (Fayetteville) – The Commission accepted the permanent voluntary surrender of the firm license of Arch Way Real Estate Inc. effective November 12, 2014. The Commission dismissed without prejudice allegations that Arch Way Real Estate violated provisions of the Real Estate License Law and Commission rules. Arch Way Real Estate neither admitted nor denied misconduct.
BECKLEE REAL ESTATE LLC (Raleigh) Following a hearing, the Commission permanently revoked the firm license of Becklee Real Estate effective October 24, 2014. The Commission found that Becklee Real Estate and its qualifying broker/broker-in-charge engaged in general real estate brokerage and property management services; that 10 separate complaints were filed with the Commission between March 3, 2014 and September 8 alleging various violations of license law by the firm; that the firm continued to conduct business within the state after being administratively dissolved by the Secretary of State; that the firm failed to respond to Letters of Inquiry from a Commission representative, failed to provide requested trust account records, failed to deliver trust account statements and rental proceeds for properties the firm managed and that rental proceeds and trust account statements when delivered, did not balance, failed to pay trust monies owed to complainants, failed to respond to complainants’ repeated attempts to obtain information; and that on June 30, 2014, allowed it’s license to expire without providing clients with any documentation or trust proceeds for their properties.
WALTER E. BELL, SR. (Fayetteville) – The Commission accepted the permanent voluntary surrender of the broker license of Mr. Bell effective November 12, 2014. The Commission dismissed without prejudice allegations that Mr. Bell violated provisions of the Real Estate License Law and Commission rules. Mr. Bell neither admitted nor denied misconduct.
BROOKS & BROADWELL REALTY, INC. (Marion) – The Commission accepted the permanent voluntary surrender of the firm license of Brooks & Broadwell Realty effective January 14, 2015. The Commission dismissed without prejudice allegations that Brooks & Broadwell Realty violated provisions of the Real Estate License Law and Commission rules. Brooks & Broadwell Realty neither admitted nor denied misconduct.
TONY M. BROWN, JR. (Charlotte) – The Commission accepted the surrender of the broker license of Mr. Brown for a period of three years effective November 1, 2014. The Commission dismissed without prejudice allegations that Mr. Brown violated provisions of the Real Estate License Law and Commission rules. Mr. Brown neither admitted nor denied misconduct.
GEORGE M. BURGESS (West Jefferson) – By Consent, the Commission suspended the broker license of Mr. Burgess for a period of 24 months effective October 1, 2014. The Commission then stayed the suspension and prohibited Mr. Burgess from acting as broker-in-charge for a period of five years. The Commission found that Mr. Burgess, as broker-in-charge and qualifying broker of a real estate brokerage firm, represented a buyer in or about 2007 in purchasing a property in Ashe County as being “owner built” and including a septic system; that Mr. Burgess did not give and review a copy of the Working With Real Estate Agents brochure with the buyer and failed to execute a written agency agreement with the buyer; and that in 2010, Ashe County informed the buyer that the structure was built without permits and that the buyer would be required to tear down and replace the structure. The Commission noted that Mr. Burgess and the buyer have agreed to a financial settlement.
CAPE FEAR REALTY, LLC (Bald Head Island) – By Consent, the Commission suspended the firm license of Cape Fear Realty for a period of one year effective December 31, 2014. The Commission then stayed the suspension for a probationary period through December 31, 2016. The Commission found that Cape Fear Realty’s trust accounts and records did not reconcile with the bank and/or journal balances, that checks were reported as outstanding when they had in fact cleared, that negative balances appeared on various trial balances, and that there was a problem with the computer software program. The Commission noted that Cape Fear Realty has corrected the problems associated with the trust accounts and records, and no consumers were harmed as a result.
CATHY DYER, INC. (Apex) – By Consent, the Commission reprimanded Cathy Dyer, Inc., effective January 1, 2015. The Commission found that Cathy Dyer, Inc., entered into an Exclusive Right to Sell Listing Agreement in May 2013 with a seller and was aware that the seller’s property, a townhome, was occupied by renters when it was listed and that the renters’ lease was to expire on August 31, 2013; that the seller signed a contract on June 7, 2013, to sell the property with a settlement date of July 22, 2013; that Cathy Dyer, Inc., despite having knowledge that the rental contract extended beyond the July 22 settlement date, did not discuss adding a contingency clause to the sales contract with her client, the seller; that the tenants failed to move out prior to the July 22 closing date; and that the sales contract was eventually terminated by the potential buyer. The Commission noted that Cathy Dyer, Inc., offered to assist the potential buyer in recouping any expenses incurred as a result of the failed transaction from her client, the seller.
ALICIA A. CHRISTIAN (Fayetteville) – By Consent, the Commission permanently revoked the broker license of Ms. Christian effective October 15, 2014. The Commission found that Ms. Christian, as sole proprietor of a real estate brokerage firm, collected tenant security deposits and rents on behalf of her landlord clients and deposited those funds into a trust account; that Ms. Christian, in responding to a Commission request to conduct a spot audit of the account, admitted to converting approximately $25,000 of the funds she held on behalf of her landlords and tenants to her own use; that Ms. Christian failed to reconcile her accounts on a monthly basis and failed to maintain a journal, ledgers, or other trust account documents as required by the Commission; and that Ms. Christian failed to maintain or produce any transaction records for the Commission.
JENNIFER PAUL COLLINS (Simpson) – The Commission accepted the surrender of the broker license of Ms. Collins for a period of five years effective October 15, 2014. The Commission dismissed without prejudice allegations that Ms. Collins violated provisions of the Real Estate License Law and Commission rules. Ms. Collins neither admitted nor denied misconduct.
PRESTON H. CUDD, JR. (Raleigh) – By Consent, the Commission suspended the broker license of Mr. Cudd for a period of one year effective October 1, 2014. Three months of the suspension were active with the remainder stayed for a probationary period ending October 1, 2015. The Commission found that Mr. Cudd listed a home and represented that all of the polybutylene piping had been replaced; that, although the seller had a letter certifying the same, the buyer’s home inspection revealed that polybutylene pipe was visible in the kitchen and laundry room; that the seller discovered that the letter certifying the work was a forgery and informed Mr. Cudd of the fact during the due diligence period; that Mr. Cudd did not convey the information to the buyers or their agent; and that the sellers discovered after closing that none of the piping had been replaced and had to pay $6,000 for their replacement.
THOMAS L. DALE (Greenville) – By Consent, the Commission reprimanded Mr. Dale effective January 1, 2015. The Commission found that Mr. Dale served as listing broker for a property and, based solely on the seller’s representations, advertised the property in the MLS as having four bedrooms; that at the time of the listing the property was, in fact, served by a septic system only approved to support three bedrooms; that the county tax collector’s records also listed the property as having only three bedrooms; and that Mr. Dale failed to inspect either the septic permit or review the tax records to verify the seller’s claim as to the number of bedrooms in the property.
WILLIAM EDWARD DAVID, JR. (Mooresville) – By Consent, the Commission suspended the broker license of Mr. David for a period of 24 months effective October 15, 2014. One month of the suspension was active with the remainder stayed for a probationary period of 23 months. The Commission found that Mr. David, who operated a vacation rental property management company, managed his own property as well as that of others; that Mr. David’s company was not licensed and did not have a qualifying broker or broker-in-charge; that Mr. David, while operating his company, was not broker-in-charge eligible; that Mr. David’s vacation rental property management agreements did not include his broker license number or the required disclosures of the Vacation Rental Act and did not address interest earned on deposits; and that Mr. David’s firm had an account entitled “escrow account”, however, Mr. David did not follow the Commission’s rules in maintaining this account.
NANCY C. DYER (Apex) – By Consent, the Commission reprimanded Ms. Dyer effective January 1, 2015. The Commission found that Ms. Dyer entered into an Exclusive Right to Sell Listing Agreement in May 2013 with a seller and was aware that the seller’s property, a townhome, was occupied by renters when it was listed and that the renters’ lease was to expire on August 31, 2013; that the seller signed a contract on June 7, 2013, to sell the property with a settlement date of July 22, 2013; that Ms. Dyer, despite having knowledge that the rental contract extended beyond the July 22 settlement date, did not discuss adding a contingency clause to the sales contract with her client, the seller; that the tenants failed to move out prior to the July 22 closing date; and that the sales contract was eventually terminated by the potential buyer. The Commission noted that Ms. Dyer offered to assist the potential buyer in recouping any expenses incurred as a result of the failed transaction from her client, the seller.
JUDY R. ELLIS (Laurinburg) – The Commission accepted the surrender of the broker license of Ms. Ellis for a period of one year effective October 15, 2014. The Commission dismissed without prejudice allegations that Ms. Ellis violated provisions of the Real Estate License Law and Commission rules. Ms. Ellis neither admitted nor denied misconduct.
EXECUTIVE SELLERS LLC (Charlotte) – By Consent, the Commission suspended the firm license of Executive Sellers for a period of 12 months effective January 1, 2015. The Commission then stayed the suspension. The Commission found that Executive Sellers, acting as a buyer’s agent, failed to review the “Working with Real Estate Agents” brochure or enter into a written agency agreement; that the firm deposited a $1000 earnest money check into its operating account; that the firm increased buyer’s written offer amount and initialed the increase without buyer’s written consent; that the firm deposited a second $1000 earnest money check into its operating account; that the firm never informed the listing agent of the additional $1000 deposit; that buyer’s offer was never accepted and buyer requested a refund of the $2000 deposit; and that the firm asked the buyer to sign a Termination of Contract which appeared to be signed by the seller, but that the seller and the listing agent deny that the seller ever signed. The Commission noted that Executive Sellers did refund the buyer’s deposit.
ROBERT S. FOWLER (Gaffney, South Carolina) – By Consent, the Commission suspended the broker license of Mr. Fowler for a period of six months. One month of the suspension was active with the remainder stayed for a probationary period ending April 1, 2015. The Commission found that Mr. Fowler represented a buyer attempting to purchase property being offered for short-sale; that during the transaction, Mr. Fowler presented a loan preapproval letter to the Seller as part of an Offer to Purchase and Contract; and that Mr. Fowler represented that the loan preapproval letter was issued by and bore the signature of a loan underwriter from a credit union, when it did not.
GATEWAY REALTY, LLC (Kitty Hawk) – By Consent, the Commission suspended the broker firm license of Gateway Realty for a period of two years effective December 31, 2014. The Commission then stayed the suspension for a probationary period ending December 31, 2019. The Commission found that a spot inspection of Gateway Realty’s trust account records revealed that an employee of Gateway Realty misappropriated cash rental payments that should have been deposited into Gateway Realty’s trust account. The Commission noted that Gateway Realty has since fully funded the trust account, that no consumers were harmed as a result, and that the trust account records are balanced, reconciled and in compliance.
GEORGE W. GOSS (Durham) – The Commission accepted the permanent voluntary surrender of the broker license of Mr. Goss effective November 12, 2014. The Commission dismissed without prejudice allegations that Mr. Goss violated provisions of the Real Estate License Law and Commission rules. Mr. Goss neither admitted nor denied misconduct.
BRADLEY D. GRAHAM (Raleigh) – By Consent, the Commission suspended the broker license of Mr. Graham for a period of 18 months effective January 1, 2015. The Commission then stayed the suspension for a probationary period ending July 1, 2016, on certain conditions. The Commission found that Mr. Graham pleaded guilty in a Virginia U. S. District Court on June 25, 2014, to one count of failing to report the commission of a felony by another and received two years of probation and was ordered to pay restitution; and that Mr. Graham has met the terms of his probation and paid his restitution in full. The Commission noted that Mr. Graham reported his conviction within 60 days as required by Commission rules.
CHRISTOPHER V. HART (Myrtle Beach, South Carolina) – By Consent, the Commission revoked the broker license of Mr. Hart effective October 15, 2014. The Commission found that Mr. Hart failed to supervise his unlicensed administrative staff in the management his Myrtle Beach, South Carolina property management firm; that Mr. Hart relied solely on reports generated by his staff to monitor his firm’s finances and trust accounts; that, due to the actions of his unlicensed staff, there was a trust account shortfall of at least $190,000, and that some property owners had not been paid monies owed for two months; that in December 2013 Mr. Hart had admitted to four violations of the South Carolina Real Estate Commission Practice Act, and, his license having been cancelled in January 2013, was publicly reprimanded and fined $4000; and that Mr. Hart failed to timely report the disciplinary action to the Commission. The Commission noted Mr. Hart filed bankruptcy on behalf of his firm, and that of $239,997.84 in allowed claims only $19,964.45 was paid to claimants.
RONALD M. HAVERLAND (Gibsonville) – By Consent, the Commission reprimanded Mr. Haverland effective April 1, 2015. The Commission found that Mr. Haverland managed a property and that the management agreement and lease contract included some language regarding fair housing, but did not include the specific Fair Housing provision required by the Real Estate License Law, nor did either include the broker license number of Mr. Haverland. The Commission also found that Mr. Haverland had been broker-in-charge (BIC) of his sole proprietorship since 2004, but had not taken the proper continuing education requirements from 2007 to 2013 and lost his BIC eligibility for that period of time. The Commission noted that Mr. Haverland, after being informed about his BIC status in 2013, immediately took the BIC education course and hired a BIC for his company.
RODNEY JAMES HYSON, JR. (Wilmington) – By Consent, the Commission suspended the broker license of Mr. Hyson for a period of one year effective December 31, 2014. The Commission then stayed the suspension for a probationary period through December 31, 2016 on certain conditions. The Commission found that Mr. Hyson’s trust accounts and records did not reconcile with the bank and/or journal balances, that checks were reported as outstanding when they had in fact cleared, that negative balances appeared on various trial balances, and that there was a problem with the computer software program. The Commission noted that Mr. Hyson has corrected the problems associated with the trust accounts and records and no consumers were harmed as a result.
INTEGRITY FIRST PROPERTIES LLC (Fayetteville) – By Consent, the Commission suspended the firm license of Integrity First Properties for a period of six months effective November 12, 2014. The Commission then stayed the suspension for a probationary period ending May 12, 2015 on condition that Integrity First Properties shall not engage in property management for a period of five years from the effective date. The Commission found that Integrity First Properties managed some 300 properties; that in November 2013 Integrity First Properties sold its management contracts to another licensed firm; that the new firm discovered a shortage in the security deposit account; that Integrity First Properties, when notified of the shortage, immediately paid the new firm the full amount of the shortage; and that a Commission audit found that Integrity First Properties had not performed bank reconciliation on the security deposit account since January 2010. The Commission noted that Integrity First Properties has not engaged in property management since the sale of its management contracts to the new firm and that no consumers were harmed.
PATRICIA JANE LANCASTER (Murphy) – The Commission accepted the permanent voluntary surrender of the broker license of Ms. Lancaster effective December 31, 2014. The Commission dismissed without prejudice allegations that Ms. Lancaster violated provisions of the Real Estate License Law and Commission rules. Ms. Lancaster neither admitted nor denied misconduct.
LAURANCE REALTY ASSOCIATES, LLC (Charlotte) – By Consent, the Commission suspended the firm license of Laurance Realty Associates for a period of 24 months effective January 15, 2015. The Commission then stayed the suspension for a probationary period of 24 months. The Commission found that in 1998, Laurance Realty Associates entered into a Venture Management Agreement with a developer to market, sell, lease, and manage properties that were being developed; that this Agreement did not contain the required fair housing provision, nor did it contain the firm license number; that in 2009, the broker-in-charge (BIC) of Laurance Realty Associates left and became the BIC of his own sole proprietorship; that, absent a BIC, Laurance Realty Associates’ other broker applied to become the BIC of the firm, but was denied due to her lack of 2 years’ experience; that Laurance Realty Associates continued to operate and engage in real estate brokerage without a BIC until the broker turned down for the position was approved in 2011; that Laurance Realty Associates acted as manager of a homeowners association (HOA) from its inception through 2011and that the firm, through its BIC, claims that there was a written agency agreement in place, but that it was lost a few years ago; that Laurance Realty Associates failed to create a new agreement and has thus failed to maintain a copy of same; and that Laurance Realty Associates collected rents and other fees on behalf of the HOA and failed to place these funds into an account designated to be “trust” or “escrow”.
FELIX A. LEE (Durham) – By Consent, the Commission reprimanded Mr. Lee effective January 1, 2015. The Commission found that Mr. Lee accepted a listing on undeveloped land although he had limited experience in land sales; that Mr. Lee was unable to locate comparable properties and did not perform a comparable market analysis on the subject property; that, after consulting with another broker with experience in land sales to determine a reasonable listing price, Mr. Lee initially recommended the property be listed at $75,000; that the seller wanted to list the property at $100,000 or above; that after further review, Mr. Lee recommended that the property be listed at $125,000, which was agreed to by the owner, and the property sold at that price; and that, after the property went under contract, the owner had an appraisal performed which indicated the land could have a value of as much as $190,000. Mr. Lee neither admitted nor denied, but did not object to the Commission’s findings.
WILLIAM M. LITTLE (Fayetteville) – By Consent, the Commission reprimanded Mr. Little effective January 1, 2015. The Commission found that Mr. Little, acting as broker-in-charge of a real estate brokerage firm, failed to promptly deliver all client records as requested after his firm was terminated as property and property owner’s association’s manager, and that a trust account audit showed that records were not maintained in full compliance of Commission rules and that an accurate audit trail could not be determined. The Commission noted that an audit of the firm’s current property owner’s association accounts shows substantial compliance with Commission rules.
LITTLE & YOUNG, INC. (Fayetteville) – By Consent, the Commission reprimanded Little & Young effective January 1, 2015. The Commission found that Little & Young, a real estate brokerage firm, failed to promptly deliver all client records as requested after the firm was terminated as property and property owner’s association’s manager, and that a trust account audit showed that records were not maintained in full compliance of Commission rules and that an accurate audit trail could not be determined. The Commission noted that an audit of the firm’s current property owner’s association accounts shows substantial compliance with Commission rules.
LORI B. LONDON (Kitty Hawk) – By Consent, the Commission suspended the broker license of Ms. London for a period of two years effective December 31, 2014. The Commission then stayed the suspension for a probationary period ending December 31, 2019. The Commission found that a spot inspection of Ms. London’s trust account records revealed that an employee of Ms. London misappropriated cash rental payments that should have been deposited into Ms. London’s trust account. The Commission noted that Ms. London has since fully funded the trust account, that no consumers were harmed as a result, and that the trust account records are balanced, reconciled and in compliance.
BRYAN KELLY LOWE (Kannapolis) – By Consent, the Commission reprimanded Mr. Lowe effective January 1, 2015. The Commission found that Mr. Lowe was the listing agent for property; that within a few months after closing, the new owners discovered that cracks were forming on the ceilings, molding began to separate, and that windows and doors were not closing properly; that the sellers had a masonry company jack up the house and repair the foundation; that Mr. Lowe stated that he had no knowledge of any foundation issues with the home other than some repairs to the foundation brick veneer; that the sellers stated that they spoke in general terms with Mr. Lowe of the work performed on the foundation; that Mr. Lowe did not make any further inquiries into these repairs; that the sellers completed a Residential Property Disclosure Form and checked “no” to the question regarding knowledge of foundation problems and checked “no” for the questions about structural changes to the property; and that an appraisal and inspection were completed prior to closing and neither mentioned potential structural or foundational problems. Mr. Lowe neither admitted nor denied but did not object to the Commission’s findings.
ANGELA HUSKINS MCGHEE (Marion) – The Commission accepted the permanent voluntary surrender of the broker license of Ms. McGhee effective January 14, 2015. The Commission dismissed without prejudice allegations that Ms. McGhee violated provisions of the Real Estate License Law and Commission rules. Ms. McGhee neither admitted nor denied misconduct.
SHENA A. MONTGOMERY (Charlotte) – The Commission accepted the voluntary surrender of the broker license of Ms. Montgomery for a period of three years effective January 1, 2015. The Commission dismissed without prejudice allegations that Ms. Montgomery violated provisions of the Real Estate License Law and Commission rules. Ms. Montgomery neither admitted nor denied misconduct.
MICHELLE L. MORRIS (Fayetteville) – By Consent, the Commission suspended the broker license of Ms. Morris for a period of six months effective November 12, 2014. The Commission then stayed the suspension for a probationary period ending May 12, 2015 on condition that Ms. Morris shall not engage in property management for a period of five years from the effective date. The Commission found that Ms. Morris, acting as broker-in-charge and qualifying broker of a real estate brokerage firm that managed some 300 properties, sold its management contracts in November 2013 to another licensed firm; that the new firm discovered a shortage in the security deposit account; that Ms. Morris, when notified of the shortage, immediately paid the new firm the amount of the shortage; and that a Commission audit found that Ms. Morris had not performed bank reconciliation on the security deposit account since January 2010. The Commission noted that Ms. Morris has not engaged in property management since the sale of her firm’s management contracts to the new firm and that no consumers were harmed.
REBECCA L. NIEMCHAK (Raleigh) – Following a hearing, the Commission permanently revoked the broker license of Ms. Niemchak effective October 24, 2014. The Commission found that Ms. Niemchak acted as qualifying broker/broker-in-charge of a licensed real estate firm engaging in general real estate brokerage and property management services; that 10 separate complaints were filed with the Commission between March 3, 2014 and September 8 alleging various violations of license law by Ms. Niemchak and her firm; that Ms. Niemchak’s firm continued to conduct business within the state after being administratively dissolved by the Secretary of State; that Ms. Niemchak failed to respond to repeated attempts by a Commission representative to meet with her, failed to respond to Letters of Inquiry from a Commission representative, failed to provide requested trust account records, failed to deliver trust account statements and rental proceeds for properties she and her firm managed and that rental proceeds and trust account statements when delivered, did not balance, failed to pay trust monies owed to complainants, failed to respond to complainants’ repeated attempts to contact her; and that on June 30, 2014, both Ms. Niemchak and her firm allowed their licenses to expire without providing clients with any documentation or trust proceeds for their properties.
KATHLEEN M. O’CONNOR (Charlotte) – By Consent, the Commission suspended the broker license of Ms. O’Connor for a period of 24 months effective January 15, 2015. The Commission then stayed the suspension for a probationary period of 24 months. The Commission found that Ms. O’Connor affiliated with a firm as a broker in 2008 and that in 2009 the broker-in-charge (BIC) of the firm left to become the BIC of his own sole proprietorship; that, absent a BIC, Ms. O’Connor applied for the position but was denied due to her lack of two years’ experience; that Ms. O’Connor continued to engage in real estate brokerage without a BIC until she became BIC of the firm in 2011; that, while Ms. O’Connor was BIC of the firm, the firm collected rents and other fees on behalf of the Marlborough Woods HOA and did not place these funds into an account designated to be “trust” or “escrow”; that, while BIC of the firm, Ms. O’Connor failed to maintain a copy of the Property Management Agreement between the firm and the HOA for a period of three years after termination; and that the Venture Management Agreement between the firm and a developer did not include the firm license number or the fair housing provision.
PARKER & BURGESS RTY INC. (West Jefferson) By Consent, the Commission suspended the firm license of Parker & Burgess for a period of 24 months effective October 1, 2014. The Commission then stayed the suspension. The Commission found that Parker & Burgess represented a buyer in or about 2007 in purchasing a property in Ashe County which was listed as being “owner built” and including a septic system; that Parker & Burgess did not give and review a copy of the Working With Real Estate Agents brochure with the buyer and failed to execute a written agency agreement with the buyer; that in 2010, Ashe County informed the buyer that the structure was built without permits, and that these permits required the buyer to tear down and replace the structure. The Commission noted that firm is now in compliance with the Office of the NC Secretary of State and with the Commission, and that Parker & Burgess and the buyer have agreed to a financial settlement.
JAMES EUGENE SMITH, JR. (Charlotte) – By Consent, the Commission suspended the broker license of Mr. Smith for a period of 12 months effective January 1, 2015. Two months of the suspension were active with the remainder stayed for a probationary period ending January 1, 2016. The Commission found that Mr. Smith, acting qualifying broker and broker-in-charge of a real estate firm, failed to review the “Working with Real Estate Agents” brochure or enter into a written agency agreement with a buyer client; that Mr. Smith deposited a $1000 earnest money check into his firm’s operating account; that Mr. Smith increased buyer’s written offer amount and initialed the increase without buyer’s written consent; that Mr. Smith deposited a second $1000 earnest money check into his firm’s operating account; that Mr. Smith never informed the listing agent of the additional $1000 deposit; that buyer’s offer was never accepted and buyer requested a refund of the $2000 deposit; and that Mr. Smith asked the buyer to sign a Termination of Contract which appeared to be signed by the seller, but that the seller and the listing agent deny that the seller ever signed. The Commission noted that Mr. Smith did refund the buyer’s deposit.
WAYNE WALTER SMITH, JR. (Waxhaw) – By Consent, the Commission permanently revoked the broker license of Mr. Smith effective January 14, 2015. The Commission found that Mr. Smith on or about November 20, 2013, pleaded guilty in Superior Court to two felony charges: one count of embezzlement and one count of exploitation of an elder adult and was sentenced to a minimum term of five (5) months and a maximum term of six (6) months imprisonment, and was ordered to pay restitution; and that Mr. Smith failed to report the plea, conviction, and sentence to the Commission within 60 days.
LYNELL DELAPOUYADE WEST (Hendersonville) – By Consent, the Commission reprimanded Ms. West effective November 1, 2014. The Commission found that Ms. West was convicted in March, 2014, of misdemeanor Failure to Deliver Title involving the sale of a truck owned by her and her ex-husband; that Ms. West’s ex-husband passed away and Ms. West sold the car to a dealership and signed her deceased husband’s name on the title; and that Ms. West did not have Power of Attorney over her ex-husband and was not aware that she needed to have one. The Commission noted that Ms. West has since reimbursed her ex-husband’s estate for his share of the vehicle and that Ms. West notified the Commission of this conviction within the 60-day requirement.
CHERYL B. WILKINS (Nags Head) – By Consent, the Commission permanently revoked the broker license of Ms. Wilkins effective November 12, 2014. The Commission found that as broker-in-charge of a vacation rental management firm, it was Ms. Wilkins’ duty to place tenants in properties she managed for her landlord clients, collect tenant security deposits when required, collect rent, and to hold these monies in trust on behalf of her landlord clients; and that Ms. Wilkins failed to maintain the money collected from tenants on behalf of her landlord clients in a trust account, and, instead, converted the money for her personal use.
PAMELA W. WOODDELL (Wilmington)- Following a hearing, the Commission reprimanded Ms. Wooddell effective October 29, 2014. The Commission found that, in June 2013, Ms. Wooddell, while acting as dual agent in a real estate owned (REO) purchase transaction, disclosed the price and material terms of a competing offer to her buyer client without the express authority of the offering party. The information was not used by the buyer client and the property was ultimately purchased by the offering party. The Commission also found that in May 2011 Ms. Wooddell agreed to a stayed suspension of her license and was placed on a period of probation until May 2014. This was in connection with a previous disciplinary action initiated by a 2006 Complaint, to which Ms. Wooddell neither admitted nor denied wrongdoing. The Commission further found Ms. Wooddell in violation of the terms of her probation and suspended her license for a period of thirty (30) days effective December 1, 2014.
This article came from the February 2015-Vol45-3 edition of the bulletin.
Stephen L. Fussell, Senior Consumer Protection Officer, has received the 2014 Investigator of the Year Award from the Association of Real Estate License Law Officials (ARELLO®), an international organization.
Fussell’s investigation involved the activities of a real estate broker whose conduct went outside the scope of her employment, without her employer’s knowledge. Fussell obtained evidence that the broker offered to assist a disabled tenant, whose rental unit was being demolished as part of a right-of-way taking by NCDOT, in relocating from the property and convinced the tenant to purchase a property that resulted in a windfall profit, not to the broker, but, in secret, to her close friend. The Commission suspended her real estate license as a result.
Distinguishing Fussell from other real estate investigators was his role as a Consumer Protection Officer (CPO) rather than a field/auditor investigator. Fussell performed his investigation entirely from within the office by letter, telephone, fax, and email, not in person as a field investigator. Most complaints received by the Commission every year are handled by CPO’s, who can complete certain types of cases much faster than a field investigator. Fussell’s knowledge, expertise, and experience enable him to investigate difficult cases without outside field assistance.
Fussell, who has been with the Commission for 23 years, holds an undergraduate degree from the University of North Carolina at Chapel Hill and a graduate degree from Campbell University. He is a licensed real estate broker and a Certified Fraud Examiner.
This article came from the October 2014-Vol45-2 edition of the bulletin.