Appearances

Frederick A. Moreno, Chief Deputy Legal Counsel, spoke to the Raleigh office of Fonville Morisey Real Estate.

Jean A. Wolinski-Hobbs, Auditor/Investigator, spoke to Allen Tate Company in Charlotte.

Peter B. Myers, Legal Information Officer, spoke to REMAX Leading Edge in Concord.

Disciplinary Actions

MARC ANDREW CASORIA (Hendersonville) – By Consent, the Commission reprimanded Mr. Casoria effective June 26, 2019. The Commission ordered Mr. Casoria to comply with all restrictions imposed on his driving privileges and, during the period Mr. Casoria is restricted to driving a vehicle equipped with an ignition interlock device, he shall not operate a motor vehicle while transporting real estate clients or customers. The Commission found that Mr. Casoria, on or about February 28, 2019, was convicted of a Level II DWI and timely disclosed this DWI on April 1, 2019. Mr. Casoria was sentenced to seven days in jail with 120 days suspended, 12 months of supervised probation, a 12-month driver’s license suspension, and substance abuse assessment and treatment.

CENTURY 21 TRIANGLE PROPERTY MANAGEMENT (Raleigh) – By Consent, the Commission reprimanded Century 21 Triangle Property Management effective June 10, 2019. The Commission found that the firm operated as a property management firm without first obtaining a license from 2014 to April 19, 2018 and allowed day-to-day operations to be run by an unlicensed individual. The firm failed to maintain trust account records in compliance with Commission rules including failure to include required information on ledgers, holding rents in an operating account and reconciliations not being performed in a timely manner. The Commission noted that the firm’s trust account records are currently in substantial compliance with Commission rules.

MENTALLA EFFAT (Charlotte) – By Consent, the Commission suspended the broker license of Ms. Effat for a period of 12 months effective June 14, 2019. The Commission then stayed the suspension for a probationary period through June 13, 2020. The Commission required that Ms. Effat’s license status remain as provisional broker for a period of five years from the effective date and required completion of all postlicensing courses within 18 months. In addition, Ms. Effat must inform current and future BIC’s of this Consent Order and provide her BIC with all executed transactional documents within 24 hours of execution, so long as she is a provisional broker. The Commission found that Ms. Effat left one firm to join another and believed that she could take two buyer clients of the former firm with her to the new firm. Ms. Effat created and provided termination agreements to the two buyer clients after her employment by the former firm had ended. Both buyers signed agency agreements with Ms. Effat and her new firm prior to signing the termination agreements with the former firm.  Furthermore, the former firm did not sign the termination agreements releasing the buyers from their contract. Once Ms. Effat was advised by her new BIC that she could not bring these clients to the new firm without permission, Ms. Effat ceased communicating with those buyers. While at the new firm, Ms. Effat executed agency agreements with buyers who went under contract to purchase properties, without informing her BIC or providing the firm with copies of transaction documents.

LORI LOVE (Mount Pleasant) – The Commission accepted the permanent voluntary surrender of the broker license of Ms. Love effective July 22, 2019. The Commission dismissed without prejudice allegations that Ms. Love violated provisions of the Real Estate License Law and Commission rules. Ms. Love neither admitted nor denied misconduct.

LYRUBEC PROPERTIES LLC (Charlotte) – By Consent, the Commission suspended the firm license of Lyrubec Properties for a period of 24 months effective June 14, 2019. The Commission then stayed the suspension for a probationary period from June 14, 2019 until June 13, 2021. The Commission found in a review of Lyrubec Properties’ two trust accounts that: deposit slips were not designated “trust” or “escrow”; cancelled checks failed to identify the property or owner; bank disbursement transactions failed to identify the purpose for the disbursement; ledgers failed to identify the owner and tenant, the purpose of the monies deposited, or the purpose of disbursements; separate ledger sheets were not maintained for each security deposit; deficit spending existed; and a shortage was present in both accounts. The shortages appear to have been attributed to the former bookkeeper who was arrested and charged with felonious embezzlement. Lyrubec Properties has brought its trust accounts into compliance with Commission rules and the shortages have been funded. The Commission previously reprimanded Lyrubec Properties in 2013 for trust account related issues.

AUDRA L. MELTON (Raleigh) – By Consent, the Commission suspended the broker license of Ms. Melton for a period of 43 months effective November 30, 2017. The Commission found that Ms. Melton self-reported December 10, 2015, convictions of misdemeanor DUI and felonious Homicide by Vehicle while DUI, in Pennsylvania court. Ms. Melton was incarcerated for 18 months and released on parole. Ms. Melton has returned to North Carolina, is on supervised probation through June 30, 2021, and is unable to restore her driving privileges until December of 2020. Ms. Melton’s broker license has been inactive since July 1, 2014.

S K GOODMAN INC (Huntersville) – By Consent, the Commission reprimanded S K Goodman, Inc. effective February 1, 2019. The Commission found that Goodman’s qualifying broker and broker-in-charge supervised a provisional broker who acted as listing agent for a commercial property on which a residential house was located. The owner of the property was living in the house at the time of the listing and told the provisional broker that city water and sewer served the property. Without independently verifying that the property was connected to city sewer, the provisional broker advertised the subject property in the MLS as being connected. After closing on the property, the buyer discovered a septic tank on the premises and the city informed the buyer that the property was connected to city water but not city sewer. 

SELLING SOLUTIONS REAL ESTATE (Fayetteville) – By Consent, the Commission permanently revoked the firm license of Selling Solutions Real Estate effective July 31, 2019. The Commission found that Selling Solutions managed a residential property and disbursed rent proceeds to the property owner without receiving a rent payment from the tenants, causing deficit spending. Selling Solutions was unable to produce all financial trust account documents requested by the Commission. A review of Selling Solutions Real Estate’s trust account records found that: deposit slips, checks, and bank statements were not labeled “trust” or “escrow”; cancelled checks failed to identify the purpose for disbursement; deposit tickets failed to identify the purpose of the monies deposited, the date of the deposit, or the remitter; ledger sheets failed to identify to whom disbursements were paid; there was a lack of an audit trail; and that deficit spending was occurring. Selling Solutions Real Estate failed to provide all leases and management agreements to the Commission and disbursed funds from the Tenant Security Deposit  account prior to the tenant vacating the subject property and in an amount more than collected, leading to a shortage.

LOUELLA M. VENABLE (Raleigh) – By Consent, the Commission suspended the broker license of Ms. Venable for a period of 12 months effective November 1, 2018. Two months of the suspension were active with the remainder stayed on certain conditions. Ms. Venable agreed not to act as or become a broker-in-charge and not to engage in property management for a period of five years from the effective date of this order. The Commission found that Ms. Venable was qualifying broker and broker-in-charge of a property management firm when the Commission cancelled its license on December 20, 2017. Prior to securing a tenant, Ms. Venable did not have a signed property management agreement with a potential owner-client. Ms Venable, however, provided a signed property management agreement to the Commission during its investigation. Without the potential owner-client’s knowledge or authorization, Ms. Venable used DocuSign to sign the potential client’s name on the property management agreement and provided it to the Commission. Ms. Venable collected $2,125 in management fees despite not having a signed property management agreement with the owner-client. Ms. Venable failed to maintain the firm’s trust accounts and records in compliance with Commission rules.

CHERYL CUNNINGHAM WARREN (Charlotte) – By Consent, the Commission suspended the broker license of Ms. Warren for a period of 24 months effective June 14, 2019. Six months of the suspension are active with the remaining 18 months stayed for a probationary period of two years from December 14, 2019 until December 13, 2021. Ms. Warren may not act as a broker-in-charge for a period of five years from the effective date, must disclose the trust account violations to the new acting broker-in-charge, and must not have control over the firm’s trust account during this period. The Commission found in a review of the firm’s two trust accounts that: deposit slips were not designated “trust” or “escrow”; cancelled checks failed to identify the property or owner; bank disbursement transactions failed to identify the purpose for the disbursement; ledgers failed to identify the owner and tenant, the purpose of the monies deposited, or the purpose of disbursements; separate ledger sheets were not maintained for each security deposit; deficit spending existed; and a shortage was present in both accounts. The shortages appear to have been attributed to the former bookkeeper who was arrested and charged with felonious embezzlement. The firm has brought its trust accounts into compliance with Commission rules and the shortages have been funded. The Commission previously reprimanded the firm in 2013 for trust account related issues.

Unclaimed Property: NC Law Requires Annual Records Review and Reporting

By Madison L. Mackenzie, Associate Legal Counsel I

Do you have “dormant” funds sitting in your trust or escrow account?  Maybe a tenant failed to provide a forwarding address for you to return his or her tenant security deposit or maybe you received an earnest money deposit from a buyer who was never heard from again. If those funds are still sitting in your trust account after time has passed, it could pose a problem.

All businesses operating in North Carolina are subject to the State’s Unclaimed Property laws, codified in Chapter 116B, Article 4 of the North Carolina General Statutes.

These laws require all businesses to review their accounting records annually and determine whether they are in possession of any dormant unclaimed property. If they are, the business is required to file a report with the Unclaimed Property Division of the N.C. Department of State Treasurer and remit the unclaimed property. Failure to file this report and properly remit unclaimed property can result in interest charges, a $1,000 civil penalty for each day of delinquency, and a penalty equal to 25% of the value of the unreported property. 

Any real estate firm with a trust account holding money on behalf of others is a potential holder of unclaimed property and is therefore subject to these laws. The N.C. Department of State Treasurer has outlined four steps to identify unclaimed property and properly report it. 

1. Identify Property that Should be Reported

Property is unclaimed if the apparent owner has not communicated with the holder of the funds or indicated an interest in the property within a period of time known as the “dormancy period.”  The dormancy period varies depending on the type of property being held.  In most cases, the dormancy period for funds in an agent’s trust account is five years.  However, disputed funds are not unclaimed property and should never be remitted to the State Treasurer.  

For most holders, November 1st is the due date to report all unclaimed property that has reached its dormancy holding period as of the prior June 30th.  The State Treasurer provides conversion tables on its website to assist with determining when reporting is due. 

2. Attempt to Locate the Owners

Prior to reporting unclaimed property that has reached its dormancy holding period, the agent must make an attempt to contact the apparent owner in writing when the property being held exceeds $50.  The State Treasurer refers to this written notice as a “due diligence letter,” not to be confused with the due diligence associated with real estate transactions.   This notice to the apparent owner must be mailed not more than 120 days or less than 60 days from the reporting due date.

If the agent is unsuccessful in identifying the apparent owner of the funds, the agent should contact the State Treasurer for further assistance.  The property will still need to be reported and remitted, even if the apparent owner is unknown.

3. Prepare your Report

The report(s) required will depend on the type of unclaimed property being reported.   Most likely, the agent will be reporting unclaimed “cash”; and therefore, will need to complete the Unclaimed Property Verification Report (ASD-159) and Form ASD-21. 

The agent should be prepared to provide names, last known addresses, social security or tax identification numbers, dates of birth, driver license numbers, and email addresses of the apparent owners, if known by the agent.  Any other information that may be available to help in identifying the owner should be reported with each property.

4. Submit your Report and Remit Funds Due

 If the agent is reporting less than 50 property owner records, the report can be filed electronically or in paper form.  If more than 50 properties, the report must be filed electronically.  Remitting unclaimed funds can be done by check or ACH or Wire Transfer. 

For reports filed after July 16, 2012, the records accompanying the report must be retained for 5 years from the date the report is filed. (Note: record retention for reports filed before July 16, 2012 remains at 10 years.)

No report is required if there is no unclaimed property identified in the agent’s financial review.  Additionally, filing extensions may be granted for good cause.

For further information, The North Carolina Holder Reporting Guide produced by the N.C. Department of State Treasurer can be found at https://www.nctreasurer.com/upp/Resources/NC_Holder_Reporting_Guide.pdf. 

What you can do to Prevent Unclaimed Property? Keeping proper and current trust accounting records will keep you from later discovering a trove of unclaimed property.  Ensure that accounts are reconciled timely and resolve all exceptions, review uncashed checks in ledger accounts, and review unusual journal entries. 

The real estate firm is relieved of liability once they have remitted dormant unclaimed property to the State.  If the apparent owner later wishes to claim the property, they must direct that claim to the State.  Also, the real estate firm avoids fines and penalties by properly and timely reporting unclaimed property.

Unclaimed property laws also apply to accounts other than trust or escrow accounts.  To learn more about your responsibilities as a real estate agent or firm when it comes to unclaimed property, contact the North Carolina Unclaimed Property compliance staff at unclaimed.property@nctreasurer.com or by calling 919-814-4200.

To stay up-to-date on new laws and legislation that affect your responsibilities as an unclaimed property holder, sign up for Holder Reporting e-Updates provided by the N.C. Department of State Treasurer at https://2ec804.campgn5.com/UP-Business-Holders.

Avoid Vaguely Written DDRA’s

By Sheryl B. Graham, Consumer Protection Officer

What are the consequences of a vaguely written DDRA?

One of the most important issues addressed during the due diligence period of a real estate transaction is the condition of the property.  Brokers should address their client’s concerns and expectations when it comes to the requested repairs and adjustments. 

Several recent cases reviewed by the Commission’s Regulatory Division staff have involved complaints filed against brokers by buyer clients after closing.  These cases have centered on poorly prepared Due Diligence Request and Agreement documents, Form 310-T, which often result in the expectations of the clients not being met. While this specific form is provided by NCREALTORS® for use by its membership, the same issues can arise in repair negotiations in due diligence contracts which do not use this form.

The details of the following case study are based on an actual complaint. A real estate broker assisted a buyer client with the purchase of a home.  During the due diligence period, the buyer had a home inspection performed by a certified home inspector as suggested by the broker. The inspection revealed several items of concern with the property and the report noted, among other things, the following issues:

 Item 2.4 Rotted wood at the base of the left porch column should be evaluated and repaired as necessary.  Item 5.5 The crawl space shows widespread high moisture and fungal growth.   Consult a professional foundation moisture control contractor to determine solution.  Item 5.6 Moisture damaged sub-floor under master bath, evidence of water intrusion.  Item 5.7 Vapor barrier should be installed in crawl space.  Item 6.2 Kitchen sink spray option not working.  Have repaired or replaced.  Item 6.7 Hall bath shower head leaking.  Have repaired or replaced.   

The buyer’s agent prepared the Due Diligence Request & Agreement (DDRA) for the buyer client and it read as follows:  “The buyers are requesting that the sellers repair the following items from the Home Inspection Summary, Items 2.4, 5.5, 5.6, 5.7, 6.2, and 6.7.” The buyer agent emailed the DDRA to the listing agent with the home inspection summary attached and the sellers agreed to the DDRA as written.

The buyers were comfortable to proceed with the sale and expected a professional moisture control contractor would evaluate and correct the crawl space issues.  The sellers agreed to the repairs but it was their intention to hire a plumber for some of the items and do some of the work themselves.    

As in many cases, the vaguely written DDRA led to a misunderstanding that was revealed right before closing!   The day of the walk-through, the buyer agent asked for repair receipts and discovered that the crawl space repairs were not done by a professional moisture control contractor, but by the seller’s brother, a plumber.  To repair the crawl space issues, the plumber had checked for leaks and finding none, installed a new vapor barrier and sprayed the visible fungus with a household cleaner.  The remedy in no way met the expectations of the buyer.  Not being able to delay closing because their household goods were outside on a moving van, the buyers felt they had no choice but to proceed with settlement.  Ultimately, the buyer’s fears were realized when they found the moisture issues in the crawl space were not effectively repaired . 

The language in the DDRA was vague and did not clearly define what exactly was being requested, how the requested repairs were to be completed, or who was to complete the repairs.  The home inspection report outlined the issues but did not address how to specifically remedy them.  Neither the buyer’s expectations nor the sellers were clearly defined, explained or fulfilled.  In this case, like many others, the agreed upon repairs were left open to interpretation by the buyers and the sellers.

A poorly written DDRA that does not specifically address the issues, the remedies, the methods of repair and other important details, has the potential to adversely affect more than just the buyer of the property.  The sellers and the brokers can also be adversely affected.  Brokers should take great care to discuss and discern the expectations of the client, advise the client to seek additional professional opinions when necessary, and clearly articulate the client’s requests.

Possible violation of the Real Estate License Law in this case study include violations of N.C.G.S. § 93A-6 (a)(8) for being unworthy or incompetent to act in a manner which protects the public. 

Things to keep in mind when preparing and negotiating the Due Diligence Request & Agreement

• What are the client’s expectations?  What are the client’s concerns? 

• Discuss all inspection findings and repair requests with the clients.  Communication is key. 

• The DDRA form reads … the Buyer requests and the Seller agrees….  The decision is the client’s.

• The language on the DDRA needs to be clear and specific: consider who will perform repairs, what will be repaired, and how the work should be done.  Reference to an item number from an inspection report is not enough.

• A broker may want to advise the client to seek additional input from a repair professional.

• Avoid terminology that may not be clearly understood.  Leave no room for interpretation. Seek legal counsel if needed.

• Any changes made to the DDRA need to be initialed by all parties to the transaction

• Seller agents should confirm that the sellers know specifically what they are expected to do and when.

• Buyer agents should recommend that the buyer client have a re-inspection if desired. 

• Ratification of the DDRA does not end the Due Diligence period or amend the details of the contract. 

• Use properly prepared documentation to amend the contract for money in lieu of repairs or to make changes to the Due Diligence period. 

• Confirm that both parties have signed the agreement and there are no edits creating a counter-offer.

Subscribe now to the Commission’s new digital Real Estate Manual

The NC Real Estate Commission now offers its Real Estate Manual in an interactive and user-friendly web-based format.   

Features of the new publication include: comic strips that display brokerage activities and examples of agency relationships between brokers and clients, self-check assessments, informative graphics, keyword searches, quick access to Postlicensing course content, and a database of sample contract forms.

The web-based Real Estate Manual will be offered for a subscription fee of $25.00 per license year.  

CLICK HERE to subscribe to the new web-based Real Estate Manual. 

Disciplinary Actions

MAUREEN ELLEN ANOBA (Raleigh) – By Consent, the Commission reprimanded Ms. Anoba effective June 10, 2019. The Commission found that Ms. Anoba, a broker-in-charge, failed to maintain her firm’s trust account records in compliance with Commission rules, failed to maintain a journal with a running balance, failed to include required information on ledgers, and did not perform reconciliations in a timely manner.

CHRISTOPHER BRANDON BARTON (Fort Mill, South Carolina) – The Commission accepted the permanent voluntary surrender of the broker license of Mr. Barton effective June 19, 2019. The Commission dismissed without prejudice allegations that Mr. Barton violated provisions of the Real Estate License Law and Commission rules. Mr. Barton neither admitted nor denied misconduct.

CHRISTOPHER R. BARTON (Fort Mill, South Carolina) – The Commission accepted the permanent voluntary surrender of the broker license of Mr. Barton effective June 19, 2019. The Commission dismissed without prejudice allegations that Mr. Barton violated provisions of the Real Estate License Law and Commission rules. Mr. Barton neither admitted nor denied misconduct.

CHARLOTTE HOMES & RENTALS LLC (Charlotte – By Consent, the Commission suspended the firm license of Charlotte Homes & Rentals for a period of 12 months effective June 14, 2019. The Commission then stayed the suspension for a probationary period from June 14, 2019 until June 13, 2020. The Commission found that Charlotte Homes & Rentals operated without a designated broker-in-charge from June 29, 2017, until December 11, 2018. The firm withheld earnings from an employee’s paycheck for child support payments and failed to remit these monies to the County. Charlotte Homes & Rentals initially failed to provide deposit slips, cancelled checks, property management agreements, or lease documents to the Commission’s investigator. A review of the firm’s rental trust account found that ledger sheets lacked the name of the owner and tenant, the lack of an audit trail, and deficit spending that included a shortage in the account. A review of the firm’s security deposit account found: lack of a journal, lack of a ledger, lack of an audit trail, and an overage in the account. Charlotte Homes & Rentals has worked to bring its trust accounts into compliance.

RYAN NICOLE GRAHAM (Winston-Salem) – By Consent, the Commission suspended the broker license of Ms. Graham for a period of nine months effective September 30, 2019. The Commission then stayed the suspension for a probationary period through June 30, 2020.  The Commission found that Ms. Graham, acting as a buyer agent in a transaction, gave her buyer-client the code to a lock box enabling her client to access a property listed for sale by another firm without obtaining authorization from the seller. Ms. Graham received a termite report for the subject property that indicated there was “excessive water in the basement,” but failed to give her buyer-client a copy of the report or disclose its contents.

SYLVESTER HOWARD (Jacksonville) – By Consent, the Commission reprimanded Mr. Howard effective June 19, 2019. The Commission found that Mr. Howard, a qualifying broker and broker-in-charge, on or about April 17, 2018, pleaded guilty to one count of Theft of Government Property, was ordered to 12 months’ probation, and ordered to pay a fine.

JOSHUA REAL ESTATE GROUP LLC (Fort Mill, South Carolina) – The Commission accepted the permanent voluntary surrender of the firm license of Joshua Real Estate Group effective June 19, 2019. The Commission dismissed without prejudice allegations that Joshua Real Estate Group violated provisions of the Real Estate License Law and Commission rules. Joshua Real Estate Group neither admitted nor denied misconduct.

TABITHA M. KINCH (Raleigh) By Consent, the Commission reprimanded Ms. Kinch effective June 5, 2019.The Commission found that Ms. Kinch acted as a listing agent and buyer agent for a client on separate properties. Both Ms. Kinch’s agency agreements expired prior to her client closing on both properties and Ms. Kinch failed to execute new ones or sign an extension. The purchase contract for her seller clients stated that the “existing refrigerator” would convey with the property. Ms. Kinch advised her seller clients that they could substitute another refrigerator instead. After closing, however, no refrigerator remained in the property. The Commission notes that Ms. Kinch personally paid for a refrigerator to the satisfaction of the buyers.

BRYCE HOWARD SMITH (Charlotte) – By Consent, the Commission suspended the broker license of Mr. Smith for a period of 12 months effective June 14, 2019. The Commission then stayed the suspension for a probationary period from June 14, 2019 until June 13, 2020. The Commission found that Mr. Smith, a qualifying broker, allowed his firm to operate without a designated broker-in-charge from June 29, 2017, until December 11, 2018. The firm withheld earnings from an employee’s paycheck for child support payments and failed to remit these monies to the County. Mr. Smith initially failed to provide deposit slips, cancelled checks, property management agreements, or lease documents to the Commission’s investigator. A review of the firm’s rental trust account found that ledger sheets lacked the name of the owner and tenant, the lack of an audit trail, and deficit spending that included a shortage in the account. A review of the firm’s security deposit account found: lack of a journal, lack of a ledger, lack of an audit trail, and an overage in the account. Mr. Smith has worked to bring his firm’s trust accounts into compliance.

JOSHUA DON STURTZ (Fayetteville) – By Consent, the Commission reprimanded Mr. Sturtz effective June 5, 2019. The Commission found that Mr. Sturtz acted as a buyer agent for a residential property where his client requested the completion of certain repairs along with a roof certification. Mr. Sturtz received the Due Diligence Request and Agreement (“DDRA”) back from the listing agent with the roof certification crossed out and initialed by the sellers. Mr. Sturtz failed to send the DDRA to his buyer client, failed to inform his client of the certification’s removal from the DDRA, and then told his client that roof certification had been completed, when, in fact, it had not.

STEPHEN MICHAEL VOTINO, JR. (Raleigh) By Consent, the Commission reprimanded Mr. Votino effective June 10, 2019. Mr. Votino agrees that he shall be prohibited from performing property management services on behalf of others for a period of five years. The Commission found that Mr. Votino was the owner of a property management firm that was mistakenly unlicensed from 2014 until its licensure on April 19, 2018. Mr. Votino is now qualifying broker of the firm. Mr. Votino allowed an unlicensed individual to carry out day-to-day operations in the firm. The firm did not maintain its trust account records in compliance with Commission rules and did not reconcile its records timely. The firm’s trust accounts are currently in substantial compliance with Commission rules and Mr. Votino is in the process of transferring ownership of the Firm.

Staff Update

Allan R. Dameron Legal Internship Award

Logan Rigsbee (left center) and Bailey Kirby (right center) are the recipients of the 2019 Allan R. Dameron Legal Internship Award. Rigsbee is a rising second-year law student at the University of North Carolina Law School and Kirby is a rising third-year law student at Campbell University School of Law. The awards were presented by Commission Chair Anna Gregory Wagoner and Vice Chair Thomas R. Lawing, Jr. at the June Commission meeting. The award is given annually in memory of and tribute to former Commission Chair Allan R. Dameron for his dedicated service to protect the interests of consumers.

Michele L. Bennett has been employed as Accounting/Administrative Specialist in the Accounting Division. Prior to joining the Commission, she was an administrative assistant with a structural engineering firm, and was self-employed for 10 years.

Rebecca J. Holbert has been employed as Legal Case Management Paralegal in the Regulatory Affairs Division. She is a graduate of N.C. State University with a B.A. in Communication and Digital Media. She received a Paralegal certificate from Meredith College and is a North Carolina Certified Paralegal. Prior to joining the Commission, she worked as a pastry chef.

Carla Johnstone has been employed as a License Specialist in the Education and Licensing Division. Carla and her husband moved to Raleigh in 2016 from the Washington, DC area where she was an Administrative Assistant in a radiology practice.

Thomie M. Moore has been employed as a License Specialist in the Education and Licensing Division. Prior to joining the Commission, she was employed in the publishing industry.

Appearances

Marcia M. Waldron, Auditor, spoke to the Property Management Division of the Winston-Salem Regional Association of REALTORS®.

Stephen L. Fussell, Chief Consumer Protection Officer, spoke to the Winston-Salem Regional Association of REALTORS®.

Sheryl B. Graham, Consumer Protection Officer, spoke to the Greensboro Regional REALTORS® Association.

Disciplinary Actions

TIMOTHY GEORGE DOWD (Winston-Salem) – The Commission accepted the voluntary surrender of the broker license of Mr. Dowd effective May 22, 2019. Mr. Dowd may not reapply for five years. The Commission dismissed without prejudice allegations that Mr. Dowd violated provisions of the Real Estate License Law and Commission rules. Mr. Dowd neither admitted nor denied misconduct.

MARLIES GREEN (Fayetteville) – By Consent, the Commission permanently revoked the broker license of Ms. Green effective May 22, 2019. The Commission found that Ms. Green, qualifying broker and broker-in-charge with a management agreement for a residential property, moved into the property as a tenant. Ms. Green failed to pay rent in a timely manner to the owner, caused extensive damage to the premises, and was eventually evicted. Ms. Green failed to return deposits to the property owner. Ms. Green failed to remit rental proceeds to other owner clients, failed to pay vendors for work performed on properties managed by her firm, and failed to return a tenant security deposit to a tenant within thirty days of lease termination.  When Ms. Green finally did remit the deposit to the tenant, the bank returned the check due to insufficient funds. The tenant has still not received the deposit. Ms. Green has refused to communicate with property owners, vendors, tenants, and Commission staff and failed to update Commission records with her new address and that of the firm. 

PAUL ROBERT JONES (Wilmington) – By Consent, the Commission suspended the broker license of Mr. Jones for a period of 26 months effective May 9, 2019. The Commission then stayed the suspension for a probationary period from May 9, 2019 through July 9, 2021. The Commission found that Mr. Jones timely reported his July 9, 2018, conviction for felonious Possession With Intent to Sell and Deliver a schedule VI controlled substance. Mr. Jones was sentenced to 6-17 months of imprisonment, which was suspended for a 36-month period of supervised probation. Mr. Jones may be transferred to unsupervised probation for the last six months if he remains in compliance with probation.

DEBRA THOMAS PARSONS (Rockingham) – By Consent, the Commission reprimanded Ms. Parsons effective May 22, 2019. The Commission found that Ms. Parsons, broker-in-charge and qualifying broker, reported that a former bookkeeper had embezzled funds from her property management firms.  The employee was a licensed broker who later surrendered her real estate license to the Commission and signed a Confession of Judgment in District Court. The majority of funds embezzled belonged to Ms. Parson’s firms although some were funds held in trust for others. An initial review of Ms. Parson’s trust accounts found that the firm did not perform three-way monthly reconciliations and left unreconciled deposits dating back years on the books. Since the audit, Ms. Parsons has brought the firm’s trust accounts into compliance with Commission rules. The Commission notes that Ms. Parsons and her staff have taken the Commission’s Basic Trust Account course and hired a vendor to assist with the management software.

PREFERRED PROPERTIES OF NC LLC (Rockingham) – By Consent, the Commission reprimanded Preferred Properties of NC effective May 22, 2019. The Commission found that the broker-in-charge and qualifying broker of Preferred Properties of NC reported that a former bookkeeper had embezzled funds from the firm’s trust accounts. The employee was a licensed broker who later surrendered her real estate license to the Commission and signed a Confession of Judgment in District Court. The majority of the funds embezzled belonged to the firm although some were funds held in trust for others. An initial review of the firm’s trust accounts found that did not perform three-way monthly reconciliations and left unreconciled deposits dating back years on the books. Since the audit, the firm has brought its trust accounts into compliance with Commission rules. The Commission notes that firm’s staff has taken the Commission’s Basic Trust Account course and the firm has hired a vendor to assist with the management software.

PREFERRED RENTALS OF NC LLC  (Rockingham) – By Consent, the Commission reprimanded Preferred Rentals of NC effective May 22, 2019. The Commission found that the broker-in-charge and qualifying broker of Preferred Rentals of NC reported that a former bookkeeper had embezzled funds from the firm’s trust accounts. The employee was a licensed broker who later surrendered her real estate license to the Commission and signed a Confession of Judgment in District Court. The majority of the funds embezzled belonged to the firm although some were funds held in trust for others. An initial review of the firm’s trust accounts found that the firm did not perform three-way monthly reconciliations and left unreconciled deposits dating back years on the books. Since the audit, the firm has brought its trust accounts into compliance with Commission rules. The Commission notes that firm’s staff has taken the Commission’s Basic Trust Account course and the firm has hired a vendor to assist with the management software.

QUALITY HOMES PROPERTY MANAGEMENT LLC (Fayetteville) – By Consent, the Commission permanently revoked the firm license of Quality Homes Property Management effective May 22, 2019. The Commission found that its qualifying broker and broker-in-charge had a management agreement for a residential property, moved into the property as a tenant, failed to make timely rent payments to the owner, and caused extensive damage to the premises. The owner evicted the broker who also failed to return deposits to the property owner. The firm failed to remit rental proceeds to other owners and failed to pay vendors for work performed on properties the firm managed. The firm also failed to return a tenant security deposit to a tenant within thirty days of lease termination. When the firm issued a check to the tenant, the bank returned the check due to insufficient funds. The tenant has still not received the deposit. The firm has refused to communicate with property owners, vendors, tenants, and Commission staff and failed to update Commission address records for the broker and firm.  

MARK JOSEPH VOLAK (Mooresville) – By Consent, the Commission suspended the broker license of Mr. Volak for a period of one year effective December 1, 2018. Six months of the suspension were active with the remainder stayed for a probationary period from June 1, 2019 to December 1, 2020. The Commission also ordered that Mr. Volak shall be ineligible to act as a Broker-in-Charge until November 1, 2023. The Commission found that Mr. Volak, who held a contractor’s license in addition to a broker license, contracted in December 2014 to build a home for a client but failed to complete construction of the project, leaving materials and a rented dumpster on the site. As a result, liens were filed by various vendors against his client for more than $65,000 despite Mr. Volak’s having collected more than $182,000 in draws and other payments. Mr. Volak permanently surrendered the broker license of his construction firm in a 2016 disciplinary action based on a prior construction project. Mr. Volak continued to pay vendors after termination of the construction contract in the present complaint.

RULEMAKING APPROVED

The Commission’s current rulemaking session is now complete. The Rules Review Commission approved 11 rules, 7 amendments and 4 readoptions, at its May 16, 2019, meeting. Text of the approved rules may be found on the Commission’s website under ‘License Law and Rule Changes.’  Changes to the rules are reflected by underlining text that will be added and striking through text that will be deleted. The rules have an effective date of July 1, 2019, except for 21 NCAC 58A .1902, which has an effective date of July 1, 2020. Each effective date is noted in the history of each rule. 

If you would like to receive notifications of rulemaking proceedings, please visit www.ncrec.gov/home/subscribe.

Proper Use of the Working with Real Estate Agents Brochure

By Sheryl B. Graham, Consumer Protection Officer

The Working with Real Estate Agents brochure (“WWREA”), first published in May 2001, is required to be used by brokers in every real estate sales transaction. Not only is the brochure to be presented in every real estate sales transaction, it is to be reviewed by the broker at the first substantial contact with both buyers and sellers.

What determines first substantial contact?  It is not the length of a conversation or communication; it is the substance of that communication. Substantial contact occurs when a buyer or seller begins to talk about personal or confidential information. Examples include a buyer discussing their price range. It may be a seller talking about their motivation to sell or reason for the move.

Commission Rule 58A. 0104 ( c) states:  In every real estate sales transaction, a broker shall, at first substantial contact with a prospective buyer or seller, provide the buyer or seller with a copy of the publication WWREA, set forth the broker’s name and license number thereon, review the publication with the buyer or seller, and determine whether the agent will act as the agent of the buyer or seller in the transaction.

The WWREA brochure explains the various types of agency relationships with the goal of educating the consumer and defining expectations. The WWREA is a broker’s opportunity to discuss and clarify what their agency role is in the transaction. The WWREA starts the conversation concerning the contemplated agency status and future options.

When first substantial contact with a buyer or seller is via telephone or email, a broker must transmit or mail the brochure to the buyer or seller within three days of that first substantial contact. A broker should then follow up with a conversation with the buyer or seller to review the brochure and answer any questions the consumer may have. Sometimes, a broker’s first substantial contact with a buyer or seller is in person, at the office or at an open house. The same rule and expectations apply: when a consumer acts as though an agency relationship exists by discussing personal or confidential information, the broker must present and review the WWREA brochure.

A link to the brochure provided at the foot of a broker’s email without further review or discussion is not sufficient. Similarly, sending both the WWREA and the completed agency agreement to the buyer or seller for electronic signature at the same time could indicate that the broker has delayed delivery of the WWREA past first substantial contact and may never have had the substantive discussion or review with the client.

Not every potential buyer or seller decides to sign an agency agreement with the first broker they meet. A broker would be expected to have a folder full of signed WWREA brochures for prospective customers who do not become clients. Every time a buyer or seller starts to communicate substantial information, the broker should present, review and have signed a WWREA brochure. Like all records of sales, rentals and other transactions, the signed WWREA brochure copies should be retained for three years. A broker may want to have a folder full of blank WWREA brochures, ready for the next conversation.