Several brokers recently discovered the hard way that a Continuing Education (CE) course they completed before the annual June 10th CE deadline had not been posted to their license record. Unfortunately, some of these discoveries were made too late for renewal purposes, and licenses were placed on inactive status due to clerical errors by an education provider.
Although certified Education Providers (EPs) are required to submit rosters for Commission-approved courses within 7 days after course completion, brokers should not rely totally on the EPs. Sometimes erroneous information, such as a wrong license number, appears on a course roster, or a student is omitted completely.
To avoid unpleasant and unnecessary surprises around renewal time, brokers are strongly encouraged to proactively monitor the posting of accurate information to their license record:
Please…do not submit any Course Completion Certificate to the Commission unless you are specifically requested to do so by Commission Staff. Educational credit will ONLY be provided based on information submitted directly by a certified EP.
A little vigilance soon after completing a course can save a broker from possibly being inactive in July.
FACTS: A customer, who was relocating, contacted a broker for help in finding a home in North Carolina. After explaining NC agency and the Working With Real Estate Agents Disclosure, the customer entered into an exclusive buyer agency agreement with the broker.
From the onset of the relationship, the client shared with their buyer agent how excited they were to bring their new pontoon boat down to their new home. After viewing several properties, the client was ready to make an offer on a home in a newer subdivision. The property had a large driveway with plenty of room for their boat. The client also noticed that the neighboring property had a boat as well.
The buyer’s offer was accepted. Ther seller and buyer went under contract, and the transaction concluded successfully. The client moved into the property without any issues. However, a few months later, the client started getting notices with violations and fines from the Homeowner’s Association. Upon speaking with the HOA, the buyer was informed that the subdivision had restrictive covenants that did not allow recreational vehicles to be parked in the driveway of properties.
While the neighbor had a boat parked in their driveway, they were doing so in violation of the covenants and being fined as well.
ISSUE: Did the broker comply with N.C.G.S. §93A-6(a)(1)?
ANALYSIS: No. N.C.G.S. § 93A-6(a)(1) states that the Commission has power to suspend or revoke at any time a license issued under the provisions of this Chapter, or to reprimand or censure any licensee, if following a hearing, the Commission adjudges the licensee to be guilty of making any willful or negligent misrepresentation or any willful or negligent omission of material fact.
A material fact is any fact that could affect a reasonable person’s decision to buy, sell, or lease real property. Therefore, a broker has an affirmative duty to take reasonable steps to discover and disclose material facts to all parties in a transaction. Additionally, brokers are expected to take reasonable steps to discover all pertinent facts that are necessary to serve their clients’ interest. In this case study, the broker neglected to verify information that was of special importance to their client, having a pontoon boat parked at their property.
The Commission also determines whether or not a broker knew of the existence of a material fact by analyzing documents and reviewing written correspondence. The Commission uses the Reasonableness Standard to evaluate a broker’s duty to discover and disclose material facts. This standard dictates that a broker has a duty to discover and disclose any particular material fact if a reasonably knowledgeable and prudent broker would have discovered the fact during the course of the transaction and while acquiring information about the property.
In this scenario, the broker neglected to discuss the possibility of restrictive covenants with their client. While the broker would not necessarily be expected to interpret the covenants, they would be expected to provide the covenants and caution the buyer to take notice of recreational vehicles and/or boats. The broker did not act like a reasonably prudent broker because theyfailed to properly discover and disclose a material fact of special importance to their client. Every broker must exercise reasonable care and diligence in timely discovering and disclosing material facts to all interested parties in a transaction in adherence to N.C.G.S. § 93A-6(a)(1).
As a result of this omission and the broker’s failure to adhere to N.C.G.S. § 93A-6(a)(1), the broker may be subject to disciplinary action by the Commission.
Resources:
N.C.G.S. § 93A-6(a)(1), 93A-6(a)(8), and 93A-6(a)(10)
License Law and Commission Rules: Rule 58A .0114(c)
Articles: 2022-2023 General Update Course
2018-2019 General Update Course
Did you know that the North Carolina Real Estate Commission has a YouTube channel? Have you subscribed to the channel? If not, watch this video to learn more.
Video: https://youtu.be/p-Y3nQzuGKM
As part of an initiative to engage with consumers and those who may be interested in a career in real estate, the North Carolina Real Estate Commission (NCREC) developed a video to provide insight on a career in real estate. The video highlights NCREC Commission Members, NCREC’s mission, the real estate licensing process, and the many disciplines that exist within the real estate profession.
This video was made possible by the contributions of several volunteers and industry organizations who were essential to the completion of this video. The NCREC would like to recognize the volunteers for their time, patience, and commitment to the NCREC’s initiatives.
The final video, “Careers in Real Estate: An Inside Look”, can be found on the NCREC YouTube channel. Please share this video with your professional network.
A huge thank you to the following individuals and volunteers:
Adrienne Bain
Ayesha Richardson
Brian Campbell
Cindy Chandler
Dionne Nelson
Ed Roberson
Erica Butler
Jennifer Miles
Kim Kendall
Lauren Reeves
Leslye Helton
Magda Esola
Marvette Artis
Nina Karras
Scott Dampier
Sherkica Miller McIntyre
Travis Everette
Trish Adams
William Haygood
Tiffany Ross, Consumer Resource Officer, and Kizzy Crawford Heath, Assistant Director of Education and Licensing, spoke at Berkshire Hathaway HomeServices York Simpson Underwood Meeting on July 16.
Len Elder, Director of Education and Licensing, spoke at Durham Regional Association of REALTORS® on July 24.
Bruce Rinne, Information Officer, spoke at Catawba Valley Association of REALTORS®, on July 29.
STEVEN OLOUGHLIN MORGAN (HUNTERSVILLE) – The Commission accepted the voluntary surrender of the real estate license of Morgan, effective June 19, 2024. The Commission dismissed without prejudice allegations that Morgan violated provisions of the Real Estate License Law and Commission Rules. Morgan neither admitted nor denied misconduct.
STEVEN ERIC BEAM (CHARLOTTE) – By Consent, the Commission suspended the broker license of Beam for a period of 3 years, effective May 1, 2024. The Commission then stayed the suspension following a 1.5-month active period upon certain conditions. The Commission found that Beam, acting as qualifying broker/broker-in-charge, failed to personally retain a copy of the trust account and transaction records after ceasing property management services for his firm, resulting in an inability to conduct a timely Commission audit.
JEFFREY DUSTIN BENNETT (BENSON) – By Consent, the Commission suspended the broker license of Bennett for a period of 12 months, effective June 19, 2024. The Commission then stayed the suspension in its entirety upon certain conditions. The Commission found that Bennett represented a seller in the subject transaction and negligently misrepresented the acreage of the subject property.
DIANA CABRERA BLANCO (CHARLOTTE) – By Consent, the Commission suspended the broker license of Blanco for a period of 6 months, effective June 17, 2024. The Commission then stayed the suspension in its entirety upon certain conditions. The Commission found that Blanco, acting as the listing agent, advertised a property as “remodeled top to bottom” but, prior to listing, failed to discover and disclose, with particularity, beyond what she personally observed, what renovations were completed, whether permits should have been obtained, or whether licensed contractors were required or, if they were required, used.
RE III INC (JACKSONVILLE) – By Consent, the Commission reprimanded the firm effective June 17, 2024. The Commission found that a broker affiliated with the firm and acting as buyer agent failed to notice that the subject property was listed on MLS as being on city sewer but was marked as being on septic on the Residential Property and Owner Association Disclosure Statement. The broker also failed to notice that the appraisal also showed the property as being on septic. At closing, a different broker affiliated with the firm discovered the discrepancy and advised the buyer to have a septic inspection before recording, after which, the buyer closed the transaction. The buyer agent paid for the buyer’s septic inspection.
AMY ELIZABETH DEMARS (JACKSONVILLE) – By Consent, the Commission reprimanded Demars effective June 17, 2024. The Commission found that Demars acted as broker-in-charge of a provisional broker who represented a buyer. The broker failed to notice that the subject property was listed on MLS as being on city sewer but was marked as being on septic on the Residential Property and Owner Association Disclosure Statement. The broker also failed to notice that the appraisal also showed the property as being on septic. At closing, a different broker affiliated with the firm discovered the discrepancy and advised the buyer to have a septic inspection before recording, after which, the buyer closed the transaction. The provisional broker paid for the buyer’s septic inspection.
CHRISTI HILL INC (JACKSONVILLE) – By Consent, the Commission reprimanded the firm effective June 17, 2024. The Commission found that a broker affiliated with the firm represented a seller. The broker, as listing agent, received a home inspection report and additional information from a buyer under contract regarding a leaking bathroom drainpipe, wobbly toilet, and damaged subfloor. The contract terminated after the parties could not come to an agreement on repairs and the listing agent failed to update the listing or otherwise disclose the material facts to subsequent buyers.
CHRISTI LYN HILL (JACKSONVILLE) – By Consent, the Commission reprimanded Hill effective June 17, 2024. The Commission found that Hill acted as broker-in-charge of a broker who represented a seller. The broker, as listing agent, received a home inspection report and additional information from the buyer under contract regarding a leaking bathroom drainpipe, wobbly toilet, and damaged subfloor. The contract terminated after the parties could not come to an agreement on repairs and the listing agent failed to update the listing or otherwise disclose the material facts to subsequent buyers.
RALEIGH REALTY INC (RALEIGH) – By Consent, the Commission reprimanded the firm effective June 17, 2024. The Commission found that an affiliated broker acted as buyer agent on behalf of a client for whom he was also acting as listing agent for the sale of the client’s property. The buyer agent failed to advise his client that the contract did not include a contingency for the sale of his current home, failed to advise or request an extension of the due diligence period when repairs has not been agreed on, and failed to ensure that a second extension had been signed by the seller. The client was reimbursed the $20,000 due diligence fee and the firm instituted new training and written policies regarding contingent sales.
JERRY DANIEL ROBTOY (CARY) – By Consent, the Commission suspended the broker license of Robtoy for a period of 2 years, effective June 15, 2024. The Commission then stayed the suspension in its entirety upon certain conditions. The Commission found that Robtoy, acting as both listing agent and buyer agent for a client, failed to ensure that a written contingency for the sale of the client’s home. Robtoy failed to advise or request an extension to the due diligence period when repairs had not yet been agreed upon and failed to ensure a second amendment to the contract was signed by all parties. The client lost a $20,000 non-refundable due diligence fee when the purchase transaction did not close. The client was reimbursed the $20,000 due diligence fee.
HEATHER DANIELLE STONE (HICKORY) – By Consent, the Commission reprimanded Stone effective June 20, 2024. The Commission found that Stone represented the seller of the subject property that was encumbered by a 99-year lease to a neighbor of the property. The seller provided Stone with a lease termination that was purportedly signed by the lessee. In addition, in order to convey clear title to the property, Stone witnessed the seller’s ex-wife and current husband sign a general warranty deed. Stone then caused her husband, who was then a notary public, to falsely notarize these two documents.
JONATHAN W WASHBURN (WILMINGTON) – The Commission accepted the voluntary surrender of the real estate license of Washburn, effective June 20, 2024. The Commission dismissed without prejudice allegations that Washburn violated provisions of the Real Estate License Law and Commission Rules. Washburn neither admitted nor denied misconduct.
WILLIAM HOWARD WEST V (WINSTON SALEM) – By Consent, the Commission suspended the broker license of West for a period of 12 months, effective June 15, 2024. The Commission found that West, acting as a listing agent, relied on their seller-client’s representation that the subject property was partially on city sewer and partially on septic following a 1970s addition. The elderly seller had not lived in the property for several years. West contacted the county and asked about utilities but failed to discover and accurately disclose that the property was fully on septic and instead had a city water/well split. The buyer of the subject property discovered that discrepancy only after closing.
DAVID A ZELINSKI (JACKSONVILLE) – By Consent, the Commission suspended the broker license of Zelinski for a period of 30 months, effective June 17, 2024. The Commission then stayed the suspension in its entirety upon certain conditions. The Commission found that Zelinski acted as listing agent for a property for which he had previously acted as property manager. The seller represented on the Residential Property and Owner Association Disclosure Statement that the property was on septic and was permitted for four bedrooms. Zelinski’s assistant entered the property as being on city sewer on MLS and Zelinski, while reviewing, failed to notice the misrepresentation. Zelinski also failed to obtain the septic permit that showed the property was permitted for three bedrooms. At closing, the buyer discovered the property was on septic and that the permit was for three bedrooms. The parties agreed to delay the settlement until the buyer had the opportunity to inspect and consider their options. The buyer’s agent paid for a septic inspection and Zelinski paid for the septic system to be pumped and distribution box and filter to be cleaned and the buyer, thereafter, approved recording the deed.
Have you been disciplined by an occupational licensing board in North Carolina or another state? Have you been convicted of a felony or misdemeanor offense? Do you know of a broker who has?
Commission Rule A.0113 requires that a broker, including an inactive broker, report criminal convictions and disciplinary actions by governmental and occupational licensing agencies by filing Form REC 2.09 with the Commission within 60 days of final judgment, order, or disposition of:
The Criminal Conviction / Disciplinary Action Reporting Form is available on the Commission’s website at www.ncrec.gov under Forms or upon request to the Commission. Make sure to fully complete the form. Rule A .0113 requires a broker to provide a description of any criminal convictions or disciplinary actions. You will also note that Form 2.09 prompts a broker to upload certified copies of any judgment or order in the case. Providing a copy of any such order or disciplinary action with the notification form will only help to expedite the Commission’s review and investigation of the matter, if warranted.
The monthly eBulletin is intended to be a valuable and timely resource for all NC real estate licensees.
As a BIC, you can use some of the articles/videos during your office trainings to ensure brokers adhere to law and rule changes, competently practice brokerage to prevent disciplinary issues, and participate in educational opportunities. The eBulletin is considered by Regulatory Affairs as a valuable resource and an educational tool.